E*TRADE FINANCIAL CORPORATION 172,000,000 Shares of Common Stock ($0.01 par value per share) UNDERWRITING AGREEMENT
Exhibit
1.1
E*TRADE
FINANCIAL CORPORATION
172,000,000
Shares of
Common
Stock
($0.01
par value per share)
April 29,
2010
▇▇▇▇▇▇▇
LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
Sandler
▇’▇▇▇▇▇ & Partners, L.P.
Citadel
Securities LLC
as
Representatives of the several
Underwriters
listed in Schedule 1 to the Underwriting Agreement
c/o
MERRILL LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Certain
stockholders named in Schedule 2 hereto (the “Selling
Stockholders”) of E*TRADE Financial Corporation, a Delaware corporation
(the “Company”), propose to
sell to the several Underwriters listed in Schedule 1 hereto (the “Underwriters”), for
whom ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, Sandler ▇’▇▇▇▇▇
& Partners, L.P. and Citadel Securities LLC are acting as representatives
(the “Representatives”),
with respect to the sale by the Selling Stockholders, subject to the terms and
conditions described below (this “Agreement”), of an
aggregate of 172,000,000 shares (the “Underwritten Shares”)
of common stock, $0.01 par value per share (the “Common Stock”), of
the Company and, at the option of the Underwriters, up to an additional
25,800,000 shares of common stock of the Company (the “Option Shares”). The
Underwritten Shares and the Option Shares are herein referred to as the
“Shares”.
The
Company and the Selling Stockholders hereby confirm their agreement with the
several Underwriters 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 Underwriters , 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 pricing information set forth on
Annex A, the “Pricing
Disclosure Package”): a Preliminary Prospectus dated April 28, 2010 and
each “freewriting prospectus” (as defined pursuant to Rule 405 under the
Securities Act) listed on Annex B hereto.
“Time of
Sale” means 8:45 A.M., New York City time, on April 29, 2010.
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1.
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Purchase of the Shares
by the Underwriters.
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(a)
Each of the Selling Stockholders agrees, severally and not jointly, to sell the
Underwritten Shares to the several Underwriters as provided in this Agreement,
and each Underwriter, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from each of the Selling
Stockholders at a purchase price per share of $1.68 (the “Purchase Price”) the
number of Underwritten Shares (to be adjusted by the Representatives as to
eliminate fractional shares) determined by multiplying the number of
Underwritten Shares to be sold by each of the Selling Stockholders as set forth
opposite their respective names in Schedule 2 hereto by a fraction, the
numerator of which is the aggregate number of Underwritten Shares to be
purchased by such Underwriter as set forth opposite the name of such Underwriter
in Schedule 1 hereto and the denominator of which is the aggregate number of
Underwritten Shares to be purchased by all the Underwriters from all of the
Selling Stockholders hereunder.
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In addition, Citadel Equity Fund Ltd. agrees
to sell the Option Shares to the several Underwriters and the Underwriters, on
the basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, shall have the option to purchase,
severally and not jointly, from Citadel Equity Fund Ltd. at the Purchase Price
less an amount per share equal to any dividends or distributions declared by the
Company and payable on the Underwritten Shares but not payable on the Option
Shares.
If any
Option Shares are to be purchased, the number of Option Shares to be purchased
by each Underwriter shall be the number of Option Shares which bears the same
ratio to the aggregate number of Option Shares being purchased as the number of
Underwritten Shares set forth opposite the name of such Underwriter in Schedule
1 hereto (or such number increased as set forth in Section 9 hereof) bears to
the aggregate number of Underwritten Shares being purchased from the Selling
Stockholders by the several Underwriters, subject, however, to such ad justments
to eliminate any fractional Shares as the Representatives in their sole
discretion shall make.
The
Underwriters may exercise the option to purchase Option Shares at any time in
whole, or from time to time in part, on or before the thirtieth day following
the date of the Prospectus, by written notice from the Representatives to the
Company and Citadel Equity Fund Ltd. Such notice shall set forth the aggregate
number of Option Shares as to which the option is being exercised and the date
and time when the Option Shares are to be delivered and paid for, which may be
the same date and time as the Closing Date (as hereinafter defined) but shall
not be earlier than the Closing Date or later than the tenth full business day
(as hereinafter defined) after the date of such notice (unless such time and
date are postponed in accordance with the provisions of Section 9 hereof). Any
such notice shall be given at least two business days prior to the date and time
of delivery specified therein.
