Exhibit 10.1
SEVERANCE AGREEMENT
     THIS SEVERANCE AGREEMENT (the “Agreement”) is made and entered into as of
August 31, 2008 by and among FRANKLIN BANK CORP., a Delaware corporation (the
“Company”), FRANKLIN BANK, S.S.B., a Texas savings bank and wholly-owned
subsidiary of the Company (the “Bank”) and DANIEL E. COOPER (“Executive”). The
Company, the Bank and Executive are each a “Party” and collectively, the
“Parties.”
Recitals
     Whereas, Executive is an employee of the Bank and serves as Executive Vice
President and Managing Director – Mortgage Banking, of the Bank;
     Whereas, Executive and the Company desire to enter into this Agreement to
confirm certain compensatory arrangements upon Executive’s separation from the
Company;
     Whereas, this Agreement also provides for a release of claims; and
     Whereas, Executive has been advised to consult with an attorney prior to
executing this Agreement.
Agreement
     Now Therefore, in consideration of the promises and mutual agreements set
forth in this Agreement, the receipt and sufficiency of which is hereby
acknowledged by all parties, the Parties agree as follows:
     1. Resignation. Executive hereby resigns from all positions with the
Company and the Bank effective as of August 31, 2008 (the “Effective Date”).
     2. Indemnification and Insurance.
          (a) Article 8 of the Amended and Restated Certificate of Incorporation
(the “Certificate”) of the Company provides that each of the Company’s officers
and directors (and former officers and directors) who is or was made a party (or
is threatened to be made a party) to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding”) by reason of the fact that he is or was a director or officer of
the Company (or any subsidiary of the Company) shall be indemnified to the
fullest extent authorized by the General Corporation Law of the State of
Delaware (“Delaware Law”) against all expense, liability and loss (including
without limitation attorneys’ fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, provided that such person meets
the standard of conduct applicable to such proceeding under Delaware Law.
Article 8 of the Certificate further provides that the right to indemnification
contained therein shall be a contract right and provides for certain other
rights, benefits and obligations of the Company and Executive, including the
right of the Executive to be paid by the Company the expenses incurred in
defending any such proceeding, in advance of its final disposition, such
advances to be paid by the Corporation within 20 days after receipt by the
Company of a statement or statement from

 

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

 

the person requesting such advance or advances from time to time, provided that
the person delivers to the Company an undertaking to repay all amounts so
advanced if it shall ultimately be determined that such officer of director is
not entitled to be indemnified under such provision or otherwise. The Company
hereby confirms to Executive that the provisions of Article 8 of the Certificate
constitute a contract right of the Executive and shall remain applicable to
Executive following the Effective Date in accordance with their terms.
          (b) Article 7 of the Articles of Incorporation, as amended (the
“Articles”), of the Bank provide that the Bank shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such action, suit or
proceeding, or any inquiry or investigation which could lead to such an action,
suit or proceeding, by reason of the fact that such person is or was a director,
officer, employee or agent of the Bank, or is or was serving at the request of
the Bank as a director, officer, employee, agent or similar functionary of
another foreign or domestic corporation, partnership, joint venture or other
enterprise, against expenses (including court costs and attorneys’ fees),
judgments, penalties, fines, excise taxes and amounts paid in connection with
such action, suit or proceeding to the full extent authorized by law. Article 7
of the Articles further provides that reasonable expenses incurred by a
director, officer, employee or agent of the Bank in defending an action, suit or
other proceeding shall be authorized by the Board of Directors of the Bank upon
receipt of a written affirmation by or on behalf of such person of his good
faith belief that he has met the standards of conduct necessary for
indemnification pursuant to applicable law, and a written undertaking to repay
such amount if it shall ultimately be determined that the person has not met
such standards or that such indemnification is prohibited by law. Article 7 of
the Articles further provides that the duty of the Bank to indemnify and advance
expenses to a director, officer, employee or agent shall be a contract right.
The Bank hereby confirms to Executive that the provisions of Article 8 of the
Certificate constitute a contract right of the Executive and shall remain
applicable to Executive following the Effective Date in accordance with their
terms.
     3. Cash Compensation.
          (a) Executive shall be entitled to receive as severance seven months
salary continuation commencing September 1, 2008 and ending March 31, 2009 (the
“Severance Period”), payable at his base salary as of the Effective Date in
equal monthly installments payable on the fifteenth of each month.
          (b) On the Effective Date, Executive shall receive a payment from the
Company for accrued and unused vacation through the Effective Date.
          (c) Executive shall be reimbursed by the Company for reasonable
attorney fees and expenses incurred in connection with Executive’s retirement
from the Company, not to exceed $10,000.
          (d) Upon the Effective Date, Executive’s right to participate in the
2007 Franklin Bank Incentive Plan, and any other cash bonus or incentive plan of
the Company, shall terminate and no amounts shall be payable thereunder.

