Franklin Bank Corp. 4% Contingent Convertible Senior Notes due 2027 UNDERWRITING AGREEMENT
EXHIBIT 1.1
$100,000,000
4% Contingent Convertible Senior Notes due 2027
April 12, 2007
RBC Capital Markets Corporation
Bear, Xxxxxxx & Co. Inc.
c/o RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx, 000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Bear, Xxxxxxx & Co. Inc.
c/o RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx, 000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Ladies and Gentlemen:
Franklin Bank Corp., a Delaware corporation (the “Company”), confirms its agreement with RBC
Capital Markets Corporation and Bear, Xxxxxxx & Co. Inc., as the underwriters (the “Underwriters”)
with respect to the issue and sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective principal amounts set forth in Schedule A of
the Company’s 4% Contingent Convertible Senior Notes due 2027 (the “Securities”), to be issued
pursuant to the provisions of an Indenture dated as of April 9, 2007 (the “Base Indenture”) between
the Company and The Bank of New York Trust Company, N.A., as Trustee (the “Trustee”), as
supplemented by the First Supplemental Indenture to be dated as of April 18, 2007, between the
Company and the Trustee (the Base Indenture as so supplemented, the “Indenture”) and pursuant to
the pricing terms attached hereto as Exhibit A.
The Securities will be convertible into cash and, in certain circumstances, shares of the
Company’s Common Stock, $0.01 par value per share (the “Common Stock”). The shares of Common Stock
into which the Securities are convertible are hereinafter referred to as the “Underlying
Securities.”
The Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (File No. 333-141039) with respect to the
Securities pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and the rules
and regulations of the Commission thereunder. As used in this Agreement, “Effective Time” means
the date and the time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; “Effective Date” means the
date of the Effective Time; “Execution Time” shall mean the date and time that this Agreement is
executed and
delivered by the parties hereto; “Base Prospectus” means the base prospectus referred to in
paragraph 1(a) below contained in the Registration Statement (as defined below) at the Execution
Time; “Preliminary Prospectus” means each preliminary prospectus included in such registration
statement, or amendments thereof, before it became effective under the Securities Act and any
preliminary prospectus supplement filed with the Commission by the Company with the consent of the
Underwriters pursuant to Rule 424(b) under the Securities Act, together with the Base Prospectus;
“Pricing Prospectus” means any preliminary prospectus supplement relating to the Securities which
is used prior to the filing of the Prospectus (as defined below), together with the Base
Prospectus; “Prospectus” means the prospectus supplement relating to the Securities that was first
filed pursuant to Rule 424(b) under the Securities Act after the Execution Time, together with the
Base Prospectus; “Registration Statement” means such registration statement referred to above,
including exhibits and financial statements and any prospectus supplement relating to the
Securities that is filed with the Commission pursuant to Rule 424(b) under the Securities Act and
deemed part of such registration statement pursuant to Rule 430B under the Securities Act, as
amended on each Effective Date and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date, shall also mean such registration statement as so amended;
“Free Writing Prospectus” means any “free writing prospectus” as defined in Rule 405 under the
Securities Act relating to the Securities; and “Issuer Free Writing Prospectus” means any “issuer
free writing prospectus” as defined in Rule 433 under the Securities Act relating to the
Securities; “Time of Sale Disclosure Package” means (i) the Base Prospectus, (ii) the Preliminary
Prospectus used most recently prior to the Execution Time, (iii) the Issuer Free Writing
Prospectuses and other documents, if any, identified in Schedule I(a) hereto, (iv) the final term
sheet prepared and filed pursuant to Section 4(b) hereto, if any, and (v) any other Free Writing
Prospectus that the parties hereto shall hereafter expressly agree in writing to treat as part of
the Time of Sale Disclosure Package. For the purposes of this Agreement, the “Applicable Time” is
7:00 p.m. (Eastern time) on the date of this Agreement.
Any reference herein to the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act which were filed under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or before the Effective
Date of the Registration Statement or the date of the Base Prospectus, any Preliminary Prospectus
or the Prospectus, as the case may be; and any reference herein to the terms “amend,” “amendment”
or “supplement” with respect to the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration Statement or the date of the
Base Prospectus, any Preliminary Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
In consideration of the mutual agreements contained herein and of the interests of the parties
in the transactions contemplated hereby, the parties hereto agree as follows:
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1. Representations and Warranties of the Company.
The Company represents and warrants to each Underwriter as follows:
(a) The Company meets the requirements for use of Form S-3 under the Securities Act and has
prepared and filed with the Commission a shelf registration statement (File No. 333-141039) on Form
S-3, including a related base prospectus (the “Base Prospectus”), for registration under the
Securities Act of the offering and sale of the Securities and the Underlying Securities. Such
Registration Statement, including any amendments thereto filed prior to the Execution Time, became
effective on April 9, 2007. The Company has filed with the Commission, pursuant to Rule 424(b)
under the Securities Act, one or more preliminary prospectus supplements relating to the
Securities, each of which has previously been furnished to the Underwriters. The Company will file
with the Commission a final prospectus supplement relating to the Securities in accordance with
Rule 424(b) under the Securities Act. As filed, such final prospectus supplement shall comply in
all material respects with the applicable requirements of the Securities Act and the rules
thereunder, and, except to the extent each Underwriter shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to the Underwriters prior to the
Execution Time or, to the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in the Base Prospectus and
any Preliminary Prospectus) as the Company has advised the Underwriters, prior to the Execution
Time, will be included or made therein. The Registration Statement, at the Execution Time, meets
the requirements set forth in Rule 415(a)(1)(x).
(b) The Registration Statement has been filed with the Commission under the Securities Act and
has become effective under the Securities Act. No stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose are pending before or, to
the knowledge of the Company, threatened by the Commission. The Commission has not issued any
order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing
Prospectus. Copies of such registration statement and each of the amendments thereto have been
delivered by the Company to the Underwriters. At of the Effective Date, the Execution Time and the
Closing Date (as defined below), the Registration Statement conformed and will conform, and any
further amendments or supplements to the Registration Statement will conform, in all material
respects with the applicable requirements of the Securities Act and the applicable rules and
regulations thereunder. The Prospectus and each Preliminary Prospectus, as of their respective
dates and the Closing Date, conformed and will conform, and any amendments or supplements thereto
as of their respective dates and the Closing Date will conform, in all material respects with the
applicable requirements of the Securities Act and the applicable rules and regulations thereunder.
Upon effectiveness of the Registration Statement, the Indenture was duly qualified under the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”). As of the Effective Date, the
Execution Time and the Closing Date, the Registration Statement did not and will not, and any
further amendments to the Registration Statement will not, when they become effective, contain an
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements
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therein not misleading; as of its date and on the Closing Date, the Prospectus, and any
amendment or supplement thereto, will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the Time of Sale Disclosure Package, as of the
Applicable Time, did not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; each Issuer Free Writing Prospectus listed on Schedule
I(a) or Schedule I(b) hereto and the final term sheet issued pursuant to Section 4(b) hereto, as of
their respective dates and at all subsequent times through the completion of the public offer and
sale of the Securities, did not, do not and will not conflict with the information contained in the
Registration Statement; and each such Issuer Free Writing Prospectus listed on Schedule I(b), as
supplemented by and taken together with the Time of Sale Disclosure Package as of the Applicable
Time, did not include any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations and warranties set
forth in this sentence do not apply to statements or omissions in the Registration Statement, the
Prospectus, any Preliminary Prospectus, the Time of Sale Disclosure Package or any Issuer Free
Writing Prospectus or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Underwriters expressly for use therein, such
information being listed in Section 11 below. The Company filed the Registration Statement with
the Commission before using any Issuer Free Writing Prospectus and each Issuer Free Writing
Prospectus was preceded or accompanied by the most recent Preliminary Prospectus satisfying the
requirements of Section 10 under the Securities Act.
(c) At the earliest time after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the
Securities Act) of the Securities, the Company was not, is not on the date of this Agreement and
will not be on the Closing Date an Ineligible Issuer (as defined in Rule 405 under the Securities
Act), without taking account of any determination by the Commission pursuant to Rule 405 that it is
not necessary that the Company be considered an Ineligible Issuer.
(d) The documents incorporated or deemed to be incorporated by reference in the Registration
Statement (the “Incorporated Documents”), at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the applicable requirements of
the Exchange Act and the applicable rules and regulations thereunder, and when read together with
the other information in the Time of Sale Disclosure Package as of the Applicable Time, and the
Prospectus as of its date and as of the Closing Date, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
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(e) This Agreement has been duly authorized, executed and delivered by the Company. The
Company has full power and authority to enter into this Agreement and to authorize, issue and sell
the Securities as contemplated by this Agreement and the Indenture.