(b) The
Company and the Selling Stockholders understand that the Underwriters intend to
make a public offering of the Shares as soon after the effectiveness of this
Agreement as in the judgment of the Representatives is advisable, and initially
to offer the Shares on the terms set forth in the Prospectus. The Company and
the Selling Stockholders acknowledge and agree that the Underwriters may offer
and sell Shares to or through any affiliate of an Underwriter.
(c) Payment
for the Shares shall be made by wire transfer in immediately available funds to
the account specified by the Selling Stockholders to the Representatives in the
case of the Underwritten Shares, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M., New York City time, on May 4, 2010, 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 Representatives and the
Selling Stockholders may agree upon in writing or, in the case of Option Shares,
on the date and at the time and place specified by the Representatives in the
written notice of the Underwriters’ election to purchase such Option Shares. The
time and date of such payment for the Underwritten Shares is referred to herein
as the “Closing
Date”, and the time and date for any such payment for Option Shares, if
other than the Closing Date, is herein referred to as an “Additional Closing
Date.”
Payment
for the Shares to be purchased on the Closing Date or any Additional Closing
Date, as the case may be, shall be made against delivery to the Representatives
for the respective
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accounts of the several Underwriters of the
Shares to be purchased on such date with any transfer taxes payable in
connection with the sale of such Shares duly paid by the Company. Delivery of
the Shares shall be made through the facilities of The Depository Trust Company
(“DTC”) unless
the Representatives shall otherwise instruct. The certificates for the Shares
will be made available for inspection and packaging by the Representatives at
the office of DTC or its designated custodian not later than 1:00 P.M., New York
City time, on the business day prior to the Closing Date or the Additional
Closing Date, as the case may be.
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2.
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[Reserved]
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3. Representations, Warranties
and Agreements of the Company. The Company represents and
warrants to, and agrees with, each Underwriter and the Selling Stockholders, on
and as of (i) the Time of Sale, (ii) the Closing Date and (iii) each Additional
Closing Date, as applicable (each such date listed in (i) through (iii), a
“Representation
Date”), as follows:
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(a)
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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 any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use
in any Preliminary Prospectus, it being understood and agreed that the
only such information furnished by any 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 and, if applicable, as of any Additional Closing Date, as the case
may be, 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 any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use in such Pricing Disclosure Package, it being understood
and agreed that the only such information furnished by any 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
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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 each Representation Date (other than the date
hereof), 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 Rep
resentation Date, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; as of each Representation Date (other than
the date hereof), 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 any Underwriter and furnished in writing by or on behalf
of such Underwriter through the Representatives 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)).
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(b)
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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 Representatives, 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 Representatives 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,
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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 any 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.
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(c)
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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 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.
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(d)
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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 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 in the
Registration Statement, the Pricing Disclosure Package, Prospectus or any
Permitted Free Writing Prospectus are, in all material respects, fairly
presented.
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(e)
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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
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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 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.
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(f)
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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.
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(g)
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Each
of the subsidiaries of the Company listed on Schedule 3
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.
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(h)
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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
Stockholders) have been duly and validly authorized and issued and are
fully paid and non-assessable and are not subject to any preemptive or
similar rights; except as described in or expressly contemplated by the
Registration Statement, the Pricing Disclosure Package,
the
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Prospectus or any Permitted Free Writing
Prospectus, there are no outstanding rights (including, without limitation,
preemptive 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 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.
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(i)
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[Reserved.]
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(j)
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The
Company has full right, power and authority to execute and deliver this
Agreement and perform its obligations hereunder or thereunder; 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.
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(k)
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This
Agreement has been duly authorized, executed and delivered by the
Company.
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(l)
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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.
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(m)
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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,
except, in the case of clauses (ii) and (iii) above, for any such default
or violation that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse
Effect.
