E*TRADE FINANCIAL CORPORATION 27,500,000 Shares of Common Stock ($0.01 par value per share) UNDERWRITING AGREEMENT
Exhibit 1.1
EXECUTION VERSION
E*TRADE FINANCIAL CORPORATION
27,500,000 Shares of
Common Stock
($0.01 par value per share)
April 25, 2011
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Citadel Equity Fund Ltd., a stockholder (the “Selling Stockholder”) of E*TRADE Financial Corporation, a Delaware corporation (the “Company”), proposes to sell to Xxxxxx Xxxxxxx & Co. Incorporated (the “Underwriter”) 27,500,000 shares (the “Shares”) of the Company’s common stock, $0.01 par value per share (the “Common Stock”) subject to the terms and conditions described below (this “Agreement”).
The Company and the Selling Stockholder hereby confirm their agreement with the Underwriter concerning the purchase and sale of the Shares, as follows:
The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (No. 333-158636) for the registration of the Shares under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”); and such registration statement sets forth the material terms of the offering, sale and plan of distribution of the Shares and contains additional information concerning the Company and its business. As used herein, “Registration Statement” means such registration statement, as amended at the time of such registration statement’s effectiveness for purposes of Section 11 of the Securities Act, as such section applies to the Underwriter, including (1) all documents filed as a part thereof or incorporated, or deemed to be incorporated, by reference therein and (2) any information contained or incorporated by reference in a prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act, to the extent such information is deemed, pursuant to Rule 430B or Rule 430C under the Securities Act, to be part of the registration statement at the effective time. “Basic Prospectus” means the prospectus dated April 17, 2009, filed as part of the Registration Statement, including the documents incorporated by reference therein as of the date of such prospectus; “Preliminary Prospectus” means each prospectus included in such registration statement (and any amendments thereto) before effectiveness, any prospectus filed with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement at the time of its effectiveness that omits Rule 430 Information; “Prospectus” means the prospectus (including the Basic Prospectus) in the form first used (or made available upon request of purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales of the
Shares; and “Permitted Free Writing Prospectuses” has the meaning set forth in Section 3(b). Any reference herein to the Registration Statement, any Preliminary Prospectus, the Basic Prospectus or the Prospectus shall, unless otherwise stated, be deemed to refer to and include the documents, if any, incorporated, or deemed to be incorporated, by reference therein (the “Incorporated Documents”), including, unless the context otherwise requires, the documents, if any, filed as exhibits to such Incorporated Documents. Any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus shall, unless stated otherwise, be deemed to refer to and include the filing of any document under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Exchange Act”) on or after the initial effective date of the Registration Statement or the date of the Basic Prospectus, the Prospectus or such Permitted Free Writing Prospectus, as the case may be, and deemed to be incorporated therein by reference. At or prior to the Time of Sale (as defined below), the Company had prepared the following information (collectively with the information set forth on Annex A (the “Pricing Date Information”), the “Pricing Disclosure Package”): a Preliminary Prospectus dated April 25, 2011 (the “Pricing Prospectus”) and each “free-writing prospectus” (as defined pursuant to Rule 405 under the Securities Act) listed on Annex B hereto (the “Pricing FWPs”).
“Time of Sale” means 5:00 P.M., New York City time, on April 25, 2011.
1. Purchase of the Shares by the Underwriter.
(a) The Selling Stockholder agrees to sell the Shares to the Underwriter as provided in this Agreement, and the Underwriter, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees to purchase the Shares from the Selling Stockholder at a purchase price per share of $16.38 (and, if applicable, in the case of Class A Debentures, the aggregate amount of shares of Common Stock issuable on conversion of such Class A Debentures, multiplied by such price per share) (the “Purchase Price”).
(b) The Company and the Selling Stockholder understand that the Underwriter intends to make a public offering of the Shares as soon after the effectiveness of this Agreement as in its judgment is advisable, and initially to offer the Shares on the terms set forth in the Prospectus. The Company and the Selling Stockholder acknowledge and agree that the Underwriter may offer and sell Shares to or through any affiliate of the Underwriter.
(c) Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Selling Stockholder to the Underwriter in the case of the Shares, at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:00 A.M., New York City time, on April 29, 2011, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Company, the Underwriter and the Selling Stockholder may agree upon in writing. The time and date of such payment for the Shares is referred to herein as the “Closing Date”.
Payment for the Shares to be purchased on the Closing Date shall be made against delivery to the Underwriter of the Shares to be purchased on such date with any transfer taxes
2
payable in connection with the sale of such Shares duly paid by the Company. At the option of the Underwriter, the Selling Stockholder shall deliver, in lieu of such number of Shares as the Underwriter may specify by written notice delivered not later than 6:00 P.M. on April 26, 2011, Class A Senior Convertible Debentures due 2019 (the “Class A Debentures”) to the Underwriter in an aggregate principal amount convertible on the date of such delivery into such specified number of the Shares; provided that the aggregate principal amount of Class A Debentures that may be requested shall not exceed the lesser of an aggregate principal amount convertible on the date of such delivery into (i) 7% of the 248,262,109 shares of the Common Stock of the Company outstanding and (ii) the amount of Shares to be purchased by the Underwriters that have not been allocated to investors as of 6:00 P.M. on April 26, 2011. Delivery of the Shares (and Class A Debentures, if applicable) shall be made at such times and in such quantities on the Closing Date as the Underwriter shall instruct (as described in the next paragraph) through the facilities of The Depository Trust Company (“DTC”), unless the Underwriter shall otherwise instruct. The Shares (and Class A Debentures, if applicable) will be made eligible for book entry delivery through the facilities of DTC to securities accounts of the Underwriter not later than 1:00 P.M., New York City time, on the business day prior to the Closing Date.
The Selling Stockholder will deliver the Shares (and Class A Debentures) to the Underwriter on the Closing Date in one or more tranches, at the direction of and only upon oral notice from the Underwriter with respect to each tranche (each, a “Purchase Notice”). Except as set forth below, in no event shall the Selling Stockholder deliver Shares in a single tranche in excess of the lesser of (i) 9.9% of the outstanding Common Stock of the Company (calculated as the quotient of (x) the number of Shares to be delivered in such tranche and (y) 248,262,109 shares of the Common Stock of the Company outstanding) (the “9.9% Limit”) and (ii) the number of Shares specified in the Purchase Notice for such tranche. Each Purchase Notice shall specify the number of Shares (and Class A Debentures) to be delivered to the Underwriter. After the initial Purchase Notice, each subsequent Purchase Notice shall be delivered upon the Underwriter reselling Shares such that, immediately following such resale, the total number of shares of Common Stock then beneficially owned by the Underwriter does not exceed the 9.9% Limit. Notwithstanding the foregoing, (i) if the Underwriter has not delivered Purchase Notices for delivery of all Shares (either directly or by delivering Class A Debentures) by 1:00 P.M., New York City time, on the Closing Date, then the Selling Stockholder shall be permitted to deliver unconverted Class A Debentures in an aggregate principal amount convertible on the date of such delivery into all remaining Shares in a single tranche immediately thereafter and (ii) the provisions of this Section 1(d) shall in no way otherwise affect the Underwriter’s obligations to purchase the Shares pursuant to, and subject to the terms of, this Agreement. For the avoidance of doubt, if the Underwriter receives Class A Debentures in lieu of Shares pursuant to this Agreement, the Underwriter shall not offer, sell, transfer or otherwise dispose of such debentures (except to the conversion agent under the Debenture Documents (as defined herein) for conversion) without the prior written approval of the Company.