(f) The Securities have been duly authorized and, when duly authenticated by the Trustee and
duly executed, issued, delivered and paid for pursuant to this Agreement and in accordance with the
terms of the Indenture, will have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, rehabilitation, moratorium or similar laws and judicial decisions
affecting the rights of creditors generally, and subject to general principles of equity, and will
be entitled to the benefits provided by the Indenture; and the Securities and the Indenture will
conform in all material respects to the descriptions thereof in the Time of Sale Disclosure Package
and the Prospectus.
(g) The Underlying Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Securities and the Indenture, will
be validly issued, fully paid and non-assessable, and the issuance of the Underlying Securities
will not be subject to any preemptive or similar rights.
(h) The Indenture has been duly authorized by the Company and constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
rehabilitation, moratorium or similar laws and judicial decisions affecting the rights of creditors
generally, and subject to general principles of equity.
(i) The historical consolidated financial statements of the Company and its subsidiaries
included in the Time of Sale Disclosure Package and the Prospectus, together with the related
schedules and notes, present fairly the consolidated financial position of the Company and its
subsidiaries, at the dates indicated and for the periods indicated; said financial statements have
been prepared in conformity with generally accepted accounting principles in the United States
(“GAAP”) applied on a consistent basis throughout the periods involved except as noted therein.
The summary consolidated financial data included in the Time of Sale Disclosure Package and the
Prospectus present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited and unaudited financial statements, as applicable, included in
the Time of Sale Disclosure Package and the Prospectus. To the Company’s knowledge, Deloitte &
Touche, LLP, which has expressed its opinion with respect to the audited financial statements and
schedules incorporated by reference into the Time of Sale Disclosure Package and the Prospectus and
with regard to the Company’s internal control over financing reporting and management’s assessment
thereof, is an independent registered public accounting firm with respect to the Company within the
meaning of the Securities Act and the rules and regulations thereunder and such firm is not in
violation of the auditor independence requirements of the Sarbanes Oxley Act of 2002 (the “Sarbanes
Oxley Act”) with respect to the Company.
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(j) Since the respective dates as of which information is given in the Time of Sale Disclosure
Package and the Prospectus, except as otherwise stated therein (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a “Material Adverse Effect”), (B) there have been no
transactions entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock, other than regular
dividends on the outstanding shares of the Company’s Series A Non-Cumulative Perpetual Preferred
Stock.
(k) The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, and is duly registered as a Savings and Loan
Holding Company under the Home Owner’s Loan Act, as amended (the “HOLA”), and has the corporate
power and authority to own, lease and operate its properties and to conduct its business as
described in the Time of Sale Disclosure Package and the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
(l) The Company has no “Significant Subsidiaries,” as that term is defined in Item 1-02 of
Regulation S-X, other than those listed on Schedule II attached hereto (the
“Subsidiaries”). Each of the Company’s Subsidiaries is a corporation, state savings bank, business
trust, or limited liability company and has been duly incorporated or organized (as the case may
be) and is validly existing as a corporation, state savings bank, business trust, or limited
liability company (as the case may be) in good standing under the laws of the jurisdiction of its
incorporation or organization (as the case may be), has the corporate or other power and authority
to own, lease and operate its properties and to conduct its business as described in the Time of
Sale Disclosure Package and the Prospectus and is duly qualified as a foreign corporation or other
entity to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify or to be in good standing would not, singly or
in the aggregate, reasonably be expected to result in a Material Adverse Effect; except as
otherwise disclosed in the Time of Sale Disclosure Package and the Prospectus, all of the issued
and outstanding capital stock or other equity interests of each Subsidiary of the Company has been
duly authorized and validly issued, is fully paid and non-assessable except to the extent such
shares may be deemed assessable under 12 U.S.C. Section 55 or 12 U.S.C. Section 1831 or under
applicable state banking law and, other than trust preferred securities, is owned by the Company,
directly or through subsidiaries, and free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of capital stock or ownership
interests of any Subsidiary of the Company was issued in violation of the preemptive or similar
rights of any securityholder of such Subsidiary. The deposit
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accounts of Franklin Bank S.S.B. (the “Bank”) are insured by the Bank Insurance Fund
administered by the Federal Deposit Insurance Corporation up to the maximum amount provided by law;
and no proceedings for the modification, termination or revocation of any such insurance are
pending or, to the knowledge of the Company, threatened.
(m) The authorized capital stock of the Company is as set forth in the Time of Sale Disclosure
Package and the Prospectus under the captions “Description of Preferred Stock” and “Description of
Common Stock,” and the capital stock of the Company conforms in all material respects to the
description thereof contained in the Time of Sale Disclosure Package and the Prospectus. The
issued and outstanding shares of capital stock of the Company have been duly authorized and validly
issued by the Company and are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or other similar rights of
any securityholder of the Company that have not been irrevocably waived by valid, binding and
enforceable waivers.
(n) Neither the Company nor any of its Subsidiaries is (1)(A) in violation of its charter,
by-laws or other organizational instrument or (B) in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them may be bound, or to which any
of the property or assets of the Company or any of its Subsidiaries is subject (collectively,
“Agreements and Instruments”), except for such defaults in (1)(B) that would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect or (2) in violation of any
law, ordinance, governmental rule, regulation or court decree (collectively, the “Laws”) including,
but not limited to, those of self-regulatory organizations, the HOLA, the Community Reinvestment
Act, the Bank Secrecy Act, the Xxxxx-Xxxxx-Xxxxxx Act, the International Money Laundering Abatement
and Anti-Terrorist Financing Act of 2001, the USA Patriot Act of 2001 and those of the Board of
Governors of the Federal Reserve System (the “Federal Reserve”), the Federal Home Loan Mortgage
Corporation (“FHLMC”), the Federal Housing Administration (the “FHA”), the Federal National
Mortgage Association (the “FNMA”) and the United States Department of Housing and Urban Development
(“HUD”), applicable to its business or to which it or its property or assets may be subject or has
failed to obtain any license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or assets or to the conduct of its business,
except for such violations or failures that would not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect; and neither the Company nor any of the
Subsidiaries has received any notification asserting any failure to comply with or violation of any
such Laws, which assertion has not been rescinded, or which non-compliance has not been cured or
resolved, in all material respects, and the Company and each of the Subsidiaries have filed all
reports, registrations and statements, together with any amendments required to be made with
respect thereto, that were required to be filed (A) under the Laws (B) under any applicable
statute, rule, regulation, law or order, with any applicable governmental authority or
self-regulatory organization with jurisdiction over any of the activities of the Company or the
Subsidiaries (other than filings with such other governmental authorities or self-regulating
organizations which
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individually or in the aggregate are not material to the business of the Company or the
Subsidiaries taken as a whole) including reports relating to escheatment of funds (collectively,
the “Company Regulatory Reports”), and have paid all fees in connection therewith, except in each
case for such non-compliance or failure to file that has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated in
this Agreement, the Indenture and the Securities and compliance by the Company with its obligations
under this Agreement, the Indenture and the Securities do not and will not, whether with or without
the giving of notice or passage of time or both, constitute a Repayment Event (as defined below)
under, or conflict with or constitute a material breach of, or material default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Subsidiaries pursuant to the Agreements and Instruments, nor will such action
result in any violation of (A) the provisions of the charter, by-laws or other organizational
instrument of the Company or any of its Subsidiaries or (B) any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its Subsidiaries or any of
their assets, properties or operations, except, in the case of clause (B), for violations that
would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse
Effect. As used herein, a “Repayment Event” means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its Subsidiaries.
(o) No labor dispute with the employees of the Company or any of its Subsidiaries exists or,
to the knowledge of the Company, is imminent, which may reasonably be expected to result in a
Material Adverse Effect.
(p) There is no action, suit, proceeding, inquiry or investigation before or brought by any
court or governmental agency or body now pending or, to the knowledge of the Company, threatened,
against or affecting the Company or any of its Subsidiaries, which is required to be disclosed in
the Time of Sale Disclosure Package and the Prospectus (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the consummation of the transactions contemplated in
this Agreement or the performance by the Company of its obligations hereunder.
(q) There are no contracts or documents which are required to be described in the Incorporated
Documents or to be filed as exhibits thereto which have not been so described and filed as
required.
(r) The Company and its Subsidiaries own or possess, or reasonably believe they can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
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confidential information, systems or procedures), trademarks, trademark registrations, service
marks, service xxxx registrations, trade names or other intellectual property (collectively,
“Intellectual Property”) necessary to carry on the business now operated by them, except where the
failure so to own or possess would not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, and neither the Company nor any of its Subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the interest of the Company and
its subsidiaries therein, and which infringement or conflict or invalidity or inadequacy would,
singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(s) No filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority, agency or body is necessary or
required for the performance by the Company of its obligations hereunder, in connection with the
offering or sale of the Securities under this Agreement or the consummation of the transactions
contemplated by this Agreement, except such as have been already made or obtained or as may be
required under the Securities Act or the rules and regulations thereunder or foreign or state
securities or blue sky laws.
