EXHIBIT 1.1
FRANKLIN BANK CORP.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
________________, 2003
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
as Representative of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Franklin Bank Corp., a Delaware corporation (the "Company"),
and the stockholders of the Company listed on Schedule I hereto (the "Selling
Stockholders"), confirm their respective agreements with each of the
Underwriters listed on Schedule II hereto (collectively, the "Underwriters"),
for whom Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. is acting as representative (in
such capacity, the "Representative"), with respect to (i) the sale by the
Company and the Selling Stockholders of _________ shares (the "Initial Shares")
of Common Stock, par value $0.01 per share, of the Company ("Common Stock") in
the respective numbers of shares set forth opposite the names of the Company and
each Selling Stockholder in Schedule I hereto, and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
shares of Common Stock set forth opposite the names of the Underwriters in
Schedule II hereto, and (ii) the grant by the Company to the Underwriters,
acting severally and not jointly, of the option described in Section 1(b) hereof
to purchase all or any part of _________ additional shares of Common Stock to
cover over-allotments (the "Option Shares"), if any. The Initial Shares and the
Option Shares are hereinafter called, collectively, the "Shares." The Shares are
to be sold by the Company and the Selling Stockholders acting severally and not
jointly.
The Company understands that the Underwriters propose to make
a public offering of the Shares as soon as the Underwriters deem advisable,
subject to applicable law, after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-1 (No.
333-108026) and a related preliminary prospectus for the registration of the
Shares under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations thereunder (the "Securities Act Regulations"). The
Company has prepared and filed such amendments thereto, if any, and such amended
preliminary prospectuses, if any, as may have been required to the date hereof,
and will file such additional amendments thereto and such amended prospectuses
as may hereafter be required. The registration statement has been declared
effective under the Securities Act by the Commission. The registration statement
as amended through the time it became effective (including all information
deemed to be a part of the registration statement at the time it became
effective pursuant to Rule 430A(b) of the Securities Act Regulations) is
hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined in Section 2(a)), "Registration
Statement" shall refer to such registration statement as so amended. Any
registration statement filed pursuant to Rule 462(b) of the Securities Act
Regulations is hereinafter called the "Rule 462(b) Registration Statement," and
after such filing the term "Registration Statement" shall include the 462(b)
Registration Statement. Each prospectus included in the Registration Statement,
or amendments thereof or supplements thereto, before it became effective under
the Securities Act, including any prospectus filed with the Commission by the
Company pursuant to Rule 424(a) of the Securities Act Regulations, is
hereinafter called the "Preliminary Prospectus." The term "Prospectus" means the
final prospectus, as first filed with the Commission pursuant to paragraph (1)
or (4) of Rule 424(b) of the Securities Act Regulations, and any amendments
thereof or supplements thereto. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
Each Selling Stockholder has executed and delivered a Custody
Agreement and a Power of Attorney in the form attached hereto as Exhibit A
(collectively, the "Agreement and Power of Attorney") pursuant to which each
Selling Stockholder party thereto has placed the Initial Shares to be sold by it
pursuant to this Agreement in custody and appointed the persons designated
therein, and each of them, as a committee (the "Committee") with the authority
to execute and deliver this Agreement on behalf of such Selling Stockholder and
to take certain other actions with respect thereto and hereto.
The Company, each of the Selling Stockholders and the
Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $________, the Company and the Selling Stockholders, acting
severally and not jointly, agree to sell to the Underwriters the number of
Initial Shares set forth in Schedule I opposite their respective names, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
the Selling Stockholders the number of Initial Shares set forth in Schedule II
opposite such Underwriter's name, plus any additional number of Initial Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof, subject in each case, to such adjustments among
the Underwriters as the Representative in its sole discretion shall make to
eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in Section 1(a), the Company hereby grants an option
to the Underwriters,
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acting severally and not jointly, to purchase from the Company all or any part
of the Option Shares, plus any additional number of Option Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof. The option hereby granted will expire 30 days after the date
hereof and may be exercised in whole or in part from time to time until such
date only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Shares upon notice
by the Representative to the Company setting forth the number of Option Shares
as to which the several Underwriters are then exercising the option and the date
of payment and delivery for such Option Shares. If the option is exercised as to
all or any portion of the Option Shares, the Company will sell such Option
Shares to the Underwriters, and each of the Underwriters, acting severally and
not jointly, will purchase that proportion of the total number of Option Shares
then being purchased which the number of Initial Shares set forth in Schedule II
opposite the name of such Underwriter bears to the total number of Initial
Shares, subject in each case to such adjustments among the Underwriters as the
Representative in its sole discretion shall make to eliminate any sales or
purchases of fractional shares.
2. Payment and Delivery
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company and the Selling Stockholders
shall be delivered by or on behalf of the Company and the Selling Stockholders
to the Representative, including, at the option of the Representative, through
the facilities of The Depository Trust Company ("DTC") for the account of such
Underwriter, 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 to the Representative by the Company and each of the Selling
Stockholders, upon at least forty-eight hours' prior notice. The Company will
cause the certificates representing the Initial Shares to be made available for
checking and packaging at least twenty-four hours prior to the Closing Time at
the office of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇, or at the office of DTC or its designated custodian, as
the case may be (the "Designated Office"). The time and date of such delivery
and payment shall be 9:30 a.m., New York City time, on the third (fourth, if
pricing occurs after 4:30 p.m., New York City time) business day after the date
hereof (unless another time and date shall be agreed to in writing by the
Representative and the Company). The time at which such payment and delivery are
actually made is hereinafter sometimes called the "Closing Time."
(b) Option Shares. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representative, including, at the option of the
Representative, through the facilities of DTC for the account of such
Underwriter, against payment by or on behalf of such
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Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified to the Representative by the Company
upon at least forty-eight hours' prior notice. The Company will cause the
certificates representing the Option Shares to be made available for checking
and packaging at least twenty-four hours prior to the Date of Delivery (as
defined below) at the Designated Office. The time and date of such delivery and
payment shall be 9:30 a.m., New York City time, on the date specified by the
Representative in the notice given by the Representative to the Company pursuant
to Section 1(b) hereof of the Underwriters' election to purchase such Option
Shares, but shall not be later than three full business days (or earlier,
without the consent of the Company, than two full business days) after the
exercise of such option, nor in any event prior to the Closing Time (unless
another time and date shall be agreed to in writing by the Company and the
Representative). The time at which such payment and delivery are actually made
is hereinafter sometimes called the "Date of Delivery."
(c) Directed Shares. It is understood that up to 2.0% of the Initial
Shares ("Directed Shares") initially will be reserved by the Underwriters for
offer and sale to employees and persons having business relationships with the
Company ("Directed Share Participants") as part of the distribution of the
Shares by the Underwriters, upon the terms and conditions set forth in this
Agreement, and in accordance with the rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD") (the "Directed Share Program").
Except as set forth in this Agreement, neither the Representative nor any
Underwriter will be liable to the Company or to any Directed Share Participant
for any action taken or omitted to be taken in good faith in connection with the
Directed Share Program. To the extent that any Directed Shares are not
affirmatively reconfirmed for purchase by any Directed Share Participant (orally
or in writing) by the end of the second business day after the date of this
Agreement, such Directed Shares may be offered by the Underwriters to the public
as part of the public offering contemplated herein.
3. Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters that:
(a) the Company had at the date indicated in the Prospectus under the
heading "Capitalization", an authorized, actual capitalization as set forth in
the Prospectus; the outstanding shares of capital stock of the Company and each
subsidiary of the Company (all of which are named in Exhibit 21 to the
Registration Statement (each, a "Subsidiary")) have been duly and validly
authorized and issued and are fully paid and non-assessable, and all of the
outstanding shares of capital stock (or equivalent equity interests) of the
Subsidiaries are directly or indirectly owned of record and beneficially by the
Company, free and clear of all liens, encumbrances, equities or claims; except
as disclosed in the Prospectus, there are no outstanding (i) securities or
obligations of the Company or any of the Subsidiaries convertible into or
exchangeable for any capital stock of the Company or any such Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or any
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such convertible or exchangeable securities or obligations, or (iii) obligations
of the Company or any such Subsidiary to issue any shares of capital stock, any
such convertible or exchangeable securities or obligations, or any such
warrants, rights or options;
(b) each of the Company and the Subsidiaries has been duly incorporated
(or organized) and is validly existing as a corporation (or business trust or
state savings bank, as applicable) in good standing under the laws of its
respective jurisdiction of incorporation (or organization) with full corporate
(or other applicable) power and authority to own its respective properties and
to conduct its respective businesses as described in the Registration Statement
and Prospectus and, in the case of the Company, to execute and deliver this
Agreement and to consummate the transactions contemplated herein;
(c) the Company and all of the Subsidiaries are duly qualified or
licensed and are in good standing in each jurisdiction in which they conduct
their respective businesses or in which they own or lease real property or
otherwise maintain an office, except for such failures to be so qualified or
licensed as would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the business, results of operations or
financial condition of the Company and the Subsidiaries taken as a whole (a
"Material Adverse Effect"); except as disclosed in the Prospectus, no Subsidiary
(except Franklin Bank Capital Trust I (the "Trust")) is prohibited or
restricted, directly or indirectly, from paying dividends to the Company, or
from making any other distribution with respect to such Subsidiary's capital
stock or from repaying to the Company or any other Subsidiary any amounts which
may from time to time become due under any loans or advances to such Subsidiary
from the Company or such other Subsidiary, or from transferring any such
Subsidiary's property or assets to the Company or to any other Subsidiary; other
than as disclosed in the Prospectus, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, joint venture or other
association;
(d) the Company and the Subsidiaries are in compliance in all material
respects with all applicable material laws, rules, regulations, orders, decrees
and judgments (including, without limitation, all regulations and orders of, or
agreements with, the Office of Thrift Supervision (the "OTS"), the Federal
Deposit Insurance Corporation (the "FDIC"), the Texas Savings and Loan
Department (the "TSLD"), the Federal Housing Finance Board, the Home Owner's
Loan Act, as amended ("HOLA"), the Texas Savings Bank Act, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and any
applicable state law precluding the denial of credit due to the neighborhood in
which a property is situated, the Home Mortgage Disclosure Act, all other
applicable fair lending laws or other laws relating to discrimination and the
Bank Secrecy Act and Title III of the U.S.A. Patriot Act, and the applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act")), and
neither the Company nor any of its Subsidiaries has received any written
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communication from any governmental authority asserting that the Company or any
of its Subsidiaries is not in compliance with any such laws, rules, regulations,
orders, decrees and judgments, which assertion has not been rescinded, or which
non-compliance has not been cured or resolved, in all material respects;
(e) neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under) (i) its respective
organizational documents; or (ii) any obligation, agreement, covenant or
condition contained in any license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Company or such
Subsidiary is a party or by which any of them or their respective properties is
bound, except, in the case of clause (e)(ii), for such breaches or defaults
which would not reasonably be expected to have a Material Adverse Effect;
(f) the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated herein will not (A) conflict with,
or result in any breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the organizational documents of the Company
or any Subsidiary, or (ii) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties may be bound or affected, or under any federal, state or
local law, regulation or rule or any decree, judgment or order applicable to the
Company or any Subsidiary, except in the case of this clause (ii) for such
conflicts, breaches or defaults which would not reasonably be expected to have a
Material Adverse Effect; or (B) except as contemplated by this Agreement, result
in the creation or imposition of any material lien, charge, claim or encumbrance
upon any property or asset of the Company or any Subsidiary;
(g) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable principles, and
