Exhibit 10.1
TEXAS CAPITAL BANCSHARES, INC.
COMMON STOCK ($0.01 PAR VALUE PER SHARE)
EQUITY DISTRIBUTION AGREEMENT
January 27, 2010

--------------------------------------------------------------------------------

 

January 27, 2010
To Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
     Texas Capital Bancshares, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell through Morgan Stanley & Co. Incorporated, as sales
agent (the “Manager”), on the terms set forth in this equity distribution
agreement (this “Agreement”), shares of its common stock, par value $0.01 (the
“Shares”), having an aggregate gross sales price of up to $40,000,000 (the
“Maximum Aggregate Gross Sales Price”). The shares of common stock, par value
$0.01, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the “Common Stock”.
     The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement (File No. 333-158586), including a
prospectus, on Form S-3, relating to the securities (the “Shelf Securities”),
including the Shares, to be issued from time to time by the Company. The
registration statement as of its most recent effective date, including the
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A or Rule 430B under the Securities Act of
1933, as amended (the “Securities Act”), is hereinafter referred to as the
“Registration Statement”, and the related prospectus covering the Shelf
Securities and filed as part of the Registration Statement, together with any
amendments or supplements thereto as of the most recent effective date of the
Registration Statement, is hereinafter referred to as the “Basic Prospectus”.
“Prospectus Supplement” means the final prospectus supplement, relating to the
Shares, filed by the Company with the Commission pursuant to Rule 424(b) under
the Securities Act on or before the second business day after the date hereof,
in the form furnished by the Company to the Manager in connection with the
offering of the Shares. Except where the context otherwise requires,
“Prospectus” means the Basic Prospectus, as supplemented by the Prospectus
Supplement and the most recent Interim Prospectus Supplement (as defined in
Section 6(c) below), if any. For purposes of this Agreement, “free writing
prospectus” has the meaning set forth in Rule 405 under the Securities Act.
“Permitted Free Writing Prospectuses” means the documents listed on Schedule I
hereto or otherwise approved in writing by the Manager in accordance with
Section 6(b), and “broadly available road show” means a “bona fide electronic
road show” as defined in Rule 433(h)(5) under the Securities Act that has been
made available without restriction to any person. As used herein, the terms
“Registration Statement”, “Basic Prospectus”, “Prospectus Supplement”, “Interim
Prospectus Supplement” and “Prospectus” shall include the documents, if any,
incorporated by reference therein. The terms “supplement”, “amendment” and
“amend” as used herein with respect to the Registration Statement, the Basic
Prospectus, the Prospectus Supplement, any Interim Prospectus Supplement, the
Prospectus or any free writing prospectus shall include all documents
subsequently filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), that are deemed to be
incorporated by reference therein (the “Incorporated Documents”).

A-1

--------------------------------------------------------------------------------

 

     1. Representations and Warranties. The Company represents and warrants to
and agrees with the Manager that:
     (a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect; and no
proceedings for such purpose are pending before or threatened by the Commission.
The Company was not, at the time of filing the Registration Statement and each
amendment thereto, and is not, an “ineligible issuer,”as defined in Rule 405
under the Securities Act.
     (b) (i) (A) At the respective times the Registration Statement and each
amendment thereto became effective, (B) at each deemed effective date with
respect to the Manager pursuant to Rule 430B(f)(2) under the Securities Act
(each, a “Deemed Effective Time”), (C) as of each time Shares are sold pursuant
to this Agreement (each, a “Time of Sale”), (D) at each Settlement Date (as
defined below) and (E) at all times during which a prospectus is required by the
Securities Act to be delivered (whether physically or through compliance with
Rule 172 under the Securities Act or any similar rule) in connection with any
sale of Shares (the “Delivery Period”), the Registration Statement complied and
will comply in all material respects with the requirements of the Securities Act
and the rules and regulations under the Securities Act; (ii) the Basic
Prospectus complied, or will comply, at the time it was, or will be filed, with
the Commission, complies as of the date hereof (if filed with the Commission on
or prior to the date hereof) and, as of each Time of Sale and at all times
during the Delivery Period, will comply in all material respects with the rules
and regulations under the Securities Act; (iii) each of the Prospectus
Supplement, any Interim Prospectus Supplement and the Prospectus will comply, as
of the date that such document is filed with the Commission, as of each Time of
Sale, as of each Settlement Date and at all times during the Delivery Period, in
all material respects with the rules and regulations under the Securities Act;
and (iv) the Incorporated Documents, when they were filed with the Commission,
conformed in all material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder, and any further
Incorporated Documents so filed and incorporated by reference, when they are
filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.
     (c) (i) As of the date hereof, at the respective times the Registration
Statement and each amendment thereto became effective and at each Deemed
Effective Time, the Registration Statement did not and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
(ii) as of each Time of Sale, the Prospectus (as amended and supplemented at
such Time of Sale) and any Permitted Free Writing Prospectus then in use,
considered together (collectively, the “General Disclosure Package”), did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (iii) as of its date,
the Prospectus did 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; and
(iv) at any Settlement Date, the Prospectus (as amended and supplemented at such
Settlement Date) did not and will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the

A-2

--------------------------------------------------------------------------------

 

statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statement or omission made in reliance upon and in
conformity with information furnished in writing to the Company by the Manager
expressly for use in the Prospectus or in the General Disclosure Package.
     (d) Any free writing prospectus that the Company is required to file
pursuant to Rule 433(d) under the Securities Act has been, or will be, filed
with the Commission in accordance with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder. Each free
writing prospectus that the Company has filed, or is required to file, pursuant
to Rule 433(d) under the Securities Act or that was prepared by or on behalf of
or used or referred to by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus, as
of its issue date and at all subsequent times through the completion of the
public offer and sale of the Shares or until any earlier date that the Company
notified or notifies the Manager, did not, does not and will not include any
material information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus.
     (e) (i)(A) At the time of filing of the Registration Statement, (B) at the
time of the most recent amendment thereto for the purposes of complying with
Section 10(a)(3) of the Securities Act (whether such amendment was by
post-effective amendment, incorporated report filed pursuant to Section 13 or
15(d) of the Exchange Act or form of prospectus) and (C) at the time the Company
or any person acting on its behalf (within the meaning, for this clause only, of
Rule 163(c)) made any offer relating to the Shelf Securities in reliance on the
exemption of Rule 163 under the Securities Act, the Company was not an
“ineligible issuer” as defined in Rule 405 of the Securities Act; and (ii)(A) at
the time of filing of the Registration Statement, (B) at the earliest time
thereafter that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the
Shares and (C) at the date hereof, the Company was not and is not an “ineligible
issuer” as defined in Rule 405 under the Securities Act.
     (f) The Shares have been duly authorized and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued and fully paid
and non assessable; no holder of the Shares will be subject to personal
liability by reason of being such a holder; and the issuance of the Shares is
not subject to the preemptive or other similar rights of any securityholder of
the Company.
     (g) There are no contracts or documents which are required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits
thereto which have not been so described and filed as required.
     (h) The Registration Statement is not the subject of a pending proceeding
or examination under Section 8(d) or 8(e) of the Securities Act, and the Company
is not the subject of a pending proceeding under Section 8A of the Securities
Act in connection with the offering of the Shares.