(t) The Company and its Subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, “Governmental Licenses”) issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, and the Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to possess or to comply
would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect;
all of the Governmental Licenses held by the Company or any of its Subsidiaries are valid and in
full force and effect, except where the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect.
(u) The Company and its Subsidiaries have good and marketable title to all material real
property owned by them and good title to all other material properties owned by them, in each case
free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the Time of Sale Disclosure Package
and the Prospectus or (b) do not affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and its Subsidiaries where such
effect or interference, singly or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect; and all of the leases and subleases to which the Company or any of its
Subsidiaries is a party and under which the Company or any of its Subsidiaries hold properties
described in the Time of Sale Disclosure Package and the Prospectus are in full force and effect,
and neither the
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Company nor any of its Subsidiaries has received any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company or its Subsidiaries under any
of the leases or subleases mentioned above, or affecting or questioning the rights of the Company
or any such subsidiary to the continued possession of the leased or subleased premises under any
such lease or sublease, except where the failure to be in such full force or effect, or where such
claim, would not, singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(v) Neither the Company nor any of its Subsidiaries is, and upon the sale of the Securities
and the application of the proceeds thereof as described in the Time of Sale Disclosure Package and
the Prospectus, none of them will be, an “investment company” or an entity “controlled” by an
“investment company” as such terms are defined in the Investment Company Act of 1940, as amended
(the “1940 Act”).
(w) There are no persons with registration rights or other similar rights to have any
securities of the Company registered under the Securities Act.
(x) No relationship, direct or indirect, exists between or among the Company or any of its
Subsidiaries, on the one hand, and the directors, officers, shareholders, customers or suppliers of
the Company or any of its Subsidiaries, on the other hand, which is required to be described in the
Time of Sale Disclosure Package and the Prospectus which is not so described.
(y) In the ordinary course of its business, the Company, and each of the Subsidiaries,
maintain insurance against such losses and risks and in such amounts as they reasonably believe are
adequate for the businesses in which they are engaged; neither the Company nor any Subsidiary has
any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not result in a Material Adverse Effect, except as
described in or contemplated by the Time of Sale Disclosure Package and the Prospectus.
(z) The Company and each of its Subsidiaries has timely filed all federal, state, local and
foreign tax returns that are required to be filed or has duly requested extensions thereof and all
such tax returns are true, correct and complete, except to the extent that any failure to file or
request an extension or any failure to be correct and complete would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. The Company and each of
its Subsidiaries has timely paid all taxes shown as due on such filed tax returns (including any
related assessments, fines or penalties), except to the extent that any such taxes are being
contested in good faith and by appropriate proceedings, or to the extent that any failure to pay
would not reasonably be expected to result in a Material Adverse Effect.
(aa) The statistical and market-related data included in the Time of Sale Disclosure Package
and the Prospectus are derived from sources which the Company reasonably and in good faith believes
to be accurate, reasonable and reliable.
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(bb) The Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with management’s general or
specific authorization; (B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in accordance with management’s
general or specific authorization; and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the Time of Sale Disclosure Package and in the Prospectus,
since the most recent audit of the effectiveness of the Company’s internal control over financial
reporting, there has been (i) to the Company’s knowledge, no material weakness in the Company’s
internal control over financial reporting (whether or not remediated) and (ii) no change in the
Company’s internal control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.
(cc) The Company is in compliance in all material respects with the applicable provisions of
the Sarbanes Oxley Act of 2002 and the applicable rules and regulations of the Commission
thereunder.
(dd) The Company has established and maintains “disclosure controls and procedures” (as
defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange
Act, and such controls and procedures have been designed to ensure that material information
relating to the Company, including its subsidiaries, is made known to the Company’s principal
executive officer and principal financial officer.
(ee) Other than this Agreement, there are no contracts, agreements or understandings between
the Company and any person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder’s fee or other like payment in connection with the
offering of the Securities.
(ff) The Company is subject to the reporting requirements of either Section 13 or Section
15(d) of the Exchange Act
(gg) The Company has not distributed and will not distribute, any offering material
(including, without limitation, content on the Company’s website that may be deemed to be offering
material) in connection with the offering and sale of the Securities other than the Time of Sale
Disclosure Package and the Prospectus.
(hh) Neither the Company, nor to the Company’s knowledge, any of its affiliates, has taken or
may take, directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the illegal stabilization or
manipulation of the price of any security of the Company in connection with the offering of the
Securities.
-11-
(ii) The statements in the Time of Sale Disclosure Package and the Prospectus under the
captions “Description of Notes” and “Description of Common Stock,” insofar as such statements
purport to constitute a summary of the terms of the Securities and the common stock of the Company,
fairly summarize such terms in all material respects.
(jj) The information contained in the Time of Sale Disclosure Package and the Prospectus
regarding the Company’s expectations, plans and intentions, and any other information that
constitutes “forward-looking” information within the meaning of the Securities Act and the Exchange
Act were made by the Company on a reasonable basis and reflect the Company’s good faith belief
and/or estimate of the matters described therein
(kk) Neither the Company nor any of its affiliates has, prior to the date hereof, made any
offer or sale of any securities which could be “integrated” for purposes of the Securities Act or
the rules and regulations thereunder with the offer and sale of the Securities pursuant to the
Registration Statement.
(ll) The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is
listed on the Nasdaq Global Select Market, and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq Global Select Market, nor has the Company
received any notification that the Commission or the Nasdaq Global Select Market is contemplating
terminating such registration or listing.
(mm) The Company has an Exchange Act reporting history of greater than 36 months and a public
float equal to or greater than $150 million.
(nn) [Reserved].
(oo) To the knowledge of the Company, the operations of the Company and its subsidiaries are
currently in compliance with applicable financial record keeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes
of all jurisdictions, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and any instances of non-compliance have been resolved
with the applicable governmental agency and no formal action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened, except in each case for such non-compliance that has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(pp) None of the Company or any of its subsidiaries or, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets
-12-
Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
Any certificate signed by any officer of the Company and delivered to each Underwriter in
connection with the offering of the Securities contemplated hereby shall be deemed a representation
and warranty by the Company to the Underwriters and shall be deemed to be a part of this Section 1
and incorporated herein by this reference.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties and covenants herein contained, and
subject to the conditions herein set forth, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from
the Company, at a purchase price of 97.50% of the principal amount thereof (the “Purchase Price”),
the aggregate principal amount of Securities set forth in Schedule A opposite the name of
such Underwriter, plus any additional principal amount of Securities which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) The Securities to be purchased by the Underwriters hereunder will be represented by one or
more definitive global securities in book-entry form, which will be deposited by or on behalf of
the Company with The Depository Trust Company (“DTC”) or its designated custodian. The Company
will deliver the Securities to the respective accounts of the Underwriters for the Securities to be
purchased by them, against payment by or on behalf of such Underwriter of the Purchase Price
therefor by wire transfer of federal (same-day) funds to the account specified by the Company to
the Underwriter at least forty-eight (48) hours in advance, by causing DTC to credit the Securities
to the account of RBC Capital Markets Corporation at DTC. The time and date of such delivery and
payment for the Securities shall be 10:00 a.m., New York City time, on April 18, 2007, or at such
other time on the same or such other date, not later than April 18, 2007, as shall be designated in
writing by the Underwriter (the “Closing Date”).
3. Offering Of Securities.
It is understood that the Underwriters propose to offer the Securities for sale to the public
as set forth in the Prospectus.
-13-
4. Covenants of the Company.
(1) The Company covenants and agrees with each Underwriter that:
(a) The Company will (i) prepare and timely file with the Commission pursuant to Rule 424(b)
under the Securities Act the Prospectus, properly completed, in a form approved by the Underwriters
containing information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A under the Securities Act; (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus, any Preliminary Prospectus or any Issuer
Free Writing Prospectus of which the Underwriters shall not previously have been advised and
furnished with a copy or to which the Underwriters shall have reasonably objected in writing or
which is not in compliance with the rules and regulations under the Securities Act; and (iii) file
on a timely basis all reports and any definitive proxy or information statements required to be
filed by the Company with the Commission subsequent to the date of the Prospectus and prior to the
completion of the offering of the Securities by the Underwriters.
(b) The Company will prepare a final term sheet, containing solely a description of the
pricing terms applicable to the Securities and information derived therefrom, in the form of
Exhibit A, and will file such term sheet pursuant to Rule 433(d) under the Securities Act
within the time required by such rule.
(c) The Company has not distributed and, without the prior consent of the Underwriters, it
will not distribute any prospectus or other offering material (including, without limitation, any
offer relating to the Securities that would constitute a Free Writing Prospectus and content on the
Company website that may be deemed to be a prospectus or other offering material) in connection
with the offering and sale of the Securities, other than the materials referred to in Section 1(b).