-2-

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

 

     4. Non Cash Compensation.
          (a) The Parties agree that (i) the options to purchase common stock of
the Company, par value $0.01 per share (the “Common Stock”), listed under the
heading “Stock Option Agreements” in Schedule A attached hereto (collectively,
the “Stock Option Agreements”) are the only options to purchase capital stock of
the Company held by Executive, and (ii) the options evidenced by the Stock
Option Agreements are presently exercisable to the extent, and for the time
period, described on Schedule A. To the extent the Stock Option Agreements are
not presently exercisable, no additional shares shall hereafter vest or be
purchasable thereunder. With respect to the right to purchase shares pursuant to
the Stock Option Agreements that have fully vested, but have not been exercised,
each of the Company and Executive acknowledges and agrees that the options with
respect to such vested shares expire and cease to be exercisable three months
after the Effective Date .
          (b) The Parties agree that (i) the shares of Common Stock that have
been issued to and held in the name of Executive pursuant to the Restricted
Stock Agreements between the Company and Executive listed under the heading
“Restricted Stock Agreements” in Schedule A hereto (collectively, the “RSAs”)
are the only shares of restricted stock awarded to and held by the Executive
under stock restriction agreements, and (ii) in accordance with the terms of
each RSA, the shares of Common Stock awarded under the RSAs are forfeited as of
the date hereof and shall be cancelled, with Executive having no further rights
therein.
          (c) The Parties agree that the performance units listed under the
heading “Performance Unit Grant Agreements” on Schedule A hereto (collectively,
the “PUGAs”) are the only performance units that have been issued to Executive
by the Company. By the terms of PUGAs, Executive shall be entitled at the
conclusion of the current performance cycle to a pro-rated award payout
calculated as of the Effective Date, provided that the conditions to such payout
are satisfied in accordance with the terms of the PUGAs.
          (d) The Parties agree that the Company shall reimburse Executive for
the premiums paid by Executive and all amounts paid by Executive related to
deductibles, co-payment limits or applicable out-of-pocket maximums for health
care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”) until the first to occur of (i) the commencement of
Executive’s employment with another person or firm or (ii) the expiration of the
18 month coverage period permitted by COBRA.
     5. Release of Claims.
          (a) In consideration of the payments and benefits described in
Paragraph 3 and Paragraph 4 of this Agreement, and other good and valuable
consideration within this Agreement, Executive, on behalf of himself, his heirs,
executors, successors and assigns, irrevocably and unconditionally releases,
waives, and forever discharges the Company and the Bank, their respective
officers, directors, shareholders and employees, the law firms of Bracewell &
Giuliani LLP and Baker Botts LLP and their respective partners, associates and
employees, the accounting firms Deloitte & Touche and Ernst & Young, and their
respective partners, associates and employees, and each of their respective
heirs, executors, administrators, legal representatives, successors and assigns
(the “Franklin Parties”) from any and all claims,

-3-

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

 