2. [Reserved]
3. Representations, Warranties and Agreements of the Company. The Company represents and warrants to, and agrees with, the Underwriter and the Selling Stockholder, on and as of (i) the Time of Sale and (ii) the Closing Date, as applicable (each such date listed in (i) and (ii), a “Representation Date”), as follows:
3
| (a) | No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, complied in all material respects with the Securities Act, and no Preliminary Prospectus, at the time of filing thereof, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to the Underwriter furnished to the Company in writing by the Underwriter expressly for use in any Preliminary Prospectus, it being understood and agreed that the only such information furnished by the Underwriter consists of the information described as such in Section 10(c) hereof. The Pricing Disclosure Package as of the Time of Sale did not, and as of the Closing Date, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to the Underwriter furnished to the Company in writing by the Underwriter expressly for use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by the Underwriter consists of the information described as such in Section 10(c) hereof. The Registration Statement is an “automatic shelf registration statement” as defined under Rule 405 of the Securities Act that has been filed with the Commission not earlier than three years prior to the date hereof; there is no order preventing or suspending the use of the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus, and, to the knowledge of the Company, no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering has been initiated or threatened by the Commission; no notice of objection of the Commission to the use of such Registration Statement pursuant to Rule 401(g)(2) under the Securities Act has been received by the Company; the Registration Statement complied when it initially became effective, complies as of the date hereof and, as then amended or supplemented, as of each other Representation Date will comply, in all material respects, with the requirements of the Securities Act; the conditions to the use of Form S-3 in connection with the offering and sale of the Shares as contemplated hereby have been satisfied; the Registration Statement meets, and the offering and sale of the Shares as contemplated hereby complies with, the requirements of Rule 415 under the Securities Act (including, without limitation, Rule 415(a)(5)); the Prospectus complied or will comply, at the time it was or will be filed with the Commission, and will comply, as then amended or supplemented, as of the Closing Date, in all material respects, with the requirements of the Securities Act; the Registration Statement did not, as of the time of its initial effectiveness, and does not or will not, as then amended or supplemented, as of each Representation Date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or |
4
| necessary to make the statements therein not misleading; as of the Closing Date, the Prospectus, as then amended or supplemented, together with all of the then issued Permitted Free Writing Prospectuses, if any, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty with respect to any statement or omission in the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus in reliance upon and in conformity with information concerning the Underwriter and furnished in writing by or on behalf of the Underwriter expressly for use in the Registration Statement, the Prospectus or such Permitted Free Writing Prospectus (it being understood that such information consists solely of the information specified in Section 10(c)). |
| (b) | Prior to the execution of this Agreement, the Company has not, directly or indirectly, offered or sold any of the Shares by means of any “prospectus” (within the meaning of the Securities Act) or used any “prospectus” (within the meaning of the Securities Act) in connection with the offer or sale of the Shares, in each case other than the Basic Prospectus and the Preliminary Prospectus. The Company represents and agrees that, unless it obtains the prior consent of the Underwriter, it has not made and will not make any offer relating to the Shares that would constitute an “issuer free writing prospectus” (as defined in Rule 433 under the Securities Act) or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act). Any such free writing prospectus relating to the Shares consented to by the Underwriter is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has complied and will comply in all material respects with the requirements of Rule 433 under the Securities Act applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping. The conditions set forth in one or more of subclauses (i) through (iv), inclusive, of Rule 433(b)(1) under the Securities Act are satisfied, and the registration statement relating to the offering of the Shares contemplated hereby, as initially filed with the Commission, includes a prospectus that, other than by reason of Rule 433 or Rule 431 under the Securities Act, satisfies the requirements of Section 10 of the Securities Act; neither the Company nor the Underwriter is disqualified, by reason of Rule 164(f) or (g) under the Securities Act, from using, in connection with the offer and sale of the Shares, “free writing prospectuses” (as defined in Rule 405 under the Securities Act) pursuant to Rules 164 and 433 under the Securities Act; the Company is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Securities Act with respect to the offering of the Shares contemplated by the Registration Statement. |
| (c) | The Incorporated Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and none of such documents contained an untrue |
5
| 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 light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. |
| (d) | The financial statements and the related notes thereto included or incorporated by reference in the Registration Statement, the Pricing Disclosure Package, the Prospectus and any Permitted Free Writing Prospectus (other than with respect to the financial data incorporated by reference from the Company’s Current Report on Form 8-K filed with the Commission on April 20, 2011) comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as applicable, and present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and their results of operations, stockholders’ equity and cash flows for the periods specified, and such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis throughout the periods involved. The other historical financial and statistical information and data included or incorporated by reference (including, without limitation, the financial data incorporated by reference from the Company’s Current Report on Form 8-K filed with the Commission on April 20, 2011) in the Registration Statement, the Pricing Disclosure Package, Prospectus or any Permitted Free Writing Prospectus are, in all material respects, fairly presented. |
| (e) | Except in each case as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package, the Prospectus and any Permitted Free Writing Prospectus, since the date of the most recent financial statements of the Company included or incorporated by reference in the Registration Statement, the Pricing Disclosure Package, the Prospectus and any Permitted Free Writing Prospectus, (i) there has not been any material change in the capital stock or long-term debt of the Company or any of its subsidiaries and there has not been a Material Adverse Effect (as defined below), (ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement that is material to the Company and its subsidiaries, taken as a whole, or incurred any liability or obligation, direct or contingent, except for such liabilities or obligations that, individually or in the aggregate, would not have a Material Adverse Effect and (iii) neither the Company nor any of its subsidiaries has sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except for such losses that, individually or in the aggregate, would not have a Material Adverse |
6
| Effect. As used herein, “Material Adverse Effect” means a material adverse effect on the earnings, business, properties, condition (financial or otherwise), results of operations or prospects of the Company and its subsidiaries taken as a whole. |
| (f) | The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the state of Delaware, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect. |
| (g) | Each of the subsidiaries of the Company listed on Schedule 1 hereto (the “Named Subsidiaries”) has been duly organized, and is validly existing and in good standing under the laws of its respective jurisdictions of formation or organization, has the corporate power and authority to own, lease and operate its property and to conduct its business as described in Registration Statement, the Pricing Disclosure Package and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect; all of the issued shares of capital stock of each Named Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (“Liens”), except as to Liens disclosed in the Prospectus. Each significant subsidiary (as defined in Rule 1-02(w) of Regulation S-X) of the Company is a Named Subsidiary. |
| (h) | The Company has an authorized capitalization as set forth in the Registration Statement, the Pricing Disclosure Package, the Prospectus and any Permitted Free Writing Prospectus; all the outstanding shares of capital stock of the Company (including the Shares to be sold by the Selling Stockholder) have been duly and validly authorized and have been, or with respect to any Shares to be issued upon conversion of any Convertible Debentures after the date hereof, have been reserved, and when issued upon conversion will be, validly issued and fully paid and non-assessable and are not, or will not be, as applicable, subject to any pre-emptive or similar rights; except as described in or expressly contemplated by the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, there are no outstanding rights (including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interests in the Company or any of its significant subsidiaries, nor any contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any capital stock of the Company or any such significant subsidiary, any such convertible or exchangeable securities or any |
7
| such rights, warrants or options; and the capital stock of the Company conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package, the Prospectus and any Permitted Free Writing Prospectus. |