Any Issuer Free Writing prospectus the use of which has been consented to by the Company is listed
on Schedule I(a) or Schedule I(b) hereto. The Company has complied and will comply with the
requirements of Rule 433 under the Securities Act applicable to any Issuer Free Writing Prospectus,
including timely filing with the Commission or retention where required and legending. The Company
represents that it has satisfied and agrees that it will satisfy the conditions under Rule 433
under the Securities Act to avoid a requirement to file with the Commission any electronic road
show. The Company agrees that if at any time following issuance of an Issuer Free Writing
Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus
would conflict with the information in the Registration Statement or the Prospectus or would
include an untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances prevailing at that
subsequent time, not misleading, the Company will give prompt notice thereof to the Underwriters
and, if requested by the Underwriters, will prepare and furnish without charge to the Underwriters
an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or
omission.
(d) The Company will advise the Underwriters promptly (i) when any post-effective amendment to
the Registration Statement shall have been filed (if required) with the Commission and
-14-
become effective; (ii) of receipt of any comments from the Commission; (iii) of any request of
the Commission for amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information; (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the use of the Prospectus or of the institution
of any proceedings for that purpose; and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in any jurisdiction or
the institution or threatening of any proceedings for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(e) The Company will not take, directly or indirectly, any action designed to cause or result
in, or that has constituted or might reasonably be expected to constitute, the illegal
stabilization or manipulation of the price of any securities of the Company.
(f) The Company will cooperate with the Underwriters in endeavoring to qualify the Securities
for sale under the securities laws of such jurisdictions as the Underwriters may reasonably have
designated in writing and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company shall not be
required to qualify as a foreign corporation or to file a general consent to service of process in
any jurisdiction where it is not now so qualified or required to file such a consent. The Company
will, from time to time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period as the Underwriters
may reasonably request for distribution of the Securities.
(g) If, at any time prior to the filing of the Prospectus pursuant to Rule 424(b) under the
Securities Act, any event occurs as a result of which the Time of Sale Disclosure Package would
include any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading, the Company will (i) promptly notify the Underwriters so that any use of the Time of
Sale Disclosure Package may cease until it is amended or supplemented; (ii) amend or supplement the
Time of Sale Disclosure Package to correct such statement or omission; and (iii) supply any
amendment or supplement to any Underwriter in such quantities as such Underwriter may reasonably
request.
(h) If, at any time when the Prospectus is required to be delivered under the Securities Act
(including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), any event occurs as a result of which the Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading, or if it shall be necessary to amend the Registration Statement, file a new
registration statement or supplement the Prospectus to comply with the Securities Act or the
Exchange Act or the respective rules thereunder, including in connection with use or delivery of
the Prospectus, the Company promptly will (i) notify the Underwriters of such event, (ii) prepare
and file with the Commission an amendment or supplement or new registration statement which will
correct such
-15-
statement or omission or effect such compliance, (iii) if applicable, use its reasonable best
efforts to have any amendment to the Registration Statement or new registration statement declared
effective as soon as practicable in order to avoid any disruption in use of the Prospectus and (iv)
supply any supplemented Prospectus to any Underwriter in such quantities as such Underwriter may
reasonably request.
(i) If requested by any Underwriter, the Company will promptly furnish to such Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so long as delivery of a
prospectus by the Underwriter or dealer is required by the Securities Act (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 of the Securities Act),
as many copies of each Preliminary Prospectus, the Prospectus, the Time of Sale Disclosure Package
and each Issuer Free Writing Prospectus and any amendment or supplement thereto as any Underwriter
may reasonably request. The Company will pay the expenses of printing or other production of all
documents relating to the offering.
(j) The Company agrees that, unless it has obtained or will obtain the prior written consent
of the Underwriters, and each Underwriters agrees with the Company that, unless it has obtained or
will obtain, as the case may be, the prior written consent of the Company, it has not made and will
not make any offer relating to the Securities that would constitute an Issuer Free Writing
Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405)
required to be filed by the Company with the Commission or retained by the Company under Rule 433,
other than the information contained in the final term sheet prepared and filed pursuant to Section
4(b) hereto; provided that the prior written consent of the parties hereto shall be deemed to have
been given in respect of the Free Writing Prospectuses included in Schedule I(a) hereto. Any such
free writing prospectus consented to by the Underwriters or the Company is hereinafter referred to
as a “Permitted Free Writing Prospectus.” The Company agrees that (x) it has treated and will
treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing
Prospectus and (y) it has complied and will comply, as the case may be, with the requirements of
Rules 164 and 433 applicable to any Permitted Free Writing Prospectus, including in respect of
timely filing with the Commission, legending and record keeping.
(k) The Company will not, without the prior written consent of the Underwriters, from the
Execution Date and continuing to and including the date 90 days after the date of the Prospectus
(the “Lock-Up Period”) (A) issue, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
for the sale of, or lend or otherwise dispose of or transfer any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or repayable with Common Stock, or
file any registration statement under the Securities Act with respect to any of the foregoing, or
(B) enter into any swap, derivative or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership of Common Stock or
any securities convertible into or exchangeable for or repayable with Common Stock, whether any
such transaction described in clause (A) or (B) above is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise, except that the Company may, without such consent
(i) issue and sell
-16-
the Securities and the Underlying Securities, (ii) grant options and award, issue and sell
shares of Common Stock pursuant to existing employee benefit plans, stock option plans or other
employee compensation benefit plans or pursuant to currently outstanding convertible securities,
options, warrants or rights existing on the date of the Prospectus and (iii) at any time after May
12, 2007, issue and sell up to $25.0 million of shares of Common Stock so long as the price at
which the Company sells such Common Stock is not less than $15.70 per share. Without the prior
written consent of the Underwriters or unless contractually obligated to do so, the Company agrees
not to accelerate the vesting of any option or warrant or the lapse of any repurchase right prior
to the expiration of the Lock-Up Period.
(l) The Company has obtained and delivered to the Underwriters executed copies of “lock-up”
agreements (the “Lock-Up Agreements”), each in the form attached as Exhibit B hereto, from
each executive officer and director of the Company listed on Schedule III.
(m) The Company shall apply the net proceeds of its sale of the Securities as described under
the heading “Use of Proceeds” in the Time of Sale Disclosure Package and the Prospectus.
(n) The Company shall not invest, or otherwise use the proceeds received from its sale of the
Securities in such a manner as would require the Company or any of the Subsidiaries to register as
an investment company under the 0000 Xxx.
(o) So long as delivery of a prospectus by the Underwriters or a dealer may be required by the
Securities Act (including in circumstances where such requirement may be satisfied pursuant to rule
172 of the Securities Act), the Company will file on a timely basis with the Commission such
periodic and special reports as required by the Exchange Act and the rules and regulations
thereunder.
(p) The Company will reserve and keep available at all times, free of preemptive rights, the
Underlying Securities for the purpose of enabling the Company to satisfy any obligations to issue
the Underlying Securities upon conversion of the Securities.
(q) The Company will use its best efforts to promptly have the Underlying Securities approved
by the Nasdaq Global Select Market for listing following the Closing Date.
(2) Each Underwriter, severally and not jointly, covenants and agrees with the Company that
such Underwriter will not use or refer to any “free writing prospectus” (as defined in Rule 405
under the Securities Act) without the prior written consent of the Company if such Underwriter’s
use of or reference to such “free writing prospectus” would require the Company to file with the
Commission any “issuer information” (as defined in Rule 433 under the Securities Act).
-17-
5. Costs and Expenses.
The Company will pay all costs, expenses and fees incident to the performance of the
obligations of the Company under this Agreement, including, without limiting the generality of the
foregoing, the following: accounting fees of the Company; the fees and disbursements of counsel
for the Company; the cost of printing and delivering to, or as requested by the Underwriters,
copies of any Time of Sale Disclosure Package and the Prospectus, and any supplements or amendments
thereto; any fee associated with the listing of the Underlying Securities on the Nasdaq Global
Select Market, any fees charged by securities rating services for rating the Securities; the cost
of preparing, issuing and delivering the Securities; the costs and charges of any transfer agent,
registrar or depositary; the fees and expenses, if any, incurred in connection with the admission
of the Securities for trading on any appropriate market system; and the costs and expenses of the
Company relating to investor presentations on any “road show” undertaken in connection with the
marketing of the offering of the Securities, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of the Company.
The Company shall not, however, be required to pay for any expense of a particular Underwriter
except that, if this Agreement shall not be consummated because the conditions in Section 6 hereof
are not satisfied, or because this Agreement is terminated by the Underwriters pursuant to Section
9 hereof, or by reason of any failure, refusal or inability on the part of the Company to perform
any undertaking or satisfy any condition of this Agreement or to comply with any of the terms
hereof on its part to be performed, unless such failure to satisfy said condition or to comply with
said terms be due to the default of the particular Underwriter, then the Company shall reimburse
each Underwriter that did not fail to satisfy said condition or to comply with said terms for
reasonable out-of-pocket expenses, including all reasonable fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to market the
Securities or in contemplation of performing its obligations hereunder; but the Company shall not
in any event be liable to the Underwriters for damages on account of loss of anticipated profits
from the sale by it of the Securities.