demands, actions, causes of action, costs, fees, attorneys’ fees, and all
liability whatsoever, whether known or unknown, fixed or contingent, which
Executive has, had, or may have against any of the Franklin Parties including,
without limitation, any claims under the letter agreement between Executive and
the Bank dated December 23, 2003, any claims under the Employment Agreement
between Executive and the Company dated December 23, 2003 and any acts or
omissions that resulted in Executive’s separation from employment with the
Company, based on facts occurring from the beginning of time and up to and
including the Effective Date, including, without limitation, any claims under
any local, municipal, state or federal law including, without limitation, claims
under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Texas Commission on Human Rights Act, claims of
harassment, discrimination or wrongful termination, and any other statutory,
tort, or common law claims. Executive represents and warrants to the Company and
the Bank that Executive is the sole owner of, and he has not sold, assigned or
transferred (with or without consideration) to any person any of the claims,
demands, actions, causes of action, costs, fees, attorney’s fees or liabilities
being released hereby.
          (b) In consideration of the release Executive has provided in this
Agreement, and other good and valuable consideration within this Agreement, each
of the Company and the Bank, on behalf of itself, its successors and assigns,
irrevocably and unconditionally releases, waives, and forever discharges
Executive and each of Executive’s heirs, executors, administrators, legal
representatives, successors and assigns (the “Cooper Parties”) from any and all
claims, demands, actions, causes of action, costs, fees, attorneys’ fees, and
all liability whatsoever, whether known or unknown, fixed or contingent, which
the Company or the Bank has, had, or may have against any of the Cooper Parties,
based on facts occurring from the beginning of time and up to and including the
Effective Date. Each of the Company and the Bank represents and warrants to
Executive that each is the sole owner of, and has not sold, assigned or
transferred (with or without consideration) to any person any of the claims,
demands, actions, causes of action, costs, fees, attorney’s fees or liabilities
being released hereby.
     6. No Admission of Liability/Confidentiality of Release. Executive
understands and agrees that this Agreement shall not in any way be construed as
an admission by the Company or the Bank of any unlawful or wrongful acts
whatsoever against Executive or any other person, and each of the Company and
the Bank specifically disclaim any liability to or wrongful acts against
Executive or any other person. Similarly, each of the Company and the Bank
acknowledges and agrees that this Agreement shall not in any way be construed as
an admission by Executive of any unlawful or wrongful act by Executive and
Executive specifically disclaims any liability to or wrongful acts against the
Company, the Bank or any other person. Executive agrees to keep this Agreement
and any of its terms completely confidential; however, Executive may disclose
the terms of this Agreement to his attorney, accountant, spouse, or as otherwise
required by law. Accordingly, nothing in this Paragraph 6 is intended to
preclude Executive, the Company or the Bank from disclosing information in
response to a subpoena issued by a court of law or a government agency having
jurisdiction or power to compel the disclosure or as otherwise may be required
by law. Further, Executive acknowledges and agrees that nothing in this
Agreement prevents the Company or the Bank from disclosing the terms of this
Agreement and filing a copy of this Agreement (i) in response to a subpoena
issued by a court of law or a government agency having jurisdiction or power to
compel the disclosure,

-4-

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

 

(ii) in response to a request by a governmental law enforcement agency or
federal or state agency giving jurisdiction over the acts or activities of the
Company or the Bank or any of their subsidiaries, or (iii) as the Company or the
Bank believes is reasonably required by applicable federal or state law,
including without limitation, the provisions, rules or regulations of the
Securities Exchange Act of 1934, as amended.
     7. Non-Disparagement.
          (a) Executive agrees not to, directly or indirectly, disclose,
communicate, or publish any intentionally disparaging, negative, harmful, or
disapproving information, written communications, oral communications,
electronic or magnetic communications, writings, oral or written statements,
comments, opinions, facts, or remarks, of any kind or nature whatsoever
(collectively, “Disparaging Information”), concerning or related to the Company
or the Bank or any of their respective officers, directors or employees.
Executive understands and acknowledges that this non-disparagement clause
prevents him from disclosing, communicating, or publishing, directly or
indirectly, any Disparaging Information concerning or related to the Company or
the Bank including, without limitation, information regarding the Company or the
Bank businesses, customers or clients, proprietary or technical information,
documents, operations, inventions, trade secrets, product ideas, technical
information, know-how, processes, plans (including, without limitation,
marketing plans and strategies), specifications, designs, methods of operation,
techniques, technology, formulas, software, improvements, internal or external
audits, internal controls, or any financial, marketing or accounting information
of any nature whatsoever. Further, Executive acknowledges that in executing this
Agreement, he has knowingly, voluntarily, and intelligently waived any free
speech, free association, free press or First Amendment to the United States
Constitution (including, without limitation, any counterpart or similar
provision or right under the Texas Constitution or any other state constitution
which may be deemed to apply) rights to disclose, communicate, or publish
Disparaging Information concerning or related to the Company or the Bank.
Notwithstanding Paragraph 14(i), in the event that Executive breaches or
threatens to breach this Paragraph 7(a), the Company or the Bank, as applicable,
will not be limited to a damages remedy, but may seek all other equitable and
legal relief including, without limitation, a temporary restraining order,
temporary injunctive relief, a permanent injunction, and its attorneys’ fees and
costs, against Executive and any other persons, individuals, corporations,
businesses, groups, partnerships or other entities acting by, through, under, or
in concert with Executive. Nothing in this Agreement shall, however, be deemed
to prevent Executive from testifying fully and truthfully in response to a
subpoena from any court or from responding to investigative inquiry from any
governmental agency.
          (b) Each of the Company and the Bank agrees not to, directly or
indirectly, disclose, communicate, or publish any intentionally Disparaging
Information, concerning or related to Executive. Each of the Company and the
Bank understands and acknowledges that this non-disparagement clause prevents it
from disclosing, communicating, or publishing, directly or indirectly, any
Disparaging Information concerning or related to Executive including, without
limitation, information regarding Executive’s character, behavior, work history,
finances, or relationship with the Company or the Bank. Further, each of the
Company and the Bank acknowledges that in executing this Agreement, it has
knowingly, voluntarily, and intelligently waived any free speech, free
association, free press or First Amendment to the