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(n)
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The
execution, delivery and performance by the Company of this Agreement, the
compliance by the Company with the terms hereof and the consummation of
the transactions contemplated hereby 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
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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 and
compliance by the Company with the terms hereof and the consummation of the
transactions contemplated hereby, 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.
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(o)
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The
execution and delivery by the Company of, and the performance by the
Company of its obligations under, this Agreement do not require any
consent or approval of any shareholders or any other securityholders of
the Company.
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(p)
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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.
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(q)
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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.
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(r)
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Each
of the Company and its subsidiaries (i) has not violated its charter,
by-laws or any other applicable organizational documents, (ii) has not
defaulted, and no event has occurred which, with notice or lapse of time
or both, would constitute
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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 it is a party or by which it is bound or to which any of its property or
assets is subject, (iii) is in compliance, in the conduct of its business, with
all applicable laws, ordinances, governmental rules, capital regulatory
requirements, regulations or court decrees to which it or its property or assets
may be subject, 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, 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 clause (ii) and (iii) 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 any default or violation that would
not have a Material Adverse Effect.
|
(s)
|
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.
|
|
(t)
|
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.
|
10
|
(v)
|
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 Representatives which has requested the same accurate and
complete copies of all such reports. Except as disclosed in the
Registration Statement, the Pricing
Disclosure
|
11
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 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.
|
(w)
|
The
Company has delivered or made available to the Representatives, 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.
|
|
(x)
|
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.
|
|
(y)
|
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.
|
|
(z)
|
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,
|
12
|
the
Pricing Disclosure Package or described in the Registration Statement and
the Prospectus.
|
|
(aa)
|
Deloitte
& Touche LLP, who 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.
|
|
(bb)
|
Each
of the Company and its subsidiaries has filed all material federal, state,
local and foreign income and franchise 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.
|
|
(cc)
|
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”).
|
|
(dd)
|
No
client of the Advisers is currently registered as an investment company
under the Investment Company Act of
1940.
|
|
(ee)
|
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.
|
|
(ff)
|
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
|
(hh)
|
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.
|
|
(ii)
|
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 conformity with generally accepted
accounting principles and to maintain asset accountabil-
|
14
ity;
(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, 2009, 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.
|
(jj)
|
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.
|
|
(kk)
|
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 (the “SDN List”)
maintained by the OFAC or currently subject to any U.S. sanctions
administered by the OFAC.
|
|
(ll)
|
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.
|
|
(mm)
|
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 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
|
15
subsidiaries,
or (iv) any member of the immediate family of the foregoing persons.
|
(nn)
|
The
operations of the Company and its subsidiaries are and have been conducted
at all times in 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
with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company, threatened.
|
|
(oo)
|
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 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
and the rules and regulations promulgated in connection therewith (the
“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”), including Section 402 related to loans and Sections 302 and
906 related to certifications.
|
|
(pp)
|
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 any Underwriter for a brokerage
commission, finder’s fee or like payment in connection with the offering
and sale of the Shares.
|
|
(qq)
|
Other
than pursuant to the Amended and Restated Registration Rights Agreement
between the Company and Citadel Equity Fund Ltd. 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 to be sold by
the Selling Stockholders hereunder.
|
|
(rr)
|
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.
|
|
(ss)
|
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 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.
|
16
|
(uu)
|
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.
|
|
(vv)
|
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.
|
|
(ww)
|
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.
|
|
(xx)
|
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).
|
|
(yy)
|
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
any Underwriter or to counsel to the Underwriters pursuant to or in connection
with this Agreement shall be deemed a representation and warranty by the Company
to the Underwriters as to the matters covered thereby.
17
4.