A-3

--------------------------------------------------------------------------------

 

     (i) The statements set forth in each of the Registration Statement, the
General Disclosure Package and the Prospectus under the headings “Certain U.S.
Federal Income Tax Consequences to Non-U.S. Holders of Common Stock,”
“Description of Common Stock” and “Plan of Distribution,” under the heading
“Regulation and Supervision” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2008 (which is incorporated by reference in the
Prospectus) and in Item 15 of the Registration Statement, insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate and complete in all material respects.
     (j) To the knowledge of the Company, there are no affiliations or
associations between any member of the FINRA and any of the Company’s officers,
directors or beneficial owners of 5% or more of the Company’s outstanding Common
Stock, except as set forth in the Registration Statement, General Disclosure
Package or Prospectus or as disclosed in writing to the Manager.
     (k) The Shares are not required to be approved for listing on the Exchange
upon official notice of issuance.
     (l) Except as otherwise disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, there are no persons with
registration rights or other similar rights to have any securities registered by
the Company under the Securities Act, including by reason of filing of the
Registration Statement.
     (m) The financial statements and the related notes thereto of the Company
and its consolidated Subsidiaries (as defined below) included or incorporated by
reference in the Registration Statement, the General Disclosure Package and the
Prospectus present fairly in all material respects the financial position of the
Company and its consolidated Subsidiaries as of the dates indicated and the
results of their operations and the changes in their cash flows for the periods
specified; such financial statements have been prepared in conformity with U.S.
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby; the other financial information included
or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus has been derived from the accounting
records of the Company and its consolidated Subsidiaries and presents fairly in
all material respects the information shown thereby.
     (n) The statistical information required by Commission Industry Guide 3
included or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus present fairly in all material respects
the information set forth therein, is in compliance in all material respects
with the Securities Act and the rules and regulations of the Commission
thereunder and such Guide 3, and is consistent in all material respects with the
Company’s financial statements included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the Prospectus,
except as noted therein. Nothing has come to the attention of the Company that
has caused the Company to believe that the other statistical and market related
data included or incorporated by reference in the Registration Statement, the
General Disclosure Package and the Prospectus is not based on or derived from
sources that are generally believed to be reliable.

A-4

--------------------------------------------------------------------------------

 

     (o) The Company and each of its subsidiaries (collectively, the
“Subsidiaries”) have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization (or,
in the case of Texas Capital Bank, National Association (the “Bank”), is duly
chartered and validly existing as a national banking association), are duly
qualified to do business and are in good standing in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or in good standing or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, management, financial position, stockholders’ equity,
results of operations or prospects of the Company and its Subsidiaries taken as
a whole or on the performance by the Company of its obligations hereunder (a
“Material Adverse Effect”). The Bank is the only significant Subsidiary of the
Company.
     (p) Since the date of the most recent financial statements of the Company
included or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus, (i) there has not been any change in the
capital stock, long-term debt, notes payable or current portion of long-term
debt of the Company or any of its Subsidiaries, or any dividend or distribution
of any kind declared, set aside for payment, paid or made by the Company on any
class of capital stock, or any Material Adverse Effect; (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, that is material to the Company
and its Subsidiaries taken as a whole; (iii) neither the Company nor any of its
Subsidiaries has sustained any material 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; and
(iv) there has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole, from that set forth in the General Disclosure
Package, except in each case as otherwise disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus.
     (q) The Company has an authorized capitalization as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus; all
the outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and are not subject to
any pre-emptive or similar rights; except as described in or expressly
contemplated by the Registration Statement, the General Disclosure Package and
the Prospectus, there are no outstanding rights (including, without limitation,
pre-emptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in the Company or any of its Subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the issuance of
any capital stock of the Company or any such Subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options; the capital
stock of the Company conforms in all material respects to the description
thereof contained in the Registration Statement, the

A-5

--------------------------------------------------------------------------------

 

General Disclosure Package and the Prospectus; and all the outstanding shares of
capital stock or other equity interests of each Subsidiary owned, directly or
indirectly, by the Company have been duly authorized and validly issued, are
fully paid and non-assessable, except, in the case of the Bank, as provided in
12 U.S.C. §55, and are owned directly or indirectly by the Company, free and
clear of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party.
     (r) The Company has been duly registered as a bank holding company and
qualified as a financial holding company under the applicable provisions of the
Bank Holding Company Act of 1956, as amended. The Company and the Bank are in
compliance in all material respects with all applicable laws administered by and
regulations of the Board of Governors of the Federal Reserve System (the
“Federal Reserve Board”), the Federal Deposit Insurance Corporation (the
“FDIC”), the Office of the Comptroller of the Currency (the “OCC”) and any other
federal or state bank regulatory authority (collectively, the “Bank Regulatory
Authorities”) with jurisdiction over the Company or the Bank, other than where
such failures to comply would not, individually or in the aggregate, have a
Material Adverse Effect. Except as otherwise disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, neither the
Company nor the Bank is a party to any written agreement or memorandum of
understanding with, or a party to, any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of an
extraordinary supervisory letter that is enforceable against the Company or the
Bank and would result in sanctions against the Company or the Bank from, or has
adopted any board resolutions at the request of, any Bank Regulatory Authority
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit policies or its management except, in each
case, as individually or in the aggregate would not reasonably expected to have
a Material Adverse Effect, nor have any of them been advised by any Bank
Regulatory Authority that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, or any such board resolutions.
     (s) The Company has full right, power and authority to execute and deliver
this Agreement and issue and sell the Shares and to perform its obligations
hereunder; and all action required to be taken for the due and proper
authorization, execution and delivery by it of this Agreement, the issuance and
sale of the Shares and the consummation by it of the transactions contemplated
hereby or by the Registration Statement, the General Disclosure Package and the
Prospectus has been duly and validly taken.
     (t) This Agreement has been duly authorized, executed and delivered by the
Company.
     (u) 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

A-6

--------------------------------------------------------------------------------

 

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, individually or in the aggregate, have a
Material Adverse Effect.
     (v) The execution, delivery and performance by the Company of this
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated hereby will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to, 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; (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its
Subsidiaries; 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 authority, except in the case of clauses (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.
     (w) No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory
authority is required for the execution, delivery and performance by the Company
of this Agreement, the issuance and sale of the Shares and the consummation of
the transactions contemplated hereby, except (i) for such consents, approvals,
authorizations, orders and registrations or qualifications as have already been
made or obtained or will be made or obtained prior to the date hereof;
(ii) registration under the Securities Act of the offer and sale of the Shares,
which has been effected; (iii) as may be required under applicable state
securities laws in connection with the sale of the Shares by the Manager or
under the rules and regulations of the NASDAQ Global Select Market (the
“Exchange”) or the Financial Industry Regulatory Authority, Inc. (“FINRA”); or
(iv) where the failure to obtain such consent, authorization, order or
qualification would not have a Material Adverse Effect.
     (x) Except as described in the Registration Statement, the General
Disclosure Package and the Prospectus, there are no legal, governmental or
regulatory investigations, actions, suits or proceedings pending or, to the
knowledge of the Company, threatened, to which the Company or any of its
Subsidiaries is or may be a party or to which any property of the Company or any
of its Subsidiaries is or may be the subject that (i) individually or in the
aggregate, if determined adversely to the Company or any of its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect or (ii) are
required to be described in the Registration Statement or the Prospectus and are
not so described.
     (y) Ernst & Young LLP, who have certified certain financial statements of
the Company and its Subsidiaries, is an independent registered public accounting
firm with respect to the Company and its Subsidiaries within the applicable
rules and regulations adopted by the

A-7

--------------------------------------------------------------------------------

 

Commission and the Public Company Accounting Oversight Board (United States) and
as required by the Securities Act.
     (z) The Company and its Subsidiaries have good and marketable title to, or
have valid rights to lease or otherwise use, all items of real and personal
property that are material to the respective businesses of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those that (i) do not materially
interfere with the use made or to be made of such property by the Company and
its Subsidiaries, (ii) are disclosed in the Registration Statement, the General
Disclosure Package and Prospectus or (iii) would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
     (aa) The Company and its Subsidiaries own or possess adequate rights to use
all material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations, copyrights, licenses
and know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) necessary to
carry on their businesses as presently conducted; and the Company and its
Subsidiaries have not received any notice of any claim of infringement of or
conflict with any such rights of others that, individually or in the aggregate,
if determined adversely to the Company or any of its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect.
     (bb) Except as would not have a Material Adverse Effect, no relationship,
direct or indirect, exists between or among the Company or any of its
Subsidiaries, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its Subsidiaries, on the other,
that is required by the Securities Act to be described in a registration
statement to be filed with the Commission and that is not so described in the
Registration Statement, the General Disclosure Package and the Prospectus.
     (cc) The Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Registration Statement, the General Disclosure Package and the Prospectus, will
not be required to register as an “investment company” or an entity “controlled”
by 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) The Company and its Subsidiaries have paid all federal, state, local
and foreign taxes and filed all tax returns required to be paid or filed through
the date hereof, or requests for extensions to file such tax returns have been
timely filed or granted and have not expired, except where the Company and its
Subsidiaries are contesting in good faith such taxes and except where the
failure to so file or pay would not reasonably be expected to have a Material
Adverse Effect; and except as otherwise disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus, there is no tax deficiency
that has been asserted against the Company or any of its Subsidiaries or any of
their respective properties or asset.