| (i) | The Class A Debentures and the Indenture governing the Class A Debentures, dated August 25, 2009, between E*Trade Financial Corporation and The Bank of New York Mellon, as amended (the “Indenture”, together with the Class A Debentures, the “Debenture Documents”) have been duly authorized , executed and delivered by the Company and, assuming due execution and delivery in accordance with their terms by each of the parties thereto (other than the Company), constitute valid and legally binding agreements of the Company enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally or by equitable principles relating to enforceability. |
| (j) | The Company has full right, power and authority to execute and deliver this Agreement and perform its obligations hereunder and under the Debenture Documents; and all action required to be taken for the due and proper authorization, execution and delivery by it of this Agreement and the consummation by it of the transactions contemplated hereby and thereby has been duly and validly taken. |
| (k) | This Agreement has been duly authorized, executed and delivered by the Company. |
| (l) | This Agreement conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package, the Prospectus and any Permitted Free Writing Prospectus. |
| (m) | Neither the Company nor any of its subsidiaries is (i) in violation of its charter or by-laws or similar organizational documents, (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, including, but not limited to, the laws, regulations and rules administered by the Commission, the Financial Industry Regulatory Authority, Inc. (“FINRA”), the Federal Reserve, the Office of Thrift Supervision (the “OTS”), the Federal Deposit Insurance Corporation (the “FDIC”), any applicable state, federal or self regulatory organization and the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the Equal Credit Opportunity Act, the Fair Housing Act, |
8
| the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, all other applicable fair lending and fair housing laws or other laws relating to discrimination (including, without limitation, anti-redlining, equal credit opportunity and fair credit reporting), truth-in-lending, real estate settlement procedures, adjustable rate mortgages disclosures or consumer credit (including, without limitation, the federal Consumer Credit Protection Act, the federal Truth-in Lending Act and Regulation Z thereunder, the federal Real Estate Settlement Procedures Act of 1974 and Regulation X thereunder, and the federal Equal Credit Opportunity Act and Regulation B thereunder) or with respect to the Flood Disaster Protection Act and the Bank Secrecy Act, except, in the case of clauses (ii) and (iii) above, for any default or violation that is accurately described in all material respects in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus and for any such default or violation that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. |
| (n) | The execution, delivery and performance by the Company of this Agreement, the compliance by the Company with the terms hereof and of the Debenture Documents and the consummation of the transactions contemplated hereby and thereby will not (i) contravene, conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) contravene or result in any violation of the provisions of the charter or bylaws of the Company or (iii) contravene or result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the execution, delivery and performance by the Company of this Agreement or the Debenture Documents and compliance by the Company with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby, except as have been made or obtained and except as may be required by and made with or obtained from state securities laws or regulations. |
| (o) | The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement and the Debenture Documents do not require any consent or approval of any shareholders or any other securityholders of the Company (other than the Selling Stockholder or the Underwriter with respect to any Shares issued upon conversion of Class A |
9
| Debentures by the Selling Stockholder or the Underwriter, as applicable, pursuant to the terms of this Agreement). |
| (p) | The Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the business now operated by them, and neither the Company nor its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. |
| (q) | Except as set forth in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, each of the Company and its Named Subsidiaries holds, and is in compliance in all material respects with, all material permits, licenses, authorizations, exemptions, orders and approvals (“Permits”), necessary for the operation of their respective businesses, and there are no proceedings pending to which the Company or any of its Named Subsidiaries is a party or, to the knowledge of the Company, threatened by any governmental entity seeking to terminate, revoke or limit any such Permits, nor, to the knowledge of the Company, do grounds exist for any such action by any governmental entities. |
| (r) | Each of the Company and ETB Holdings, Inc. is duly registered with the OTS as a savings and loan holding company under the Home Owners Loan Act, as amended (“HOLA”); E*TRADE Bank continues to hold a valid charter to do business as a federal savings bank; E*TRADE Bank meets the qualified thrift lender test under Section 10(m) of HOLA; and the Company is a savings and loan holding company under Section 10 of HOLA, as amended; and the direct and indirect activities of the Company and its subsidiaries comply with restrictions on holding company activities provided in Section 10 of HOLA. E*TRADE Bank is well capitalized according to the capital standards set forth by the OTS. E*TRADE Bank and its deposits are insured by FDIC to the fullest extent permitted by law. |
| (s) | Each of E*TRADE Securities LLC, E*TRADE Clearing LLC and E*TRADE Capital Markets, LLC is duly registered as a broker-dealer with the Commission, and is registered as a broker-dealer with each state and is a member in good standing of each self-regulatory organization where its business so requires. |
| (t) | None of the Company, its Named Subsidiaries, or E*TRADE Capital Management, LLC (“ETCM”) (i) is subject or is party to, or has received any |
10
| notice or advice that any of them may become subject or party to, any legal or governmental proceedings pending or threatened, including but not limited to, any investigation with respect to any cease-and-desist order, consent agreement, any commitment letter or similar undertaking to, memorandum of understanding or other regulatory enforcement action, proceeding or order with or by, other than proceedings accurately described in all material respects in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus and proceedings that would not have a Material Adverse Effect, or on the power or ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated hereby or (ii) is subject to, other than proceedings accurately described in all material respects in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, any directive by, or has been a recipient of any supervisory letter from, or has adopted any board resolutions at the request of, any Regulatory Agency (as defined below) that currently restricts in any material respect the conduct of their business or that in any material manner relates to their capital adequacy, their credit policies, their management or their business (each, a “Regulatory Agreement”), nor has the Company or any of its subsidiaries been advised by any Regulatory Agency that it is considering issuing or requesting any such Regulatory Agreement or that they may be subject to an investigation, audit or other examination which is likely to lead to the imposition of any civil monetary or other penalties that would have a Material Adverse Effect, and there is no unresolved violation, criticism or exception by any Regulatory Agency with respect to any report or statement relating to any examinations of the Company or any of its subsidiaries which, in the reasonable judgment of the Company, is expected to result in a Material Adverse Effect. As used herein, the term “Regulatory Agency” means OTS, FDIC, the Federal Reserve Bank, and any other federal or state agency charged with the supervision or regulation of depository institutions or holding companies of depository institutions, or engaged in the insurance of depository institution deposits, or the Commission, FINRA or any other applicable self regulatory organization, or any court, administrative agency or commission or other governmental agency, authority or instrumentality having supervisory or regulatory authority with respect to the Company or any of its subsidiaries. |
| (u) | The Company, E*TRADE Bank and each of the Company’s applicable subsidiaries have duly filed with the OTS and the FDIC, as the case may be, in correct form the reports required to be filed under applicable laws and regulations and such reports were in all material respects complete and accurate and in compliance with the requirements of applicable laws and regulations; provided that information as of a later date shall be deemed to modify information as of an earlier date; and the Company has previously delivered or made available to the Underwriter accurate and complete copies of all such reports requested by the Underwriter. Except as disclosed in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, neither the Company nor E*TRADE Bank is subject to, or expects to be subject to, any formal or informal enforcement or supervisory action by the OTS or the |
11
| FDIC. Neither the Company nor E*TRADE Bank has been required by the OTS or the FDIC to make material corrections or changes in its management, operations or policies or procedures, which to the knowledge of the Company or E*TRADE Bank, have not been substantially corrected or changed to the satisfaction of the regulators. |
| (v) | The Company has delivered or made available to the Underwriter a true and complete copy of the Company’s and its subsidiaries’ currently effective Forms BD and ADV as filed with the Commission and all other similar forms required to be filed with governmental entities. The information contained in such forms and reports was or will be, in the case of any forms and reports filed after the date of this Agreement, complete and accurate in all material respects as of the time of filing thereof. |
