EXHIBIT
1.2
TRIDENT SECURITIES, INC.
4601 SIX FORKS ROAD, SUITE 400
RALEIGH, NORTH CAROLINA 27609
TELEPHONE (919) 781-8900
FACSIMILE (919) 787-1670
June 9, 1997
Board of Directors
Lexington First Federal Savings Bank
19 Natchez Trace Drive
Lexington, Tennessee 38351
RE: Conversion Stock Marketing Services
Gentlemen:
This letter sets forth the terms of the proposed engagement between Trident
Securities, Inc. ("Trident") and Lexington First Federal Savings Bank,
Lexington, Tennessee (the "Bank") concerning our investment banking services in
connection with the conversion of the Bank from a mutual to a capital stock form
of organization.
Trident is prepared to assist the Bank in connection with the offering of its
shares of common stock during the subscription offering and community offering
as such terms are defined in the Bank's Plan of Conversion. The specific terms
of the services contemplated hereunder shall be set forth in a definitive sales
agency agreement (the "Agreement") between Trident and the Bank to be executed
on the date the offering circular/prospectus is declared effective by the
appropriate regulatory authorities. The price of the shares during the
subscription offering and community offering will be the price established by
the Bank's Board of Directors, based upon an independent appraisal as approved
by the appropriate regulatory authorities, provided such price is mutually
acceptable to Trident and the Bank.
In connection with the subscription offering and community offering, Trident
will act as financial advisor and exercise its best efforts to assist the Bank
in the sale of its common stock during the subscription offering and community
offering. Additionally, Trident may enter into agreements with other National
Association of Securities Dealers, Inc., ("NASD") member firms to act as
selected dealers, assisting in the sale of the common stock. Trident and the
Bank will determine the selected dealers to assist the Bank during the community
offering. At the appropriate time, Trident in conjunction with its counsel,
will conduct an examination of the relevant documents and records of the Bank as
Trident deems necessary and appropriate. The Bank will make all documents,
records and other information deemed necessary by Trident or its counsel
available to them upon request.
For its services hereunder, Trident will receive the following compensation and
reimbursement from the Bank:
1. A management fee in the amount of $65,000.
TRIDENT SECURITIES, INC.
Board of Directors
June 9, 1997
Page 2
2. For stock sold by other NASD member firms under selected dealer's
agreements, the commission shall not exceed a fee to be agreed
upon jointly by Trident and the Bank to reflect market
requirements at the time of the stock allocation in a Syndicated
Community Offering.
3. The foregoing fees and commissions are to be payable to Trident
at closing as defined in the Agreement to be entered into between
the Bank and Trident.
4. Trident shall be reimbursed for allocable expenses incurred by
them, including legal fees, whether or not the Agreement is
consummated. Trident's out-of-pocket expenses will not exceed
$10,000 and its legal fees will not exceed $10,000. The Bank will
forward to Trident a check in the amount of $10,000 as an advance
payment to defray the allocable expenses of Trident.
It further is understood that the Bank will pay all other expenses of the
conversion including but not limited to its attorneys' fees, NASD filing
fees, and filing and registration fees and fees of either Trident's
attorneys or the attorneys relating to any required state securities law
filings, telephone charges, air freight, rental equipment, supplies,
transfer agent charges, fees relating to auditing and accounting and costs
of printing all documents necessary in connection with the foregoing.
For purposes of Trident's obligation to file certain documents and to make
certain representations to the NASD in connection with the conversion, the
Bank warrants that: (a) the Bank has not privately placed any securities
within the last 18 months; (b) there have been no material dealings within
the last 12 months between the Bank and any NASD member or any person
related to or associated with any such member; (c) none of the officers or
directors of the Bank has any affiliation with the NASD; (d) except as
contemplated by this engagement letter with Trident, the Bank has no
financial or management consulting contracts outstanding with any other
person; (e) the Bank has not granted Trident a right of first refusal with
respect to the underwriting of any future offering of the Bank stock; and
(f) there has been no intermediary between Trident and the Bank in
connection with the public offering of the Bank's shares, and no person is
being compensated in any manner for providing such service.
The Bank agrees to indemnify and hold harmless Trident and each person, if
any, who controls the firm against all losses, claims, damages or
liabilities, joint or several and all legal or other expenses reasonably
incurred by them in connection with the investigation or defense thereof
(collectively, "Losses"), to which they may become subject under the
securities laws or under the common law, that arise out of or are based
upon the conversion or the engagement hereunder of Trident unless it is
determined by final judgment of a court having jurisdiction over the matter
that such Losses are primarily a result of Trident's willful misconduct or
gross negligence. If the foregoing indemnification is unavailable for any
reason, the Bank agrees to contribute to such Losses in the proportion that
its financial interest in the conversion bears to that of the indemnified
parties. If the Agreement is entered into with respect to the common stock
to be issued in the conversion, the Agreement will provide for
indemnification, which will be in addition to any rights that
TRIDENT SECURITIES, INC.
Board of Directors
June 9, 1997
Page 3
Trident or any other indemnified party may have at common law or otherwise.
The indemnification provision of this paragraph will be superseded by the
indemnification provisions of the Agreement entered into by the Bank and
Trident.
This letter is merely a statement of intent and is not a binding legal
agreement except as to paragraph (4) above with regard to the obligation to
reimburse Trident for allocable expenses to be incurred prior to the
execution of the Agreement and the indemnity described in the preceding
paragraph. While Trident and the Bank agree in principle to the contents
hereof and propose to proceed promptly, and in good faith, to work out the
arrangements with respect to the proposed offering, any legal obligations
between Trident and the Bank shall be only as set forth in a duly executed
Agreement. Such Agreement shall be in form and content satisfactory to
Trident and the Bank, as well as their counsel, and Trident's obligations
thereunder shall be subject to, among other things, there being in
Trident's opinion no material adverse change in the condition or
obligations of the Bank or no market conditions which might render the sale
of the shares by the Bank hereby contemplated inadvisable.
Please acknowledge your agreement to the foregoing by signing below and
returning to Trident one copy of this letter along with the advance payment
of $10,000. This proposal is open for your acceptance for a period of
thirty (30) days from the date hereof.
Yours very truly,
TRIDENT SECURITIES, INC.
By: /s/ Timothy E. Lavelle
------------------------
Timothy E. Lavelle
Managing Director
Agreed and accepted to this 10th day
of June, 1997
LEXINGTON FIRST FEDERAL SAVINGS BANK
By: /s/ Howard W. Tignor
--------------------------------
Howard W. Tignor
President
RLB:cs
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