A-8

--------------------------------------------------------------------------------

 

     (ee) The Company and its Subsidiaries possess all licenses, certificates,
permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or
regulatory authorities that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as described
in the Registration Statement, the General Disclosure Package and the
Prospectus, except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and except as
described in the Registration Statement, the General Disclosure Package and the
Prospectus or would not, individually or in the aggregate, have a Material
Adverse Effect, neither the Company nor any of its Subsidiaries has received
notice of any revocation or modification of any such license, certificate,
permit or authorization or has knowledge that any such license, certificate,
permit or authorization will not be renewed in the ordinary course.
     (ff) No labor disturbance by or dispute with employees of the Company or
any of its Subsidiaries exists or, to the knowledge of the Company, is
contemplated or threatened and the Company is not aware of any existing or
imminent labor disturbance by, or dispute with, the employees of any of its or
its Subsidiaries’ principal suppliers, contractors or customers, except as would
not have a Material Adverse Effect.
     (gg) The Company and its Subsidiaries (i) are in compliance with any and
all applicable federal, state, local and foreign laws, rules, regulations,
requirements, decisions and orders relating to the protection of human health or
safety, the environment, natural resources, hazardous or toxic substances or
wastes, pollutants or contaminants (collectively, “Environmental Laws”),
(ii) have received and are in compliance with all permits, licenses,
certificates or other authorizations or approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii) have not received notice of any actual or potential liability under or
relating to any Environmental Laws, including for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except for any such failure to comply, or
failure to receive required permits, licenses or approvals, or liability, as
would not, individually or in the aggregate, have a Material Adverse Effect.
     (hh) (i) Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for
which the Company or any member of its “Controlled Group” (defined as any
organization which is a member of a controlled group of corporations within the
meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the
“Code”)) would have any liability (each, a “Plan”) has been maintained in
material compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code; (ii) no prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any Plan
excluding transactions effected pursuant to a statutory or administrative
exemption; (iii) for each Plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA, no failure to satisfy the
minimum funding standards (within the meaning of Sections 412 or 430 of the Code
or Section 302 of ERISA) applicable to such Plan, has occurred or is reasonably
expected to occur, whether or not waived; (iv) no determination that any Plan
is, or is expected to be, in “at risk” status (within the

A-9

--------------------------------------------------------------------------------

 

meaning of Section 430 of the Code or Title IV of ERISA) has occurred or is
reasonably expected to occur; (v) the fair market value of the assets of each
Plan exceeds the present value of all benefits accrued under such Plan
(determined based on those assumptions used to fund such Plan); (vi) no
“reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred
or is reasonably expected to occur; and (vii) neither the Company nor any member
of the Controlled Group has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than contributions to the Plan or
premiums to the PBGC, in the ordinary course and without default) in respect of
a Plan (including a “multiemployer plan”, within the meaning of
Section 4001(a)(3) of ERISA).
     (ii) 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 is 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.
     (jj) 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 accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus, there are no material
weaknesses in the Company’s internal controls. Prior to the filing of the
Company’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2009, each of the Company’s auditors and the Audit Committee of the Company’s
Board of Directors (the “Board”) had been advised of (A) all significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal control
over financial reporting; and, since such date, neither the Company’s auditors
nor the Audit Committee of the Board have been advised of any such significant
deficiencies and material weaknesses or fraud.

A-10

--------------------------------------------------------------------------------

 

     (kk) Except as would not have a Material Adverse Effect, the Company and
its Subsidiaries maintain insurance of the types and in the amounts that they
reasonably believe to be adequate in their respective businesses and consistent
with insurance coverage maintained by similar companies and businesses, and as
required by the rules and regulations of all governmental agencies having
jurisdiction over the Company or the Bank, all of which insurance is in full
force and effect.
     (ll) Neither the Company nor any of its subsidiaries nor, to the Company’s
knowledge, any affiliate, director, officer, employee, agent or representative
of the Company or of any of its subsidiaries or affiliates, has taken or will
take any action in furtherance of an offer, payment, promise to pay, or
authorization or approval of the payment or giving of money, property, gifts or
anything else of value, directly or indirectly, to any “government official”
(including any officer or employee of a government or government-owned or
controlled entity or of a public international organization, or any person
acting in an official capacity for or on behalf of any of the foregoing, or any
political party or party official or candidate for political office) to
influence official action or secure an improper advantage; and the Company and
its subsidiaries and affiliates have conducted their businesses in compliance
with applicable anti-corruption laws and have instituted and maintain and will
continue to maintain policies and procedures designed to promote and achieve
compliance with such laws and with the representation and warranty contained
herein.
     (mm) The operations of the Company and its subsidiaries are in material
compliance with all applicable financial recordkeeping and reporting
requirements, including those of the Bank Secrecy Act, as amended by Title III
of the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the
applicable anti-money laundering statutes of jurisdictions where the Company and
its subsidiaries conduct business, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines issued, administered or
enforced by any governmental agency (collectively, the “Anti-Money Laundering
Laws”), 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 Anti-Money Laundering Laws is pending or, to
the best knowledge of the Company, threatened.
     (nn) (i) The Company represents that neither the Company nor any of its
Subsidiaries (collectively, the “Entity”) or, to the knowledge of the Entity,
any director, officer, employee, agent, affiliate or representative of the
Entity, is an individual or entity (“Person”) that is, or is owned or controlled
by a Person that is:
     (A) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United
Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s
Treasury (“HMT”), or other relevant sanctions authority (collectively,
“Sanctions”), nor

A-11

--------------------------------------------------------------------------------

 

     (B) located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
North Korea, Sudan and Syria).
     (ii) The Entity represents and covenants that it will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person:
     (A) to fund or facilitate any activities or business of or with any Person
or in any country or territory that, at the time of such funding or
facilitation, is the subject of Sanctions; or
     (B) in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as agent,
advisor, investor or otherwise).
     (iii) The Entity represents and covenants that, except as detailed in
Schedule II, for the past 5 years, it has not knowingly engaged in, is not now
knowingly engaged in, and will not engage in, any dealings or transactions with
any Person, or in any country or territory, that at the time of the dealing or
transaction is or was the subject of Sanctions.
     (oo) Except as described in the Registration Statement, the General
Disclosure Package and 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,
from making any other distribution on such Subsidiary’s capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary’s properties or assets to
the Company or any other Subsidiary.
     (pp) Except as would not have a Material Adverse Effect, 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 would give rise
to a valid claim against the Company or any of its Subsidiaries or the Manager
for a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Shares.
     (qq) The Company has not taken, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in the unlawful
stabilization or manipulation of the price of the Shares to facilitate the sale
or resale of the Shares.
     (rr) None of the Company, any of its Subsidiaries or, to the Company’s
knowledge, any agent thereof acting on behalf of them has taken, and none of
them will take, any action that could reasonably be expected to cause this
Agreement or the issuance or sale of the Shares or the application of the
proceeds thereof to violate Regulation T, Regulation U or Regulation X of the
Federal Reserve Board.
     (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 in
the

A-12

--------------------------------------------------------------------------------

 

