STOCK OPTION AGREEMENT
EXHIBIT
10.2
This Stock Option Agreement dated as of [___] (the “Agreement”), is by and between Franklin
Bank. Corp., a Delaware corporation (the “Company”), and [___] (“Optionee”).
RECITALS
WHEREAS, on April 9, 2002, the Company acquired all of the outstanding capital stock of
Franklin Bank, S.S.B., a Texas state savings xxxx (the “Bank”), pursuant to the terms of an
Agreement and Plan of Reorganization dated as of October 3, 2001, as amended (the “Reorganization
Agreement”); and
WHEREAS, the Reorganization Agreement imposes certain restrictions upon the operations of the
Company until such time as the Company raises an additional $35 million in capital through a
private placement in which certain of the former shareholders of the Bank are
entitled to participate; and
WHEREAS, on November 4, 2002, the Company completed an offering made through Friedman,
Billings, Xxxxxx & Co., Inc. (“FBR”) pursuant to which the Company received gross proceeds of $80
million from qualified institutional investors, institutional accredited investors and persons
living outside the United States, as well as individual accredited investors having participation
rights under the Reorganization Agreement (the “Offering”); and
WHEREAS, the Company and Xxxxxxx & Co., Inc. (“Xxxxxxx & Co.”) entered into a
Consulting Agreement as of November 4, 2002 (the “Consulting Agreement”) pursuant to which the
Company retained the services of Xxxxxxx & Co. as a consultant, effective upon closing of the
Offering, to assist the Company in the deployment of the additional capital proposed to be raised
in the Offering over the Company’s original expectation; and
WHEREAS, as partial consideration for the services to be provided by Xxxxxxx & Co. under the
Consulting Agreement, the Company granted to Xxxxxxx & Co. an option represented by the Stock
Option Agreement dated as of November 4, 2002 for the purchase of 570,000
shares of the Class A Common Stock of the Company (the “Original Option”); and
WHEREAS, Xxxxxxx &. Co, has informed the Company that pursuant to purchase and repurchase
agreements, dated as of January 2, 2003 between, (i) for purchase agreements, Xxxxxxx & Co. and
various purchasers (the “Purchasers’”), and (ii) for repurchase agreements, Xxxxx X. Xxxxxxx and
the Purchasers (with the exception of Xxxxx X. Xxxxxxx), and in accordance with Section 9(f) of the
Original Option, Xxxxxxx &. Co. transferred, on the date hereof, a portion of the Original Option
representing 552,900 shares in the aggregate underlying the Original Option (the “Transfer”); and
WHEREAS, the Optionee is one of the Purchasers, and the Company, pursuant to Section 9(f) of
the Original Option, is issuing this Option (as hereinafter defined) to the Optionee.
NOW, THEREFORE, in consideration of the foregoing, and the respective representations,
warranties, covenants and agreements set forth herein, the Company and Optionee agree as follows:
1. Issuance of Option. As a result of the Transfer and subject to the terms and
conditions set forth herein, the Company hereby issues to Optionee, in replacement and substitution
in part of the Original Option, an irrevocable option (the “Option”) to purchase [___] shares (the
“Option Shares”) of common stock, par value $.01 per share (the “Common Stock”), of the Company at
a purchase price per Option Share equal to TEN DOLLARS ($10.00), subject to adjustment as provided
herein (the “Purchase Price”). Notwithstanding anything to the contrary contained herein, and
except to the extent the Option represented hereby shall have been previously exercised, if at any
time during the Option Period (as hereinafter defined) the Company shall exercise its right to
terminate the Consulting Agreement pursuant to Section 3 thereof, such termination shall also
terminate this Agreement and the Option represented hereby, and Optionee’s right to purchase Option
Shares, whether or not vested, shall be terminated and of no further force and effect.
2. Option Period. (a) Subject to the other terms of this Agreement, the Option may be
exercised by Optionee in whole or in part at any time during the ten (10) year period (the “Option
Period”) beginning on [___] (the “Effective Date”).
(b) Subject to the other terms of this Agreement, the Option Shares shall vest
in, and become exercisable by, Optionee as follows:
(1) on the first anniversary of the Effective Date, [___] shares shall vest and become
exercisable;
(2) on the second anniversary of the Effective Date, an additional [___] shares shall vest
and become exercisable, so that on that date a total of [___] shares shall be vested and
exercisable; and
(3) on the third anniversary of the Effective Date, an additional [1/3 of Option Shares]
shares shall vest and become exercisable, so that on that date all Option Shares shall be vested
and exercisable.
3. Exercise of Option. (a) In the event that Optionee is entitled to and wishes to
exercise the Option, it will send to the Company a written notice (an “Exercise Notice”; the date
of which being herein referred to as the “Notice Date”) to that effect and which Exercise Notice
also will specify the number of Option Shares Optionee wishes to purchase, the denominations of the
certificate or certificates evidencing the Option Shares which Optionee wishes to purchase and a
date (an “Option Closing Date”), not earlier than 5 business clays nor later than 15 business days
from the Notice Date, for the closing of such purchase (in all cases an “Option Closing”). Any
Option Closing will be at the offices of the Company in Houston., Texas on the applicable Option
Closing Date or at such, other place on such other date as may be necessary so as to comply with
Section 3(b).