except to the extent that the indemnification and contribution provisions of
Section 9 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof;
(h) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency (including, without limitation, approvals by or filings with
the FDIC, the OTS or the TSLD) is required in connection with the Company's
execution, delivery and performance of this Agreement, its consummation of the
transactions contemplated herein, and its sale and delivery of the Shares, other
than (A) such as have been obtained or made, or will have been obtained or made
at the Closing Time or the relevant Date of Delivery, as the case may be, under
the Securities Act and the Securities Act Regulations
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or under the Securities Exchange Act of 1934 (the "Exchange Act") and the rules
and regulations thereunder (the "Exchange Act Regulations"), (B) such as have
been obtained or made, or will have been obtained or made at the Closing Time or
the relevant Date of Delivery, as the case may be, in connection with the
approval of the underwriting terms and arrangements by the NASD and the
quotation of the Shares on the Nasdaq National Market, and (C) such as have been
obtained or made, or will have been obtained or made at the Closing Time or the
relevant Date of Delivery, as the case may be, based on the "blue sky" survey
prepared by counsel for the Underwriters, in connection with any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters;
(i) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses as described
in the Prospectus, except to the extent that any failure to have any such
licenses, authorizations, consents or approvals, to make any such filings or to
obtain any such authorizations, consents or approvals would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect;
neither the Company nor any of the Subsidiaries is required by any applicable
law to obtain accreditation or certification from any governmental agency or
authority in order to provide the products and services which it currently
provides, except as have already been obtained and are in full force and effect
or as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; neither the Company nor any of the Subsidiaries
is in violation of, in default under, or has received any written notice
asserting (nor does the Company have knowledge of) a possible violation, default
or revocation of any such license, authorization, consent or approval (which
assertion has not been rescinded, or which violation, default or revocation has
not been cured or resolved, in all material respects) the effect of which would
reasonably be expected to have a Material Adverse Effect; and no such license,
authorization, consent or approval contains a materially burdensome restriction
that is not adequately disclosed in the Registration Statement and the
Prospectus;
(j) The Company is duly registered as a Savings and Loan Holding
Company under HOLA. Franklin Bank S.S.B. (the "Bank") is a member in good
standing of the Federal Home Loan Bank of Dallas. The deposits held by the Bank
are insured by the FDIC up to legally applicable limits, and no proceedings for
the termination or revocation of such insurance are pending or, to the knowledge
of the Company, threatened. For purposes of this Agreement, "knowledge of the
Company" or words of similar import mean knowledge, after reasonable
investigation, of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Company's Chief Executive Officer;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Bank's Managing Director - Lending and Mortgage Banking;
▇▇▇▇▇ ▇▇▇▇▇▇, the Bank's Managing Director - Credit and Administration; ▇▇▇▇▇▇▇
▇▇▇▇▇▇, the Company's Chief Financial Officer; or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the Bank's
Managing Director - Commercial Lending;
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(k) each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and the Company has
complied to the Commission's satisfaction with any request on the part of the
Commission for additional information in connection therewith;
(l) the Preliminary Prospectus and the Registration Statement comply,
and the Prospectus and any amendments or supplements thereto will, when they
have become effective or are filed with the Commission, as the case may be,
comply, in all material respects with the applicable requirements of the
Securities Act and the Securities Act Regulations; the Registration Statement
did not, and any amendment thereto will not, in each case, as of the applicable
effective date, 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 not misleading; and the Preliminary Prospectus does not, and
the Prospectus and any amendment or supplement thereto will not, as of the
applicable filing date and at the Closing Time and on the relevant Date of
Delivery (if any), 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; provided, however, that the Company makes no warranty or
representation with respect to any statement contained in the Registration
Statement, the Preliminary Prospectus or the Prospectus, or any amendments or
supplements thereto, in reliance upon and in conformity with the information
furnished in writing by or on behalf of the Underwriters through the
Representative to the Company expressly for use in the Registration Statement,
Preliminary Prospectus or Prospectus or any such amendment or supplement (that
information being limited to that described in the penultimate sentence of the
first paragraph of Section 9(b) hereof);
(m) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("▇▇▇▇▇"), except to the extent permitted by Regulation S-T;
(n) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary or any of their respective officers and directors
or to which the properties, assets or rights of any such entity are subject, at
law or in equity, before or by any federal, state or local governmental or
regulatory commission, board, body, authority, arbitral panel or agency, which
would reasonably be expected to result in a judgment, decree, award or order
having a Material Adverse Effect;
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(o) the financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly in all material
respects the consolidated financial position of the entities to which such
financial statements relate (the "Covered Entities") as of the dates indicated
and the consolidated results of operations and changes in financial position and
cash flows of the Covered Entities for the periods specified; such financial
statements have been prepared in conformity in all material respects with
generally accepted accounting principles as applied in the United States and on
a consistent basis during the periods involved and in accordance in all material
respects with the applicable requirements of Regulation S-X promulgated by the
Commission; the amounts in the Prospectus under the captions "Summary - Summary
Historical Financial Data" and "Selected Historical Financial Data" fairly
present in all material respects the information shown therein and have been
compiled on a basis consistent with the financial statements included in the
Registration Statement and the Prospectus; no other financial statements or
supporting schedules are required to be included in the Registration Statement;
the financial information in the Prospectus under the caption "Unaudited Pro
Forma Combined Consolidated Financial Information" (including the related notes)
and all other unaudited pro forma financial information included in the
Prospectus and any Preliminary Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Securities Act and
the Securities Act Regulations, and management of the Company believes that the
assumptions underlying any such pro forma financial information are reasonable;
any adjustments have been properly applied to the historical amounts in the
compilation of such pro forma information; and no other pro forma financial
statements are required to be included in the Registration Statement.
Notwithstanding the foregoing, the representations in this Section 3(o) are
made, with respect to the financial statements of Jacksonville Bancorp, Inc., to
the knowledge of the Company;
(p) Deloitte & Touche LLP ("D&T"), whose reports on the consolidated
financial statements of the Company and the Subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus and (to the
knowledge of the Company) any other accounting firm that has certified Company
financial statements and delivered its reports with respect thereto, are, and
were during the periods covered by such reports, independent public accountants
as required by the Securities Act and the Securities Act Regulations, and D&T
have advised the Company in writing that they are independent certified public
accountants with respect to the Company within the meaning of the Securities Act
and the applicable rules and regulations thereunder adopted by the Commission;
(q) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be disclosed
in the Registration Statement or Prospectus, there has not been (A) any Material
Adverse Effect or any development that would reasonably be expected to result in
a Material Adverse Effect, whether or not arising in the ordinary course of
business, (B) any transaction that is material to the Company and the
Subsidiaries taken as a whole, contemplated or entered into by the Company or
any of the Subsidiaries, (C) any
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obligation, contingent or otherwise, directly or indirectly incurred by the
Company or any Subsidiary that is material to the Company and Subsidiaries taken
as a whole or (D) any dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock;
(r) when issued and delivered as contemplated by this Agreement, the
Shares will conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus;
(s) except with respect to the Initial Shares being sold by the Selling
Stockholders and as disclosed in the Prospectus, there are no persons with
registration or other similar rights to have any equity or debt securities,
including securities which are convertible into or exchangeable for equity
securities, registered pursuant to the Registration Statement or otherwise
registered by the Company under the Securities Act in connection with the offer
and sale of the Shares;
(t) the Shares to be sold by the Company have been duly authorized and,
when issued and duly delivered against payment therefor as contemplated by this
Agreement, will be validly issued, fully paid and non-assessable, and free and
clear of any pledge, lien, encumbrance, security interest or other claim (other
than any such pledge, lien, encumbrance, security interest or other claim
created by any of the Underwriters or against any of the Underwriters by any
third party), and the issuance and sale of the Shares by the Company is not
subject to preemptive or other similar rights arising by operation of law, under
the organizational documents of the Company or under any agreement to which the
Company or any Subsidiary is a party or otherwise;
(u) the Shares have been approved for quotation on the Nasdaq National
Market, subject to official notice of issuance;
(v) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(w) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act and the Exchange Act Regulations, or (ii) directly, or indirectly
through one or more intermediaries, controls or has any other association with
(within the meaning of Article I of the NASD's By-laws) any member firm of the
NASD;
(x) the Company has not relied upon the Representative or legal counsel
for the Representative for any legal, tax or accounting advice in connection
with the offering and sale of the Shares, except with respect to the
qualification of the Shares under applicable blue sky laws;
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(y) any certificate signed by any officer of the Company or any
Subsidiary that is required to be delivered to the Representative or counsel for
the Underwriters pursuant to this Agreement shall be deemed a representation and
warranty by the Company to each Underwriter as to any matters concerning the
Company or any Subsidiary covered thereby;
(z) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements and any
applicable requirements of the organizational documents of the Company;
(aa) the Company and the Subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all material personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Prospectus or such as would not materially and adversely
affect the value to the Company or such Subsidiaries of such property or
interfere with the use made of such property by the Company and the
Subsidiaries; and any real property and buildings held under lease by the
Company or any Subsidiary are held under valid, existing and enforceable leases,
with such exceptions as are disclosed in the Prospectus or are not material or
do not interfere in any material respects with the use made of such property and
buildings by the Company or such Subsidiary;
(bb) the descriptions in the Registration Statement and the Prospectus
of the legal or governmental proceedings, contracts and other legal documents
therein described are fair descriptions of such proceeding or documents, and
there are no legal or governmental proceedings, contracts or other documents of
a character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement which are
not so described or filed; all material agreements between the Company or any of
the Subsidiaries and third parties expressly referenced in the Prospectus are
legal, valid and binding obligations of the Company or one or more of the
Subsidiaries, enforceable against the Company or such Subsidiary in accordance
with their respective terms, except to the extent enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general equitable principles;
(cc) the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights, software and design licenses, trade secrets, and other
intangible property rights and know-how (collectively "Intangibles") necessary
to entitle the Company and each Subsidiary to conduct its business as described
in the Prospectus, and neither the Company nor any Subsidiary has received any
written notice of infringement of or conflict with (and, to the knowledge of the
Company, there exists no such infringement of or conflict with) asserted rights
of others with respect to any Intangibles which would reasonably be expected to
have a Material Adverse Effect;
-11-
(dd) the Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient in all material respects to provide
reasonable assurance that (i) transactions relating to the business of the
Company and the Subsidiaries are executed in accordance with management's
general or specific authorizations; (ii) such transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles as applied in the United States and to
maintain asset accountability; (iii) access to assets of the Company or a
Subsidiary is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for such assets is compared
with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences;
(ee) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts reasonably believed by the Company to be adequate for their
respective businesses, including, but not limited to, insurance covering real
and personal property owned or leased by the Company and the Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect
in all material respects;
(ff) neither the Company nor any of the Subsidiaries is in violation,
or has received written notice of any violation with respect to, any applicable
environmental, safety or similar law applicable to the business of the Company
or any of the Subsidiaries, and the Company and the Subsidiaries have received
all permits, licenses or other approvals required of them under applicable
federal and state occupational safety and health and environmental laws and