Registration Statement, the General Disclosure Package and Prospectus has been
made or reaffirmed without a reasonable basis or has been disclosed other than
in good faith.
     (tt) 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 with
any provision of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and the
rules and regulations promulgated in connection therewith, including Section 402
related to loans and Sections 302 and 906 related to certifications.
     (uu) There are no securities or preferred stock of or guaranteed by the
Company or any of its Subsidiaries that are rated by a “nationally recognized
statistical rating organization,” as such term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act.
     Any certificate signed by any officer of the Company or any of its
Subsidiaries delivered to the Manager or to counsel for the Manager shall be
deemed a representation and warranty by the Company to the Manager as to the
matters covered thereby.
     2. Sale of Securities. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and the Manager agree that the Company may from time to time
seek to sell Shares through the Manager, acting as sales agent as follows:
     (a) The Company may submit its orders to the Manager by telephone
(including any price, time or size limits or other customary parameters or
conditions) to sell Shares on any Trading Day (as defined herein) which order
shall be confirmed by the Manager (and accepted by the Company) orally or by
electronic mail using a form substantially similar to that attached hereto as
Exhibit A to be executed by the Chief Executive Officer or the Chief Financial
Officer of the Company (it being understood, that any oral confirmation and
acceptance shall be deemed to have the same effect as any confirmation and
acceptance delivered by electronic mail pursuant to this Section 2(a)). As used
herein, “Trading Day” shall mean any trading day on the Exchange, other than a
day on which the Exchange is scheduled to close prior to its regular weekday
closing time.
     (b) Subject to the terms and conditions hereof, the Manager shall use its
commercially reasonable efforts to execute any Company order to sell Shares
submitted to it hereunder and with respect to which the Manager has agreed to
act as sales agent. The Company acknowledges and agrees that (i) there can be no
assurance that the Manager will be successful in selling the Shares, (ii) the
Manager will incur no liability or obligation to the Company or any other person
or entity if it does not sell Shares for any reason and (iii) the Manager shall
be under no obligation to purchase Shares on a principal basis pursuant to this
Agreement.
     (c) The Company shall not authorize the issuance and sale of, and the
Manager shall not sell, any Share at a price lower than any minimum price
therefor designated by the Company pursuant to Section 2(a) above. In addition,
the Company or the Manager may, upon notice to the other party hereto by
telephone (confirmed promptly by email or facsimile), suspend an offering of the
Shares pursuant to this Agreement; provided, however, that such suspension or

A-13

--------------------------------------------------------------------------------

 

termination shall not affect or impair the parties’ respective obligations with
respect to the Shares sold hereunder prior to the receipt of such notice.
     (d) The Manager shall provide written confirmation (which may be by
facsimile or email) to the Company following the close of trading on the
Exchange each day in which Shares are sold under this Agreement setting forth
(i) the amount of Shares sold on such day, (ii) the gross offering proceeds
received from such sale and (iii) the commission payable by the Company to the
Manager with respect to such sales.
     (e) At each Time of Sale, Settlement Date and Representation Date (as
defined below), the Company shall be deemed to have affirmed each representation
and warranty contained in this Agreement. Any obligation of the Manager to use
its commercially reasonable efforts to sell the Shares on behalf of the Company
as sales agent shall be subject to the continuing accuracy of the
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder and to the continuing satisfaction of the
additional conditions specified in Section 5 of this Agreement.
     (f) Notwithstanding any other provision of this Agreement, the Company and
the Manager agree that no sales of Shares shall take place, the Company shall
not request the sales of any Shares that would be sold and the Manager shall not
be obligated to sell or offer to sell (1) except as otherwise agreed upon by the
Company and the Manager, during any period in which the Company’s insider
trading policy, as it exists on the date of this Agreement, would prohibit the
purchase or sale of Common Stock by persons subject to such policy, (2) except
as otherwise agreed upon by the Company and the Manager, during the period from
the date of issuance of any earnings release by the Company and the date on
which the Company’s next subsequent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, as the case may be, is filed with the Commission or (3)
during any other period in which the Company is, or could be deemed to be, in
possession of material non-public information; provided, that, in the event that
the Company intends to amend, supplement, revise or otherwise change its insider
trading policy, (A) written notice of such intent and a copy of such amendment,
supplement or revision shall be given to the Manager at least 10 days before
such amendment, supplement or revision becomes effective and (B) such amendment,
supplement or revision is reasonably satisfactory to the Manager in all material
respects.
     3. Fee. (a) The fee payable to the Manager for sales of the Shares with
respect to which the Manager acts as sales agent hereunder shall be equal to
(1) 1.0% of the Maximum Aggregate Gross Sales Price to be paid on the date
hereof and (2) 1.0% of the gross offering proceeds of such Shares, to be paid
from time to time as such Shares are sold.
     (b) The Company shall reimburse the Manager for 50% of all reasonable fees
and disbursements of counsel for the Manager incurred by it in connection with
the offering contemplated by this Agreement after the date hereof.
     4. Payment, Delivery and Other Obligations. Settlement for sales of the
Shares pursuant to this Agreement will occur on the third Trading Day (or such
earlier day as is industry practice for regular-way trading) following the date
on which such sales are made (each such day, a “Settlement Date”). On each
Settlement Date, the Shares sold through the Manager for settlement on such date
shall be issued and delivered by the Company to an account designated by the
Manager against payment of the net proceeds from the sale of such Shares.
Settlement for all such Shares shall be effected by free delivery of the Shares
by the Company or its transfer agent to the Manager’s account or its designee’s
account (provided that the Manager shall have

A-14

--------------------------------------------------------------------------------

 

given the Company written notice of such designee prior to the Settlement Date)
at The Depository Trust Company or by such other means of delivery as may be
mutually agreed upon by the parties hereto, which in all cases shall be freely
tradable, transferable, registered shares in good deliverable form, in return
for payment in same day funds delivered to the account designated by the
Company. If the Company, or its transfer agent (if applicable), shall default on
its obligation to deliver the Shares on any Settlement Date, the Company shall
(i) hold the Manager harmless against any loss, claim, damage, or expense
(including reasonable legal fees and expenses), as incurred, arising out of or
in connection with such default by the Company and (ii) pay the Manager any
commission, discount or other compensation to which it would otherwise be
entitled absent such default.
     5. Conditions to the Manager’s Obligations. The obligations of the Manager
are subject to the following conditions:
     (a) Since the later of (A) the date of this Agreement and (B) the
immediately preceding Representation Date:
     (i) there shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded any of the securities of the Company or any of its
Subsidiaries by any “nationally recognized statistical rating organization”, as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act;
and
     (ii) there shall not have occurred any change, or any development involving
a prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its Subsidiaries, taken as a
whole, from the respective dates of the Registration Statement, the Prospectus
and the General Disclosure Package that, in the Manager’s judgment, is material
and adverse and that makes it, in the Manager’s judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
     (b) The Manager shall have received on each Representation Date a
certificate, dated such Representation Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(a)(i) above and to the
effect that (i) the representations and warranties of the Company contained in
this Agreement are true and correct in all material respects as of such
Representation Date; (ii) the Company has complied in all material respects with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before such Representation Date; (iii) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been initiated or, to the
knowledge of the Company, threatened by the Commission; (iv) the Prospectus
Supplement, any Interim Prospectus Supplement and each Permitted Free Writing
Prospectus have been timely filed with the Commission under the Securities Act
(in the case of a Permitted Free Writing Prospectus, to the extent required by
Rule 433 under the Securities Act), and all requests for additional information
on the part of the Commission have been complied with or otherwise satisfied;
(v) as of such Representation Date and as of each Time of Sale, if any,

A-15

--------------------------------------------------------------------------------

 

subsequent to the immediately preceding Representation Date, the Registration
Statement did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; and (vi) as of such Representation Date and
as of each Time of Sale, if any, subsequent to the immediately preceding
Representation Date, the General Disclosure Package did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that no such certificate shall apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to the
Company by the Manager expressly for use in the General Disclosure Package.
     The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
     (c) The Manager shall have received on each Representation Date, and on
such other dates as may be reasonably requested by the Manager, an opinion of
Winstead PC, outside counsel for the Company, dated such date, substantially to
the effect that:
     (i) the Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the Securities Act; any required
filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b) (without reference to
Rule 424(b)(8)); any required filing of each Issuer Free Writing Prospectus
pursuant to Rule 433 has been made in the manner and within the time period
required by Rule 433(d); and, to such counsel’s knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to our
knowledge, threatened by the Commission;
     (ii) the Registration Statement, including any Rule 462(b) Registration
Statement and the Rule 430A Information, the Prospectus and each amendment or
supplement to the Registration Statement and Prospectus, as of their respective
effective or issue dates (other than the financial statements, notes and
schedules and other financial information and statistical data included therein
or omitted therefrom, as to which such counsel need express no opinion) complied
as to form in all material respects with the requirements of the Securities Act
and the Securities Act Regulations;
     (iii) the Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Delaware and the
Bank is validly existing as a national banking association under the laws of the
United States. The Company is duly registered as a bank holding company and
qualified as a financial holding company under the Bank Holding Company Act of
1956, as amended. The Company is duly qualified and in good standing as a
foreign corporation under the laws of the State of Texas;
     (iv) all the outstanding shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and non-assessable;
the capital stock