6. Conditions of Obligations of the Underwriters.
The obligation of the several Underwriters to purchase the Securities on the Closing Date is
subject to the accuracy, as of the Closing Date of the representations and warranties of the
Company contained herein, and to the performance by the Company of its covenants and obligations
hereunder and to the following additional conditions:
(a) The Prospectus, and any supplement thereto, shall have been filed in the manner and within
the time period required by Rule 424(b); the final term sheet contemplated by Section 5(b) hereto,
and any other material required to be filed by the Company pursuant to Rule 433(d) under the
Securities Act, shall have been filed with the Commission within the applicable time periods
prescribed for such filings by Rule 433; and no stop order suspending the effectiveness of the
Registration
-18-
Statement or any notice objecting to its use shall have been issued and no proceedings for
that purpose shall have been instituted or threatened by the Commission.
(b) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date
(i) there shall not have occurred any downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded the Company or any of the Company’s
securities or in the rating outlook for the Company by any “nationally recognized statistical
rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act and (ii) no such organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company’s securities.
(c) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date
there shall not have occurred any change, or any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, from that set forth in the Time of Sale Disclosure Package and
the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this
Agreement) that, in the Underwriters’ judgment, is material and adverse and that makes it, in the
Underwriters’ judgment, impracticable to market the Securities on the terms and in the manner
contemplated in the Time of Sale Disclosure Package and the Prospectus.
(d) The Underwriters shall have received on the Closing Date the opinion of Xxxxxxxxx &
Xxxxxxxx LLP, counsel for the Company, to the effect set forth on Exhibit C.
(e) The Underwriters shall have received from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, counsel for the Underwriters, an opinion dated the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, and such counsel shall have received such papers and
information as they reasonably request to enable them to pass upon such matters.
(f) The Underwriters shall have received, on each of the date hereof and the Closing Date a
letter dated the date hereof or the Closing Date, as applicable, in form and substance satisfactory
to the Underwriters, of Deloitte & Touche, LLP, confirming that they are an independent registered
public accounting firm with respect to the Company within the meaning of the Securities Act and the
rules and regulations thereunder and stating that in their opinion the financial statements and
schedules examined by them and included in the Pricing Prospectus and the Prospectus comply in form
in all material respects with the applicable accounting requirements of the Securities Act and the
related rules and regulations; and containing such other statements and information as are
ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial
statements and certain financial and statistical information contained in the Pricing Prospectus
and the Prospectus.
-19-
(g) The Underwriters shall have received on the Closing Date a certificate or certificates of
the Company’s Chief Executive Officer and Chief Financial Officer to the effect that, as of the
Closing Date, each of them severally represents, on behalf of the Company, as follows:
(i) The representations and warranties of the Company contained in Section 1 hereof are true
and correct, in all material respects, as if made at and as of such Closing Date, and the Company
has complied with all the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) The signers of said certificate have carefully examined the Time of Sale Disclosure
Package and the Prospectus, and any amendments thereof or supplements thereto (including any
documents filed under the Exchange Act and deemed to be incorporated by reference into the Time of
Sale Disclosure Package and the Prospectus), and
(1) the Prospectus, as amended or supplemented, does not include and did not include as of its
date, or the Closing Date, any untrue statement of a material fact or omit to state and did not
omit to state as of its date, or the Closing Date, a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading,
(2) neither (1) the Time of Sale Disclosure Package nor (2) each Issuer Free Writing
Prospectus listed on Schedule I(b), as supplemented by and taken together with the Time of Sale
Disclosure Package as of the Applicable Time, includes, nor included as of the Applicable Time any
untrue statement of a material fact or omits, or omitted as of the Applicable Time, to state any
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(3) since the Applicable Time, there has occurred no event required to be set forth in an
amendment or supplement to the Prospectus which has not been so set forth, and there has been no
document required to be filed under the Exchange Act that upon such filing would be deemed to be
incorporated by reference into the Time of Sale Disclosure Package or into the Prospectus that has
not been so filed,
(4) subsequent to the respective dates as of which information is given in the Time of Sale
Disclosure Package, neither the Company nor any of the Subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into any material transactions, not in
the ordinary course of business, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock other than pursuant to existing employee benefit plans and
regular dividends on the Company’s Series A Non-Cumulative Perpetual Preferred Stock, and except as
disclosed in the Time of Sale Disclosure Package and in the Prospectus, there has not been any
change in the capital stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options), or any material
change in the short-term or long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock other than pursuant to existing employee
benefit plans, of the Company, or any of its subsidiaries, or any Material Adverse Effect or any
-20-
development involving a prospective Material Adverse Effect (whether or not arising in the
ordinary course of business), or any loss by strike, fire, flood, earthquake, accident or other
calamity, whether or not covered by insurance, incurred by the Company or any Subsidiary, and
(5) except as stated in the Time of Sale Disclosure Package and in the Prospectus, there is
not pending, or, to the knowledge of the Company, threatened or contemplated, any action, suit or
proceeding to which the Company or any of the Subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which reasonably would be expected to
result in any Material Adverse Effect.
(h) The Company shall have furnished to the Underwriters such further certificates and
documents confirming the representations and warranties, covenants and conditions contained herein
and related matters as the Underwriters may reasonably have requested.
(i) The Lock-Up Agreements described in Section 4(g) shall be in full force and effect.
The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance
with the provisions hereof only if they are in all material respects satisfactory to the
Underwriters and to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the
Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, the obligations of the
Underwriters hereunder may be terminated by the Underwriters.
In such event, the Company and the Underwriters shall not be under any obligation to each
other (except to the extent provided in Sections 5 and 7 hereof).
7. Indemnification.
(a) The Company agrees:
(i) to indemnify and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Securities Act, against any losses, claims, damages or
liabilities to which such Underwriter or any such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (A) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Company) or arises out of or is
based upon any omission or alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, (B) any untrue statement or alleged
untrue statement of any material fact contained in either the Base Prospectus, any Preliminary
Prospectus or any other preliminary prospectus supplement relating to the Securities, the Time of
Sale Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or the
-21-
information contained in the final term sheet required to be prepared and filed pursuant to
Section 4(b) hereto, or any amendment or supplement thereto, (C) the omission or alleged omission
to state in any document listed in (B) above a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, or (D) any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Securities or the offering contemplated hereby, and which
is included as part of or referred to in any loss, claim, damage, liability or action arising out
of or based upon matters covered by clause (A), (B) or (C) above (provided, however, that the
Company shall not be liable under this clause (D) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct); provided, however, that the
Company will not be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue statement, or
omission or alleged omission made in the Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or through or on behalf of such
Underwriter by RBC Capital Markets Corporation specifically for use in the preparation thereof,
such information being listed in Section 11 below.
(ii) to reimburse each Underwriter and each such controlling person upon demand for any legal
or other out-of-pocket expenses reasonably incurred by such Underwriter or such controlling person
in connection with investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the offering of the
Securities, whether or not such Underwriter or such controlling person is a party to any action or
proceeding. In the event that it is finally judicially determined that such Underwriter or such
controlling person was not entitled to receive payments for legal and other expenses pursuant to
this subparagraph, such Underwriter or such controlling person will promptly return all sums that
had been advanced pursuant hereto.
(b) Each Underwriter severally agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers and each person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages or liabilities to which the
Company or any such director, officer, or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in either the Time of Sale Disclosure Package or
the Prospectus, or any amendment or supplement thereto, or (ii) the omission or the alleged
omission to state in either the Time of Sale Disclosure Package or the Prospectus, or any amendment
or supplement thereto, a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
and will reimburse any legal or other expenses reasonably incurred by the Company or any such
director, officer, or controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however, that such Underwriter will
be liable in
-22-
each case to the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in either the Time of Sale Disclosure
Package or the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or through or on behalf of such
Underwriter through RBC Capital Markets Corporation specifically for use in the preparation
thereof, such information being listed in Section 11 below.
(c) In case any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to this Section, such
person (the “indemnified party”) shall promptly notify in writing the person against whom such
indemnity may be sought (the “indemnifying party”). No indemnification provided for in this
Section 7 shall be available to any party who shall fail to give notice as provided in this
Subsection if the party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give such notice, but the
failure to give such notice shall not relieve the indemnifying party or parties from any liability
which it or they may have to the indemnified party for contribution or otherwise than on account of
the provisions of this Section. In case any such proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent that it shall wish,
to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its own counsel at its
own expense. Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or
within 30 days of presentation) the fees and expenses of one counsel retained by the indemnified
party in the event (i) the indemnifying party shall have authorized the retention of such counsel
in writing, (ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing interests between them
or (iii) the indemnifying party shall have failed to assume the defense and employ counsel
reasonably acceptable to the indemnified party within a reasonable period of time after notice of
commencement of the action.