Representations and
Warranties of the Selling Stockholders. Each of the Selling Stockholders
severally represents and warrants to each Underwriter and the Company
that:
|
(a)
|
All
consents, approvals, authorizations and orders necessary for the execution
and delivery by such Selling Stockholder of this Agreement, and for the
sale and delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and such Selling Stockholder has full
right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Stockholder hereunder; this Agreement has been duly authorized, executed
and delivered by such Selling
Stockholder.
|
|
(b)
|
The
execution, delivery and performance by such Selling Stockholder of this
Agreement, the sale of the Shares to be sold by such Selling Stockholder
and the consummation by such 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 such Selling Stockholder
pursuant to, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder is bound or to which any of the
property or assets of such Selling Stockholder is subject, (ii) result in
any violation of the provisions of the charter or by-laws or similar
organizational documents of such 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 such Selling Stockholder’s
ability to consummate the transactions contemplated by this
Agreement.
|
|
(c)
|
Such
Selling Stockholder has good and valid title to the Shares to be sold at
the Closing Date or each Additional Closing Date, as the case may be, by
such Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or adverse claims; such Selling Stockholder will
have, immediately prior to the Closing Date or each Additional Closing
Date, as the case may be, good and valid title to the Shares to be sold at
the Closing Date or each Additional Closing Date, as the case may be, by
such Selling Stockholder, free and clear of all liens, encumbrances,
equities or adverse claims; and, upon delivery of the certificates
representing such Shares and payment therefor pursuant hereto, good and
valid title to such Shares, free and clear of all liens, encumbrances,
equities or adverse claims, will pass to the several Underwriters. Citadel
(as defined in the Preliminary Prospectus) and all affiliates thereof
(other than individuals) that currently own Common Stock or any
Convertible Debentures are parties to a “lock up” agreement referred to in
Section 7.
|
|
(d)
|
Such
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.
|
18
|
(f)
|
Other
than the Registration Statement, the Preliminary Prospectus and the
Prospectus, such Selling Stockholder (including its agents and
representatives, other than the Underwriters in their 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
Representatives.
|
|
(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 and as of each Additional
Closing Date, as the case may be, 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
such 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 such Selling Stockholder
furnished to the Company in writing by such Selling Stockholder through
the Representative expressly for use in the Registration Statement, the
Pricing Disclosure Package and the Prospectus and any amendment or
supplement thereto, it being understood and agreed that the only such
information furnished by such Selling Stockholder consists of the
information about such Selling Stockholder set forth in the “Selling
Stockholders” section of the Preliminary
Prospectus.
|
5.
Certain
Covenants of the Company. The Company hereby agrees with each Underwriter
as follows:
19
|
(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 ▇▇▇▇▇ System or any successor system thereto
(collectively, “▇▇▇▇▇”)) to the
Representatives via e-mail in “pdf” format on such filing date to e-mail
accounts designated by the Representatives; and, at the Representatives’
request, to furnish copies of the Pricing Disclosure Package, 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
Representatives, 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 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
|
20
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 Representatives 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 Representatives 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
Representatives, 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 Representatives 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.
|
|
(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 Underwriters 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
|
21
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 Representatives 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.
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(h)
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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.
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(i)
|
[Reserved].
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(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 shall prevent the Company from filing or submitting reports
under the Exchange Act or issuing press releases in the ordinary course of
business.
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(k)
|
Except
as otherwise agreed between the Company and the Underwriters, 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 Underwriters 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 Underwriters 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
Underwriters 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 Underwriters in connection therewith) and the printing and
furnishing of copies of any blue sky surveys or legal investment surveys
to the Underwriters, (E) the listing of the Shares on the Exchange and
any
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22
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
Underwriters 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.
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(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.
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(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.
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(n)
|
[Reserved].
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(o)
|
For
a period of 90 days after the date of the Prospectus, 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, 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
Representatives, 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 Class A Convertible
Debentures and Class B Convertible
Debentures).
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6.
Further Agreements of
the Selling Stockholders. Each of the Selling Stockholders covenants and
agrees with each Underwriter that:
23
(a)
It will deliver to the Representatives prior
to or at the Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement specified by
the Treasury Department regulations in lieu thereof) in order to facilitate the
Underwriters’ documentation of their compliance with the reporting and
withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982
with respect to the transactions herein contemplated.
(b) It will
cause its affiliates to exercise that number of Convertible Debentures (as
defined in the Preliminary Prospectus) and deliver Common Stock to Citadel
Equity Fund Ltd. to the extent necessary to deliver any Option Shares to the
Underwriters.
7.