A-16

--------------------------------------------------------------------------------

 

of the Company conforms in all material respects to the description thereof
contained in the Registration Statement, General Disclosure Package and
Prospectus; and all the outstanding shares of capital stock or other equity
interests of the Bank have been duly and validly authorized and issued, are
fully paid and non-assessable, except, as provided in 12 U.S.C. §55;
     (v) the Company has full right, power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; and all action required
to be taken for the due and proper authorization, execution and delivery by the
Company of this Agreement, the issue and sale of the Shares and the consummation
by the Company of the transactions contemplated hereby or by the Registration
Statement as it relates to the Shares, General Disclosure Package and Prospectus
has been duly and validly taken;
     (vi) this Agreement has been duly authorized, executed and delivered by the
Company;
     (vii) the Shares to be issued and sold by the Company hereunder have been
duly authorized, and when issued and delivered by the Company pursuant to this
Agreement, will be validly issued, fully paid and non-assessable and are free of
statutory preemptive rights and, to such counsel’s knowledge, contractual
preemptive rights or similar rights;
     (viii) this Agreement conforms in all material respects to the description
thereof contained in the Registration Statement, General Disclosure Package and
Prospectus;
     (ix) the execution, delivery and performance by the Company of this
Agreement, the compliance by the Company with the terms hereof, the issuance and
sale of the Shares and the consummation of the transactions contemplated hereby
or by the Registration Statement as it relates to the Shares, General Disclosure
Package and Prospectus will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its Subsidiaries pursuant to,
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 and that
is filed as an exhibit to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008, (ii) result in any violation of the provisions of the
charter or by-laws or similar organizational documents of the Company or any of
its Subsidiaries or (iii) result in the violation of any law or statute or any
judgment, order or regulation of any court or arbitrator or governmental or
regulatory authority except, in the case of clauses (i) and (iii) above, for
such conflict, breach, violation or default that would not, individually or in
the aggregate, have a Material Adverse Effect;
     (x) no consent, approval, authorization, or order of or filing with any
federal, Delaware state, New York state or Texas state governmental authority
or, to such

A-17

--------------------------------------------------------------------------------

 

counsel’s knowledge, any federal, Delaware state, New York state or Texas state
court is required for the issuance and sale of the Shares, the Company’s
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated thereby, other than (a) those that have been obtained
under the Securities Act, the Exchange Act or the rules of the Exchange, and
(b) those under state securities or blue sky laws or FINRA (as to which such
counsel need express no opinion);
     (xi) to the knowledge of such counsel, except as described in the
Registration Statement, General Disclosure Package and Prospectus, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings
pending or threatened required to be disclosed in the Registration Statement,
General Disclosure Package or Prospectus;
     (xii) the descriptions in the Registration Statement, General Disclosure
Package and Prospectus of statutes, legal, governmental and regulatory
proceedings and contracts and other documents are accurate in all material
respects; the statements in the Registration Statement, General Disclosure
Package and Prospectus under the headings “Certain U.S. Federal Income Tax
Consequences to Non-U.S. Holders of Common Stock” and “Description of Common
Stock” and under the heading “Regulation and Supervision” in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008 (which is
incorporated by reference in the Prospectus), to the extent that they constitute
summaries of the terms of stock, matters of law or regulation or legal
conclusions, fairly summarize the matters described therein in all material
respects;
     (xiii) the Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Registration Statement, General Disclosure Package and Prospectus, will not be
required to register as an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act;
     (xiv) the execution and delivery of this Agreement by the Company, the
issuance and sale of the Shares or the use of the proceeds from the sale of the
Shares, as described in the Prospectus under the caption “Use of Proceeds”, will
not violate Regulation T, U or X of the Federal Reserve Board;
     (xv) (A) in the opinion of such counsel each Incorporated Document (other
than the financial statements, notes and schedules and other financial and
statistical data included therein or omitted therefrom, as to which such counsel
need not express any opinion) complied as to form as of its filing date in all
material respects to the requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder and (B) nothing has come to
the attention of such counsel that causes such counsel to believe that (1) any
part of the Registration

A-18

--------------------------------------------------------------------------------

 

Statement, when such part became effective (other than the financial statements,
notes and schedules and other financial and statistical data included therein or
omitted therefrom, as to which such counsel need not express any belief),
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (2) the Registration Statement (other than the financial
statements, notes and schedules and other financial and statistical data
included therein or omitted therefrom as to which such counsel need not express
any belief), on the date of this Agreement and at each Deemed Effective Time,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (3) the Prospectus (other than the financial statements, notes
and schedules and other financial and statistical data included therein or
omitted therefrom, as to which such counsel need not express any belief) as of
its date, or, as amended or supplemented, if applicable, as of such date,
contained or contains any untrue statement of a material fact or omitted or
omits 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 or (4) the General Disclosure Package (other than the financial
statements, notes and schedules and other financial and statistical data
included therein or omitted therefrom, as to which such counsel need not express
any belief), as amended or supplemented, if applicable, as of such date,
contains any untrue statement of a material fact or omits 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.
     (d) The Manager shall have received on each Representation Date, and on
such other dates as may be reasonably requested by the Manager, an opinion of
Simpson Thacher & Bartlett LLP, counsel for the Manager, dated such date, in
form and substance reasonably satisfactory to the Manager.
     The opinion of counsel for the Company described in Section 5(c) above
shall be rendered to the Manager at the request of the Company and shall so
state therein.
     (e) The Manager shall have received on each date specified in Section 6(o),
a letter dated such date in form and substance satisfactory to the Manager, from
Ernst & Young LLP, independent public accountants for the Company,
(A) confirming that they are an independent registered public accounting firm
within the meaning of the Securities Act, the Exchange Act and the Public
Company Accounting Oversight Board, (B) stating, as of such date, the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants’ “comfort letters” to
underwriters in connection with registered public offerings (the first such
letter, the “Initial Comfort Letter”) and (C) updating the Initial Comfort
Letter with any information that would have been included in the Initial Comfort
Letter had it been given on such date and modified as necessary to relate to the
Registration Statement, the Prospectus Supplement, the Prospectus or any issuer
free writing prospectus, as amended and supplemented to the date of such letter.
     (f) On each date specified in Section 6(p) (and only to the extent required
by the terms of Section 6(p)), (1) the Manager shall have received a letter
dated such date in form and substance satisfactory to the Manager, from the
Chief

A-19

--------------------------------------------------------------------------------

 

Financial Officer of the Company, stating, as of such date, the conclusions and
findings of such individual, in his or her capacity as Chief Financial Officer
of the Company, with respect to certain current financial information requested
by the Manager, (2) the Chairman of the Company’s Audit Committee of the Board
shall have participated in a conference call with the Manager regarding such
current financial information and other matters and (3) the Manager shall have
received the monthly financials of the Company and/or its Subsidiaries from
which such current financial information is derived.
     (g) All filings with the Commission required by Rule 424 under the Act to
have been filed by each Time of Sale or related Settlement Date shall have been
made within the applicable time period prescribed for such filing by Rule 424
(without reliance on Rule 424(b)(8)).
     (h) In the event that a supplemental listing is required by the Nasdaq
Listing Rules, the Shares shall have been approved for listing on the Exchange.
     (i) The Common Stock shall be an “actively-traded security” excepted from
the requirements of Rule 101 of Regulation M under the Exchange Act by
subsection (c)(1) of such rule.
     (j) If, between the Time of Sale of any Shares and the corresponding
settlement of the sale of such Shares on the scheduled Settlement Date, an event
occurs which would result in the failure of any of the conditions described in
Section 5(a) or the Company would be unable to deliver the certificate
contemplated by Section 5(b), then the Manager may cause the Company to cancel
the sale by the Company to any purchaser thereof of all or a portion of such
Shares and each of the Manager and the Company shall be released from any of its
obligations under Section 4 with respect to such Shares. The Company shall hold
the Manager harmless against any loss, claim, damage or expense (including
reasonable legal fees and expenses), as incurred, arising out of or in
connection with the cancellation of any sale pursuant to this Section 5(i).
     6. Covenants of the Company. The Company covenants with the Manager as
follows:
     (a) To furnish to the Manager copies of the Registration Statement
(excluding exhibits) and copies of the Prospectus (or the Prospectus as amended
or supplemented) in such quantities as the Manager may from time to time
reasonably request. In case the Manager is required to deliver, under the
Securities Act (whether physically or through compliance with Rule 172 under the
Securities Act or any similar rule), a prospectus relating to the Shares after
the nine-month period referred to in Section 10(a)(3) of the Securities Act, or
after the time a post-effective amendment to the Registration Statement is
required pursuant to Item 512(a) of Regulation S-K under the Securities Act,
upon the request of the Manager, and at its own expense, the Company shall
prepare and deliver to the Manager as many copies as the Manager may reasonably
request of an amended Registration Statement or amended or supplemented
prospectus complying with Item 512(a) of Regulation S-K or Section 10(a)(3) of
the Securities Act, as the case may be.