It is understood that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of
more than one separate firm for all such indemnified parties. Such firm shall be designated in
writing by the applicable Underwriter in the case of parties indemnified pursuant to Section 7(a)
and by the Company in the case of parties indemnified pursuant to Section 7(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against any loss or liability
by reason of such settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action or proceeding of which indemnification may
be sought hereunder (whether or not any indemnified party is an actual or potential party to such
claim,
-23-
action or proceeding) unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such claim, action or
proceeding.
If at any time an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement
(d) If the indemnification provided for in this Section is unavailable to or insufficient to
hold harmless an indemnified party under Section 7(a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) in such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering of the Securities.
If, however, the allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Underwriters on the other and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Subsection were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in this Subsection.
The amount paid or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in this Subsection
shall be deemed to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. Notwithstanding the
provisions of this Subsection, (i) no Underwriter shall be required to contribute any amount in
excess of the
-24-
underwriting discounts and commissions applicable to the Securities purchased by such
Underwriter and (ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’ respective obligations to
contribute pursuant to this Section 7 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A hereto and not joint.
(e) In any proceeding relating to the Base Prospectus, any Preliminary Prospectus or any other
preliminary prospectus supplement relating to the Securities, the Time of Sale Disclosure Package,
the Prospectus, any Issuer Free Writing Prospectus or the information contained in the final term
sheet required to be prepared and filed pursuant to Section 4(b) hereto, or any supplement or
amendment thereto, each party against whom contribution may be sought under this Section hereby
consents to the jurisdiction of any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon him or it by any other contributing
party and consents to the service of such process and agrees that any other contributing party may
join him or it as an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an indemnified party is
entitled to indemnification or contribution under this Section shall be paid by the indemnifying
party to the indemnified party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this Section and the
representations and warranties of the Company set forth in this Agreement shall remain operative
and in full force and effect, regardless of (i) any investigation made by or on behalf of the
Underwriters or any person controlling any Underwriter, the Company, its directors or officers or
any persons controlling the Company, (ii) acceptance of any Securities and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained in this Section.
8. Notices.
All communications hereunder shall be in writing and, except as otherwise provided herein,
will be mailed, delivered, or faxed and confirmed as follows:
if to the Underwriters, to
|
RBC Capital Markets Corporation Bear, Xxxxxxx & Co. Inc. c/o RBC Capital Markets Xxx Xxxxxxx Xxxxx, 000 Xxxxxxxx Xxx Xxxx, XX 00000-0000 Attention: Xxx Xxxxx Syndicate Director Fax: (000) 000-0000 |
-25-
if to the Company, to
|
Franklin Bank Corp. 000 Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxxx, XX 00000 Attention: Xxxxxxx X. Xxxxxxx President and Chief Executive Officer Fax: (000) 000-0000 |
9. Termination.
This Agreement may be terminated by the Underwriters at any time prior to the Closing Date:
(a) if any of the following has occurred: (i) since the respective dates as of which
information is given in the Time of Sale Disclosure Package or the Prospectus, any material adverse
change or any development involving a prospective change, which, in the discretion of the
Underwriters, has had or is reasonably likely to have a Material Adverse Effect, (ii) any outbreak,
attack, or escalation of hostilities or declaration of war, national emergency, act of terrorism or
other national or international calamity or crisis or change in economic, financial or political
conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or
change on the financial markets of the United States would, in the discretion of the Underwriters,
make it impracticable or inadvisable to market the Securities or to enforce contracts for the sale
of the Securities, or (iii) suspension of trading in securities generally on the New York Stock
Exchange, the NASDAQ System or the American Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on such stock exchanges, (iv)
the enactment, publication, decree or other promulgation of any statute, regulation, rule or order
of any court or other governmental authority which in the Underwriters’ opinion materially and
adversely affects or may materially and adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by United States or New York or Texas state authorities,
(vi) any downgrading, or placement on any watch list for possible downgrading, in the rating of the
Company’s debt securities by any “nationally recognized statistical rating organization” (as
defined for purposes of Rule 436(g) under the Securities Act); (vii) the suspension of trading of
the Company’s Common Stock by the Nasdaq Global Select Market, the Commission, or any other
governmental authority or, (viii) the taking of any action by any governmental body or agency in
respect of its monetary or fiscal affairs which in the Underwriters’ reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(b) if any of the conditions specified in Section 6 hereof shall not have been satisfied when
and as required by this Agreement.
10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at the Closing Date to purchase the Securities
which it or they are obligated to purchase under this Agreement (the “Defaulted Securities”), the
-26-
non-defaulting Underwriter shall have the right, within 24 hours thereafter, to make
arrangements for it, or any other alternative underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, such Underwriter shall not have completed such arrangements within such 24-hour
period, then:
(i) if the principal amount of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased on such date, the
non-defaulting Underwriter shall be obligated to purchase the full amount thereof; or
(ii) if the principal amount of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased on such date, this Agreement shall
terminate without liability on the part of the non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting Underwriter from
liability in respect of its default.
In the event of any such default which does not result in a termination of this Agreement, the
Underwriters or the Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term “Underwriter”
includes any person substituted for an Underwriter under this Section 10.
11. Successors.
This Agreement has been and is made solely for the benefit of the Company and the
Underwriters, and the officers, directors and controlling persons referred to and to the extent
provided herein, and their respective successors, executors, administrators, heirs and assigns, and
no other person will have any right or obligation hereunder. No purchaser of any of the Securities
from the Underwriter shall be deemed a successor or assign merely because of such purchase
12. Information Provided by Underwriters.
The Company and each Underwriter acknowledge and agree that the only information furnished or
to be furnished by the Underwriters to the Company for inclusion in the Time of Sale Disclosure
Package or the Prospectus consists of the following information under the caption “Underwriting” in
the Time of Sale Disclosure Package and the Prospectus: (i) the first sentence of the first
paragraph under the subheading “Commissions and Discounts,” concerning the initial public offering
price, (ii) the third sentence of the paragraph under the subheading “New Issue of Securities”,
concerning market making, (iii) the first paragraph under the subheading “Price Stabilization and
Short Positions,” concerning short sales, stabilizing transactions and penalty bids and (iv) the
first sentence of the paragraph under the subheading “Passive Market Making,” concerning passive
market making transactions.
-27-
13. Research Independence.
The Company acknowledges that each Underwriter’s research analysts and research departments
are required to be independent from such Underwriter’s investment banking divisions and are subject
to certain regulations and internal policies, and that such Underwriter’s research analysts may
hold and make statements or investment recommendations and/or publish research reports with respect
to the Company and/or the offering that differ from the views of its investment bankers. The
Company hereby waives and releases, to the fullest extent permitted by law, any claims that the
Company may have against any Underwriter with respect to any conflict of interest that may arise
from the fact that the views expressed by their independent research analysts and research
departments may be different from or inconsistent with the views or advice communicated to the
Company by such Underwriter’s investment banking divisions. The Company acknowledges that each
Underwriter is a full service securities firm and as such from time to time, subject to applicable
securities laws, may effect transactions for its own account or the account of its customers and
hold long or short positions in debt or equity securities of the companies which may be the subject
to the transactions contemplated by this Agreement.
14. Absence of Fiduciary Relationship.
The Company acknowledges and agrees that: (a) the Underwriters have been retained solely to
act as underwriters in connection with the sale of the Securities and that no fiduciary, advisory
or agency relationship between the Company and the Underwriters has been created in respect of any
of the transactions contemplated by this Agreement, irrespective of whether the Underwriters have
advised or are advising the Company on other matters; (b) the price and other terms of the
Securities set forth in this Agreement were established by the Company following discussions and
arms-length negotiations with the Underwriters and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement; (c) it has been advised that the Underwriters and their affiliates
are engaged in a broad range of transactions which may involve interests that differ from those of
the Company and that the Underwriters have no obligation to disclose such interest and transactions
to the Company by virtue of any fiduciary, advisory or agency relationship; (d) it has been advised
that the Underwriters are acting, in respect of the transactions contemplated by this Agreement,
solely for the benefit of the Underwriters and not on behalf of the Company; (e) it waives to the
fullest extent permitted by law, any claims it may have against the Underwriters for breach of
fiduciary duty or alleged breach of fiduciary duty in respect of any of the transactions
contemplated by this Agreement and agrees that the Underwriters shall have no liability (whether
direct or indirect) to the Company in respect of such a fiduciary duty claim on behalf of or in
right of the Company, including stockholders, employees or creditors of the Company.
15. Miscellaneous.
The reimbursement, indemnification and contribution agreements contained in this Agreement and
the representations, warranties and covenants in this Agreement shall remain in full force and
effect regardless of (a) any termination of this Agreement, (b) any investigation made by
-28-
or on behalf of the Underwriters or any controlling person thereof, or by or on behalf of the
Company or its directors or officers and (c) delivery of and payment for the Securities under this
Agreement.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. Facsimile copies of signatures
shall constitute original signatures for all purposes of this Agreement and any enforcement hereof.