Conditions of
Underwriters’ Obligations. The obligation of each Underwriter to purchase
the Underwritten Shares on the Closing Date or the Option Shares on each
Additional Closing Date, as the case may be, 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 Stockholders herein contained or contained in any certificate of
an officer or officers of the Company and each of the Selling Stockholders
delivered pursuant to the provisions hereof shall be true and correct in all
respects.
(ii)
The
Company and each Selling Stockholders shall have performed and observed their
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 Representatives
makes it impracticable or inadvisable to proceed with the offering, sale or
delivery of the Shares on the Closing Date or each Additional Closing Date, as
the case may be, 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
▇▇▇▇▇’▇ 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
24
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 or any
Additional Closing Date, as applicable, prevent the sale of the Shares and (B)
no injunction or order of any federal, state or foreign court shall have been
issued that would, as of the Closing Date or any Additional Closing Date, as
applicable, prevent the sale of the Shares.
(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
Representatives; and (D) no suspension of the qualification of the Shares for
offering or sale in any jurisdiction, and no initiation 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 Representatives 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 or any Additional Closing Date, as applicable, 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 Representatives 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 Representatives the opinion and negative
assurance letter of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel to the
Company, addressed to the Underwriters and dated the Closing Date, in the form
of Exhibit B
hereto.
(xii) The
Company shall have delivered to the Representatives an opinion of internal
counsel of the Company, addressed to the Underwriters and dated the Closing
Date, in the form of Exhibit C
hereto.
25
(xiii)
The Representatives
shall have received an opinion and negative assurance letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP, counsel
to the Underwriters, addressed to the Underwriters and dated the Closing Date,
addressing such matters as the Representatives may reasonably
request.
(xiv) On the
date of this Agreement and on the Closing Date and each Additional Closing Date,
as the case may be, Deloitte & Touche LLP shall have furnished to the
Representatives, at the request of the Company, letters, dated the respective
dates of delivery thereof and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representatives, 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 and each Additional Closing Date, as the
case may be, shall use a “cut-off” date no more than three business days prior
to such Closing Date or such Additional Closing Date, as the case may
be.
(xv) The
Company shall have delivered to the Representatives 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.
(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 4
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 full force and effect on the Closing Date or Additional Closing
Date, as the case may be.
(xvii)
The
Company and each Selling Stockholder shall have delivered to the Representatives
such other documents as the Representatives shall reasonably
request.
(xviii)
[Reserved.]
(xix) Each of
the Selling Stockholders shall have delivered to the Representatives an
officer’s certificate signed by one of such Selling Stockholder’s executive
officers, dated the Closing Date, certifying as to the matters set forth in
Exhibit E
hereto.
(xx) The
Selling Stockholders shall have delivered to the Representatives the opinions of
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel to the Selling
Stockholders and ▇▇▇▇▇▇ and Calder, special Cayman counsel to
26
the Selling
Stockholders, addressed to the Underwriters and dated the Closing Date, in form
and substance reasonably satisfactory to the Representatives.
All
opinions, letters and other documents referred to above shall be satisfactory in
form and substance to the Representatives.
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8.
|
Termination.
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(a) This
Agreement may be terminated in the absolute discretion of the Representatives if
after the execution and delivery of this Agreement and prior to the Closing Date
or, in the case of the Option Shares, prior to any Additional 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 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
Representatives’ 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 (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 Representatives’ judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Pricing Disclosure Package and the Prospectus. If the Representatives
elect to terminate the obligations of the Underwriters pursuant to this Section
8, the Company and the Selling Stockholders shall be notified promptly in
writing.
(b) If (i)
this Agreement is terminated pursuant to Section 8(a), (ii) the Selling
Stockholders for any reason fail to tender the Shares for delivery to the
Underwriters or (iii) the Underwriters decline to purchase the Shares for any
reason permitted under this Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriters in connection
with this Agreement and the offering contemplated hereby.