regulations to conduct their respective businesses, and are in compliance with
all terms and conditions of any such permit, license or approval, except for any
such violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals which would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect;
(gg) neither the Company nor any of the Subsidiaries is a party to or
subject to any order, decree, agreement, memorandum of understanding,
supervisory letter or similar arrangement (other than those of general
applicability) with any applicable governmental authority charged with the
supervision or regulation of depository institutions or engaged in the insurance
of deposits (including the FDIC) or the supervision or regulation of it or any
of the Subsidiaries, and neither the Company nor any of the Subsidiaries has
been advised in writing by any such governmental authority (nor does the Company
have knowledge) that such governmental authority is contemplating issuing or
requesting any such order, decree, agreement, memorandum of understanding,
supervisory letter or similar arrangement;
(hh) neither the Company nor any Subsidiary is in violation of or has
received written notice of any violation with respect to any federal or state
law relating to
-12-
discrimination in the hiring, promotion or pay of employees, or any applicable
federal or state wages and hours law, the violation of any of which would
reasonably be expected to have a Material Adverse Effect;
(ii) neither the Company nor any of the Subsidiaries sponsors any
employee benefit plan that is subject to the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder;
(jj) neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company, any officer or director purporting to act on behalf of
the Company or any of the Subsidiaries, has at any time (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contributions, in violation of law, (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
allowed by applicable law, (iii) made any payment outside the ordinary course of
business to any investment officer or loan broker or person charged with similar
duties of any entity to which the Company or any of the Subsidiaries sells or
from which the Company or any of the Subsidiaries buys loans or servicing
arrangements for the purpose of illegally influencing such agent, officer,
broker or person to buy loans or servicing arrangements from or sell loans to
the Company or any of the Subsidiaries, or (iv) engaged in any transactions,
maintained any bank account or used any corporate funds except for transactions,
bank accounts and funds which have been and are reflected in the normally
maintained books and records of the Company and the Subsidiaries or, in the case
of transactions and use of funds, were immaterial and of a de minimis amount;
(kk) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of the Subsidiaries or any of the
members of the families of any of them;
(ll) neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company, any employee or agent of the Company or any of the
Subsidiaries, has made any payment of funds of the Company or of any Subsidiary
or received or retained any funds for or on behalf of the Company in violation
of any law, rule or regulation or of a character required to be disclosed in the
Prospectus;
(mm) all securities issued by the Company, any of the Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities laws,
and (ii) the laws of the applicable jurisdiction of incorporation of the issuing
entity;
(nn) in connection with the offering and sale of the Shares, the
Company has not offered and will not offer its Common Stock or any other
securities convertible into or exchangeable or exercisable for Common Stock in a
manner in violation of the
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Securities Act. The Company has not distributed and will not distribute any
Prospectus or other solicitation material for the offer and sale of the Shares,
without the approval of the Representative;
(oo) the Company has complied and will comply with all the provisions
of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida); and
neither the Company nor any of the Subsidiaries or affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba;
(pp) except as disclosed in the Prospectus, the Company has not
incurred any liability for any finder's fees or similar payments in connection
with the transactions herein contemplated;
(qq) no relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of the Subsidiaries
on the other hand, which is required by the Securities Act and the Securities
Act Regulations to be described in the Registration Statement and the Prospectus
and which is not so described. There are no outstanding loans, extensions of
credit, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees of indebtedness by the Company or any
Subsidiary to or for the benefit of any of the officers or directors of the
Company or any of their respective family members, except as disclosed in the
Registration Statement and the Prospectus or that are not in violation of
Section 402 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act;
(rr) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, 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 "Investment
Company Act");
(ss) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of the
Subsidiaries which would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(tt) each of the Company and the Subsidiaries has filed on a timely
basis all material federal, state and local income and franchise tax returns
required to be filed through the date hereof and have paid all taxes shown as
due thereon; and no tax deficiency has been asserted against any such entity,
nor does the Company know of any tax deficiency which is likely to be asserted
against any such entity which, if determined adversely to any such entity, could
materially and adversely affect the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of any such entity,
respectively;
(uu) no consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained or that shall
have been obtained
-14-
prior to the Closing Date, is required in connection with the offering of the
Directed Shares in any jurisdiction where the Directed Shares are being offered.
The Company has not offered, or caused the Representative to offer, Shares to
any person pursuant to the Directed Share Program with the specific intent to
unlawfully influence (with knowledge that such action is unlawful) (i) a
customer or supplier of the Company to alter the customer's or supplier's level
or type of business with the Company or (ii) a trade journalist or publication
to write or publish favorable information about the Company or its products;
(vv) The Company has filed with the OTS an application for approval of
its merger with Jacksonville Bancorp, Inc. (the "Jacksonville HC Application").
The Jacksonville HC Application complied, and at the Closing Time and on the
relevant Date of Delivery will comply, in all material respects, with the
applicable provisions of HOLA and the regulations promulgated thereunder. The
OTS has approved the Jacksonville HC Application. The Company has filed with the
FDIC and the TSLD an application for approval of the merger of the Bank with
Jacksonville Savings Bank, S.S.B. (the "Jacksonville Bank Application"). The
Jacksonville Bank Application complied, and at the Closing Time and on the
relevant Date of Delivery will comply, in all material respects, with the
applicable provisions of the Texas Savings Bank Act, the bank merger provisions
of the Federal Deposit Insurance Act, as amended, and the regulations
promulgated thereunder. Each of the FDIC and the TSLD have approved the
Jacksonville Bank Application.
Each Selling Stockholder represents and warrants to the Underwriters,
severally and not jointly, that:
(a) such Selling Stockholder has full power and authority to enter into
this Agreement and the Agreement and Power of Attorney to which it is a party.
All authorizations and consents necessary for the execution and delivery by such
Selling Stockholder of the Agreement and Power of Attorney, and for the
execution of this Agreement on behalf of such Selling Stockholder, have been
given. Each of the Agreement and Power of Attorney and this Agreement has been
duly authorized, executed and delivered, as applicable, by or on behalf of such
Selling Stockholder and constitutes a valid and binding agreement of such
Selling Stockholder and is enforceable against such Selling Stockholder in
accordance with the terms thereof and hereof, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general equitable principles, and except to
the extent that the indemnification and contribution provisions of Section 9
hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof;
(b) such Selling Stockholder now has, and at the Closing Time will
have, (i) good and marketable title to the Initial Shares to be sold by such
Selling Stockholder hereunder (all of which are held in book-entry form), free
and clear of all liens, encumbrances and claims whatsoever (other than pursuant
to the Agreement and Power of
-15-
Attorney), and (ii) full legal right and power to sell, transfer and deliver
such Initial Shares to the Underwriters hereunder and to make the
representations, warranties and agreements made by such Selling Stockholder
herein. Upon the delivery of and payment for such Initial Shares hereunder, such
Selling Stockholder will deliver good and marketable title thereto, free and
clear of any pledge, lien, encumbrance, security interest or other claim (other
than any such pledge, lien, encumbrance, security interest or other claim
created by any of the Underwriters or against any of the Underwriters by any
third party);
(c) at the Closing Time, all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold by such Selling Stockholder to the
Underwriters hereunder will have been fully paid or provided for by such Selling
Stockholder and all laws imposing such taxes will have been fully complied with;
(d) The performance of this Agreement and the consummation of the
transactions contemplated herein will not conflict with, or result in any breach
of, or constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of, or default under), (i) to
the extent applicable, any provision of the certificate or articles of
incorporation, other charter or similar constitutive documents, or the bylaws of
the Selling Stockholder, or (ii) any provision of any license, indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which the Selling Stockholder is a party or by which it or its
properties may be bound or affected, or under any federal, state or local law,
regulation or rule, or any decree, judgment or order applicable to the Selling
Stockholder; or result in the creation or imposition of any lien, charge, claim
or encumbrance upon any property or asset of the Selling Stockholder;
(e) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Selling Stockholder's
execution, delivery and performance of this Agreement, its consummation of the
transactions contemplated hereby, and its sale and delivery of the Initial
Shares, other than (i) such as have been obtained, or will have been obtained at
the Closing Time, from the NASD or under the Securities Act and the Securities
Act Regulations, and under the Exchange Act and the Exchange Act Regulations,
(ii) such approvals as have been obtained, or will have been obtained at the
Closing Time, in connection with the approval of the quotation of the Initial
Shares on the Nasdaq National Market and (iii) any necessary qualification under
the securities or blue sky laws of the various jurisdictions in which the
Initial Shares are being offered by the Underwriters;
(f) all material information with respect to such Selling Stockholder
contained in the Registration Statement and the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
or supplement thereto) and made in reliance upon and in conformity with
information furnished in writing by the
-16-
Selling Stockholder to the Company expressly for use in the Registration
Statement and Prospectus complied and will comply in all material respects with
all applicable provisions of the Securities Act and the Securities Act
Regulations, contains and will contain all statements of material fact required
to be stated therein in accordance with the Securities Act and the Securities
Act Regulations, and does 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 in order to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading;
(g) other than as permitted by the Securities Act and the Securities
Act Regulations, such Selling Stockholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Initial Shares; and
such Selling Stockholder has not taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result in, under
the Securities Act, the Securities Act Regulations or otherwise, or which has
constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(h) the Initial Shares to be sold hereunder by such Selling Stockholder
have been placed in custody, for the purpose of making delivery of such Initial
Shares under this Agreement and under the Agreement and Power of Attorney,
pursuant to which The Bank of New York, the Company's registrar and transfer
agent, has been appointed as custodian (the "Custodian") for such Selling
Stockholder; such Selling Stockholder agrees that the Initial Shares held in
custody for such Selling Stockholder under the Agreement and Power of Attorney
are for the benefit of and coupled with and subject to the interest hereunder of
the Custodian, the Committee, the Underwriters, each other Selling Stockholder
and the Company; that the arrangements made by such Selling Stockholder for such
custody and the appointment of the Custodian and the Committee by such Selling
Stockholder are irrevocable; that the obligations of such Selling Stockholder
hereunder shall not be terminated by operation of law, whether by the death,
disability, incapacity or liquidation of such Selling Stockholder or the
occurrence of any other event affecting such Selling Stockholder; and that, if
such Selling Stockholder should die, become disabled or incapacitated or be
liquidated or if any other such event should occur before the delivery of the
Initial Shares hereunder, such Initial Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement and
actions taken by the Committee and the Custodian pursuant to the Agreement and
Power of Attorney shall be as valid as if such death, liquidation, incapacity or
other event had not occurred, regardless of whether or not the Custodian or the
Committee, or either of them, shall have received notice thereof;
(i) such Selling Stockholder has not relied upon the Representative or
legal counsel for the Representative for any legal, tax or accounting advice in
connection with the offering and sale of such Selling Stockholder's Initial
Shares, except with respect to the qualification of such Initial Shares under
applicable blue sky laws;
-17-
(j) except as disclosed in the Prospectus, such Selling Stockholder
does not have any registration or other similar rights to have any equity or
debt securities registered for sale by the Company under the Registration
Statement or included in the offering contemplated by this Agreement;
(k) such Selling Stockholder does not have, or has waived prior to the
date hereof, any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Shares that are to be sold by the
Company or any of the other Selling Stockholders to the Underwriters pursuant to
this Agreement; and such Selling Stockholder does not own any warrants, options
or similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus; and
(l) except as otherwise disclosed to the Underwriters in writing
(including in response to any NASD questionnaire), such Selling Stockholder is
not a member of or an affiliate of or associated with any member of the NASD.