A-20

--------------------------------------------------------------------------------

 

     (b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to the Manager a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
the Manager reasonably objects (other than any prospectus supplement relating to
the offering of Shelf Securities other than the Common Stock). To furnish to the
Manager a copy of each proposed free writing prospectus to be prepared by or on
behalf of, used by, or referred to by the Company and not to use or refer to any
proposed free writing prospectus to which the Manager reasonably objects. Not to
take any action that would result in the Manager or the Company being required
to file with the Commission pursuant to Rule 433(d) under the Securities Act a
free writing prospectus prepared by or on behalf of the Manager that the Manager
otherwise would not have been required to file thereunder.
     (c) To file, subject to Section 6(b) above, promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus Supplement and for the
duration of the Delivery Period. For the duration of the Delivery Period, to
include in its quarterly reports on Form 10-Q, and in its annual reports on Form
10-K, a summary detailing, for the relevant reporting period, (i) the number of
Shares sold through the Manager pursuant to this Agreement, (ii) the net
proceeds received by the Company from such sales and (iii) the compensation paid
by the Company to the Manager with respect to such sales (or alternatively,
prepare a prospectus supplement (each, an “Interim Prospectus Supplement”) with
such summary information and, at least once a quarter and subject to Section
6(b) above, file such Interim Prospectus Supplement pursuant to Rule 424(b)
under the Securities Act (and within the time periods required by Rule 424(b)
and Rules 430A, 430B or 430C under the Securities Act)).
     (d) To file any Permitted Free Writing Prospectus to the extent required by
Rule 433 under the Securities Act and to provide copies of the Prospectus and
such Prospectus Supplement and each Permitted Free Writing Prospectus (to the
extent not previously delivered or filed on the Commission’s Electronic Data
Gathering, Analysis and Retrieval system or any successor system thereto) to the
Manager via electronic mail in “.pdf” format on such filing date to an
electronic mail account designated by the Manager and, at the Manager’s request,
to also furnish copies of the Prospectus and such Prospectus Supplement to the
Exchange and each other exchange or market on which sales of the Shares were
effected, in each case, as may be required by the rules or regulations of the
Exchange or such other exchange or market.
     (e) During the Delivery Period to advise the Manager, promptly after it
receives notice thereof, of the issuance of any stop order by the Commission, 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, or of any request by the Commission for the amending or supplementing
of the Registration Statement, the Prospectus Supplement, the Prospectus or any
Permitted Free Writing Prospectus or for additional information; and, in the
event of the issuance of any such stop order or of any order preventing or
suspending the use of any prospectus relating to the Shares or suspending any
such qualification, to promptly use its best efforts to obtain its withdrawal.

A-21

--------------------------------------------------------------------------------

 

     (f) If, after the date hereof and during the Delivery Period, either
(i) any event shall occur or condition exist as a result of which the Prospectus
would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (ii) for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file any document in order to comply with the
Securities Act or the Exchange Act, to promptly advise the Manager by telephone
(with confirmation in writing or electronic mail) and to promptly prepare and
file, subject to Section 6(b) above, with the Commission an amendment or
supplement to the Registration Statement or the Prospectus which will correct
such statement or omission or effect such compliance and to furnish to the
Manager as many copies as the Manager may reasonably request of such amendment
or supplement.
     (g) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Manager shall
reasonably request and to continue such qualifications in effect so long as
necessary under such laws for the distribution of the Shares.
     (h) To make generally available to the Company’s security holders and to
the Manager, as soon as practicable, an earnings statement covering a period of
at least twelve (12) months beginning after each effective date of the
Registration Statement (as determined for purposes of Rule 158(c) of the
Securities Act) which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder with
respect to the Shares. For the avoidance of doubt, such earnings statement will
not need to be made generally available to the Company’s security holders and to
the Manager more than once per fiscal quarter.
     (i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company’s counsel and
the Company’s accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any Prospectus
Supplement, the Prospectus, any free writing prospectus prepared by or on behalf
of, used by, or referred to by the Company and amendments and supplements to any
of the foregoing, including the filing fees payable to the Commission relating
to the Shares (within the time required by Rule 456(b)(1), if applicable), all
printing costs associated therewith, and the mailing and delivering of copies
thereof to the Manager, in the quantities hereinabove specified, (ii) all costs
and expenses related to the transfer and delivery of the Shares, including any
transfer or other taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky or Legal Investment memorandum in connection with the offer and
sale of the Shares under state securities laws and all expenses in connection
with the qualification of the Shares for offer and sale under state securities
laws as provided in Section 6(g) above, including filing fees and the reasonable
fees and disbursements of counsel for the Manager in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Manager incurred in any required review and qualification by the
FINRA; provided, however, that the aggregate fees and disbursement of counsel in
connection with this subsection (iv) and subsection (iii) above shall not exceed
$10,000 without the prior

A-22

--------------------------------------------------------------------------------

 

written consent of the Company, (v) all costs and expenses, if any, incident to
listing the Shares on the Exchange, (vi) the costs and charges of any transfer
agent, registrar or depositary, and (vii) all other costs and expenses incident
to the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood, however, that
except as provided in this Section 6, Section 3(b) and Section 8, the Manager
will pay all of its costs and expenses, including fees and disbursements of
counsel incurred prior to the date hereof and any advertising expenses connected
with any offers the Manager may make.
     (j) If the third anniversary of the initial effective date of the
Registration Statement occurs before all the Shares have been sold, prior to
such third anniversary, to file, subject to Section 6(b), a new shelf
registration statement and to take any other action necessary to permit the
public offering of the Shares to continue without interruption (references
herein to the Registration Statement shall include the new registration
statement declared effective by the Commission).
     (k) In the event that a supplemental listing is required by the Nasdaq
Listing Rules, to use its commercially reasonable efforts to cause the Shares to
be listed for trading on the Exchange and to maintain such listing and, in the
event that a Change in Number of Shares Outstanding form is required to be
filed, to timely file such form with the Exchange.
     (l) Upon commencement of the offering of the Shares under this Agreement
(and upon the recommencement of the offering of the Shares under this Agreement
following the termination of a suspension of sales hereunder), and each time
that (i) the Registration Statement or the Prospectus is amended or supplemented
(other than (1) in connection with the filing of a prospectus supplement that
contains solely the information required by the second sentence of Section 6(c),
(2) in connection with the filing of any report or other document under
Section 13, 14 or 15(d) of the Exchange Act or (3) by a prospectus supplement
relating solely to the offering of Shelf Securities other than the Shares) or
(ii) there is filed with the Commission any document incorporated by reference
into the Prospectus (other than a Current Report on Form 8-K, unless the Manager
shall otherwise reasonably request) (such commencement date (and any such
recommencement date, if applicable) and each such date referred to in (i) and
(ii) above, a “Representation Date”), to furnish or cause to be furnished to the
Manager forthwith a certificate dated and delivered as of such date, in form
reasonably satisfactory to the Manager, to the effect that the statements
contained in the certificate referred to in Section 5(b) of this Agreement are
true and correct as of such Representation Date, as though made at and as of
such time modified as necessary to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of delivery of such
certificate.
     (m) On each Representation Date, the Company shall cause to be furnished to
the Manager, dated as of such date, in form and substance satisfactory to the
Manager, the written opinion of Winstead PC, legal counsel for the Company,
substantially as described in Section 5(c), modified as necessary to relate to
the Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion.
     (n) Upon request of the Manager, on each Representation Date, Simpson
Thacher & Bartlett LLP, counsel to the Manager, shall furnish to the Manager a
written opinion, dated as of such date in form and substance reasonably
satisfactory to the Manager.