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9.
|
Defaulting
Underwriter.
|
(a)
If, on the Closing Date or any Additional Closing Date, as the case may be, any
Underwriter defaults on its obligation to purchase the Shares that it has agreed
to purchase hereunder on such date, the non-defaulting Underwriters may in their
discretion arrange for the purchase of such Shares by other persons satisfactory
to the Company and the Selling Stockholders on the terms contained in this
Agreement. If, within 36 hours after any such default by any Underwriter, the
non-defaulting Underwriters do not arrange for the purchase of such Shares, then
the Company and the Selling Stockholders shall be entitled to a further period
of 36 hours within which to procure other persons satisfactory to the
non-defaulting Underwriters to purchase such Shares on such terms. If other
persons become obligated or agree to purchase the Shares of a defaulting
Underwriter, either the non-defaulting Underwriters or the Company and the
Selling Stockholders may postpone the Closing Date or the Additional
Closing
27
Date, as the case may be, for up to five
full business days in order to effect any changes that in the opinion of counsel
for the Company, counsel for the Selling Stockholders or counsel for the
Underwriters may be necessary in the Registration Statement and the Prospectus
or in any other document or arrangement, and the Company agrees to promptly
prepare any amendment or supplement to the Registration Statement and the
Prospectus that effects any such changes. As used in this Agreement, the term
“Underwriter” includes, for all purposes of this Agreement unless the context
otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to
this Section 9, purchases Shares that a defaulting Underwriter agreed but failed
to purchase.
(b)
If, after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters, the
Company and the Selling Stockholders as provided in paragraph (a) above, the
aggregate number of Shares that remain unpurchased on the Closing Date or any
Additional Closing Date, as the case may be, does not exceed one-eleventh of the
aggregate number of Shares to be purchased on such date, then the Company and
the Selling Stockholders shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares that such Underwriter agreed to
purchase hereunder on such date plus such Underwriter’s pro rata share (based on
the number of Shares that such Underwriter agreed to purchase on such date) of
the Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made.
(c)
If, after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters, the
Company and the Selling Stockholders as provided in paragraph (a) above, the
aggregate number of Shares that remain unpurchased on the Closing Date or any
Additional Closing Date, as the case may be, exceeds one-eleventh of the
aggregate amount of Shares to be purchased on such date, or if the Company and
the Selling Stockholders shall not exercise the right described in paragraph (b)
above, then this Agreement or, with respect to any Additional Closing Date, the
obligation of the Underwriters to purchase Shares on the Additional Closing Date
shall terminate without liability on the part of the non-defaulting
Underwriters. Any termination of this Agreement pursuant to this Section 9 shall
be without liability on the part of the Company and the Selling Stockholders,
except that the Company will continue to be liable for the payment of expenses
as set forth in Section 5(k) hereof and except that the provisions of Section 10
hereof shall not terminate and shall remain in effect.
(d)
Nothing contained herein shall relieve a defaulting Underwriter of any liability
it may have to the Company, the Selling Stockholders or any non-defaulting
Underwriter for damages caused by its default.
10.
Indemnity and
Contribution.
(a)
The Company agrees to indemnify and hold harmless each Underwriter, its
affiliates, partners, directors and officers and each person, if any, who
controls such 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
28
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 Disclosure Package (or any amendment or
supplement thereto), the Prospectus (or any amendment or supplement thereto),
any Permitted Free Writing Prospectus (or any amendment or supplement thereto)
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 any Underwriter
furnished to the Company in writing by or on behalf of such Underwriter through
the Representatives expressly for use in the Registration Statement, the Pricing
Disclosure Package (or any amendment or supplement thereto) the Prospectus (or
any amendment or supplement thereto) or any Permitted Free Writing Prospectus
(it being understood that such information consists solely of the information
specified in Section 10(c)).
(b)
Each of the Selling Stockholders agrees to indemnify and hold harmless each
Underwriter, its affiliates, directors and officers and each person, if any, who
controls such 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 such Selling Stockholder furnished to the
Company in writing by such Selling Stockholder expressly for use in the
Registration Statement, the Prospectus (or any amendment or supplement thereto),
any Permitted Free Writing Prospectus or any Pricing Disclosure Package, it
being understood that such information consists solely of the information about
such Selling Stockholder set forth in the “Selling Stockholders” section of the
Preliminary Prospectus. In no event shall a Selling Stockholder be required
pursuant to this Section 10(b) to indemnify the Underwriters in an amount in
excess of the aggregate net proceeds before expenses received by such Selling
Stockholder from the Underwriters for the Shares.