(m) the representations and warranties of such Selling Stockholder in
the Agreement and Power of Attorney to which it is party are true and correct in
all material respects.
4. Certain Covenants:
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions as the Representative may designate and to
maintain such qualifications in effect as long as requested by the
Representative for the distribution of the Shares, provided that the Company
shall not be required to qualify as a foreign corporation or as a dealer in
securities or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares) or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject;
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as reasonably practicable and will advise the Representative promptly and, if
requested by the Representative, will confirm such advice in writing, when such
post-effective amendment has become effective;
(c) to prepare the Prospectus in a form reasonably satisfactory to the
Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) under the Securities Act not later than 10:00 a.m. (New York City time),
on the day
-18-
following the execution and delivery of this Agreement or on such other day as
the parties may mutually agree to in writing and to furnish promptly (and with
respect to the initial delivery of such Prospectus, not later than 10:00 a.m.
(New York City time) on the day following the execution and delivery of this
Agreement or on such other day as the parties may mutually agree to in writing
to the Underwriters copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendments or supplements
thereto after the effective date of the Registration Statement) in such
quantities and at such locations as the Underwriters may reasonably request for
the purposes contemplated by the Securities Act Regulations, which Prospectus
and any amendments or supplements thereto furnished to the Underwriters will be
identical to the version created to be transmitted to the Commission for filing
via ▇▇▇▇▇, except to the extent permitted by Regulation S-T;
(d) to advise the Representative promptly, and (if requested by the
Representative) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(e) to advise the Representative promptly, and (if requested by the
Representative) to confirm such advice in writing, of (i) the receipt of any
comments from, or any request by, the Commission for amendments or supplements
to the Registration Statement or Prospectus or for additional information with
respect thereto, or (ii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes, and, if the Commission or any other
government agency or authority should issue any such order, to make every
reasonable effort to obtain the lifting or removal of such order as soon as
reasonably practicable; and to advise the Representative promptly of any
proposed amendment or supplement to the Registration Statement or Prospectus,
and to file no such amendment or supplement to which the Representative, upon
the advise of counsel for the Underwriters, shall reasonably object in writing;
(f) to advise the Representative promptly of the happening of any event
known to the Company during the time a Prospectus relating to the Shares is
required to be delivered under the Securities Act Regulations which, in the
judgment of the Company, would require the making of any change in the
Prospectus then being used so that the Prospectus would not include 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
(g) if it is necessary, during the time a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations, to
amend or supplement the Prospectus in order to comply with any applicable law or
so that, as so amended or
-19-
supplemented, the Prospectus will not, in the light of the circumstances under
which it is delivered, be materially misleading, the Company will promptly
prepare such proposed amendment or supplement and furnish copies thereof to the
Representative before filing any such amendment or supplement with the
Commission, and thereafter will promptly furnish at the Company's own expense to
the Underwriters and to dealers, copies in such quantities and at such locations
as the Representative may from time to time reasonably request of the Prospectus
as so amended or supplemented;
(h) to file as promptly as reasonably practicable with the Commission
any amendment to the Registration Statement or the Prospectus or any supplement
to the Prospectus that may be requested by the Commission or that, in the
judgment of the Company or of the Representative, advised by counsel for the
Underwriters, is required by the Securities Act;
(i) prior to filing with the Commission any amendment to the
Registration Statement, any supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish a copy thereof to the
Representative and counsel for the Underwriters and obtain the consent of the
Representative to the filing (which consent shall not be unreasonably withheld,
conditioned or delayed);
(j) to furnish promptly to the Representative, upon request, a signed
copy of the Registration Statement, as initially filed with the Commission, and
of all amendments or supplements thereto (including all exhibits filed
therewith) and such number of conformed copies of the foregoing as the
Representative may reasonably request;
(k) to apply the net proceeds of the sale of the Shares sold by the
Company in accordance with its statements under the caption "Use of Proceeds" in
the Prospectus;
(l) to make generally available to its security holders and to deliver
to the Representative as soon as reasonably practicable, but in any event not
later than the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement an earnings
statement complying with the provisions of Section 11(a) of the Securities Act
(in form, at the option of the Company, complying with the provisions of Rule
158 of the Securities Act Regulations), covering a period of 12 months beginning
after the effective date of the Registration Statement;
(m) to use its reasonable best efforts to maintain the quotation of the
Shares on the Nasdaq National Market;
(n) to maintain, at its expense, a registrar and transfer agent for the
Shares;
(o) to refrain during a period of 180 days from the date of the
Prospectus, without the prior written consent of the Representative, from,
directly or indirectly, (i) except as disclosed in the Prospectus with respect
to the Registration Rights Agreement, dated November 4, 2002, between the
Company and the Representative (the
-20-
"Registration Rights Agreement"), offering, pledging, selling, contracting to
sell, selling any option or contract to purchase, purchasing any option or
contract to sell, granting any option for the sale of, or otherwise disposing of
or transferring (or entering into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any time
in the future of), any share of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock, or filing any registration
statement under the Securities Act with respect to any of the foregoing, or (ii)
entering into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) any Shares to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus, (D) any shares of Common Stock issued pursuant to any non employee
director stock plan or dividend reinvestment plan, or (E) any shares of Common
Stock issued as consideration in connection with any acquisition of all or
substantially all of the stock or assets of any other entity (provided that, if
the Company registers the resale of any such shares under the Securities Act by
the recipients thereof, it shall not request effectiveness of such resale
registration for a date prior to the expiration of such 180-day period; and
provided further, that each beneficial owner of any shares issued in connection
with this clause (E) who will own 5% or more of the outstanding Common Stock of
the Company (as determined in accordance with Rule 13d-3 of the Commission)
following such issuance enters into a lockup agreement in substantially the form
attached hereto as Exhibit B with respect to such Common Stock for a period
covering the remainder of such 180-day period);
(p) not to, and to use its reasonable best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares or (iii) pay or agree to pay
to any person (other than the Underwriters) any compensation for soliciting any
order to purchase any other securities of the Company;
(q) to use its reasonable best efforts to cause each executive officer
and director of the Company and each holder of any portion of the option to
purchase 570,000 shares of Common Stock originally granted to ▇▇▇▇▇▇▇ & Co.,
Inc. pursuant to the Consulting Agreement with ▇▇▇▇▇▇▇ & Co. Inc. dated as of
November 4, 2002 (the
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"▇▇▇▇▇▇▇ Option") to furnish to the Representative, prior to the Closing Time, a
letter or letters, substantially in the form of Exhibit B hereto;
(r) not to release any parties to the Franklin Bank Corp. Class B
Stockholders Agreement dated as of August 21, 2002 from the provisions
prohibiting transfers of Common Stock contained in Section 8.1 thereof without
the prior written consent of the Representative, except that the forgoing shall
not apply to any transfer made by any such party in accordance with the
provisions of the third paragraph of Exhibit B hereto;
(s) that the Company will comply with the applicable provisions of the
undertakings in the Registration Statement; and
(t) that the Company will comply in all material respects with all
applicable securities and other laws, rules and regulations, including without
limitation, the rules and regulations of the NASD, in each jurisdiction in which
the Directed Shares are offered in connection with the Directed Share Program
and will pay any stamp duties or similar taxes or duties, if any, incurred by
the Underwriters in connection therewith.
Each Selling Stockholder hereby agrees with each Underwriter:
(a) to deliver to the Representative prior to the Closing Time a
properly completed and executed United States Treasury Department Form W-8 (if
the Selling Stockholder is a non-United States person, within the meaning of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code") or Form W-9 (if the Selling
Stockholder is a United States person, within the meaning of the Code);
(b) to furnish to the Representative, prior to the Closing Time, a
letter or letters, substantially in the form of Exhibit B hereto;
(c) if, at any time prior to the date on which the distribution of the
Shares as contemplated herein and in the Prospectus has been completed, as
determined by the Representative, such Selling Stockholder has knowledge of the
occurrence of any event as a result of which the Prospectus or the Registration
Statement, in each case as then amended or supplemented, would include an 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, such Selling Stockholder will promptly notify the
Company and the Representative;
(d) to deliver to the Company or the Underwriters such documentation as
the Company or the Underwriters or any of their respective counsel may
reasonably request in order to effectuate any of the provisions of this
Agreement; and
(e) to pay when required by law all stock transfer or other taxes which
are required to be paid in connection with the sale and transfer of the Initial
Shares to be sold by such Selling Stockholder to the Underwriters hereunder.
-22-
(f) to perform the obligations of such Selling Stockholder under the
Agreement and Power of Attorney to which it is party.
5. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares sold by the Company to
the Underwriters, including any stock or other transfer taxes or duties payable
upon such sale, (iii) the printing of this Agreement and any dealer agreements
and furnishing of copies of each to the Underwriters and to dealers (including
costs of mailing and shipment), (iv) the qualification of the Shares for
offering and sale under state laws that the Company and the Representative have
mutually agreed are appropriate and the determination of their eligibility for
investment under state law as aforesaid (including the reasonable fees and
disbursements of counsel for the Underwriters relating thereto) and the printing
and furnishing of copies of any blue sky surveys or legal investment surveys to
the Underwriters and to dealers, (v) filing fees of the NASD for review of the
public offering of the Shares (including the reasonable fees and other
disbursements of counsel for the Underwriters relating thereto), (vi) the fees
and expenses of any transfer agent or registrar for the Shares and miscellaneous
expenses referred to in the Registration Statement, (vii) the fees and expenses
incurred in connection with the admission of the Shares for trading on the
Nasdaq National Market, (viii) making road show presentations with respect to
the offering of the Shares, and (ix) the performance of the Company's other
obligations hereunder. Upon the request of the Representative, the Company will
provide funds in advance for NASD filing fees.
(b) The Company agrees to reimburse the Representative for: (i) its
reasonable and documented out-of-pocket expenses relating to the private
aircraft charter that occurred in connection with the roadshow for the offering
of the Shares; and (ii) the portion of its other reasonable and documented
out-of-pocket expenses in connection with the performance of its activities
under this Agreement equal to the product of the full amount of such fees and
expenses multiplied by the percentage obtained by dividing (A) $72.5 million by
(B) the Net Proceeds (as defined below). Such reasonable and documented
out-of-pocket expenses shall include, but not be limited to, costs such as
printing, facsimile, courier service, accommodations and travel, and the fees
and expenses of the Underwriters' outside legal counsel, but excluding the fees
and expenses of any other advisors, accountants, appraisers, etc. (other than
the fees and expenses of counsel with respect to state securities or blue sky
laws and review of the public offering of the Shares by the NASD, all of which
shall be reimbursed by the Company pursuant and subject to the provisions of
subsection (a) above). For purposes of this Section 5(b), "Net Proceeds" means
the aggregate gross proceeds from the sale of the Shares as contemplated by the
Registration Statement
-23-
(including the gross proceeds from the sale of any Option Shares), less any
expenses incurred by the Company related to such sale other than expenses for
which the Representative is to be reimbursed by the Company pursuant to this
Section 5(b).