-5-

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

 

United States Constitution (including, without limitation, any counterpart or
similar provision or right under the Texas Constitution or any other state
constitution which may be deemed to apply) rights to disclose, communicate, or
publish Disparaging Information concerning or related to Executive.
Notwithstanding Paragraph 14(i), if the Company or the Bank breaches or
threatens to breach this Paragraph 7(b), Executive will not be limited to a
damages remedy, but may seek all other equitable and legal relief including,
without limitation, a temporary restraining order, temporary injunctive relief,
a permanent injunction, and its attorneys’ fees and costs, against the Company
and the Bank and any other persons, individuals, corporations, businesses,
groups, partnerships or other entities acting by, through, under, or in concert
with them. Nothing in this Agreement shall, however, be deemed to prevent the
Company or the Bank or any of their respective directors, officers or employees
from testifying fully and truthfully in response to a subpoena from any court or
from responding to investigative inquiry from any governmental agency.
          (c) Each of the Company, the Bank and Executive understands,
acknowledges and agrees nothing in this Agreement, including without limitation
the non-disparagement provisions of this Paragraph 7 or the confidentiality
provisions of Paragraph 9 hereof, shall prevent any of the Parties or any other
person from providing truthful information to, or otherwise truthfully
participating, in investigations or other legal proceedings brought by third
parties or conducted by any governmental regulatory or law enforcement agency,
including without limitation the Securities and Exchange Commission, Federal
Deposit Insurance Corporation, Office of Thrift Supervision or Texas Department
of Savings and Mortgage Lending,  but each Party gives up all rights to recover
or receive damages, money, or other personal benefits from any other Party as a
result of any such investigation, or proceeding.
     8. Cooperation. Each Party agrees to cooperate with the other Parties in
connection with the defense or prosecution of any claims, causes of action,
investigations, regulatory examinations, hearings, proceedings, arbitrations or
other tribunals now in existence or which may be brought in the future against
or on behalf of any Party that relate to events or occurrences that transpired
while Executive was employed with the Company and Bank (“Subject Matter”). The
Parties’ cooperation in connection with this Paragraph 8 shall include, without
limitation, making themselves reasonably available to meet with counsel to
prepare for discovery or trial, to act as a witness on behalf of the other Party
at convenient times, and to provide true and accurate testimony regarding any
such matters. If any Party is subpoenaed or contacted to cooperate in any manner
by a non-governmental party concerning any matter related to the Subject Matter,
the Party being so subpoenaed or contacted shall immediately notify the other
Parties, through the notice procedures identified in this Agreement, before
responding or cooperating. Without limiting the generality of the foregoing,
Executive agrees to provide assistance as reasonably requested by the Bank in
connection with the regulatory examination of the Bank being conducted on the
Effective Date.
     9. Confidentiality. Executive agrees to keep all Confidential Information
(as defined below) in strict confidence, not disclosing any Confidential
Information to any third person except (i) as consented to in writing by the
Chief Executive Officer of the Company, or (ii) as required by law or judicial
or regulatory process; provided, however, that Executive shall not be obligated
to keep in confidence any information which has become generally available to
the public without any breach by Executive of this Paragraph 9. If requested by
the Company,

-6-

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

 