This Agreement shall be governed by, and construed in accordance with, the laws of the State
of New York.
This Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
This Agreement may only be amended or modified in writing, signed by all of the parties
hereto, and no condition herein (express or implied) may be waived unless waived in writing by each
party whom the condition is meant to benefit.
[remainder of page intentionally blank]
-29-
If the foregoing letter is in accordance with your understanding of our agreement, please sign
and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement
between the Company and the Underwriters in accordance with its terms.
| Very truly yours, FRANKLIN BANK CORP. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written.
and accepted as of the date first above written.
| RBC CAPITAL MARKETS CORPORATION | ||
By:
|
/s/ Xxxx Xxxxxxx | |
| Name: Xxxx Xxxxxxx Title: Managing Director |
||
| BEAR, XXXXXXX & CO. INC. | ||
By:
|
/s/ Xxxx X. Xxxxxx | |
| Name: Xxxx X. Xxxxxx Title: Senior Managing Director |
||
SCHEDULE A
| Principal | ||||
| Amount of | ||||
| Name of Underwriter | Securities | |||
RBC Capital Markets Corporation. |
$ | 80,000,000 | ||
Bear, Xxxxxxx & Co. Inc. |
$ | 20,000,000 | ||
Total |
$ | 100,000,000 | ||
SCHEDULE I(a)
Material Other than the Pricing Prospectus that Comprise the Time of Sale Disclosure Package:
Pricing Term Sheet, dated April 12, 2007.
SCHEDULE I(b)
Issuer Free Writing Prospectuses Not included in the Time of Sale Disclosure Package
None.
-2-
SCHEDULE II
List of Significant Subsidiaries
| JURISDICTION OF | ||||
| SUBSIDIARY | INCORPORATION OR ORGANIZATION | |||
Franklin Bank, S.S.B. |
Texas | |||
SCHEDULE III
List of Executive Officers and Directors
subject to Lock-Up Agreements
List of Executive Officers and Directors
subject to Lock-Up Agreements
Executive Officers and Directors:
Xxxxxxx Xxxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxx Xxxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxx
Xxxxxxx XxXxxx
Xxx Xxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxx X. Master
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxx Xxxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxx
Xxxxxxx XxXxxx
Xxx Xxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxx X. Master
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxx
EXHIBIT A
Pricing Terms
EXHIBIT B
Form of Lock-Up Agreement
April __, 2007
RBC Capital Markets Corporation
Bear, Xxxxxxx & Co. Inc.
c/o RBC Capital Markets Corporation
Onx Xxxxxxx Xxxxx, 000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Bear, Xxxxxxx & Co. Inc.
c/o RBC Capital Markets Corporation
Onx Xxxxxxx Xxxxx, 000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Ladies and Gentlemen:
The undersigned understands that RBC Capital Markets Corporation and Bear, Xxxxxxx & Co. Inc.
(the “Underwriters”) proposes to enter into a Underwriting Agreement (the “Underwriting Agreement”)
with Franklin Bank Corp., a Delaware corporation (the “Company”), providing for the public offering
(the “Offering”) by the Underwriters of securities convertible into shares of common stock, $0.01
par value, of the Company (the “Common Stock”).
To induce the Underwriters to continue their efforts in connection with the Offering, the
undersigned hereby agrees that, without the prior written consent of the Underwriters, he, she or
it will not directly or indirectly (i) offer, sell, pledge, contract to sell (including any short
sale), grant any option to purchase or otherwise dispose of any shares of Common Stock (including,
without limitation, shares of Common Stock of the Company which may be deemed to be beneficially
owned by the undersigned on the date hereof in accordance with the rules and regulations of the
Securities and Exchange Commission, shares of Common Stock which may be issued upon exercise of a
stock option or warrant and any other security convertible into or exchangeable for Common Stock)
(ii) enter into any Hedging Transaction (as defined below) relating to the shares of Common Stock,
(iii) make any demand for, or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for the Common Stock,
or (iv) publicly announce any intention to do any of the foregoing (each of the foregoing referred
to as a “Disposition”) for a period from the date of the Underwriting Agreement until and including
the date that is 90 days after the date of the final prospectus relating to the Offering (the
“Lock-Up Period”). The foregoing restriction is expressly intended to preclude the undersigned
from engaging in any Hedging Transaction or other transaction which is designed to or reasonably
expected to lead to or result in a Disposition during the Lock-Up Period even if the securities
would be disposed of by someone other than the undersigned. “Hedging Transaction” means any short
sale (whether or not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant part of its value from
the Common Stock.
Notwithstanding the foregoing, the undersigned may transfer (a) shares of Common Stock
acquired in open market transactions by the undersigned after the date of the Prospectus, and (b)
any or all of the shares of Common Stock or other Company securities if the transfer is by gift,
will or intestacy; provided that in the case of a transfer pursuant to clause (b) above, it shall
be a condition to the transfer that the transferee execute an agreement stating that the transferee
is receiving and holding the securities subject to the provisions of this letter agreement.
The undersigned agrees that the Company may (i) with respect to any shares of Common Stock or
other Company securities for which the undersigned is the record holder, cause the transfer agent
for the Company to note stop transfer instructions with respect to such securities on the transfer
books and records of the Company and (ii) with respect to any shares of Common Stock or other
Company securities for which the undersigned is the beneficial holder but not the record holder,
cause the record holder of such securities to cause the transfer agent for the Company to note stop
transfer instructions with respect to such securities on the transfer books and records of the
Company.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this letter agreement. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
[Signature Page Follows.]
B-2
Notwithstanding anything herein to the contrary, if the closing of the Offering has not
occurred prior to April 30, 2007, this agreement shall be of no further force or effect.
| Signature: | ||||
| Print Name: | ||||
B-3
EXHIBIT C
Legal Opinion of Xxxxxxxxx & Xxxxxxxx LLP
| 1. | The Company is validly existing as a corporation in good standing under the laws of the State of Delaware, and is duly registered as a Savings and Loan Holding Company under the HOLA. The Company has the requisite corporate power and authority to own or lease its properties and to conduct its business as described in the Time of Sale Disclosure Package and the Prospectus. The Company is duly qualified to transact business and is in good standing in all jurisdictions in which the conduct of its business requires such qualification, except where the failure so to qualify or to be in good standing would not reasonably be expected to result in a Material Adverse Effect. | |
| 2. | Each Subsidiary of the Company is validly existing as a corporation (or limited liability company, business trust or State savings bank, as applicable) in good standing under the laws of the jurisdiction of its incorporation or organization (as the case may be). Each Subsidiary has the requisite corporate or other power and authority to own or lease its properties and to conduct its business as described in the Time of Sale Disclosure Package and the Prospectus. Each Subsidiary is duly qualified to transact business and is in good standing in all jurisdictions in which the conduct of its business requires such qualification, except where the failure so to qualify or to be in good standing would not reasonably be expected to result in a Material Adverse Effect. To such counsel’s knowledge, all outstanding shares of capital stock of or other equity interests in the Subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable (except to the extent such shares or interests may be deemed assessable under 12 U.S.C. Section 55 or 12 U.S.C. 1831o or the Delaware Limited Liability Company Act) and, to such counsel’s knowledge, other than trust preferred securities, the Company or another Subsidiary owns of record and beneficially, free and clear of any security interests, liens or other encumbrances, all of the issued and outstanding shares of such stock or interests. | |
| 3. | The Company has authorized capital stock as set forth in the Time of Sale Disclosure Package and the Prospectus under the captions “Description of Preferred Stock” and “Description of Common Stock.” | |
| 4. | The Securities have been duly authorized, executed and delivered by the Company and, when duly authenticated by the Trustee and issued and delivered against payment of the consideration therefor pursuant to the Underwriting Agreement and in accordance with the terms of the Indenture, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture; and the Securities conform as to legal matters in all material respects to the description thereof in the Time of Sale Disclosure Package and the Prospectus under the caption “Description of Notes.” |
| 5. | The Underlying Securities issuable upon conversion of the Securities have been duly authorized and reserved and, when issued upon conversion of the Securities in accordance with the terms of the Securities and the Indenture, will be validly issued, fully paid and non-assessable; and the issuance of the Underlying Securities will not be subject to any preemptive or similar rights. | |
| 6. | The Underwriting Agreement has been duly authorized, executed and delivered by the Company. | |
| 7. | The Indenture has been duly authorized, executed and delivered by, and (assuming due authorization, execution and delivery by the Trustee) is a valid and legally binding agreement of, the Company, enforceable against the Company in accordance with its terms. | |
| 8. | The execution and delivery by the Company of, and the performance by the Company of its obligations under, the Underwriting Agreement, the Indenture and the Securities (the “Transaction Documents”) and the consummation of the transactions contemplated thereunder, will not (i) constitute or result in a violation of any applicable provisions of the General Corporation Law of the State of Delaware or the laws of the States of New York or Texas or the United States of America, (ii) conflict with or constitute or result in any violation of the Certificate of Incorporation or By-laws of the Company, each as currently in effect, (iii) result in a breach or violation of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries may be bound, or (iv) violate any existing obligation under any judgment, order or decree of any governmental body, agency or court of the States of New York or Texas, the United States of America or the State of Delaware having jurisdiction over the Company or any Subsidiary of which such counsel has knowledge. | |