A-23

--------------------------------------------------------------------------------

 

     With respect to Sections 6(m) and 6(n) above, in lieu of delivering such an
opinion for Representation Dates subsequent to the commencement of the offering
of the Shares under this Agreement such counsel may furnish the Manager with a
letter (a “Reliance Letter”) to the effect that the Manager may rely on a prior
opinion delivered under Section 6(m) or Section 6(n), as the case may be, to the
same extent as if it were dated the date of such letter (except that statements
in such prior opinion shall be deemed to relate to the Registration Statement
and the Prospectus as amended or supplemented as of such subsequent
Representation Date).
     (o) Upon commencement of the offering of the Shares under this Agreement
(and upon the recommencement of the offering of the Shares under this Agreement
following the termination of a suspension of sales hereunder) and each time that
(i) the Registration Statement or the Prospectus is amended or supplemented to
include additional financial information, (ii) the Company files an annual
report on Form 10-K or quarterly report on Form 10-Q, (iii) there is filed with
the Commission any document (other than an annual report on Form 10-K or
quarterly report on Form 10-Q) incorporated by reference into the Prospectus
which contains additional or amended financial information or (iv) on such other
dates as may be reasonably requested by the Manager, Ernst & Young LLP,
independent public accountants of the Company, shall deliver to the Manager the
comfort letter(s) as described in Section 5(e).
     (p) Each time that there is furnished with the Commission by the Company
any earnings release or other document with comparable financial information,
but only if sales of Shares are contemplated to occur on or after such date but
prior to the date on which the Company’s next subsequent Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, is filed with the
Commission, the Company shall (1) deliver to the Manager the Chief Financial
Officer’s certificate as described in Section 5(f), (2) direct or cause the
Chairman of the Company’s Audit Committee of the Board to participate in a
conference call with the Manager regarding such matters as described in Section
5(f) and (3) deliver to the Manager the monthly financials of the Company and/or
its Subsidiaries as described in Section 5(f).
     (q) To comply with the Due Diligence Protocol attached hereto on
Schedule III and any other due diligence review or call reasonably requested by
the Manager.
     (r) To reserve and keep available at all times, free of preemptive rights,
Shares for the purpose of enabling the Company to satisfy its obligations
hereunder.
     (s) That it consents to the Manager trading in other shares of the Common
Stock for the Manager’s own account and for the account of its clients at the
same time as sales of the Shares occur pursuant to this Agreement.
     (t) That each acceptance by the Company of an order confirmation in
accordance with Section 2(a) hereunder shall be deemed to be an affirmation to
the Manager that the representations and warranties of the Company contained in
or made pursuant to this Agreement are true and correct in all material respects
as of the date of such acceptance as though made at and as of such date, and an
undertaking that such representations and warranties will be true and correct in
all material respects as of the Time of Sale and the Settlement Date for the
Shares relating to such acceptance as though made at and as of each of such
dates (except that such representations and warranties shall be deemed to relate
to the Registration Statement and the Prospectus as amended and supplemented
relating to such Shares).

A-24

--------------------------------------------------------------------------------

 

     (u) Prior to instructing the Manager pursuant to Section 2 hereof to make
sales on any given day (or as otherwise agreed between the Company and the
Manager), (1) the Board shall have approved the sale of Shares to be sold
pursuant to this Agreement and shall have provided to the Manager an authorizing
resolution approving such sale and (2) the Pricing Committee of the Board,
authorized by the Board, shall have approved parameters establishing the minimum
price and maximum number of Shares to be sold and shall have provided to the
Manager authorizing resolution(s) reflecting approval of such parameters. The
instructions provided to the Manager by the Company, pursuant to Section 2, on
such day shall reflect the terms of such authorizing resolutions of the Board
and the Pricing Committee of the Board.
     (v) Not to sell, offer to sell, contract or agree to sell, hypothecate,
pledge, grant any option to sell or otherwise dispose of or agree to dispose of,
directly or indirectly, any shares of the Common Stock or securities convertible
into or exchangeable or exercisable for the Common Stock or warrants or other
rights to purchase the Common Stock or any other securities of the Company that
are substantially similar to the Common Stock or permit the registration under
the Securities Act of any shares of the Common Stock, except for (i) the
registration of the Shares and the sales through the Manager pursuant to this
Agreement, (ii) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof and referred to in the Prospectus, (iii) any shares of Common
Stock issued or options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company or (iv) any shares of Common Stock issued
pursuant to any non-employee director stock plan, dividend reinvestment plan or
stock purchase plan of the Company, during the Delivery Period, without
(A) giving the Manager at least three (3) business days’ prior written notice
specifying the nature of the proposed sale and the date of such proposed sale
and (B) the Manager suspending activity under this program for such period of
time as requested by the Company.
     7. Covenants of the Manager. The Manager covenants with the Company not to
take any action that would result in the Company being required to file with the
Commission under Rule 433(d) a free writing prospectus prepared by or on behalf
of the Manager that otherwise would not be required to be filed by the Company
thereunder, but for the action of the Manager.
     8. Indemnity and Contribution. (a) The Company agrees to indemnify and hold
harmless the Manager, the directors, officers, employees, agents of the Manager
and each person, if any, who controls the Manager within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
affiliate of the Manager within the meaning of Rule 405 under the Securities Act
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, the Prospectus, the Prospectus Supplement (including
any Interim Prospectus Supplement), the General Disclosure Package, any free
writing prospectus that the Company has filed, or is required to file, pursuant
to Rule 433(d) under the Securities Act, or any amendment or supplement thereto,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except

A-25

--------------------------------------------------------------------------------

 

insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to the Manager furnished to the Company in writing by the
Manager expressly for use therein.
     (b) The Manager agrees to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to the Manager, but only with reference to
information relating to the Manager furnished to the Company in writing by the
Manager expressly for use in the Registration Statement, the Prospectus, the
Prospectus Supplement (including any Interim Prospectus Supplement), the General
Disclosure Package, any free writing prospectus that the Company has filed, or
is required to file, pursuant to Rule 433(d) under the Securities Act, or any
amendment or supplement thereto.
     (c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the “indemnified party”) shall
promptly notify the person against whom such indemnity may be sought (the
“indemnifying party”) in writing, and the indemnifying party, upon request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party 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 party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings 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 such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Manager, in the case of parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party 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 party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
     (d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or

A-26

--------------------------------------------------------------------------------

 

liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party 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, on the one
hand, and the Manager, on the other hand, from the offering of the Shares or
(ii) if the allocation provided by Section 8(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in Section 8(d)(i) above but also the relative
fault of the Company, on the one hand, and of the Manager, on the other hand, 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, on the one hand,
and the Manager, on the other hand, in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses) received by
the Company bear to the total commissions received by the Manager. The relative
fault of the Company, on the one hand, and the Manager, on the other hand, 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 or by the Manager
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
     (e) The Company and the Manager agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 8(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, the Manager
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Shares sold by it were offered to the public
exceeds the amount of any damages that the Manager has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. 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 remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
     (f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of the Manager, any person controlling the Manager or any
affiliate of the Manager or by or on behalf of the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Shares.