Executive will obtain from any third party to whom he discloses any Confidential
Information the written agreement (in form and substance satisfactory to the
Company in its sole discretion) of such third party to keep such information
confidential. The term “Confidential Information” is defined as all of the
Company’s technical and business information that is of a confidential, trade
secret or proprietary character; lists and identities of borrowers and other
customers; identities of prospective borrowers and other customers; loan and
other contract terms; bidding information and strategies; loan and deposit
pricing and related strategies; photographs; internal policies, procedures,
communications and reports; computer software; computer software methods and
documentation; graphic designs; hardware; the Company’s methods of operation;
the procedures, forms and techniques used in servicing accounts; and other
information or documents that the Company requires to be maintained in
confidence for the Company’s continued business. Confidential Information does
not include any information that is readily available to the public or, upon
reasonable investigation, is readily ascertainable in the public domain.
     10. Agreement to Return Company Property/Documents. Executive will not
retain, take with him, copy, alter, destroy, or delete any Company or Bank
files, documents, electronically stored information, or other materials whether
or not embodying or recording any Confidential Information, including copies,
without obtaining in advance the written consent of the Chief Executive Officer
of the Company. On or before the Effective Date, Executive will return to the
Company all Confidential Information, documents, files, electronically stored
information, records and tapes (written or electronically stored) regarding the
Company or the Bank that are in his possession or control, and after the
Effective Date Executive will not retain, use or disclose Confidential
Information in any way or in any format, whether written in any form or stored
by electronic means, including any and all copies of these materials. On or
before the Effective Date, Executive will return to the Company all the Company
property, including, without limitation, company automobiles, keys, equipment,
computer(s) and computer equipment, devices, cellular phones, other telephonic
equipment, Company credit cards, data, lists, information, correspondence,
notes, memos, reports, or other writings prepared by the Company or by Executive
on behalf of the Company.
     11. Nonsolicitation. Executive agrees that prior to the expiration of the
Severance Period he will not, without the prior written approval of the Company
and the Bank, whether on Executive’s own behalf or on behalf of any other
person, either directly or indirectly (a) solicit, induce, persuade or entice,
or endeavor to solicit, induce, persuade or entice, any employee of the Company
or the Bank (including any employee of the Company or the Bank in a
co-employment relationship with Administaff) to leave the employment of, or
cease performing services for, the Company or the Bank, or (b) hire or solicit,
induce, persuade or entice, or endeavor to solicit, induce, persuade or entice,
any employer by whom Executive may be employed during the Severance period to
hire any employee of the Company or the Bank (including any employee of the
Company or the Bank in a co-employment relationship with Administaff).
Notwithstanding Paragraph 14(i), in the event that Executive breaches or
threatens to breach this Paragraph 11, the Company or the Bank, as applicable,
will not be limited to a damages remedy, but may seek all other equitable and
legal relief, without limitation, a temporary restraining order, temporary
injunctive relief, a permanent injunction, and its attorneys’ fees and costs,
against executive and any other persons, individuals, corporations, businesses,
groups, partnerships and other entities acting by, through, under, or in concert
with Executive.

-7-

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

 

     12. 21-day Consideration Period. By signing this Agreement, Executive
acknowledges, represents and agrees, in compliance with the Older Workers
Benefit Protection Act, that (a) he has carefully read and fully understands all
of the provisions of this Agreement, and (b) he has had up to and including a
full twenty-one (21) calendar days within which to consider this Agreement
before executing it (or by executing this Agreement has knowingly and
voluntarily elected to reduce this time period).
     13. Revocation. Executive acknowledges that he has seven calendar days
after signing this Agreement to rescind, revoke or cancel this Agreement.
Executive understands that this Agreement will not become effective or
enforceable until the revocation period has expired. To revoke this Agreement,
Executive must return it to John R. Brantley, Bracewell & Giuliani, LLP, 711
Louisiana, Suite 2300, Houston, Texas 77002, in a manner so that he receives it
within seven calendar days of the date Executive signs this Agreement. Executive
also acknowledges that if he revokes, rescinds, or cancels this Agreement within
the seven day period, he will not be entitled to receive the payments and other
benefits described in Paragraph 3 and Paragraph 4 of this Agreement.
     14. Miscellaneous Provisions and Enforcement.
          (a) Notices. Any notice or other communication required, permitted or
desired to be given under this Agreement shall be deemed delivered when
personally delivered; the business day, if delivered by overnight courier; the
same day, if transmitted by facsimile on a business day before 12:00 p.m.,
Houston time; the next business day, if otherwise transmitted by facsimile; and
the third business day after mailing, if mailed by prepaid certified mail,
return receipt requested, as addressed or transmitted as follows (as
applicable):
If to Executive:
Daniel E. Cooper
4039 Swarthmore
Houston, Texas 77005
With a copy (which shall not constitute notice) to:
Andrews & Kurth LLP
600 Travis
Suite 4200
Houston, TX 77002
Attention: Greg Waller
Tel: 713-220-4790
Fax: 713-238-7434