(c) The Company agrees to pay (directly or by reimbursement) all fees
and expenses incident to the performance of the obligations of the Selling
Stockholders under this Agreement as set forth in the Registration Rights
Agreement.
(d) If this Agreement shall be terminated by the Underwriters, or any
of them, because of a breach of this Agreement by the Company or the Selling
Stockholders or their respective failure to fulfill any of the conditions set
forth in Section 6 of this Agreement, the Company will reimburse the
Underwriters (or such Underwriters as have so terminated this Agreement with
respect to themselves), severally, for all out-of-pocket expenses described in
subsection (b), plus the reasonable fees and expenses of such Underwriters'
outside legal counsel and any other advisors, accountants, appraisers, etc.
reasonably incurred by such Underwriters in connection with this Agreement or
the transactions contemplated herein; provided, however, that the Company shall
not be responsible under this Section 5 or any other provision of this Agreement
for the payment of any costs or expenses incurred by any Underwriter in
connection herewith if the transactions contemplated hereby are not consummated
(except as a result of a breach of this Agreement by the Company or the Selling
Stockholders or their respective failure to fulfill any of the conditions set
forth in Section 6) or this Agreement is terminated as a result of a breach of
this Agreement by such Underwriter or the gross negligence, intentional
misconduct or violation of applicable law or regulation by such Underwriter.
6. Conditions of the Underwriters' Obligations:
(a) The obligations of the Underwriters hereunder to purchase Shares at
the Closing Time or on the relevant Date of Delivery (if any), are subject to
the accuracy (subject to any materiality, knowledge and other qualifications set
forth therein) of the representations and warranties on the part of the Company
and the Selling Stockholders hereunder on the date hereof, at the Closing Time
and on such Date of Delivery, as applicable, and the performance in all material
respects by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the satisfaction of the following further
conditions at the Closing Time or on such Date of Delivery, as applicable.
(b) The Company shall furnish to the Underwriters at the Closing Time
and on the relevant Date of Delivery an opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
counsel for the Company, addressed to the Underwriters and dated the Closing
Time and such Date of Delivery and in form and substance reasonably satisfactory
to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, stating that:
(i) As of September 30, 2003 the Company had 8,270,000
shares of Class A common stock, $0.01 par value per share, and
2,353,320
-24-
shares of Class B common stock, $0.01 par value per share,
issued and outstanding, each of which shares were duly
authorized, validly issued, fully paid and non-assessable. The
Company is the sole registered owner of (A) all of the issued
and outstanding shares of capital stock of BK2 Holdings, Inc.,
a Delaware corporation ("BK2 Holdings"), and (B) all of the
issued and outstanding beneficial interests in Franklin
Capital Trust I, a Delaware statutory business trust
("Franklin Trust"). BK2 Holdings is the sole registered owner
of all of the issued and outstanding shares of capital stock
of Franklin Bank, S. S. B., a Texas state savings bank
("Franklin" and, together with BK2 Holdings and Franklin
Trust, the "Listed Subsidiaries"). The minute books of the
Listed Subsidiaries provided to us for examination do not
reflect the authorization of (X) securities or obligations of
any of the Listed Subsidiaries convertible into or
exchangeable for any capital stock of the Listed Subsidiaries,
(Y) warrants, rights or options to subscribe for or purchase
from any of the Listed Subsidiaries any such capital stock or
any such convertible or exchangeable securities or obligations
or (Z) obligations of any of the Listed Subsidiaries to issue
any such shares of capital stock, any such convertible or
exchangeable securities or obligations or any such warrants,
rights or options.
(ii) Each of the Listed Subsidiaries has been duly
incorporated or organized and is validly existing as a
corporation, business trust or state savings bank, as
applicable, in good standing under the laws of its respective
jurisdiction of incorporation or organization with full
corporate (or other applicable) power and authority to own its
respective properties and to conduct its respective businesses
as described in the Registration Statement and Prospectus.
(iii) Each of the Listed Subsidiaries are duly
qualified and in good standing in each jurisdiction in which
they own or lease real property or maintain an office and in
which such qualification is necessary, except where the
failure to be so qualified and in good standing would not
reasonably be expected to have a Material Adverse Effect. To
the knowledge of such counsel, the Company does not own,
directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest
in any partnership, joint venture or other association other
than the Listed Subsidiaries and capital stock or equity
interests held by Franklin as investments in the ordinary
course of its banking business.
(iv) Neither the Company nor any of the Listed
Subsidiaries is in breach of, or in default under (nor has any
event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under), any term or
provision of (A) its certificate or articles of
-25-
incorporation, bylaws or declaration of trust or (B) to the
knowledge of such counsel, any license, indenture, mortgage,
deed of trust, loan or credit agreement or any other agreement
or instrument to which the Company or such Listed Subsidiary
is a party or by which any of them or their respective
properties may be bound which has been filed as an exhibit to
the Registration Statement (the "Material Agreements"), except
(in the case of (B)) for such breaches or defaults as would
not reasonably be expected to have a Material Adverse Effect.
(v) The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement do not and
will not (A) conflict with, or result in any breach of, or
constitute a default under (nor constitute any event which
with notice, lapse of time, or both would constitute a breach
of or default under), (i) any provisions of the certificate or
articles of incorporation, by-laws or declaration of trust of
any Listed Subsidiary, (ii) to the knowledge of such counsel,
any provision of any Material Agreement to which the Company
or any Listed Subsidiary is a party or by which any of them or
their respective properties or assets may be bound, (iii) any
law or regulation binding the Company or any Listed Subsidiary
or any of their respective properties or assets, or (iv) to
such counsel's knowledge any decree, judgment or order to
which the Company or any Listed Subsidiary is subject, except
(in the case of clauses (ii), (iii) and (iv)) for such
conflicts, breaches or defaults as would not reasonably be
expected to have a Material Adverse Effect; or (B) except as
contemplated by this Agreement, result in the creation or
imposition of any material lien, charge, claim or encumbrance
upon any property or assets of the Listed Subsidiaries.
(vi) Each of the Company and each Listed Subsidiary
has all necessary material licenses, authorizations, consents
and approvals and has made all necessary material filings
required under any federal, state or municipal law, regulation
or rule, and has obtained all necessary material
authorizations, consents and approvals from other persons,
required to conduct their respective businesses as described
in the Prospectus. To such counsel's knowledge, neither the
Company nor any Listed Subsidiary is in violation of, in
default under, or has received any notice regarding a possible
violation, default or revocation of any such material license,
authorization, consent or approval or any material federal,
state or municipal law, regulation or decree, order or
judgment applicable to the Company or any of the Listed
Subsidiaries, except for any notice, violation, default or
revocation as would not reasonably be expected to have a
Material Adverse Effect.
-26-
(vii) The issuance and sale of the Shares by the
Company is not subject to preemptive or other similar rights
arising by operation of law, under the certificate of
incorporation or by-laws of the Company, or under any
agreement known to such counsel to which the Company is a
party.
(viii) The Jacksonville HC Application complies as to
form in all material respects with the applicable provisions
of HOLA and the regulations promulgated thereunder. The OTS
has approved the Jacksonville HC Application.
(ix) The Jacksonville Bank Application complies as to
form in all material respects with the applicable provisions
of the Texas Savings Bank Act, the bank merger provisions of
the Federal Deposit Insurance Act, as amended, and the
regulations promulgated thereunder. The FDIC and the TSLD have
approved the Jacksonville Bank Application.
(x) To the knowledge of such counsel, except as
provided in the Registration Rights Agreement there is no
person having the right to compel the Company to register
under the Securities Act the resale of any equity or debt
security of the Company.
(xi) There are no actions, suits, investigations or
proceedings pending or, to such counsel's knowledge,
threatened against the Company or any of the Listed
Subsidiaries before or by any federal, state or municipal
court, governmental or regulatory commission, board, body,
authority or agency that could reasonably be expected to have
a Material Adverse Effect
In rendering such opinions, such counsel may (i) state that such
opinions are limited to the laws of the State of Texas, the General Corporation
Law and the Statutory Trust Act of the State of Delaware and applicable federal
law, (ii) rely as to matters of fact upon certificates of public officials and
officers (after discussion of the contents thereof with such officers) of the
Company and the Listed Subsidiaries, (iii) whenever such opinion is based on
circumstances known to, or to the knowledge of, such counsel, rely exclusively
on certificates of officers (after discussion of the contents thereof with such
officers) of the Company and the Listed Subsidiaries as to the existence or
nonexistence of the circumstances upon which such opinion is predicated;
provided, that in the case of (ii) and (iii), such counsel shall also state that
it has no reason to believe that any such certificate is untrue or inaccurate in
any material respect, (iv) for purposes of the opinions in paragraphs 6(b)(ii)
and 6(b)(vi), assume the description of the properties of and business conducted
by the Company and the Listed Subsidiaries contained in the Registration
Statement and the Prospectus is complete and accurate in all material respects,
(iv) for purposes of the opinions expressed in paragraph 6(b)(xi), such counsel
need express no opinion with respect to the possible effect of actions, suits,
investigations and proceedings as to which the Company or a Listed Subsidiary is
not a
-27-
named party and (v) state that the opinion is for the benefit of the
Underwriters and may not be circulated to or relied upon by any other person.