(b) Notwithstanding anything to the contrary contained herein, my purchase
of Option Shares upon exercise of the Option will be subject to compliance with the applicable
regulations of the Securities and Exchange Commission, the Texas Savings and Loan Department, the
Office of Thrift Supervision, the Federal Deposit Insurance Corporation and other agencies having
jurisdiction over the Company’s sale, and the Optionee’s acquisition, of the Option Shares, and the
obtaining or making of any consents, approvals, orders, notifications, filings or authorizations,
the failure of which to have obtained or made would have the effect of making the issuance of
Option Shares to Optionee illegal (the “Regulatory Approvals”). In the event that the Option is
otherwise exercisable and Optionee wishes to exercise the Option, the Option may be exercised in
accordance with Section 3(a) and Optionee shall acquire the maximum number of Option Shares
specified in the Exercise Notice that Optionee is then permitted to acquire tinder the applicable
laws and regulations, and if Optionee thereafter obtains the Regulatory Approvals to acquire the
remaining balance of the Option Shares specified in the Exercise Notice, then Optionee shall be
entitled to acquire such remaining balance. The Company agrees to use its reasonable efforts to
assist Optionee in obtaining the Regulatory Approvals.
4. Payment and Delivery of Certificates. (a) At any Option Closing, Optionee will
pay to the Company in immediately available funds by wire transfer to a bank account designated in
writing by the Company an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased at such Option Closing plus the amount of any transfer, stamp or other
similar taxes or charges imposed in connection therewith.
(b) At any Option Closing, simultaneously with the delivery of immediately available funds as
provided in Section 4(a), the Company will deliver to Optionee a certificate or certificates
representing the Option Shares to be purchased at such Option Closing, which Option Shares will be
free and clear of all liens, claims, charges and encumbrances of any kind whatsoever. If at the
time of issuance of Option Shares pursuant to an exercise of the Option hereunder, the Company
shall have issued any securities similar to rights under a stockholder rights plan, then each
Option Share issued pursuant to such exercise will also represent such a corresponding right with
terms substantially the same as and at least as favorable to Optionee as are provided under any
such stockholder rights plan then in effect. Optionee shall deliver to the
Company a letter agreeing that Optionee shall not offer to sell or otherwise dispose of such Option
Shares in violation of the registration provisions of applicable federal and state law or of the
provisions of this Agreement.
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(c) Certificates for the Option Shares delivered at an Option Closing will have typed or
printed thereon a restrictive legend which will read substantially as follows:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.”
It is understood and agreed that (i) the reference to restrictions arising under the Securities Act
in the above legend will be removed by delivery of substitute certificate(s) without such
reference, if such Option Shares have been registered pursuant to the Securities Act, such Option
Shares have been sold in reliance on and in accordance with Rule 144 under the Securities Act or
Optionee has delivered to the Company a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to the Company and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and (ii) the reference
to restrictions pursuant to this Agreement in the above legend will be removed by delivery of
substitute certificate(s) without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with the provisions of this
Agreement under circumstances that do not require the retention of such reference.
5. Representations and Warranties of the Company. The Company hereby represents and
warrants to Optionee that (i) the Company has taken all necessary corporate and other action to
authorize and reserve and, subject to the receipt of any required Regulatory Approvals, to permit
it to issue the Option Shares; (ii) at all times from the date hereof until the obligation to
deliver Option Shares upon the exercise of the Option terminates, the Company shall have reserved
for issuance, upon exercise of the Option, shares of Common Stock necessary for Optionee to
exercise the Option, and the Company will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Common Stock or other securities which may be issued
pursuant to Section 7 upon exercise of the Option; and (iii) the shares of Common Stock to be
issued upon due exercise of the Option, including all additional shares of Common Stock or other
securities which may be issuable upon exercise of the Option or any other securities which may be
issued pursuant to Section 7, upon issuance pursuant hereto, will be duly and validly issued, fully
paid and nonassessable, and will be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including without limitation any preemptive rights
of any stockholder of the Company.
6. Representation and Warranty of Optionee. Optionee hereby represents and warrants to
the Company that any Option Shares or other securities acquired by Optionee upon exercise of the
Option will be acquired for investment and will not be transferred or otherwise disposed of except
in a transaction registered, or exempt from registration, under the Securities Act. Optionee has
the power and authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Optionee.
7. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any change in
the Common Stock by reason of a stock, dividend, split-up, merger, recapitalization, combination,
exchange of shares, or similar transaction, the type and number of shares or securities subject to
the Option, and the Purchase Price thereof, will be adjusted appropriately, and proper provision
will be made in the agreements governing such transaction, so that Optionee will receive upon
exercise of the Option the number and class of shares or other securities or property that Optionee
would have received in respect of the Common Stock if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable.