(c) Each
Underwriter agrees, severally and not jointly, 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 each of the
Selling Stockholders 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 such Underwriter furnished to the
Company in writing by or on behalf of such Underwriter through the
Representatives expressly for use in the Registration Statement, the Pricing
Disclosure Package (or any amendment or supplement thereto), the Prospectus (or
any amendment or supplement thereto) or any Permitted Free Writing Prospectus;
it being understood that such information shall consist solely of the following:
the third and tenth 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 in-
29
demnification
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 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 Underwriters, their affiliates, partners, directors
and officers and any control persons of the Underwriters shall be designated in
writing by the Representatives 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
30
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 Stockholders, on the one hand, and the Underwriters 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 Stockholders, on the one hand, and the
Underwriters 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 Stockholders, on the one hand, and the Underwriters on the
other, shall be deemed to be in the same respective proportions as the net
proceeds (before deducting expenses) received by the Selling Stockholders from
the sale of the Shares to the total underwriting discounts and commissions
received by the Underwriters in connection therewith bear to the aggregate
offering price of the Shares. The relative fault of the Company and the Selling
Stockholders, on the one hand, and the Underwriters 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
Stockholders or by the Underwriters and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(f)
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 10 were
determined by pro rata
allocation (even if the Selling Stockholders or the Underwriters were treated as
one entity for such purpose) 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 any Underwriter be required to contribute any amount in excess of the
amount by which the total underwriting discounts and commissions received by
such Underwriter with respect to the offering of the Shares exceeds the amount
of any damages that such 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 a 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
Disclosure Package and the Prospectus, it being understood that the only such
information furnished by any Selling Stockholder consists of the information
about such 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 such 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. The Underwriters’ obligations to contribute pursuant to this
Section 10 are several in proportion to their respective purchase obligations
hereunder and not joint.
31
(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 the Representatives or the Underwriters:
▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇ ▇▇▇▇
Attention:
Syndicate Department with a copy to:
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇ Attention: ECM Legal
and
Sandler
▇'▇▇▇▇▇ & Partners, L.P.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
Facsimile
number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Citadel
Securities LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile
number: ▇▇▇-▇▇▇-▇▇▇▇
with a
copy to:
▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy
No.: (212) -269-5420
Confirmation
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇ Silver,
Esq.
(b) if to the Company:
32
E*TRADE
Financial Corporation
▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
General Counsel and Chief Financial Officer
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
with a
copy to (which shall not constitute notice):
▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇ and
(▇▇▇)
▇▇▇-▇▇▇▇
Confirmation
No.: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇ ▇▇▇▇▇, Esq. and ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(c) if
the Selling Stockholders, at:
Citadel
Investment Group, L.L.C.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇
with a
copy to (which shall not constitute notice):
Fried,
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation
No.: (▇▇▇) ▇▇▇-▇▇▇▇
12.
No Fiduciary
Relationship. The Company and the Selling Stockholders acknowledge and
agree (i) in rendering the services set forth herein, the Underwriters are
acting, in their capacity as underwriters, solely in the capacity of an arm’s
length contractual counterparty to the Company and the Selling Stockholders and
not as a financial advisor or fiduciary to, or agent of, the Company, the
Selling Stockholders or any of its affiliates; (ii) the Underwriters may perform
the services contemplated hereby in conjunction with their affiliates, and any
of their affiliates performing services hereunder shall be entitled to the
benefits and be subject to the terms of this Agreement; (iii) each 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, each 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) no Un-
33
derwriter is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction, and the Company and the Selling Stockholders must consult with their own advisors concerning such matters and will be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and no Underwriter shall have any responsibility or liability to the Company or the Selling Stockholders 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 Underwriters or any of their affiliates will be performed solely for the benefit of the Underwriters, their affiliates and its agents and shall not be on behalf of, or for the benefit of, the Company or the Selling Stockholders, 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 Stockholders 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 Stockholders consent to the
jurisdiction of such courts and personal service with respect thereto. The
Company and the Selling Stockholders 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
Underwriter, the Company and the Selling Stockholders, 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 Stockholders 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 Stockholders and may be enforced in any other courts in the jurisdiction
of which the Company or the Selling Stockholders 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 Underwriters, the Company and the Selling Stockholders 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 ex-
34
ecutors
and administrators. No other person, partnership, association or
corporation (including a purchaser, as such purchaser, from the Underwriters)
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 Underwriters, the Company,
the Selling Stockholders, any other Indemnified Person and their respective
successors and assigns and any successor or assign of any substantial portion of
the Company’s, any Selling Stockholder’s and the Underwriters’ respective
businesses and/or assets.