(c) The Company shall furnish to the Underwriters at the Closing Time
and on the relevant Date of Delivery an opinion of Wachtell, Lipton, ▇▇▇▇▇ &
▇▇▇▇, special counsel for the Company, addressed to the Underwriters and dated
the Closing Time and such Date of Delivery and in form and substance reasonably
satisfactory to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters,
stating that:
(i) the shares of capital stock of the Company that
have become outstanding after September 30, 2003 and prior to
the date hereof have been duly and validly authorized and
issued and are fully paid and non-assessable;
(ii) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power and
authority to conduct its business as described in the
Registration Statement and Prospectus, to execute and deliver
this Agreement and to consummate the transactions described in
this Agreement;
(iii) the Company is duly qualified and in good
standing in each jurisdiction in which it owns or leases real
property or maintains an office and in which such
qualification is necessary, except where the failure to be so
qualified and in good standing would not reasonably be
expected to have a Material Adverse Effect; to the knowledge
of such counsel, except as disclosed in the Prospectus and as
set forth in the Amended and Restated Trust Agreement, dated
November 14, 2002, of Franklin Bank Capital Trust I, no
Subsidiary is prohibited or restricted in any material respect
from paying dividends to the Company, or from making any other
distribution with respect to such Subsidiary's capital stock
or from repaying to the Company or any other Subsidiary any
amounts which may from time to time become due under any loans
or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary's
property or assets to the Company or to any other Subsidiary,
except, with respect to the Franklin Bank, S.S.B., limitations
of general applicability to FDIC-insured institutions;
(iv) the Company is duly registered as a Savings and
Loan Holding Company under the Home Owners' Loan Act, as
amended, Franklin Bank, S.S.B. is a member in good standing of
the Federal Home Loan Bank of Dallas, and the deposits held by
Franklin Bank, S.S.B. are insured by the FDIC;
(v) the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company
of the
-28-
transactions contemplated by this Agreement do not and will
not (A) conflict with, or result in any breach of, or
constitute a default under (nor constitute any event which
with notice, lapse of time, or both would constitute a breach
of or default under), any provisions of the certificate of
incorporation or by-laws of the Company;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid
and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by
general principles of equity, and except that enforceability
of the indemnification and contribution provisions set forth
in Section 9 of this Agreement may be limited by the federal
or state securities laws of the United States or public policy
underlying such laws;
(vii) no approval, authorization, consent or order of
or filing with any federal or state governmental or regulatory
commission, board, body, authority or agency is required in
connection with the execution, delivery and performance of
this Agreement, the consummation of the transactions
contemplated herein, and the sale and delivery of the Shares
by the Company as contemplated herein, other than such as (A)
have been obtained or made (1) under the Securities Act and
the Securities Act Regulations and the Exchange Act and
Exchange Act Regulations, and (2) in connection with the
approval of the underwriting terms and arrangements by the
NASD and the quotation of the Shares on the Nasdaq National
Market, and (B) shall have been obtained or made prior to the
Date of Delivery, and except that such counsel need express no
opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Underwriters;
(viii) the Company is not subject to registration as
an investment company under the Investment Company Act of
1940, as amended, and the transactions contemplated by this
Agreement will not cause the Company to become an investment
company subject to registration under such Act;
(ix) the Shares to be sold by the Company have been
duly authorized and when such Shares shall have been issued
and duly delivered against payment therefor as contemplated by
this Agreement, they will be validly issued, fully paid and
non-assessable, free and clear of any pledge, lien,
encumbrance, security interest, or other claim (other than any
such pledge, lien, encumbrance, security interest or other
claim created
-29-
by any of the Underwriters or against any of the Underwriters
by any third party);
(x) when issued and delivered as contemplated by this
Agreement, the Shares will conform in all material respects to
the description thereof contained in the Prospectus under the
caption "Description of Capital Stock;"
(xi) the form of certificate used to evidence the
Common Stock complies in all material respects with all
applicable statutory requirements and any applicable
requirements of the certificate of incorporation and by-laws
of the Company;
(xii) the Registration Statement has become effective
under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued
and, to such counsel's knowledge, no proceedings with respect
thereto have been commenced or threatened;
(xiii) as of the effective date of the Registration
Statement, the Registration Statement and the Prospectus
(except as to the financial statements and notes thereto and
other financial and statistical data contained therein or
omitted therefrom, and any information provided by the
Underwriters pursuant to Sections 3(l) and 9 hereof, as to
which such counsel need express no opinion) complied as to
form in all material respects with the requirements of the
Securities Act and the Securities Act Regulations;
(xiv) the statements under the captions "Regulation
and Supervision," "Description of Capital Stock," "Management
- Board Structure and Compensation - Composition of our Board
of Directors" and "- Committees of the Board," "Management -
Employee Benefit Plans - Franklin Bank Corp, 2004 Long Term
Incentive Plan," and "Certain Relationships and Related Party
Transactions" (except any disclosure therein (a) relating to
the transfer of the ▇▇▇▇▇▇▇ Option and (b) under the
subheading "Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.") in the
Registration Statement and the Prospectus, insofar as such
statements purport to summarize the legal matters referred to
therein, constitute fair summaries of such legal matters;
(xv) the Registration Statement on Form 8-A relating
to the Company's Common Stock, when filed, complied as to form
in all material respects with the requirements of the Exchange
Act; the Registration Statement on Form 8-A has become
effective under the Exchange Act; and the Initial Shares and
the Option Shares have been validly registered under the
Securities Act, the Exchange Act and the Securities Act
Regulations and the Exchange Act Regulations; and
-30-
(xvi) to the knowledge of such counsel, there are no
contracts or documents of a character which are required to be
filed as exhibits to the Registration Statement or required to
be described or summarized in the Prospectus which have not
been so filed, summarized or described, and each such summary
or description constitutes, in all material respects, a fair
and accurate summary or description thereof.
In addition, such counsel shall state that they have participated in
the preparation of the Registration Statement and Prospectus and in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants of the Company, representatives of the
Representative and counsel for the Underwriters, at which the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although such counsel has not verified, is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus (except as and to the
extent stated in subparagraph (xviii) above), no facts have come to such
counsel's attention that lead such counsel to believe that (a) the Registration
Statement, as of its effective date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading, and (b) the
Prospectus, as of its issue date and as of the date of such counsel's opinion,
contained an untrue statement of a material fact or omitted 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 (it
being understood that, in each of case (a) and (b), such counsel need express no
view with respect to the financial statements and notes thereto and other
financial and statistical data included in the Registration Statement or
Prospectus or omitted therefrom, and any information provided by the
Underwriters pursuant to Sections 3(l) and 9). In rendering such opinion, such
counsel may (i) state that such opinion is limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware and applicable
federal law, (ii) rely as to matters of fact, to the extent they deem proper,
upon certificates of responsible officers of the Company (after discussion of
the contents thereof with such officers) and public officials, (iii) whenever
such opinion is based on circumstances known to, or to the knowledge of, such
counsel, rely exclusively on certificates of responsible officers of the Company
(after discussion of the contents thereof with such officers) as to the
existence or nonexistence of the circumstances upon which such opinion is
predicated; provided, that in the case of (ii) and (iii), such counsel shall
also state that it has no reason to believe that any such certificate is untrue
or inaccurate in any material respect, and (iv) state that the opinion is for
the benefit of the Underwriters and may not be circulated to or relied upon by
any other person.
(d) Each Selling Stockholder shall furnish to the Underwriters at the
Closing Time and on the relevant Date of Delivery an opinion of ▇▇▇▇▇▇ & Bird
LLP, counsel for the Selling Stockholders, addressed to the Underwriters and
dated the Closing Time and in form and substance reasonably satisfactory to
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, stating that:
-31-
(i) such Selling Stockholder, if a corporation,
partnership, trust or similar entity is in good standing under
the laws of its respective jurisdiction of organization and
has the requisite power and authority to execute and deliver
this Agreement and the Agreement and Power of Attorney, and to
consummate the transactions described in this Agreement and
the Agreement and Power of Attorney;
(ii) the execution, delivery and performance of this
Agreement and the Agreement and Power of Attorney by such
Selling Stockholder, and the consummation by such Selling
Stockholder of the transactions contemplated by this Agreement
and by the Agreement and Power of Attorney, do not and will
not conflict with, or result in any breach of, or constitute a
default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of or default
under), (i) any provisions of the articles/certificate of
incorporation, charter, partnership agreement, trust document,
by-laws or other similar governing documents, as applicable,
of such Selling Stockholder or (ii) any decree, judgment or
order known to such counsel and applicable to such Selling
Stockholder;
(iii) this Agreement and the Agreement and Power of
Attorney have been duly authorized, executed and delivered by
such Selling Stockholder and each is a legal, valid and
binding agreement of such Selling Stockholder enforceable in
accordance with its terms; and
(iv) upon the sale and delivery of the Initial Shares
by each Selling Stockholder against receipt of payment
therefor, in each case in accordance with the terms of this
Agreement and the Agreement and Power of Attorney, and
assuming the Underwriters do not have "notice of an adverse
claim" (within the meaning of Article 8 of the Uniform
Commercial Code) to such Initial Shares, the Underwriters will
acquire valid title to such Shares, free and clear of any
pledge, lien, encumbrance, security interest, or other claim
(other than any such pledge, lien, encumbrance, security
interest or other claim created by any of the Underwriters or
against any of the Underwriters by any third party).
In rendering such opinions, such counsel may rely as to matters of fact
exclusively on affidavits or certificates of the Selling Stockholders, or
responsible officers thereof. In addition, such counsel may state that (A) its
opinion in paragraph (ii) above is subject to the effect of any applicable
bankruptcy (including, without limitation, fraudulent conveyance and
preference), insolvency, reorganization, rehabilitation, moratorium or similar
laws and decisions relating to or affecting the enforcement of creditors' rights
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
-32-
specific performance or injunctive relief and (B) such principles are of general
application, and in applying such principles a court, among other things, might
decline to order the performance of covenants. Further, such counsel need
express no opinion with respect to the enforceability of provisions herein with
respect to waiver, delay 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 nonwaivable benefits
provided by operation of law. In addition, such counsel may state that the
enforceability of any exculpation, indemnification, contribution or
reimbursement provisions contained herein may be limited by applicable law or
public policy.
(e) The Representative shall have received from each of Deloitte &
Touche LLP, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Associates, LLP and ▇▇▇▇▇ & ▇▇▇▇▇▇, P. C., a
"comfort" letter, dated the date hereof, and bring-down letters (reaffirming the
statements made in the comfort letter) dated the Closing Time and the relevant
Date of Delivery, as applicable, addressed to the Representative, in form and
substance reasonably satisfactory to the Representative, relating to the
financial statements, including any pro forma financial statements, of the
Company and the Subsidiaries, and such other matters customarily covered by such
letters issued in connection with registered public offerings.
(f) The Representative shall have received at the Closing Time and on
the relevant Date of Delivery the favorable opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, dated the Closing Time or such Date of Delivery, addressed to the
Representative and in form and substance satisfactory to the Representative.
(g) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Representative, advised by counsel
for the Underwriters, shall have reasonably objected in writing prior to such
filing.
(h) At the Closing Time and the relevant Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued, and no proceedings for such purpose shall have been initiated or
(to the knowledge of the Company) threatened, by the Commission, and no
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or threatening of any proceedings for any of
such purposes, has occurred; and (ii) all requests for additional information on
the part of the Commission shall have been complied with to the reasonable
satisfaction of the Representative, advised by counsel for the Underwriters, and
(iii) the Registration Statement and the Prospectus shall 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.
(i) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been made in
material compliance with the applicable time period prescribed for such filing
by such Rule.
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(j) Between the time of execution of this Agreement and the Closing
Time or (with respect to any Option Shares) the relevant Date of Delivery there
shall not have been any Material Adverse Effect.
(k) The Shares shall have been approved for inclusion in the Nasdaq
National Market, subject only to official notice of issuance.
(l) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(m) The Representative shall have received lock-up agreements in the
form of Exhibit B attached hereto (1) from each of the persons listed on Exhibit
C-1 hereto and (2) from persons listed on Exhibit C-2 hereto who collectively
hold not less than 80% of the options under the ▇▇▇▇▇▇▇ Option, and such
agreements shall be in full force and effect.