| (w) | Except for such as would not, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor any of its subsidiaries nor any of their respective officers, directors or employees has been the subject of any disciplinary proceedings or orders of any governmental entity arising under applicable laws or regulations which would be required to be disclosed on Forms BD or ADV except as disclosed thereon, and no such disciplinary proceeding or order is pending or, to the knowledge of the Company, threatened, nor, to the knowledge of the Company, do grounds exist for any such material action by any governmental entity; and except as disclosed on such Form BD or ADV, neither the Company nor any of its subsidiaries nor any of their respective officers, directors or employees has been enjoined by the order, judgment or decree of any governmental entity from engaging in or continuing any conduct or practice in connection with any Company activity or in connection with the purchase or sale of any security. |
| (x) | Except as disclosed in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, no subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company or to a subsidiary of the Company, from making any other distribution on such subsidiary’s capital stock to the Company or to a subsidiary of the Company, from repaying to the Company or to a subsidiary of the Company any loans or advances to such subsidiary from the Company or a subsidiary of the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company, other than prohibitions arising under applicable law. |
| (y) | There are no contracts or other documents that are required under the Securities Act to be filed as exhibits to the Registration Statement and described in the Registration Statement, the Pricing Disclosure Package, Prospectus or any Permitted Free Writing Prospectus that are not so filed as exhibits to the Registration Statement, the Pricing Disclosure Package or described in the Registration Statement and the Prospectus. |
12
| (z) | Deloitte & Touche LLP, which certified the financial statements and supporting schedules, if any, included or incorporated by reference in the Pricing Disclosure Package or the Prospectus, is (i) an independent certified public accountant with respect to the Company and the subsidiaries within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants and (ii) registered with the Public Company Accounting Oversight Board. |
| (aa) | Each of the Company and its subsidiaries has filed all material federal, state, local and foreign tax returns required to be filed through the date hereof (taking into account any extension of time to file granted or obtained on behalf of the Company or any of its subsidiaries) and has paid all taxes due thereon (except as contested in good faith and adequately reserved for in accordance with GAAP), and no tax deficiency has been determined, as a result of a final determination, adversely to the Company or any of its subsidiaries which has had (nor does the Company or any of its subsidiaries have any knowledge of any tax deficiency which, if determined adversely to the Company or any of its subsidiaries, would have) a Material Adverse Effect. |
| (bb) | The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”). |
| (cc) | No client of ETCM to which it provides investment advisory services is currently registered as an investment company under the Investment Company Act of 1940. Neither the Company nor any of its subsidiaries other than ETCM provides investment advisory services to clients that are currently registered as an investment company under the Investment Company Act of 1940. |
| (dd) | Each of the Company and its subsidiaries (i) is in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its respective businesses and (iii) is in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse Effect. |
| (ee) | There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, and to the Company’s knowledge, have a Material Adverse Effect. |
13
| (ff) | No prohibited transaction (as defined in Section 406 of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”)) has occurred with respect to any employee benefit plan of the Company or any of its subsidiaries, excluding transactions effected pursuant to a statutory or administrative exemption, which would have a Material Adverse Effect; each such employee benefit plan is in compliance with applicable law, including ERISA and the Code, except where such noncompliance, individually or in the aggregate, would not have a Material Adverse Effect; none of the Company, any subsidiary, or any entity that was at any time required to be treated as a single employer together with the Company under Section 414(b)(c)(m) or (o) of the Code or Section 4001(a)(14) of ERISA has at any time maintained, sponsored or contributed to, and none of the employee benefit plans of the Company or any subsidiary is, a single employer plan (within the meaning of Section 4001(a)(15) of ERISA), a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for which the Company or any subsidiary could incur liability under Section 4063 or 4064 of ERISA; and each such pension plan that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and, to the knowledge of the Company, nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. |
| (gg) | The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that complies with the requirements of the Exchange Act and that has been designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act. |
| (hh) | The Company and its subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in |
14
| conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Based on the Company’s most recent evaluation of its internal controls over financial reporting pursuant to Rule 13a-15(c) of the Exchange Act, except as disclosed in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, as of December 31, 2010, there are no material weaknesses in the Company’s internal controls. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which have adversely affected or are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. |
| (ii) | The Company and each of its subsidiaries carry or are covered by insurance covering their respective properties, operations, personnel and businesses, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are prudent and customary in the businesses which they are engaged or the Company believes in its reasonable judgment are adequate to protect the Company and its subsidiaries and their respective businesses. |
| (jj) | None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent or employee of the Company or any of its subsidiaries is currently included on the List of Specially Designated Nationals and Blocked Persons maintained by the OFAC or currently subject to any U.S. sanctions administered by the OFAC. |
| (kk) | Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of the subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977 or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment. |
| (ll) | Other than as set forth in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, there are no material transactions, contracts, agreements or understandings that are required to be disclosed under Item 404 of Regulation S-K between any of the Company or any of its subsidiaries and (i) any director or executive officer of the Company or |
15
| any of its subsidiaries, (ii) any nominee for elections as director of the Company or any of its subsidiaries, (iii) any 5% securityholder of the Company or any of its subsidiaries or (iv) any member of the immediate family of the foregoing persons. |
| (mm) | The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”), except as disclosed on Form BD, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries that could reasonably be expected to be material to the Company and its subsidiaries taken as a whole with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened. |
| (nn) | There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in connection therewith (the “Xxxxxxxx-Xxxxx Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications. |
| (oo) | Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that could reasonably be expected to give rise to a valid claim against the Company or any of its subsidiaries or the Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares. |
| (pp) | Other than pursuant to the Amended and Restated Registration Rights Agreement between the Company and the Selling Stockholder dated as of August 25, 2009, no person has the right to require the Company or any of its subsidiaries to register any securities for sale under the Securities Act by reason of the filing of the Registration Statement with the Commission or, to the knowledge of the Company, the sale of the Shares or Class A Debentures, if applicable, to be sold by the Selling Stockholder hereunder. |
| (qq) | The Company has not taken, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the Company. |
| (rr) | No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained or incorporated by reference in the Registration Statement, the Pricing Disclosure Package, the |
16
| Prospectus or any Permitted Free Writing Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith. |
| (ss) | Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data included in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus, is not based on or derived from sources that are reliable and accurate in all material respects. |
| (tt) | The Company is a “well-known seasoned issuer” as defined under the Securities Act and at the times specified in the Securities Act in connection with the offering of the Shares. The Company has paid or will pay the registration fee for this offering pursuant to Rule 456(b)(1) under the Securities Act within the time period specified in such Rule. |
| (uu) | The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NASDAQ Global Select Market (the “Exchange”), nor has the Company received any notification that the Commission or the Exchange is contemplating terminating such registration or listing. The outstanding shares of the Common Stock have been approved for listing and the Shares being sold hereunder have been approved for listing, subject only to official notice of issuance, on the Exchange. |
| (vv) | There are no transfer taxes or other similar fees or charges under federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement. |
| (ww) | The Common Stock (i) is an “actively-traded security” excepted from the requirements of Rule 101 of Regulation M under the Exchange Act by Rule 101(c)(1) thereunder and (ii) has an Average Daily Trading Volume of at least $1.0 million (as provided in Regulation M) and a public float of at least $150.0 million (as defined in Regulation M). |
| (xx) | There are no legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement, the Prospectus or Permitted Free Writing Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required. |
Any certificate signed by any officer of the Company or any subsidiary delivered to the Underwriter or to counsel to the Underwriter pursuant to or in connection with this Agreement
17
shall be deemed a representation and warranty by the Company to the Underwriter as to the matters covered thereby.