| 9. | No consent, approval, authorization or order of, or registration or filing by the Company with, any federal or Texas governmental body or agency is necessary in connection with the execution and delivery of the Underwriting Agreement, the consummation of the transactions contemplated therein and the performance by the Company of its obligations under the Transaction Documents, except (i) such as have been obtained or made, and (ii) as may be required by the Securities Act and the Trust Indenture Act, and under state securities or “Blue Sky” laws. | |
| 10. | The statements in the Time of Sale Disclosure Package and the Prospectus under the captions “Description of Notes” and “Description of Common Stock,” in each case insofar as such statements constitute a summary of matters of law, fairly and accurately summarize such matters in all material respects. | |
| 11. | The statements in the Time of Sale Disclosure Package and the Prospectus under the caption “Certain U.S Federal Income Tax Considerations,” insofar as such statements constitute a |
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| summary of matters of United States federal income tax law, fairly and accurately summarize such matters in all material respects. | ||
| 12. | To such counsel’s knowledge, there are no material legal or governmental proceedings pending or threatened against the Company or any of the Subsidiaries or any of their respective properties other than as set forth in the Time of Sale Disclosure Package and the Prospectus or proceedings which would not reasonably be expected to result in a Material Adverse Effect. | |
| 13. | The Company is not and, after giving effect to the offering and sale of the Securities and the application of the net proceeds thereof as described in the Time of Sale Disclosure Package and the Prospectus, will not be subject to regulation as an “investment company” as such term is defined in the 1940 Act. | |
| 14. | The Indenture has been qualified under the Trust Indenture Act. | |
| 15. | The Registration Statement has been declared effective under the Securities Act; any required filing of the Base Prospectus, any Preliminary Prospectus and the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b) (without reference to Rule 424(b)(8)); any required filing of each Issuer Free Writing Prospectus pursuant to Rule 433 has been made in the manner and within the time period required by Rule 433(d); and, to such counsel’s knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or threatened by the Commission. | |
| 16. | Each Incorporated Document (except for financial statements and schedules and other financial, statistical or accounting data derived therefrom included therein or omitted therefrom, as to which such counsel need not express any opinion), when they were filed with the Commission, appeared on their face to comply as to form in all material respects with the requirements of the particular form under the Exchange Act and the applicable rules and regulations thereunder. | |
| 17. | The Registration Statement and the Prospectus, excluding the Incorporated Documents, as of their respective effective or issue dates (in each case, other than the financial statements and schedules and other financial, statistical or accounting data derived therefrom included therein or omitted therefrom, and the Trustee’s Statement of Eligibility on Form T-1, as to which such counsel need not express any opinion), appeared on their face to comply as to form in all material respect with the requirements of the Securities Act and the applicable rules and regulations thereunder. |
In rendering such opinion, such counsel may state that they express no opinion as to the laws
of any jurisdiction other than the relevant federal law of the United States of America, New York
law, Texas law and the Delaware General Corporation Law and that they render no opinion with
respect to the state securities or blue sky laws of any jurisdiction or the law of any other
jurisdiction.
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Such counsel may note that they are not admitted to the practice of law in the State
of Delaware. With respect to paragraph 8 above, such counsel may state that they render no opinion
with respect to the anti-fraud provisions of the federal securities laws.
Such counsel may state that whenever its opinion is based on factual matters that are “to such
counsel’s knowledge” such counsel has, with the Underwriters’ concurrence, relied to the extent
such counsel deemed appropriate on certificates of officers (after discussion of the contents
thereof with such officers) of the Company, or certificates of others, as to the existence or
nonexistence of the factual matters upon which such opinion is predicated (with such counsel
stating that is has no reason to believe, however, that any such certificate is untrue or
inaccurate in any material respect) and based such statements on the current knowledge of
individual attorneys currently within such counsel’s firm who have worked on legal matters in
connection with the Underwriting Agreement and the offering of the Securities or, with respect to
paragraph 12, who have given substantive attention to other legal matters for the Company.
Such counsel may state that in addition to the limitations and qualifications set forth above,
the enforceability of the obligations of the Company under the Securities or the Indenture is
subject to the effect of any applicable bankruptcy (including, without limitation, fraudulent
conveyance and preference), insolvency, reorganization, rehabilitation, moratorium or similar laws
and judicial decisions relating to or affecting the rights of creditors generally, and to general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law), including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and the possible unavailability of specific performance or injunctive
relief. Such counsel may state that such principles are of general application, and in applying
such principles a court, among other things, might decline to order the Company to perform
covenants. Further, such counsel need not express an opinion with respect to the enforceability of
provisions in the Securities or the Indenture with respect to waiver, delay, extension or omission
of notice or enforcement of rights or remedies, waivers of defenses or waivers of benefits of stay,
extension, moratorium, redemption, statutes of limitations or other benefits provided by operation
of law. Further, such counsel may state that the enforceability of any exculpation,
indemnification or contribution provisions contained in the Indenture may be limited by applicable
law or public policy.
Such counsel may also state that, because the primary purpose of such counsel’s engagement was
not to establish or confirm factual matters or financial or accounting matters and because of the
wholly or partially non-legal character of many of the statements contained in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus or any amendment or supplement
thereto, such counsel is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration Statement, the Time of
Sale Disclosure Package, the Prospectus or any amendment or supplement thereto (except to the
extent expressly set forth in paragraphs 10 and 11 above) and they have not independently verified
the accuracy, completeness or fairness of such statements (except as aforesaid); that, without
limiting the foregoing, they assume no responsibility for, have not independently verified and have
not been asked to comment on the accuracy, completeness or fairness of the financial statements,
schedules and related financial, statistical or accounting data derived therefrom included in the
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Registration Statement, the Time of Sale Disclosure Package, the Prospectus or any amendment or
supplement thereto, or the exhibits to the Registration Statement, and they have not examined the
accounting, financial or other records from which such financial statements, schedules and related
financial, statistical or accounting data derived therefrom contained therein were derived; and
that, although certain portions of the Registration Statement have been included therein on the
authority of “experts” within the meaning of the Securities Act, they are not experts with respect
to any portion of the Registration Statement and any amendment thereto, including, without
limitation, such financial statements, schedules and related financial, statistical or accounting
data derived therefrom included therein. Such counsel may further state that they did not
participate in the preparation of the Incorporated Documents. Such counsel shall state that they
have participated in conferences with certain officers and other representatives of the Company,
the Underwriters, counsel for the Underwriters and the independent certified public accountants of
the Company, at which conferences the contents of the Registration Statement, the Preliminary
Prospectus Supplement, the Prospectus and the Time of Sale Disclosure Package and related matters
were reviewed and discussed, and based upon such participation, and relying as to materiality in
part upon the factual statements of officers and other representatives of the Company and upon
representatives of the Underwriters, no facts have come to such counsel’s attention that have
caused them to believe that,
(i) the Registration Statement (other than the financial statements, schedules and related
financial, statistical or accounting data derived therefrom and the Form T-1 filed as an exhibit
thereto, as to which such counsel need express no belief) as of its most recent effective date
contained an untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not misleading,
(ii) the documents included in the Time of Sale Disclosure Package, all considered together
(other than the financial statements, schedules and related financial, statistical or accounting
data derived therefrom, as to which such counsel need express no belief), as of the Applicable
Time, contained an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or
(iii) the Prospectus (other than the financial statements, schedules and related financial,
statistical or accounting data derived therefrom, as to which such counsel need express no belief),
as of its date or as of the date of such opinion, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Such counsel may state that its opinion is solely for the benefit of the Underwriters pursuant
to Section 6(d) of the Underwriting Agreement, and may not be used or relied upon by the
Underwriters in any other capacity or for any other purpose and may not be used or relied upon by
any other person or entity for any purpose without such counsel’s express prior written
authorization. Such counsel may state that except for the use permitted therein, such opinion may
not be quoted, circulated or published, in whole or in part, or otherwise referred to, filed with
or furnished to any other person or entity, without such counsel’s prior written authorization;
that the
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opinion expressed therein is not an opinion with respect to matters of fact or a guarantee
and should not be construed or relied on as such; that the
opinion expressed therein is as of the
date thereof, and such counsel expressly disclaims any responsibility to update such opinion after
the date thereof; and that such opinion is strictly limited to the matters stated therein, and no
other or more extensive opinion is intended, implied or to be inferred beyond the matters expressly
stated therein.
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