(b) Without limiting the parties’ relative rights and obligations under the Consulting
Agreement and the last sentence of Section 1 of this Agreement, upon the occurrence of a Change of
Control (as hereinafter defined), the Option shall be fully vested and exercisable by the holder
thereof. For purposes of this Agreement, a “Change of Control” shall mean the happening of any of
the following events:
(1) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50%
or more of
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either (i) the then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding Company
Voting Securities”); provided, however, that for purposes of this subsection (b), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation controlled by the
Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 7(b); or
(2) Individuals who, as of the date hereof, constitute the board of directors of the Company
(the “Incumbent Board”) cease for any reason other than the act of Xxxxxxx & Co. or an affiliate of
Xxxxxxx & Co. to constitute at least a majority of the board of directors of the Company; provided,
however, that any individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the board of directors
of the Company; or
(3) Consummation of a reorganization, merger, consolidation, sale or other disposition of all
or substantially all of the assets of the Company (a “Business Combination”), in each case, unless
following such Business Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the Corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the board of directors of the Company, providing for such Business
Combination; or
(4) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company; or
(5) The date on which the Company shall consummate an underwritten public offering of Common
Stock registered under the Securities Act, and as a result of which a class of the Company’s
capital stock is authorized for trading in an automated interdealer quotation system of a
registered national securities association or is listed for trading on a national securities
exchange.
8. Loss or Mutilation. Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered will constitute an additional
contractual obligation on the part of the Company, whether or not the Agreement so lost, stolen,
destroyed, or mutilated shall at any time be enforceable by anyone.
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9. Miscellaneous.
(a) Amendment. This Agreement may not be amended, except by an instrument in writing
signed on behalf of each of the parties.
(b) Extension; Waiver. Any agreement on the part of a party to waive any provision of
this Agreement, or to extend the time for performance, will be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise will not constitute a waiver of such
rights.
(c) Entire Agreement; No Third-Party Beneficiaries. This Agreement (i) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Agreement, and (ii) is not intended
to confer upon any person other than the parties any rights or remedies.
(d) Governing Law. This Agreement will be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
(e) Notices. All notices, communications and deliveries hereunder shall be made in
writing, signed by or on behalf of the party making the same and shall be delivered personally or
by facsimile transmission or sent by registered or certified mail (return receipt requested) or by
any national overnight courier service (with postage and other fees prepaid) as follows:
If to the Company:
|
Franklin Bank Corp. | |
| 0000 Xxxxxxxx, Xxxxx 000 | ||
| Xxxxxxx, XX 00000 | ||
| Attention: Chief Financial Officer | ||
| Facsimile: (000) 000-0000 | ||
If to the Optionee: |
||
or to such other representative or at such other address of a party as such party hereto may
furnish to the other parties in writing. Any such notice, communication or delivery shall be
deemed given or made (a) on the date of delivery if delivered in person (by courier service or
otherwise), (b) upon transmission by facsimile if receipt is confirmed by telephone, provided
transmission is made during regular business hours, or if not, the next business day, or (c) on the
fifth (5th) business day after it is mailed by registered or certified mail.
(f) Assignment; Transfer. The Option represented hereby may not be sold, transferred,
pledged or hypothecated by Optionee unless the Company shall have been supplied with evidence
reasonably satisfactory to it that such sale, transfer, pledge or hypothecation is not
in violation of the Securities Act. Subject to satisfaction of the foregoing condition and the
other limitations set forth in this Agreement, the Option represented hereby and the right to
purchase the Option Shares shall be transferable by the Optionee or other holder thereof only to
one or more persons, each of whom on the date of transfer is an employee, officer, director,
member, partner, stockholder or other equity interest holder of the Optionee or its affiliates. As
used in this Agreement, an “affiliate” of Optionee shall mean any person or entity who controls, is
controlled by, or is under common control with, Optionee. To the extent any such transfer shall
occur, the Company shall issue to such transferee an Option identical in form to this Option, but evidencing the number of shares transferred to such transferee. Upon any such transfer, transferee shall be entitled to all of the benefits, and subject to all of the limitations, of Optionee hereunder, and shall be treated for all purposes as the Optionee. Any assignment or transfer of this option or any interest therein in violation of this provision shall be
occur, the Company shall issue to such transferee an Option identical in form to this Option, but evidencing the number of shares transferred to such transferee. Upon any such transfer, transferee shall be entitled to all of the benefits, and subject to all of the limitations, of Optionee hereunder, and shall be treated for all purposes as the Optionee. Any assignment or transfer of this option or any interest therein in violation of this provision shall be
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void. Subject to the foregoing provisions this Section 9(f), this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective successors and
permitted assigns.
(g) Further Assurances. In the event of any exercise of the Option by Optionee, the
Company and Optionee will execute and deliver all other documents and instruments and take all
other actions that may be reasonably necessary in order to consummate the transactions provided for
by such exercise.
(h) Enforcement. The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties will be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement
in any Federal court located in the State of Delaware or in Delaware state court, the foregoing
being in addition to any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (i) consents to submit itself to the personal jurisdiction of any
Federal court located in the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
(i) Severability. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent permitted by applicable
law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
(j) Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and Optionee have caused this Agreement to be signed by their
respective officers thereunto duly authorized as of the day and year first written above.
By: |
Its: |
By: |
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