EXHIBIT 10.7
FRANKLIN BANK CORP.
RESTRICTED STOCK AGREEMENT
This Restricted Stock Agreement ("Agreement"), entered into as of
_______________ is between Franklin Bank Corp., a Delaware corporation (the
"Company"), and _______________, (the "Employee").
1. Award of Common Stock. As of the date (the "Grant Date") on
which completion of the public offering (the "IPO") of common stock of the
Company contemplated by the Registration Statement on Form S-1 (File No.
333-108026) filed by the Company on August 15, 2003 occurs, the Company shall
grant to Employee such number of shares (the "Restricted Shares") of the
Company's common stock, $.01 par value ("Common Stock"), as shall be equal to
$____ divided by the per share public offering price in the IPO (the "Public
Offering Price") (rounded up to the nearest whole share), which shall be subject
to restrictions on transferability set forth in Section 2 herein. In the event
that the IPO does not occur, this Agreement shall be void ab initio and of no
further force and effect.
2. Restricted Period.
(a) From the Grant Date until April 1, 2005 (the
"Restricted Period"), Employee shall not be permitted to sell, assigned,
transferred, exchanged, pledged, hypothecated, or otherwise encumbered and no
such sale, assign, transfer, exchange, pledge, hypothecate, or encumber, whether
by voluntary act of Employee or any agent of Employee or by operation of law,
the Restricted Shares (such restrictions, the "Restrictions on Transferability")
and on and after April 1, 2005, the Shares shall no longer be subject to the
Restrictions on Transferability and shall be "Unrestricted Shares."
(b) Each certificate issued for Restricted Shares to
Employee shall be registered in Employee's name and shall be either deposited
with the Secretary of the Company or its designee in an escrow account or held
by the Secretary of the Company, together with stock powers or other instruments
of transfer appropriately endorsed in blank by Employee (Employee hereby
agreeing to execute such stock powers or other instruments of transfer as
requested by the Company). Such certificate or certificates shall remain in such
escrow account or with the Secretary of the Company until the termination of the
Restricted Period. Certificates representing the Restricted Shares shall bear
the following legend:
"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE
RESTRICTED STOCK AGREEMENT. COPIES OF SUCH AGREEMENT ARE ON FILE AT THE
OFFICES OF FRANKLIN BANK CORP., 0000 XXXXXXXX XXXXXX, XXXXX 000,
XXXXXXX, XXXXX 00000."
Upon Restricted Shares becoming Unrestricted Shares, the Company shall effect
the issuance and delivery of a certificate or certificates for such Unrestricted
Shares to Employee free of the legend set forth above.
(c) Employee shall, during the Restricted Period, have
all of the other rights of a stockholder with respect to the Shares including,
but not limited to, the right to vote (in person or by proxy) such Restricted
Shares at any meeting of stockholders of the Company and the right to receive
ordinary dividends, if any, as may be declared on such Restricted Shares from
time to time. Extraordinary dividends on the Restricted Shares shall be treated
in the manner set forth in Section 4 hereof.
(d) If Employee incurs a Termination of Employment prior
to the expiration of the Restricted Period for any reason other than: (i) death;
(ii) Disability; (iii) by Employee for Good Reason; or (iv) Employee's
Termination of Employment by the Company without Cause (as defined in Section 6)
then, in that event, any Restricted Shares granted to Employee hereunder shall
continue to be subject to the Restrictions on Transferability until April 1,
2005, and on and after April 1, 2005, the Shares shall no longer be subject to
the Restrictions on Transferability and shall be "Unrestricted Shares."
(e) In the event that Employee incurs a Termination of
Employment because of: (i) death; (ii) Disability; (iii) by Employee for Good
Reason; or (iv) because he or she incurs a Termination of Employment by the
Company without Cause, all Restrictions on Transferability on Employee's Shares
shall lapse and the Shares shall become Unrestricted Shares.
(f) Upon the occurrence of a Change in Control (defined
as set forth in the Company's 2004 Long-Term Incentive Plan), all Restrictions
on Transferability on Employee's Shares shall lapse and the Shares shall become
Unrestricted Shares.