4. Representations and Warranties of the Selling Stockholder. The Selling Stockholder represents and warrants to the Underwriter and the Company that:
| (a) | All consents, approvals, authorizations and orders necessary for the execution and delivery by the Selling Stockholder of this Agreement, and for the sale and delivery of the Shares and Class A Debentures, if applicable, to be sold by the Selling Stockholder hereunder, have been obtained; and the Selling Stockholder has full right, power and authority to enter into this Agreement and to sell, assign, transfer and deliver the Shares and Class A Debentures, if applicable, to be sold by the Selling Stockholder hereunder; this Agreement has been duly authorized, executed and delivered by the Selling Stockholder. |
| (b) | The execution, delivery and performance by the Selling Stockholder of this Agreement, the sale of the Shares and Class A Debentures, if applicable, to be sold by the Selling Stockholder and the consummation by the Selling Stockholder of the transactions contemplated herein or therein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Selling Stockholder pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Selling Stockholder is a party or by which the Selling Stockholder is bound or to which any of the property or assets of the Selling Stockholder is subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Selling Stockholder or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory agency, except in the case of (i) and (iii) above for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a material adverse effect on the Selling Stockholder’s ability to consummate the transactions contemplated by this Agreement. |
| (c) | The Selling Stockholder has good and valid title to the Shares and Class A Debentures, if applicable, to be sold at the Closing Date by the Selling Stockholder hereunder, free and clear of all liens, encumbrances, equities or adverse claims; the Selling Stockholder will have, immediately prior to the Closing Date good and valid title to the Shares and Class A Debentures, if applicable, to be sold at the Closing Date by the Selling Stockholder, free and clear of all liens, encumbrances, equities or adverse claims; and, upon DTC or another securities intermediary indicating by book entry on its records that such Shares and Class A Debentures, if applicable, have been credited to securities accounts of the Underwriter and payment therefor pursuant hereto, good and valid title to such Shares and Class A Debentures, if applicable, free and clear of all liens, encumbrances, equities or adverse claims, will pass to the Underwriter. Citadel LLC and all affiliates thereof (other than individuals) that currently own |
18
| Common Stock, any of the Class A Debentures or any of the Company’s Class B Senior Convertible Debentures due 2019 (together with the Class A Debentures, the “Convertible Debentures”) are parties to a “lock up” agreement referred to in Section 8. |
| (d) | The Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares. |
| (e) | The Pricing Disclosure Package, at the Time of Sale did not, and at the Closing Date, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Selling Stockholder makes no representation and warranty with respect to any statements or omissions other than statements made in reliance upon and in conformity with information relating to the Selling Stockholder furnished to the Company in writing by the Selling Stockholder expressly for use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by the Selling Stockholder consists of the information about the Selling Stockholder set forth in the “Selling Stockholder” section of the Preliminary Prospectus. |
| (f) | Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, the Selling Stockholder (including its agents and representatives, other than the Underwriter in its capacity as such) has not made, used, prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any Permitted Free Writing Prospectus, other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex B hereto, each electronic road show and any other written communications approved in writing in advance by the Company and the Underwriter. |
| (g) | As of the applicable effective date of the Registration Statement and any post-effective amendment thereto, the Registration Statement and any such post-effective amendment complied and will comply in all material respects with the Securities Act, and did not and will not contain any 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 not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Date, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Selling Stockholder makes no representation and warranty with respect to any statements or omissions other than statements made in reliance upon and in conformity with information relating to the Selling Stockholder furnished to the Company in writing by the Selling Stockholder through the Underwriter expressly for use in the Registration Statement, the Pricing Disclosure Package and the |
19
| Prospectus and any amendment or supplement thereto, it being understood and agreed that the only such information furnished by the Selling Stockholder consists of the information about the Selling Stockholder set forth in the “Selling Stockholder” section of the Preliminary Prospectus. |
5. Certain Covenants of the Company. The Company hereby agrees with the Underwriter as follows:
| (a) | For so long as the delivery of a prospectus is required (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule) in connection with the offering or sale of the Shares (the “Prospectus Delivery Period”), before amending or supplementing the Registration Statement or the Prospectus (in each case, other than due to the filing of an Incorporated Document), (i) to furnish to the Underwriter a copy of each such proposed amendment or supplement within a reasonable period of time before filing any such amendment or supplement with the Commission, (ii) that the Company shall not use or file any such proposed amendment or supplement to which the Underwriter reasonably objects, unless the Company’s legal counsel has advised the Company that filing such document is required by law, and (iii) that the Company shall not use or file any Permitted Free Writing Prospectus to which the Underwriter reasonably objects, unless the Company’s legal counsel has advised the Company that the use or filing of such document is required by applicable law. |
| (b) | To file the final Prospectus with the Commission within the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act; to file any Permitted Free Writing Prospectus to the extent required by Rule 433 under the Securities Act; to provide copies of the Pricing Disclosure Package, the Prospectus and each Permitted Free Writing Prospectus (to the extent not previously delivered or filed on the Commission’s Next-Generation XXXXX System or any successor system thereto (collectively, “XXXXX”)) to the Underwriter via e-mail in “pdf” format on such filing date to e-mail accounts designated by the Underwriter; and, at the Underwriter’s request, to furnish copies of the Pricing Disclosure Package and the Prospectus to each exchange or market on which sales were effected as may be required by the rules or regulations of such exchange or market. |
| (c) | During the Prospectus Delivery Period, to file timely all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, and during such same period to advise the Underwriter, promptly after the Company receives notice thereof, (i) of the time when any amendment to the Registration Statement has been filed or has become effective or any supplement to any Preliminary Prospectus, the Pricing Disclosure Package, the Prospectus, any Permitted Free Writing Prospectus or any amended Prospectus has been filed with the Commission, (ii) of the issuance by the Commission of any stop order or any order preventing or suspending the use of any prospectus (including any |
20
| Preliminary Prospectus) relating to the Shares or the initiation or threatening of any proceeding for that purpose, pursuant to Section 8A of the Securities Act, (iii) of any objection by the Commission to the use of Form S-3ASR by the Company pursuant to Rule 401(g)(2) under the Securities Act, (iv) of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, (v) of any request by the Commission for the amendment of the Registration Statement or the amendment or supplementation of any Preliminary Prospectus, the Prospectus or for additional information, (vi) of the occurrence of any event as a result of which any Preliminary Prospectus, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus as then amended or supplemented includes any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances existing when such Preliminary Prospectus, the Pricing Disclosure Package, the Prospectus or any such Permitted Free Writing Prospectus is delivered to a purchaser, not misleading and (vii) of the receipt by the Company of any notice of objection of the Commission to the use of the Registration Statement or any post-effective amendment thereto. |
| (d) | In the event of the issuance of any such stop order or of any such order preventing or suspending the use of any such prospectus or suspending any such qualification, or of any notice of objection pursuant to Rule 401(g)(2) under the Securities Act, to use promptly its commercially reasonable efforts to obtain its withdrawal. |
| (e) | 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 states as the Underwriter may reasonably designate and to maintain such qualifications in effect so long as required for the distribution of the Shares; provided that the Company shall not be required to qualify as a foreign corporation, become a dealer of securities, or become subject to taxation in, or to consent to the service of process under the laws of, any such state. |
| (f) | To make available to the Underwriter at its offices in New York City, without charge, as soon as practicable after the Registration Statement becomes effective, and thereafter from time to time to furnish to the Underwriter, as many copies of the Pricing Disclosure Package and the Prospectus (or of the Pricing Disclosure Package or the Prospectus as amended or supplemented if the Company shall have made any amendments or supplements thereto and documents incorporated by reference therein after the effective date of the Registration Statement) and each Permitted Free Writing Prospectus as the Underwriter may reasonably request during the Prospectus Delivery Period; and for so long as this Agreement is in effect, the Company shall prepare and file promptly such amendment or amendments to the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus as may be necessary to comply with the requirements of Section 10(a)(3) of the Securities Act. |
21