-8-

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

 

If to the Company:
Franklin Bank Corp.
9800 Richmond Avenue
Suite 680
Houston, TX 77042
Attention: Mr. Lewis S. Ranieri, Chairman
Tel: 516-745-6644
Fax: 516-745-6787
With a copy (which shall not constitute notice) to:
Bracewell & Giuliani, LLP
711 Louisiana
Suite 2900
Houston, TX 77002
Attention: John R. Brantley
Tel: (713) 221-1301
Fax: (713) 221-2112
If to the Bank:
Franklin Bank, S.S.B.
9800 Richmond Avenue
Suite 680
Houston, TX 77042
Attention: Mr. Andy Black, Chief Executive Officer
Tel: (512) 206-1446
Fax: (713) 952-2830
With a copy (which shall not constitute notice) to:
Bracewell & Giuliani, LLP
711 Louisiana
Suite 2900
Houston, TX 77002
Attention: John R. Brantley
Tel: (713) 221-1301
Fax: (713) 221-2112
          (b) Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF. THE EXCLUSIVE VENUE
FOR ALL SUITS AND PROCEEDINGS ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE
IN A COURT OF COMPETENT JURISDICTION IN HOUSTON, TEXAS.

-9-

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

 

          (c) Limitations on Assignment. Except as provided in this Agreement,
neither Party may assign this Agreement or any of the rights or obligations set
forth in this Agreement without the explicit written consent of the other Party.
Any attempted assignment by a Party in violation of this Paragraph 14(c) shall
be void. Except as provided in this Agreement, nothing in this Agreement
entitles any person, other than the parties to the Agreement, to any claim,
cause of action, remedy, or right of any kind, including, without limitation,
the right of continued employment.
          (d) Waiver. A Party’s waiver of any breach or violation of any
Agreement provisions shall not operate as, or be construed to be, a waiver of
any later breach of the same or other Agreement provision.
          (e) Severability. If any provision or provisions of this Agreement are
held to be invalid, illegal, or unenforceable for any reason whatsoever, (a) the
validity, legality, and unenforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any Agreement
paragraphs containing any provision held to be invalid, illegal, or
unenforceable, that are not themselves invalid, illegal, or unenforceable), will
not in any way be affected or impaired thereby, and (b) the provision or
provisions held to be invalid, illegal, or unenforceable will be limited or
modified in its or their application to the minimum extent necessary to avoid
the invalidity, illegality, or unenforceability, and, as so limited or modified,
the provision or provisions and the balance of this Agreement will be
enforceable in accordance with their terms.
          (f) Headings. The Agreement headings are for reference purposes only
and will not affect in any way the meaning or interpretation of this Agreement.
          (g) Counterparts. This Agreement and amendments to it will be in
writing and may be executed in multiple counterparts and by facsimile. Each
counterpart will be deemed an original, but all counterparts together will
constitute one and the same instrument.
          (h) Entire Agreement, Amendment, Binding Effect. This Agreement
constitutes the entire agreement between the Parties concerning the subject
matter in this Agreement, unless otherwise described herein. No oral statements
or prior written material not specifically incorporated in this Agreement shall
be of any force and effect, and no changes in or additions to this Agreement
shall be recognized, unless incorporated in this Agreement by written amendment,
such amendment to become effective on the date stipulated therein. Executive
acknowledges and represents that in executing this Agreement he did not rely,
and has not relied, on any communications, promises, statements, inducements, or
representation(s), oral or written, by the Company or any the Company, except as
expressly contained in this Agreement. Any amendment to this Agreement must be
signed by all parties to this Agreement. This Agreement will be binding on and
inure to the benefit of the Parties hereto and their respective successors,
heirs, legal representatives, and permitted assigns, if any.
          (i) Arbitration. If any dispute arises out of or is related to this
Agreement or Executive’s employment or separation from employment with the Bank
for any reason, and the parties to this Agreement cannot resolve the dispute,
the dispute shall be submitted to final and binding arbitration. The arbitration
shall be conducted in accordance with the American