(g) If Employee incurs a Termination of Employment prior
to the expiration of the Restricted Period, and there exists a dispute between
Employee and the Company as to the satisfaction of the conditions to the release
of the Shares from the Restrictions on Transferability hereunder, the Shares
shall remain subject to the Restrictions on Transferability until the earlier of
(i) the resolution of such dispute or (ii) the expiration of the Restricted
Period.
3. Taxes. No later than the Grant Date, Employee shall pay to the
Company, or make arrangements satisfactory to the Company regarding the payment
of, all federal, state, local and foreign taxes that are required by applicable
laws and regulations to be withheld with respect to such amount (the
"Withholding Tax Amount"). Employee shall notify the Company not later than
November __, 2003 whether the Employee will pay such amount in cash or will
elect to have such obligations satisfied by having the Company withhold from the
total number of Restricted Shares otherwise deliverable hereunder that number of
Shares determined by dividing the Withholding Tax Amount by the Public Offering
Price, which Shares shall be withheld and deemed surrendered to the Company on
the Grant Date. In the event that the Employee fails to notify the Company by
such date, the Employee shall be deemed to have elected to have Shares withheld
as provided hereunder.
4. Changes in Capital Structure. In the event of any change in
corporate capitalization (including, but not limited to, a change in the number
of shares of Common Stock outstanding), such as a stock split or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company (including
any extraordinary cash or stock dividend), any reorganization (whether or not
such
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reorganization comes within the definition of such term in Section 368 of the
Code) or any partial or complete liquidation of the Company, the compensation
committee (the "Committee") of the Board of Directors of the Company (the
"Board") or the Board may make such substitution or adjustments in the number
and kind of shares subject to this Agreement and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion (including, without limitation, the provision of an amount in cash
therefor); provided, however, that the number of shares subject to this
Agreement shall always be a whole number.
5. Compliance With Securities Laws. Upon the acquisition of any
Shares pursuant to this Agreement, Employee (or Employee's legal representative
upon Employee's death or Disability) will enter into such written
representations, warranties and agreements as the Company may reasonably request
in order to comply with applicable securities laws or with this Agreement.
6. Definitions. The following terms shall have the meanings set
forth in this Section 6.
(a) "Cause" means (1) conviction of Employee for
committing a felony under federal law or the law of the state in which such
action occurred, (2) dishonesty in the course of fulfilling an Employee's
employment duties or (3) willful and deliberate failure on the part of Employee
to perform his employment duties in any material respect, (4) the failure of
Employee to perform his or her duties in a manner that is satisfactory to
management of the Company or the appropriate subsidiary or affiliate in the
exercise of its reasonable discretion, or (5) such other events as shall be
determined by the Committee in its good faith discretion. The Committee shall
exercise good faith discretion to determine whether "Cause" exists under any set
of facts and circumstances.
(b) "Disability" means a determination that Employee is
eligible to receive benefits under the terms of the Company's Long-Term
Disability program.
(c) "Good Reason" means (1) a material adverse change in
Employee's duties or position with the Company or any subsidiary or affiliate,
or (2) any reduction of Employee's annual base salary.
(d) "Termination of Employment" means the termination of
Employee's employment with, or performance of services for, the Company and any
of its subsidiaries or affiliates. Temporary absences from employment because of
illness, vacation or leave of absence and transfers among the Company and its
subsidiaries and affiliates shall not be considered Terminations of Employment.
7. Successors.
(a) This Agreement is personal to Employee and without
the prior written consent of the Company shall not be assignable by Employee
except by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Employee's guardian and legal
representatives.
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(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
8. Miscellaneous
(a) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Texas,
without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) Notices. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery to the
other party or by facsimile, overnight courier, or registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to Employee:
At the most recent address on file for the Executive
at the Company.
If to the Company:
Franklin Bank Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
9. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
10. No Waiver. The failure of Employee or the Company to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right Employee or the Company may have under this Agreement shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
11. Entire Agreement. Employee and the Company acknowledge that as
of the Grant Date this Agreement supersedes any prior agreement between the
parties with respect to the subject matter of this Agreement and the letter
agreement between Employee and the Company dated as of ________________________.
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12. Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same original.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duty
executed by one of its officers thereunto duly authorized, and Employee has
executed this Agreement, all as of the day and year first above written.
FRANKLIN BANK CORP.
By: ____________________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
EMPLOYEE
________________________________________________
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