| (g) | If during the Prospectus Delivery Period, any event shall occur or condition shall exist as a result of which it is necessary in the reasonable opinion of counsel to the Underwriter or counsel to the Company, to further amend or supplement the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus as then amended or supplemented in order that the Pricing Disclosure Package, the Prospectus or any such Permitted Free Writing Prospectus will not include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading, in light of the circumstances existing at the time the Pricing Disclosure Package, the Prospectus or any such Permitted Free Writing Prospectus is delivered to a purchaser, or if it shall be necessary, in the reasonable opinion of either such counsel, to amend or supplement the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus in order to comply with the requirements of the Securities Act, in the case of such a determination by counsel to the Company, notice shall be given promptly, and confirmed in writing, to the Underwriter to cease the solicitation of offers to purchase the Shares, and, in either case, the Company shall promptly prepare and file with the Commission such amendment or supplement, whether by filing documents pursuant to the Securities Act, the Exchange Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement, the Pricing Disclosure Package, the Prospectus or any such Permitted Free Writing Prospectus comply with such requirements. |
| (h) | To generally make available to its security holders as soon as reasonably practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (in a form complying with the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act) covering the twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following the “effective date” (as defined in Rule 158) of the Registration Statement. |
| (i) | If the Underwriter has purchased Class A Debentures, upon delivery prior to 6:00 P.M., New York City time on any of one or more business days (any of such days, a “Notice Date”) to the Conversion Agent, as defined in the Indenture, with a copy to the Company, of any complete and manually signed irrevocable written notice pursuant to Section 12.02(b) of the Indenture, to cause the Conversion Agent to deliver such shares of Common Stock issuable pursuant to such written notice through the facilities of DTC to the Underwriter on or before 10:00 A.M., New York City time, on the third business day following the relevant Notice Date. |
| (j) | Not to, and to cause its subsidiaries not to, take, directly or indirectly, any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares; provided that nothing herein |
22
| shall prevent the Company from filing or submitting reports under the Exchange Act or issuing press releases in the ordinary course of business. |
| (k) | Except as otherwise agreed between the Company and the Underwriter, to pay all costs, expenses, fees and taxes in connection with (A) the preparation and filing of the Registration Statement (including registration fees pursuant to Rule 456(b)(1)(i) under the Securities Act), the Preliminary Prospectus, the Prospectus, any Permitted Free Writing Prospectus and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to the Underwriter and to dealers (including costs of mailing and shipment), (B) the registration and delivery of the Shares, (C) the preparation, printing and delivery to the Underwriter of this Agreement, the Shares, and such other documents as may be required in connection with the offer, purchase, sale, issuance or delivery of the Shares and any cost associated with electronic delivery of any of the foregoing by the Underwriter to investors, (D) the qualification of the Shares for offering and sale under state laws and the determination of their eligibility for investment under state law as aforesaid (including the reasonable legal fees and filing fees and other disbursements of counsel to the Underwriter in connection therewith) and the printing and furnishing of copies of any blue sky surveys or legal investment surveys to the Underwriter, (E) the listing of the Shares on the Exchange and any registration thereof under the Exchange Act, (F) any filing for review of the public offering of the Shares by FINRA, (G) the fees and disbursements of counsel to the Company and of the Company’s independent registered public accounting firm, (H) the cost of preparing the certificates for the Shares, (I) the costs and charges of any transfer agent or registrar or paying agent and (J) the performance of the Company’s other obligations hereunder; provided that the Underwriter shall be responsible for any transfer taxes on resale of Shares by it, any costs and expenses associated with the sale and marketing of the Shares and fees and disbursements of its counsel other than as specifically provided above or elsewhere in this Agreement. |
| (l) | Not to distribute any offering material in connection with the offer and sale of the Shares, other than the Registration Statement, the Pricing Disclosure Package, the Prospectus, any Permitted Free Writing Prospectus and other materials permitted by the Securities Act or the rules and regulations promulgated thereunder. |
| (m) | To retain, pursuant to reasonable procedures developed in good faith, copies of each Permitted Free Writing Prospectus that is not filed with the Commission in accordance with Rule 433 under the Securities Act. |
| (n) | [Reserved]. |
| (o) | For a period ending on the earlier of (i) 90 days after the date of the Prospectus or (ii) the second business day following the date of the Company’s press release announcing its results for the quarter ending June 30, 2011, not to (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, |
23
| 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 Common Stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such 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, without the prior written consent of the Underwriter, other than (A) the Shares to be sold hereunder, (B) any options or other awards (including without limitation restricted stock or restricted stock units), or shares of Common Stock issued with respect to such options and other awards, granted under Company stock plans or otherwise in equity compensation arrangements with directors, officers, employees and consultants of the Company and its subsidiaries and (C) any shares of Common Stock issued in connection with exchange transactions for the Company’s 12.5% Springing Lien Notes due 2017, 8% Senior Notes due 2011, 7.375% Senior Notes due 2013 and 7.875% Senior Notes due 2015 (including any shares of Common Stock issued upon conversion, exercise or exchange of any securities issued in such exchange transactions, including the issuance and conversion, exercise and exchange of the Convertible Debentures). |
6. Further Agreements of the Selling Stockholder. The Selling Stockholder covenants and agrees with the Underwriter that:
(a) It will deliver to the Underwriter prior to or at the Closing Date a properly completed and executed United States Treasury Department Form W-8BEN (or other applicable form or statement specified by the Treasury Department regulations in lieu thereof).
(b) It will convert that number of Convertible Debentures necessary to deliver any Shares to the Underwriter; subject to the last two paragraphs of Section 1 hereof.
7. Further Agreements of the Underwriter. The Underwriter covenants and agrees with the Company to offer, sell and distribute the Shares in a “widely dispersed public offering” as specified by and in accordance with the terms and conditions of the Second Supplemental Indenture (the “Second Supplemental Indenture”) to the Indenture, dated the date hereof, between the Company and The Bank of New York Mellon, as Trustee.
8. Conditions of Underwriter’s Obligations. The obligation of the Underwriter to purchase the Shares and Class A Debentures, if applicable, on the Closing Date as provided herein is subject to the following conditions:
(i) The respective representations, warranties and agreements on the part of the Company and the Selling Stockholder herein contained or contained in any certificate of an officer or officers of the Company and of the Selling Stockholder delivered pursuant to the provisions hereof shall be true and correct in all respects.
24
(ii) Each of the Company and the Selling Stockholder shall have performed and observed its respective covenants and other obligations hereunder in all material respects.
(iii) Trading in the Common Stock on the Exchange shall not have been suspended.
(iv) From the date of this Agreement, no event or condition of a type described in Section 3(e) hereof shall have occurred or shall exist, which event or condition is not disclosed in the Pricing Disclosure Package (excluding any amendment or supplement thereto) and the Prospectus (excluding any amendment or supplement thereto), the effect of which in the reasonable judgment of the Underwriter makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares or Class A Debentures, if applicable, on the Closing Date on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.
(v) Subsequent to the earlier of (A) the Time of Sale and (B) the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded any debt securities of or guaranteed by the Company or any of its subsidiaries by Xxxxx’x Investors Service, Inc. or Standard & Poor’s (a division of the McGraw Hill Companies, Inc.) and (ii) neither organization shall have publicly announced that it has under surveillance or review, or has changed its outlook with respect to, its rating of any debt securities of or guaranteed by the Company or any of its subsidiaries (other than an announcement with positive implications of a possible upgrading).
(vi) (A) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the sale of the Shares or Class A Debentures, if applicable, and (B) no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the sale of the Shares or Class A Debentures, if applicable.
(vii) (A) No order suspending the effectiveness of the Registration Statement shall be in effect, no proceeding for such purpose or pursuant to Section 8A of the Securities Act shall be pending before or threatened by the Commission and no notice of objection of the Commission to the use of the Registration Statement pursuant to Rule 401(g)(2) under the Securities Act shall have been received by the Company; (B) the Prospectus and each Permitted Free Writing Prospectus shall have been timely filed with the Commission under the Securities Act (in the case of any Permitted Free Writing Prospectus, to the extent required by Rule 433 under the Securities Act); (C) all requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of the Underwriter; and (D) no suspension of the qualification of the Shares for offering or sale in any jurisdiction, and no initiation
25
or threatening of any proceedings for any of such purposes, will have occurred and be in effect.
(viii) No amendment or supplement to the Registration Statement, the Pricing Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus shall have been filed to which the Underwriter shall have reasonably objected in writing.