18. Survival. The
respective indemnities, rights of contribution, representations, warranties and
agreements of the Company, the Selling Stockholders and the Underwriters
contained in this Agreement or made by or on behalf of the Company, the Selling
Stockholders or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company, the Selling Stockholders or
the Underwriters.
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 Underwriters may have lending relationships with issuers of
securities underwritten or privately placed by such Underwriter. To the extent
required under the securities laws, prospectuses and other disclosure documents
for securities underwritten or privately placed by such Underwriters 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 such
Underwriters.
The
Underwriters and one or more of their 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
such Underwriter is acting as an underwriter pursuant to this Agreement; provided that the
Underwriters 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 Stockholders, and that neither
the Company nor the Selling Stockholders has nor shall any of them have control
over any decision by the Underwriters and their respective affiliates to enter
into any such transactions.
35
If the foregoing correctly sets forth the
understanding among the Company, the Selling Stockholders and the Underwriters,
please so indicate in the space provided below for the purpose, whereupon this
letter and your acceptance shall constitute a binding agreement between the
Company, the Selling Stockholders and the Underwriters.
|
Very
truly yours,
|
||||
|
E*TRADE
FINANCIAL CORPORATION
|
||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||
| Title: | Chief Financial Officer | |||
[Underwriting
Agreement Signature Page]
| CITADEL EQUITY FUND LTD. | ||||
| By: | /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Authorized Signatory | |||
|
▇▇▇▇▇▇▇
CAPITAL LTD.
|
||||
| By: | s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Authorized Signatory | |||
▇▇▇▇▇▇▇
LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇, INCORPORATED
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Title: | Managing Partner | ||
|
SANDLER
▇’▇▇▇▇▇ & PARTNERS, L.P.
|
|||
| By: |
Sandler
▇’▇▇▇▇▇ and Partners Corp.
the
sole general partner
|
||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | ||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | ||
| Title: | An Officer of the corporation | ||
|
CITADEL
SECURITIES LLC
|
|||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
| Title: | Authorized Signatory | ||
For
themselves and the several Underwriters listed in Schedule 1 to the
foregoing Agreement.
[Underwriting
Agreement Signature Page]
172,000,000
shares (with an over-allotment option to purchase an additional 25,800,000
shares)
Price to
Public: $1.75
Annex
B
None
|
Underwriter
|
Number of Shares
|
|||
|
▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ and ▇▇▇▇▇ Incorporated
|
68,800,000 | |||
|
Sandler
▇’▇▇▇▇▇ & Partners, L.P.
|
60,200,000 | |||
|
Citadel
Securities LLC
|
43,000,000 | |||
| Total | 172,000,000 | |||
|
Selling
Stockholders
|
||||||||
|
Selling Stockholder
|
Number of Underwritten
Shares
|
Number of Option Shares
|
||||||
|
Citadel
Equity Fund Ltd.
|
126,545,455 | 25,800,000 | ||||||
|
▇▇▇▇▇▇▇
Capital Ltd.
|
45,454,545 | ― | ||||||
|
Total
|
172,000,000 | |||||||
Named
Subsidiaries
E*TRADE
Bank
E*TRADE
Clearing LLC
ETFC
Holdings, Inc.
E*TRADE
Capital Markets LLC
E*TRADE
Securities LLC
E*TRADE
Savings Bank
E*TRADE
United Bank
ETB
Holdings, Inc.