(n) The Company will, at the Closing Time and on the relevant Date of
Delivery, deliver to the Underwriters a certificate of its President and Chief
Executive Officer and its Chief Financial Officer or any Vice President, to the
effect that:
(i) the representations and warranties of the Company
in this Agreement are true and correct (subject to any
materiality, knowledge and other qualifications set forth
therein), as if made on and as of the date thereof, and the
Company has complied in all material respects with all the
agreements and has satisfied all the conditions on its part to
be performed or satisfied at or prior to the date thereof;
(ii) no stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment
thereto has been issued and no proceedings for that purpose
have been instituted or are pending or, to their knowledge,
threatened under the Securities Act;
(iii) when the Registration Statement became
effective and at all times subsequent thereto up to the date
thereof, the Registration Statement and the Prospectus, and
any amendments or supplements thereto contained all material
information required to be included therein by the Securities
Act or the Exchange Act and the applicable rules and
regulations of the Commission thereunder, as the case may be,
and in all material respects conformed to the requirements of
the Securities Act and the applicable rules and regulations of
the Commission thereunder; the Registration Statement and the
Prospectus, and any amendments or supplements thereto, did not
at such times and do not as of the date thereof include any
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 case of the Prospectus, in
the light of the circumstances under which they were made),
not misleading; and, since the effective date of the
Registration
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Statement, there has occurred no event required to be set
forth in an amendment or supplemented Prospectus which has not
been so set forth; and
(iv) subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, there has not been (a) any Material Adverse
Effect, (b) any transaction that is material to the Company
and the Subsidiaries considered as one enterprise, except
transactions entered into in the ordinary course of business,
(c) any obligation, direct or contingent, that is material to
the Company and the Subsidiaries considered as one enterprise,
incurred by the Company or the Subsidiaries, except
obligations incurred in the ordinary course of business, (d)
any change in the capital stock or outstanding long-term
indebtedness (other than any borrowings from the Federal Home
Loan Bank of Dallas) of the Company or any Subsidiary that is
material to the Company and the Subsidiaries considered as one
enterprise, (e) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or
any Subsidiary (except any distribution paid or made on any
Trust securities), or (f) any loss or damage (whether or not
insured) to the property of the Company or any Subsidiary
which would reasonably be expected to result in a Material
Adverse Effect.
(o) The Committee will, at the Closing Time, deliver to the
Underwriters on behalf of each Selling Stockholder a certificate, to the effect
that:
(i) the representations and warranties of such
Selling Stockholder set forth in this Agreement and in the
Agreement and Power of Attorney are true and correct (subject
to any materiality, knowledge and other qualifications set
forth therein) as of such date; and
(ii) such Selling Stockholder has complied in all
material respects with all the agreements and has satisfied
all the conditions on its part to be performed or satisfied
hereunder and under the Agreement and Power of Attorney at or
prior to the date thereof.
(p) The Company and the Selling Stockholders, as applicable, shall have
furnished to the Underwriters such other documents and certificates as to the
accuracy and completeness of any statement in the Registration Statement and the
Prospectus, the representations, warranties and statements of the Company
contained herein and in the Agreement and Power of Attorney, and the performance
by the Company and the Selling Stockholders of their respective covenants
contained herein and therein, and the fulfillment of any conditions contained
herein or therein, as of the Closing Time or the relevant Date of Delivery, as
the Underwriters may reasonably request.
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7. Termination:
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representative, at any time
prior to the Closing Time or, with respect to any Option Shares, the relevant
Date of Delivery, (i) if any of the conditions specified in Section 6 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, or
(ii) if there has been since the respective dates as of which information is
given in the Registration Statement, any Material Adverse Effect, or (iii) if,
after the date hereof, there has occurred any outbreak or escalation of
hostilities or other national or international calamity or crisis or adverse
change in economic, political or other conditions the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
judgment of the Representative, impracticable to market the Shares or enforce
contracts for the sale of the Shares, or (iv) if trading in any securities of
the Company has been suspended by the Commission or by the Nasdaq National
Market, or if trading generally on the New York Stock Exchange or on the Nasdaq
National Market has been suspended (including an automatic halt in trading
pursuant to market-decline triggers, other than those in which solely program
trading is temporarily halted), or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have been fixed, or maximum
ranges for prices for securities have been required, by such exchange or
quotation system or by order of the Commission or any other governmental
authority, or (v) if a banking moratorium (or any action having the same effect
as a banking moratorium) has been declared by either federal or New York
authorities which, in the reasonable opinion of the Representative, has a
material adverse effect on the securities markets in the United States.
If the Representative elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company or the
Selling Stockholders shall be unable to comply in all material respects with any
of the terms of this Agreement, the Company shall not be under any obligation or
liability under this Agreement (except to the extent provided in Sections 5 and
9 hereof) and the Underwriters and the Selling Stockholders shall be under no
obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on the relevant
Date of Delivery on its obligation to take up and pay for the Initial Shares or
the Option Share, as applicable, to be purchased by it under this Agreement on
such date, the Representative shall have the right, within 36 hours after such
default, to make arrangements for one or
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more of the non-defaulting Underwriters, or any other underwriters reasonably
satisfactory to the Company, to purchase on the terms contained herein all, but
not less than all, of the Shares which such Underwriter shall have agreed but
failed to take up and pay for (the "Defaulted Shares"). Absent the completion of
such arrangements within such 36-hour period, (i) if the total number of
Defaulted Shares does not exceed 10% of the total number of Shares to be
purchased on such date, each non-defaulting Underwriter shall take up and pay
for (in addition to the number of Shares which it is otherwise obligated to
purchase on such date pursuant to this Agreement) the portion of the total
number of Shares agreed to be purchased by the defaulting Underwriter on such
date in the proportion that its underwriting obligations hereunder bears to the
underwriting obligations of all non-defaulting Underwriters or in such amount as
may otherwise be agreed upon by the non-defaulting Underwriters; and (ii) if the
total number of Defaulted Shares exceeds 10% of such total, the Representative
may terminate this Agreement by notice to the Company, without liability of any
party to any other party except that the provisions of Sections 5 and 9 hereof
shall at all times be effective and shall survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Initial Shares or Option Shares, as applicable, hereunder on such
date unless all of the Initial Shares or Option Shares to be purchased on such
date are purchased on such date by the non-defaulting Underwriters (or by
substituted Underwriters selected by the Representative with the approval of the
Company) in accordance with the first paragraph of this Section 8.
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company, the Selling Stockholders
and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
respective directors, officers, employees and agents (and, with respect to
Sandler ▇'▇▇▇▇▇ & Partners, L.P., each limited partner) of each Underwriter,
from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or controlling person may incur under the Securities Act, the
Exchange Act or otherwise, but only insofar as such loss, expense, liability,
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damage or claim arises out of or is 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), the Prospectus (the term Prospectus for the
purpose of this Section 9 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Company), or
in any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the Shares
under the securities or blue sky laws thereof or filed with the Commission or
any securities association or securities exchange (each an "Application"), or
(B) any omission or alleged omission to state a material fact required to be
stated in any such Registration Statement, Prospectus or any Application, or
necessary to make the statements made therein (in the case of the Prospectus, in
the light of the circumstances under which they were made), not misleading;
except insofar as any such loss, expense, liability, damage or claim arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission of a material fact contained in and in conformity with
information furnished in writing by the Underwriters through the Representative
to the Company expressly for use in such Registration Statement, Prospectus or
Application; provided, however, that the indemnity agreement contained in this
subsection (a) with respect to the Preliminary Prospectus or the Prospectus
shall not inure to the benefit of any Underwriter (or any controlling person of
such Underwriter) with respect to any person asserting such loss, expense,
liability, damage or claim which is the subject thereof if the Prospectus or any
supplement thereto prepared with the consent of the Representative and furnished
to the Underwriters prior to the Closing Time or the relevant Date of Delivery
corrected any such untrue statement or alleged untrue statement or omission or
alleged omission of a material fact, and if such Underwriter failed to send or
give a copy of such Prospectus or supplement thereto to such person at or prior
to the time written confirmation of the sale of Shares was given to such person.
In addition, the Company agrees to indemnify and hold harmless each Underwriter,
each person, if any, who controls each Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
respective directors, officers, employees and agents (and, with respect to
Sandler ▇'▇▇▇▇▇ & Partners, L.P., each limited partner) of each Underwriter,
from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter, controlling person or other indemnified party may incur under the
Securities Act, the Exchange Act or otherwise, but only insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
Directed Share Participants in connection with the Directed Share Program, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; (ii) the failure of
any Directed Share Participant to pay for and accept
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delivery of Directed Shares which, by the end of the second business day
following the date of this Agreement, were subject to a properly confirmed
agreement to purchase; or (iii) the Directed Share Program (other than as a
result of willful misconduct or bad faith by the Underwriters). The indemnity
agreement set forth in this Section 9(a) shall be in addition to any liability
which the Company may otherwise have.
(b) Each Selling Stockholder, severally not jointly, agrees to
indemnify, defend and hold harmless each Underwriter, any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the respective directors, officers,
employees and agents (and, with respect to Sandler ▇'▇▇▇▇▇ & Partners, L.P.,
each limited partner) of each Underwriter, from and against any loss, expense,
liability, damage or claim (including the reasonable cost of investigation)
which, jointly or severally, any such Underwriter or controlling person may
incur under the Securities Act, the Exchange Act or otherwise, insofar as such
loss, expense, liability, damage or claim arises out of or is 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), Prospectus (the term
Prospectus for the purpose of this Section 9 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or in any Application or (B) any omission or
alleged omission to state a material fact required to be stated in any such
Registration Statement, Prospectus or any Application, or necessary to make the
statements made therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading; except insofar as any
such loss, expense, liability, damage or claim arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in and in conformity with information furnished in
writing by such Selling Stockholder to the Company expressly for use in such
Registration Statement, Prospectus or Application; provided, however, that the
indemnity agreement contained in this subsection (b) shall not require any such
Selling Stockholder to reimburse the Underwriters for any amount in excess of
the net sale price of the Initial Shares sold by such Selling Stockholder
pursuant to this Agreement. The indemnity agreement set forth in this Section
9(b) shall be in addition to any liabilities that the Selling Stockholders may
otherwise have.
If any action is brought against an Underwriter, controlling person or
other indemnified party in respect of which indemnity may be sought against the
Company or the Selling Stockholder pursuant to the foregoing paragraphs (a)
and/or (b), such indemnified party (or parties) shall promptly notify the
indemnifying party in writing of the institution of such action, and the
indemnifying party (or, if such action is brought against both the Company and
any Selling Stockholders, the Company) shall assume the defense of such action,
including the employment of counsel and payment of expenses; provided, however,
that any failure or delay to so notify the indemnifying party will not relieve
such party of any obligation hereunder, except to the extent that its ability to
defend is actually impaired by such failure or delay. The indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and
-39-
expenses of such counsel shall be at the expense of such party or parties unless
the employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action, or the
indemnifying party shall not have employed counsel to have charge of the defense
of such action within a reasonable time or the indemnified party or parties
shall have reasonably concluded (based on the written advice of outside counsel)
that there may be defenses available to it or them which (1) are different from
or additional to those available to the indemnifying party and (2) in the
opinion of such outside counsel present an actual or potential conflict for
counsel representing the indemnifying party and the indemnified party (in which
case the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such reasonable fees and expenses shall be borne by the indemnifying
party and paid as incurred (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate firm of
attorneys in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, the indemnifying party or parties
shall not be liable for any settlement of any such claim or action effected
without its prior written consent, unless such settlement (x) includes an
unconditional release of the indemnifying party or parties from any and all
liabilities arising from such claim or action and (y) does not include a
statement as to or an admission of fault, culpability or failure to act, of, by
or on behalf of such indemnifying party or parties.