(ix) All filings with the Commission required by Rule 424 under the Act to have been filed by the Closing Date shall have been made within the applicable time period prescribed for such filing by Rule 424 (without reliance on Rule 424(b)(8)).
(x) The Company shall have delivered to the Underwriter an officer’s certificate signed by one of the Company’s executive officers, dated the Closing Date, certifying as to the matters set forth in Exhibit A hereto.
(xi) The Company shall have delivered to the Underwriter the opinion and negative assurance letter of Xxxxx Xxxx & Xxxxxxxx LLP, special counsel to the Company, addressed to the Underwriter and dated the Closing Date, in the form of Exhibit B hereto.
(xii) The Company shall have delivered to the Underwriter an opinion of internal counsel of the Company, addressed to the Underwriter and dated the Closing Date, in the form of Exhibit C hereto.
(xiii) The Underwriter shall have received an opinion and negative assurance letter of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel to the Underwriter, addressed to the Underwriter and dated the Closing Date, addressing such matters as the Underwriter may reasonably request.
(xiv) On the date of this Agreement and on the Closing Date, Deloitte & Touche LLP shall have furnished to the Underwriter, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Underwriter, in form and substance reasonably satisfactory to the Underwriter, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus; provided, that the letter delivered on the Closing Date shall use a “cut-off” date no more than three business days prior to such Closing Date.
(xv) The Company shall have delivered to the Underwriter a certificate signed by the Company’s corporate secretary, annexing, among other documents, the resolutions duly adopted by the Company’s board of directors authorizing the Company’s execution of this Agreement and the consummation by the Company of the transactions contemplated hereby, including the issuance and sale of the Shares.
26
(xvi) The “lock-up” agreements, each substantially in the form of Exhibit D hereto, between you and the shareholders, officers and directors of the Company listed on Schedule 2 hereto, relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date.
(xvii) The Company shall have delivered to the Underwriter a certificate, dated the date hereof, signed by the chief financial officer of the Company, related to certain financial information of the Company, to the effect set forth in Exhibit E hereto.
(xviii) Each of the Company and the Selling Stockholder shall have delivered to the Underwriter such other documents as the Underwriter shall reasonably request.
(xix) The Selling Stockholder shall have delivered to the Underwriter an officer’s certificate signed by one of the Selling Stockholder’s executive officers, dated the Closing Date, certifying as to the matters set forth in Exhibit F hereto.
(xx) The Selling Stockholder shall have delivered to the Underwriter the opinions of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP, special counsel to the Selling Stockholder, and Xxxxxx and Calder, special Cayman counsel to the Selling Stockholder, addressed to the Underwriter and dated the Closing Date, in the forms of Exhibit G and Exhibit H hereto, respectively.
All opinions, letters and other documents referred to above shall be satisfactory in form and substance to the Underwriter.
9. Termination.
(a) This Agreement may be terminated in the absolute discretion of the Underwriter if after the execution and delivery of this Agreement and prior to the Closing Date, if (A) (i) trading generally shall have been materially suspended or materially limited on or by, as the case may be, any of the Exchange, the New York Stock Exchange or NYSE Amex Equities (formerly known as the American Stock Exchange), (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the counter market, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either federal or New York state authorities, (iv) there shall have occurred any attack on, or outbreak or escalation of hostilities or act of terrorism involving, the United States, or any change in financial markets or any calamity or crisis that, in each case, in the Underwriter’s judgment, is material and adverse or (v) any material disruption of settlements of securities or clearance services in the United States that would materially impair settlement and clearance with respect to the Shares or Class A Debentures, if applicable, or (B) in the case of any of the events specified in clauses (i) through (v), such event singly or together with any other such event specified in clauses (i) through (v) makes it, in the Underwriter’s judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Pricing Disclosure
27
Package and the Prospectus. If the Underwriter elects to terminate its obligations pursuant to this Section 9, the Company and the Selling Stockholder shall be notified promptly in writing.
(b) If (i) this Agreement is terminated pursuant to Section 9(a), (ii) the Selling Stockholder for any reason fail to tender the Shares or Class A Debentures, if applicable, for delivery to the Underwriter or (iii) the Underwriter declines to purchase the Shares or Class A Debentures, if applicable, for any reason permitted under this Agreement, the Company agrees to reimburse the Underwriter for all out-of-pocket costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Underwriter in connection with this Agreement and the offering contemplated hereby.
10. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriter, its affiliates, partners, directors and officers and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable out of pocket legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred) that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Pricing Prospectus (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Pricing Date Information, any Permitted Free Writing Prospectus (or any amendment or supplement thereto), any Pricing FWP or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to the Underwriter furnished to the Company in writing by or on behalf of the Underwriter expressly for use in the Registration Statement, the Pricing Prospectus (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Pricing Date Information, any Permitted Free Writing Prospectus (or any amendment or supplement thereto) or any Pricing FWP, it being understood that such information consists solely of the information specified in Section 10(c)).
(b) The Selling Stockholder agrees to indemnify and hold harmless the Underwriter, its affiliates, directors and officers and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, to the extent such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to the Selling Stockholder furnished to the Company in writing by the Selling Stockholder expressly for use in the Registration Statement, the Pricing Prospectus (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Pricing Date Information, any Permitted Free Writing Prospectus (or any amendment or
28
supplement thereto) or any Pricing FWP, it being understood that such information consists solely of the information about the Selling Stockholder set forth in the “Selling Stockholder” section of the Preliminary Prospectus. In no event shall the Selling Stockholder be required pursuant to this Section 10(b) to indemnify the Underwriter in an amount in excess of the net proceeds before expenses received by the Selling Stockholder from the Underwriter for the Shares and Class A Debentures, if applicable.
(c) The Underwriter agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the Selling Stockholder to the same extent as the indemnity set forth in Section 10(a) and 10(b), but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to the Underwriter furnished to the Company in writing by or on behalf of the Underwriter expressly for use in the Registration Statement, the Pricing Prospectus (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Pricing Date Information, any Permitted Free Writing Prospectus (or any amendment or supplement thereto) or any Pricing FWP; it being understood that such information shall consist solely of the following: the second, eighth and ninth paragraphs under the heading “Underwriting” in the Preliminary Prospectus.
(d) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to the preceding paragraphs of this Section 10, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 10 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 10. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 10 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or
29
potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they are incurred. Any such separate firm for the Underwriter, its affiliates, partners, directors and officers and any control persons of the Underwriter shall be designated in writing by the Underwriter and any such separate firm for the Company, its directors, its officers who signed the Registration Statement and any control persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but, if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
(e) If the indemnification provided for in Sections 10(a), 10(b) and 10(c) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such Sections, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholder, on the one hand, and the Underwriter on the other, from the offering of the Shares or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Selling Stockholder, on the one hand, and the Underwriter on the other, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Stockholder, on the one hand, and the Underwriter on the other, shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Selling Stockholder from the sale of the Shares and Class A Debentures, if applicable, to the total underwriting discounts and commissions received by the Underwriter in connection therewith bear to the aggregate offering price of the Shares. The relative fault of the Company and the Selling Stockholder, on the one hand, and the Underwriter on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Stockholder or by the Underwriter and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(f) The Company, the Selling Stockholder and the Underwriter agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined by pro rata
30
allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 10(e) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in Section 10(e) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 10, in no event (i) shall the Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by the Underwriter with respect to the offering of the Shares exceeds the amount of any damages that the Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (ii) in no event shall the Selling Stockholder be required to contribute (x) other than to the extent the losses, claims, damages, liabilities or expenses arose from the written information furnished to the Company by the Selling Stockholder expressly for use in the Registration Statement, the Pricing Prospectus (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Pricing Date Information, any Permitted Free Writing Prospectus (or any amendment or supplement thereto) or any Pricing FWP, it being understood that the only such information furnished by the Selling Stockholder consists of the information about the Selling Stockholder set forth in the “Selling Stockholder” section of Preliminary Prospectus and the Prospectus, or (y) any amount in excess of the aggregate net proceeds before expenses received by the Selling Stockholder from the Underwriter for the Shares. 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.