-10-

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

 

Arbitration Association’s (“AAA”) National Rules for the Resolution of
Employment Disputes (“Rules”). If the Parties cannot agree to an arbitrator, an
arbitrator will be selected through the AAA’s standard procedures and Rules. The
arbitrator shall decide the proper allocation of costs among the Parties. The
Parties agree that the arbitration shall be held in Houston, Texas. Arbitration
of the Parties’ disputes is mandatory, and in lieu of all civil causes of action
or lawsuits any Party may have against another Party arising out of the
Agreement or Executive’s employment or separation from employment with the Bank,
with the exception that the Company and the Bank may seek a temporary
restraining order and temporary injunctive relief in a court to enforce the
terms of this Agreement including Paragraphs 7(a) and Paragraph 11. Executive
acknowledges that by agreeing to this provision, he knowingly and voluntarily
waives any right he may have to a jury trial based on any claims he has, had, or
may have against the Company, including any right to a jury trial under any
local, municipal, state or federal law including, without limitation, claims
under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Texas Commission on Human Rights Act, claims of
harassment, discrimination or wrongful termination, and any other statutory,
tort, or common law claims.
          (j) Conflict. In the event of any conflict between the terms of this
Agreement and Article 8 of the Certificate, the Certificate shall control. In
the event of any conflict between the terms of this Agreement and Article 7 of
the Articles, the Articles shall control.
          (k) Regulatory Approval. The obligations of the Company and the Bank,
and the rights of Executive, hereunder are subject to 12 U.S.C. § 1828(k) and
the rules and regulations thereunder.
[Signature page follows]

-11-

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

 

     As evidenced by their signatures below, that Parties hereto certify that
they have read this Agreement and agree to its terms.

            FRANKLIN BANK CORP.
      By:     /s/ Alan E. Master       Name:   Alan E. Master      Title:  
President & Chief Executive Officer        FRANKLIN BANK, S.S.B.
      By:     /s/ Andy Black       Name:   Andy Black      Title:   Chief
Executive Officer        EXECUTIVE:
      /s/ Daniel E. Cooper       Daniel E. Cooper           

Signature Page to Retirement Agreement

 

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

 

SCHEDULE A
Stock Option Agreements

  1.   Incentive Stock Option Agreement dated April 10, 2002, by and between
Franklin Bank Corp. and Daniel E. Cooper representing the right to purchase
35,483 shares of Common Stock. This option is 100% vested as of the Effective
Date. The right to purchase shares under this option expires three months after
the Effective Date.     2.   Incentive Stock Option Agreement dated April 30,
2003 by and between Franklin Bank Corp. and Daniel E. Cooper representing the
right to purchase 17,500 shares of Common Stock. This option is 100% vested as
of the Effective Date. The right to purchase shares under this option expires
three months after the Effective Date.     3.   Incentive Stock Option Agreement
dated April 30, 2004 by and between Franklin Bank Corp. and Daniel E. Cooper
representing the right to purchase 15,000 shares of Common Stock. This option is
100% vested as of the Effective Date. The right to purchase shares under this
option expires three months after the Effective Date.     4.   Incentive Stock
Option Agreement dated May 9, 2005 by and between Franklin Bank Corp. and Daniel
E. Cooper representing the right to purchase 12,000 shares of Common Stock. The
option is 60% vested as of the Effective Date. The right to purchase the 7,200
shares vested under this option expires three months after the Effective Date.  
  5.   Stock Option Agreement dated as of December 14, 2005 by and between
Franklin Bank Corp. and Daniel E. Cooper, representing the right to purchase
6,000 shares of Common Stock. The option is 60% vested as of the Effective Date.
The right to purchase the 3,600 shares vested under this option expires three
months after the Effective Date.

Restricted Stock Agreements

  1.   Restricted Stock Agreement dated August 21, 2006 by and between Franklin
Bank Corp. and Daniel E. Cooper with respect to 2,662 shares of Common Stock.  
  2.   Restricted Stock Agreement dated May 31, 2007 by and between Franklin
Bank Corp. and Daniel E. Cooper with respect to 3,500 shares of Common Stock.

Performance Unit Grant Agreements
     Performance Unit Grant Agreement dated August 21, 2006 by and between
Franklin Bank Corp. and Daniel E. Cooper.
Schedule A