(c) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, each Selling Stockholder and any person
who controls the Company or any Selling Stockholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each of
the Company's or Selling Stockholders' respective directors, officers, employees
or agents, from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company, the Selling Stockholder or any such person may incur under the
Securities Act, the Exchange Act or otherwise, but only insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (A) any
untrue statement or alleged untrue statement of a material fact contained in and
in conformity with information furnished in writing by such Underwriter through
the Representative to the Company expressly for use in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company), the Prospectus (the term Prospectus for the
purpose of this Section 9 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Company), or
any Application, or (B) any omission or alleged omission to state a material
fact in connection with such information required to be stated either in such
Registration Statement, Prospectus or any Application or necessary to make such
information (in the case of the Prospectus, in the light of the circumstances
under which it was made), not misleading. The last paragraph of text on the
front cover page immediately before the names of the Underwriters, the names of
the Underwriters on the front and back cover pages, the names and corresponding
Share
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amounts set forth in the table of Underwriters in the first paragraph of text on
page 124 under the caption "Underwriting," the fourth paragraph of text on page
124 under the caption "Underwriting," the third, fourth, fifth, sixth and
seventh paragraphs of text on page 125 under the caption "Underwriting," in each
case, in the Preliminary Prospectus and (the corresponding paragraphs of) the
Prospectus, constitute the only information furnished by or on behalf of any
Underwriter through the Representative to the Company for purposes of Section
3(l) and this Section 9. The indemnity agreement set forth in this Section 9(c)
shall be in addition to any liabilities that the Underwriters may otherwise
have.
If any action is brought against the Company, any Selling Stockholder,
controlling person or other indemnified party in respect of which indemnity may
be sought against any Underwriter pursuant to the foregoing paragraph (c), the
Company, the Selling Stockholder or such person or party shall promptly notify
the Representative in writing of the institution of such action and the
Representative, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses; provided,
however, that any failure or delay to so notify the Representative will not
relieve the Underwriters of any obligation hereunder, except to the extent that
their ability to defend is actually impaired by such failure or delay. The
Company, the Selling Stockholder or such person or party shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Company, the Selling Stockholder or such
person or party unless the employment of such counsel shall have been authorized
in writing by the Representative in connection with the defense of such action
or the Representative shall not have employed counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the written advice of outside
counsel) that there may be defenses available to it or them which (1) are
different from or additional to those available to the Underwriters and (2) in
the opinion of such outside counsel present an actual or potential conflict for
counsel representing the indemnifying party and the indemnified party (in which
case the Representative shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such reasonable fees and expenses shall be borne by the Underwriters and paid as
incurred (it being understood, however, that the Underwriters shall not be
liable for the expenses of more than one separate firm of attorneys in any one
action or series of related actions in the same jurisdiction (other than local
counsel in any such jurisdiction) representing the indemnified parties who are
parties to such action). Anything in this paragraph to the contrary
notwithstanding, no Underwriter shall be liable for any settlement of any such
claim or action effected without the prior written consent of the
Representative, unless such settlement (x) includes an unconditional release of
the Underwriters from any and all liabilities arising from such claim or action
and (y) does not include a statement as to or an admission of fault, culpability
or failure to act, of, by or on behalf of such Underwriters.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) and (c) of
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this Section 9 in respect of any losses, expenses, liabilities, damages or
claims referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities, damages or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Selling Stockholders
and the Underwriters from the offering of the Shares or (ii) if (but only if)
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, of
the Selling Stockholders and of the Underwriters in connection with the
statements or omissions which resulted in such losses, expenses, liabilities,
damages or claims, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Selling Stockholders and the
Underwriters shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company or the Selling Stockholders, as
applicable, bear to the underwriting discounts and commissions received by the
Underwriters. The relative fault of the Company, of the Selling Stockholders and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission relates to information supplied by the Company, by
the Selling Stockholders or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages and liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any claim or action.
(e) The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
9 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 in subsection
(d)(i) and, if applicable (ii), above. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in excess
of the underwriting discounts and commissions applicable to the Shares purchased
by such Underwriter and no Selling Stockholder shall be required to contribute
any amount in excess of the net sale price of the Shares sold by such Selling
Stockholder pursuant to this Agreement. 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' and the Selling Stockholders'
obligations to contribute pursuant to this Section 9 are several (in proportion
to their respective underwriting commitments, in the case of the Underwriters,
and, in proportion to the number of Initial Shares set forth opposite their
respective names in Schedule I hereto, in the case of the Selling Stockholders)
and not joint. For purposes of this subsection (e), each person who controls an
Underwriter or who is a director, officer, employee or agent (or, with respect
to Sandler ▇'▇▇▇▇▇ & Partners, L.P., a limited partner) of an
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Underwriter, and is entitled to indemnification under subsection (a) and/or (b)
of this Section 9, shall have the same rights to contribution as such
Underwriter, and each person who controls the Company or any Selling
Stockholder, or who is a director, officer, employee or agent of the Company or
any Selling Stockholder, and is entitled to indemnification under subsection (c)
of this Section 9, shall have the same rights to contribution as the Company or
such Selling Stockholder, as the case may be.
10. Survival:
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company and the Selling
Stockholders contained in Sections 3, 4 and 5 of this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter, or any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, or the
respective directors, officers, employees or agents (and, with respect to
Sandler ▇'▇▇▇▇▇ & Partners, L.P., each limited partner ) of each Underwriter, or
by or on behalf of the Company or the Selling Stockholders, or any person who
controls the Company or any Selling Stockholder within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, or the respective
directors, officers, employees or agents of the Company and the Selling
Stockholders. The Company, each Selling Stockholder and each Underwriter agree
promptly to notify the others of the commencement of any litigation or
proceeding against it (or any of its respective directors, officers, employees
or agents (or, with respect to Sandler ▇'▇▇▇▇▇ & Partners, L.P., any of its
limited partners)), in connection with the sale and delivery of the Shares, or
in connection with the Registration Statement or Prospectus.
11. Notices:
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Syndicate Department; or if to the Company or a Selling Stockholder, shall be
sufficient in all respects if delivered to (or, in the case of any Selling
Stockholder, care of) Franklin Bank Corp., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
12. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
-43-
13. Parties at Interest:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company, the Selling Stockholders and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
15. Entire Agreement:
This Agreement (including the exhibits and schedules hereto and
documents delivered pursuant hereto) is intended by the parties to and does
constitute the entire agreement between the Company, the Selling Stockholders
and the Underwriters, with respect to the transactions contemplated by this
Agreement. This Agreement supersedes and terminates any and all prior
understandings, written or oral, between the parties regarding such
transactions, including the engagement letter dated November 20, 2003 between
the Company and the Representative.
[Remainder of page intentionally left blank]
-44-
If the foregoing correctly sets forth the understanding among the
Company, the Selling Stockholders and the Underwriters, please so indicate in
the space provided below for the purpose, whereupon this Agreement shall
constitute a binding agreement among the Company, the Selling Stockholders and
the Underwriters.
Very truly yours,
FRANKLIN BANK CORP.
By:
---------------------------------------
Name:
Title:
SELLING STOCKHOLDERS Listed on
Schedule I attached hereto
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Attorney-in-Fact
(Pursuant to Custody Agreement and
Power of Attorney)
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By:
-------------------------------
Name:
Title:
For itself and as Representative of the other
Underwriters named on Schedule II hereto.
-45-
Schedule I
Number of Initial Number of Option
Name of Party Selling Shares Shares to be Sold Shares to be Sold
-----------------------------------------------------------------------------------------------
FRANKLIN BANK CORP
---------------
SELLING STOCKHOLDERS
FAME Associates
Financial Trust Company, Inc.
---------------
Total Selling Stockholders
--------------- ---------------
Total
=============== ===============
Schedule II
Number of Initial
Underwriter Shares to be Purchased
----------------------------------------------------------------------
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
Sandler ▇'▇▇▇▇▇ & Partners, ▇.▇.
▇▇▇▇▇▇▇▇ Inc.
-----------------
Total ....................................
=================
S-2
EXHIBIT A
[FORM OF CUSTODY AGREEMENT AND POWER OF ATTORNEY]
A-1
EXHIBIT B
FORM OF LOCK-UP LETTER
_____________, 2003
Friedman, Billings, ▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that Friedman, Billings, ▇▇▇▇▇▇ & Company,
Inc. (the "Representative") proposes to enter into an
Underwriting Agreement
(the "
Underwriting Agreement"), as representative of several underwriters (the
"Underwriters"), with
Franklin Bank Corp., a Delaware corporation (the
"Company"), providing for the public offering (the "Public Offering") by the
Underwriters of shares of common stock of the Company (the "Common Stock").
To induce the Underwriters to continue their efforts in connection with
the Public Offering, the undersigned hereby agrees that, without the prior
written consent of the Representative on behalf of the Underwriters, it will
not, during the period commencing on the date hereof and ending on the 180-day
anniversary of the date of the final prospectus relating to the Public Offering
(the "Prospectus"), (1) other than pursuant to the Registration Rights
Agreement, dated November 4, 2002, between the Company and the Representative,
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 to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for any shares of Common Stock (whether such shares or any such
securities are now owned by the undersigned or are hereafter acquired), or (2)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above it is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise.
The foregoing paragraph shall not apply to (A) any such shares of
Common Stock or other securities (i) transferred as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) transferred to any trust for the direct or
indirect benefit of the undersigned or his or her immediate family (which, for
these purposes, shall mean any relationship by blood, marriage or adoption, not
more remote than first cousin), provided that the trustee agrees
A-2
to be bound in writing by the restrictions set forth herein, and provided
further that any such transfer does not involve a disposition for value, (iii)
transferred to an affiliate or an equity holder (including but not limited to
any limited partner) of the undersigned, provided that such affiliate or equity
holder agrees to be bound in writing by the restrictions set forth herein, (iv)
transferred pursuant to and in accordance with written contractual arrangements
in existence on the date hereof, (v) transferred by the undersigned, but only if
and to the extent that such shares or securities have been acquired by the
undersigned (x) pursuant to the
Underwriting Agreement or (y) in the open market
after completion of the initial closing of the Public Offering, or (iv) if the
transfer of such shares or securities occurs by operation of law, such as rules
of intestate succession or statutes governing the effects of a merger, provided
that the transferee executes an agreement stating that the transferee is
receiving and holding the shares subject to the provisions of this Lock-Up
letter, (B) any transfers of any shares of Common Stock to the Underwriters
pursuant to the
Underwriting Agreement, and (C) any swap or other derivatives
transaction entered into for any of the foregoing purposes.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to the
Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Representative. The terms of this Lock-Up
letter shall expire in the event that the Public Offering is not consummated on
or before January 31, 2004.
Very truly yours,
-------------------------------
(Printed or Typed Name)
By:
----------------------------
Title:
-------------------------
A-3
EXHIBIT C-1
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. Master
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & CO., INC.
HYPERION BK2 L.P.
A-4
EXHIBIT C-2
Percentage of
Name of Holder ▇▇▇▇▇▇▇ Option
-------------- --------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 29%
▇▇▇▇▇ ▇. ▇▇▇▇ 19%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 19%
JRDJ Associates LLP 14%
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ Family Partnership L.P. 10%
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2%
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2%
▇▇▇▇▇▇▇ & Co., Inc. 3%
A-5