(g) The remedies provided for in this Section 10 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.
11. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of communication, to the applicable party at the addresses indicated below and:
| (a) | if to Underwriter: |
Xxxxxx Xxxxxxx & Co. Incorporated, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Equity Syndicate Desk,
with a copy to (which shall not constitute notice):
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Confirmation No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
31
(b) if to the Company:
E*TRADE Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000 and (000) 000-0000
Attention: General Counsel and Chief Financial Officer
with a copy to (which shall not constitute notice):
Xxxxx Xxxx & Xxxxxxxx LLP
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000, (000) 000-0000 and (000) 000-0000
Confirmation No.: (000) 000-0000 and (000) 000-0000
Attention: Xxx Xxxxx, Esq. and Xxxxx X. Xxxxx, Esq.
(c) if to the Selling Stockholder, at:
Citadel LLC
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
with a copy to (which shall not constitute notice):
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Confirmation No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx, Esq. and Xxxxx Xxxxxxx, Esq.
12. No Fiduciary Relationship. The Company and the Selling Stockholder acknowledge and agree (i) in rendering the services set forth herein, the Underwriter is acting, in its capacity as underwriter, solely in the capacity of an arm’s length contractual counterparty to the Company and the Selling Stockholder and not as a financial advisor or fiduciary to, or agent of, the Company, the Selling Stockholder or any of their respective affiliates; (ii) the Underwriter may perform the services contemplated hereby in conjunction with its affiliates, and any of its affiliates performing services hereunder shall be entitled to the benefits and be subject to the terms of this Agreement; (iii) the Underwriter is a securities firm engaged in securities trading and brokerage activities and providing investment banking and financial advisory services, and in the ordinary course of business, the Underwriter and its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own respective accounts or the accounts of customers, in debt or equity securities of the Company or its affiliates; and (iv) the Underwriter is not an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction, and the Company and the Selling Stockholder must consult with their own advisors
32
concerning such matters and will each be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriter shall not have any responsibility or liability to the Company or the Selling Stockholder with respect thereto. Any review of the Company, any of its affiliates, any of the transactions contemplated hereby or any other matters relating to such transactions that is performed by the Underwriter or any of its affiliates will be performed solely for the benefit of the Underwriter, its affiliates and its agents and shall not be on behalf of, or for the benefit of, the Company or the Selling Stockholder, any of their respective affiliates or any other person.
13. Governing Law; Construction.
(a) This Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement (each a “Claim”), directly or indirectly, shall be governed by, and construed in accordance with, the laws of the State of New York.
(b) The Section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement.
14. Submission to Jurisdiction, etc. Except as set forth below, no Claim may be commenced, prosecuted or continued by the Company or the Selling Stockholder in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have nonexclusive jurisdiction over the adjudication of such matters, and the Company and the Selling Stockholder consent to the jurisdiction of such courts and personal service with respect thereto. The Company and the Selling Stockholder irrevocably waive the defense of an inconvenient forum or objections to personal jurisdiction with respect to the maintenance of any legal suit, action or proceeding in any way arising out of or relating to this Agreement or the performance of services hereunder. Each of the Underwriter, the Company and the Selling Stockholder, on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates, waives all right to trial by jury in any action, proceeding, claim or counterclaim, whether based upon contract, tort or otherwise, in any way arising out of or relating to this Agreement or the performance of services hereunder. The Company and the Selling Stockholder agree that a final and non-appealable judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Company and the Selling Stockholder and may be enforced in any other courts in the jurisdiction of which the Company or the Selling Stockholder is or may be subject, by suit upon such judgment. Each party not located in the United States irrevocably appoints CT Corporation System as its agent to receive service of process or other legal summons for purposes of any such suit, action or proceeding that may be instituted in any state or federal court in the City and County of New York.
15. Parties in Interest. The agreements set forth herein have been and are made solely for the benefit of the Underwriter, the Company and the Selling Stockholder and, to the extent provided in Section 10 hereof, the controlling persons, partners, directors and officers referred to in such section, and their respective successors, assigns, heirs, personal representatives and executors and administrators. No other person, partnership, association or corporation (including
33
a purchaser, as such purchaser, from the Underwriter) shall acquire or have any right under or by virtue of this Agreement.
16. Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.
17. Successors and Assigns. This Agreement shall be binding upon the Underwriter, the Company, the Selling Stockholder, any other Indemnified Person and their respective successors and assigns and any successor or assign of any substantial portion of the Company’s, the Selling Stockholder’s and the Underwriter’s respective businesses and/or assets.
18. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Selling Stockholder and the Underwriter contained in this Agreement or made by or on behalf of the Company, the Selling Stockholder or the Underwriter pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Shares and Class A Debentures, if applicable, and shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company, the Selling Stockholder or the Underwriter.
19. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the terms “affiliate” and “significant subsidiary” have the meanings ascribed thereto in Rule 405 under the Securities Act and (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City.
20. Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
21. Affiliates. Lending affiliates of the Underwriter may have lending relationships with issuers of securities underwritten or privately placed by the Underwriter. To the extent required under the securities laws, prospectuses and other disclosure documents for securities underwritten or privately placed by the Underwriter will disclose the existence of any such lending relationships and whether the proceeds of the issue will be used to repay debts owed to affiliates of the Underwriter.
The Underwriter and one or more of its respective affiliates may make markets in the Common Stock or other securities of the Company, in connection with which they may buy and sell, as agent or principal, for long or short account, shares of the Common Stock or other securities of the Company, at the same time that the Underwriter is acting as an underwriter pursuant to this Agreement; provided that the Underwriter acknowledges and agrees that any such transactions are not being, and shall not be deemed to have been, undertaken at the request or direction of, or for the account of, the Company or the Selling Stockholder, and that neither the Company nor the Selling Stockholder has nor shall any of them have control over any decision by the Underwriter and its respective affiliates to enter into any such transactions.
34
In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriter is required to obtain, verify and record information that identifies its clients, including the Company and the Selling Stockholder, which information may include the name and address of its clients, as well as other information that will allow it to properly identify its clients.
[Signature Pages Follow]
35
If the foregoing correctly sets forth the understanding among the Company, the Selling Stockholder and the Underwriter, please so indicate in the space provided below for the purpose, whereupon this letter and your acceptance shall constitute a binding agreement between the Company, the Selling Stockholder and the Underwriter.
| Very truly yours, | ||
| E*TRADE FINANCIAL CORPORATION | ||
| By: | /s/ Xxxxxxx Xxxxxxx | |
| Name: Xxxxxxx Xxxxxxx Title: Chief Financial Officer | ||
ETFC – Signature Page to Underwriting Agreement
| CITADEL EQUITY FUND LTD. | ||
| By: | Citadel Advisors LLC, | |
| its Portfolio Manager | ||
| By: | /s/ Xxxx X. Xxxxxx | |
| Name: Xxxx X. Xxxxxx Title: Authorized Signatory | ||
ETFC – Signature Page to Underwriting Agreement
Accepted as of the
date first above written:
| XXXXXX XXXXXXX & CO. INCORPORATED | ||
| By: | /s/ Xxxxxx Xxxxxx Name: Xxxxxx Xxxxxx Title: Managing Director | |
ETFC – Signature Page to Underwriting Agreement
Annex A
27,500,000 shares.
Annex B
None
Schedule 1
Named Subsidiaries
E*TRADE Bank
E*TRADE Clearing LLC
E*TRADE Capital Markets, LLC
E*TRADE Securities LLC
E*TRADE Savings Bank
E*TRADE United Bank
ETB Holdings, Inc.