A-27

--------------------------------------------------------------------------------

 

     9. Effectiveness. This Agreement shall become effective upon the execution
and delivery hereof by the parties hereto.
     10. Termination. ((a) The Company shall have the right, by giving written
notice as hereinafter specified, to terminate this Agreement in its sole
discretion at any time. Any such termination shall be without liability of any
party to any other party, except that (i) with respect to any pending sale
through the Manager for the Company, the obligations of the Company, including,
but not limited to, its obligations under Section 4 above, shall remain in full
force and effect notwithstanding such termination; and (ii) the provisions of
Section 1, Section 3(b) and Section 8 of this Agreement shall remain in full
force and effect notwithstanding such termination.
     (b) The Manager shall have the right, by giving written notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that (i) with respect to any pending sale through the Manager for
the Company, the obligations of the Company, including, but not limited to, its
obligations under Section 4 above, shall remain in full force and effect
notwithstanding such termination; and (ii) the provisions of Section 1, Section
3(b) and Section 8 of this Agreement shall remain in full force and effect
notwithstanding such termination.
     (c) This Agreement shall remain in full force and effect until and unless
terminated pursuant to Section 10(a) or (b) above or otherwise by mutual
agreement of the parties; provided that any such termination by mutual agreement
or pursuant to this clause (c) shall in all cases be deemed to provide that
Section 1, Section 3(b) and Section 8 of this Agreement shall remain in full
force and effect.
     (d) Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by the Manager or the Company, as the case may be. If such termination
shall occur prior to the Settlement Date for any sale of Shares, such sale shall
settle in accordance with the provisions of Section 4.
     11. Entire Agreement. (a) This Agreement, including the schedules and
exhibits attached hereto, represents the entire agreement between the Company
and the Manager with respect to the preparation of any Registration Statement,
Prospectus Supplement or the Prospectus, the conduct of the offering and the
sale and distribution of the Shares.
     (b) The Company acknowledges that in connection with the offering of the
Shares: (i) the Manager has acted and will act at arm’s length and owes no
fiduciary duties to, the Company or any other person, (ii) the Manager owes the
Company only those duties and obligations set forth in this Agreement and prior
written agreements (to the extent not superseded by this Agreement), if any, and
(iii) the Manager may have interests that differ from those of the Company. The
Company waives to the full extent permitted by applicable law any claims it may
have against the Manager arising from an alleged breach of fiduciary duty in
connection with the sale and distribution of the Shares.

A-28

--------------------------------------------------------------------------------

 

     12. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
     13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
     14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
     15. Notices. All communications hereunder shall be in writing and effective
only upon receipt and if to the Manager shall be delivered, mailed, telefaxed or
sent to Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, NY 10036,
facsimile number: (212) 761-0316 (Attn: Equity Capital Markets Syndicate Desk)
with a copy to Lesley Peng, Esq., Simpson Thacher & Bartlett LLP; 425 Lexington
Avenue, New York, NY 10017, and if to the Company shall be delivered, mailed or
sent to 2000 McKinney Avenue, Suite 700, Dallas, Texas 75201, with a copy to
Norman Miller, Esq., Winstead PC, 5400 Renaissance Tower, 1201 Elm Street,
Dallas, Texas 75270.
     16. Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents, affiliates and controlling persons
referred to in Section 8 hereof, and no other person will have any right or
obligation hereunder. This Agreement may not be assigned by either party without
the prior consent of the other party.
[Signature page follows]

A-29

--------------------------------------------------------------------------------

 

            Very truly yours,

TEXAS CAPITAL BANCSHARES, INC.
      By:   /s/ Peter B. Bartholow        Name:   Peter B. Bartholow       
Title:   Chief Financial Officer     

          Accepted as of the date first written above
 
        MORGAN STANLEY & CO. INCORPORATED
 
       
By:
  /s/ Ken Pott     
 
 
 
Name:  Ken Pott    
 
  Title:    Managing Director    

[Signature Page to Equity Distribution Agreement]

 

--------------------------------------------------------------------------------

 

SCHEDULE I
Permitted Free Writing Prospectuses
None.
 I-1

 

--------------------------------------------------------------------------------

 

SCHEDULE II
Transactions subject to Sanctions
None.
 II-1

 

--------------------------------------------------------------------------------

 

SCHEDULE III
Due Diligence Protocol
     Set forth below are guidelines for use by the Company and the Manager in
connection with the Manager’s continuous due diligence efforts in connection
with the sale and distribution of the Shares pursuant to the Agreement. For the
avoidance of doubt, the Company has agreed that no sales under the Agreement
will be requested or made at any time the Company is, or could be deemed to be,
in possession of material non-public information with respect to the Company.

  1.   On or immediately prior to each Representation Date, in addition to the
documents provided pursuant to Sections 6(l), (m), (n) and (o) of the Agreement,
the Manager expects to conduct a due diligence call with the appropriate
business, financial and legal representatives of the Company.     2.   On the
date of or promptly after the Company’s management report becomes available for
a given month (but no later than the last business day of the immediately
succeeding month), the Manager expects to conduct a due diligence call with the
appropriate business, financial, accounting and legal representatives of the
Company and that the Company shall provide the certificate referred to in
Section 5(b) of the Agreement.     3.   In the event that the Company requests
the Manager to sell on any one Trading Day an amount of Shares that would be
equal to or greater than 15% of the average daily trading volume (calculated
based on the most recent three completed Trading Days) of the Company’s common
stock, the Manager expects to conduct a due diligence call with the appropriate
business, financial, accounting and legal representatives of the Company and
that the Company shall provide the certificate referred to in Section 5(b) of
the Agreement.

     The foregoing is an expression of current intent only, and shall not in any
manner limit the Manager’s rights under the Agreement, including the Manager’s
right to require such additional due diligence procedures and document review as
the Manager may reasonably request pursuant to the Agreement.
 III-1

 

--------------------------------------------------------------------------------

 

Exhibit A
[Morgan Stanley & Co. Incorporated Letterhead]
                    , 2010
TEXAS CAPITAL BANCSHARES, INC.
2000 McKinney Avenue
Suite 700
Dallas, Texas 75201
Attention:                     
VIA ELECTRONIC MAIL
TRANSACTION CONFIRMATION
Dear                     :
     This Confirmation sets forth the terms of the agreement of Morgan Stanley &
Co. Incorporated (the “Manager”) with Texas Capital Bancshares, Inc. (the
“Company”) relating to the sale of shares of the Company’s common stock, par
value $0.01 per share, having an aggregate gross sales price of up to
$40,000,000 pursuant to the Equity Distribution Agreement between the Company
and the Manager, dated January 27, 2010 (the “Agreement”). Unless otherwise
defined below, capitalized terms defined in the Agreement shall have the same
meanings when used herein.
     By countersigning or otherwise indicating in writing the Company’s
acceptance of this Confirmation (an “Acceptance”), the Company shall have agreed
with the Manager to engage in the following transaction:

     
Aggregate Gross Price of Shares to be sold:
   
 
   
 
Minimum price at which Shares may be sold:
   
 
   
 
Date(s) on which Shares may be sold:
   
 
   
 
Compensation to Manager (if different than the Agreement):
   
 
   

     The transaction set forth in this Confirmation will not be binding on the
Company or the Manager unless and until the Company delivers its Acceptance;
provided, however, that neither the Company nor the Manager will be bound by the
terms of this Confirmation unless the

A-1

--------------------------------------------------------------------------------

 

Company delivers its Acceptance by            a.m./p.m. (New York time) on [the
date hereof/                    , 2010].
     By delivering its Acceptance, the Company shall be deemed to have
represented to the Manager at the time of such Acceptance that the General
Disclosure Package, as of the time of such Acceptance, does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
     The transaction, if it becomes binding on the parties, shall be subject to
all of the representations, warranties, covenants and other terms and conditions
of the Agreement, except to the extent amended or modified hereby, all of which
are expressly incorporated herein by reference. Each of the representations and
warranties set forth in the Agreement shall be deemed to have been made at and
as of every Time of Sale, every Settlement Date and every Representation Date.
     If the foregoing conforms to your understanding of our agreement, please so
indicate your Acceptance by signing below.

                  Very truly yours,    
 
                MORGAN STANLEY & CO. INCORPORATED    
 
           
 
  By:        
 
     
 
        Name:         Title:    

ACCEPTED as of the date
first above written
TEXAS CAPITAL BANCSHARES, INC.

         
By:
       
 
 
 
    Name:     Title:    

[Note: The Company’s Acceptance may also be evidenced by a separate written
acceptance referencing this Confirmation and delivered in accordance with the
Agreement]

A-2