Document:

exv10w1

 

Exhibit 10.1

June 24, 2007

Mr. George W. Cole

Encysive Pharmaceuticals Inc.

4848 Loop Central Drive, 7th Floor

Houston, Texas 77081

Dear Mr. Cole:

     Reference is made to that Termination Agreement, dated October 25, 2005 (the “Agreement”),
between Encysive Pharmaceuticals Inc. (the “Company”) and you. This letter serves as an amendment
to the Agreement.

     Pursuant to Section 13.4 of the Agreement, Section 2.1(a) of the Agreement is amended in its
entirety to read as follows:

The Company agrees to employ the Executive, and the Executive agrees to accept
employment by the Company and to serve the Company as its Chief Executive Officer.
The Executive shall report to and be subject to the direction of the Board. The
Executive shall have the authority, duties and responsibilities that are normally
associated with and inherent in the executive capacity in which the Executive will
be performing, and shall have such other or additional duties which are not
inconsistent with the Executive’s position, as may from time to time be reasonably
assigned to the Executive by the Board (or a committee thereof). While employed
hereunder, the Executive shall devote full time and attention during normal business
hours to the affairs of the Company and use his best efforts to perform faithfully
and efficiently his duties and responsibilities. The Executive agrees to cooperate
fully with the Board, and other executive officers of the Company, and not to engage
in any activity which conflicts with or interferes with the performance of his
duties hereunder. During the Employment Period, the Executive shall devote his best
efforts and skills to the business and interests of the Company, do his utmost to
further enhance and develop the Company’s best interests and welfare, and endeavor
to improve his ability and knowledge of the Company’s business, in an effort to
increase the value of his services for the mutual benefit of the parties hereto.
During the Employment Period, it shall not be a violation of this Agreement for the
Executive (i) serve on any corporate board or committee thereof with the approval of
the Board, (ii) to serve on any civic, or charitable boards or committees (except
for boards or committees of a Competing Business unless approved by the Board),
(iii) deliver lectures, fulfill teaching or speaking engagements, (iv) testify as a
witness in litigation involving a former employer or (v) manage personal
investments; provided, however, any such activities must not materially interfere
with performance of the Executive’s responsibilities under this Agreement

 

 

Mr. George W. Cole

June 24, 2007

Page 2

     Pursuant to Section 13.4 of the Agreement, the first sentence of Section 4.1 of the Agreement
is amended in its entirety to read as follows:

As compensation for services to the Company, the Company shall pay to the Executive
from the Effective Date until the Date of Termination an annual base salary of
$490,000 (the “Base Salary”).

     Pursuant to Section 13.1 of the Agreement, all notices and other communications required or
permitted under the Agreement or necessary or convenient in connection with the Agreement shall be
given to the Company at the address below:

     Encysive Pharmaceuticals Inc.

     4848 Loop Central Drive, 7th Floor

      Houston, Texas 77081

      Attention: Chairman of the Board

      Facsimile No.: (713) 782-8232

     The changes in your duties, responsibilities and position as set forth in this letter shall
not constitute “Good Reason” as defined in Section 5.5 of the Agreement.

     On the date hereof, the Company will grant to you options (the “Options”) to acquire 500,000
shares of the Company’s common stock, par value $.005 per share (the “Common Stock”), with an
exercise price of $1.89 per share of Common Stock. The Options will provide for the vesting of
one-half of the shares covered by the Options on each of May 31, 2009, and May 31, 2010. The
Options will be granted pursuant to, and will be governed by the terms of, the Company’s incentive
stock plans as then in effect, and the provisions of the Agreement (including Section 6.3(e)
thereof).

     Except as may be expressly set forth in this letter, all provisions, terms and conditions in
the Agreement remain unmodified and in full force and effect.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ John M. Pietruski

 	 
	 	John M. Pietruski 	 
	 	Chairman of the Board 	 
	 

Acknowledged as of the date

first written above:

/s/ George W. Cole                              

George W. Coleexv10w1

 

Exhibit 10.1

527 Madison Avenue

New York, NY 10022

Telephone: (212) 893-1121

Fax: (212) 893-1123

CONFIDENTIAL

June 15, 2007

Mr. Anthony J. Nocella

President & Chief Executive Officer

Franklin Bank Corp.

9800 Richmond Avenue

Suite 680

Houston, TX 77042

Dear Mr. Nocella:

This letter (the “Agreement”) will confirm the engagement of SMH Capital Inc. (“SMH Capital”), a
subsidiary of Sanders Morris Harris Inc., a Texas corporation (“SMH”), by Franklin Bank Corp., a
Delaware corporation (the “Company”), as financial adviser and exclusive placement agent in
connection with the Company’s proposed direct offering of approximately $25 million of common stock
registered on Form S-3, as amended, (file number 333-141039) (“Shares”) to investors (the
“Offering”).

	1.	 	Scope of SMH Capital’s Services. SMH Capital will be the Company’s exclusive
placement agent in the solicitation of offers for the purchase of all or part of the Shares
from the Company. To that extent, SMH Capital will distribute Offering Materials (as
hereinafter defined) to potential investors, report the status of the Offering to the Company,
and assist in consummating the Offering, including, but not limited to:

	 	a.	 	familiarizing itself to the extent it deems appropriate and feasible with the
business operations, properties, financial condition, and prospects of the Company,
	 
	 	b.	 	assisting the Company in preparing Offering Materials for distribution by SMH
Capital to potential investors selected by SMH Capital and the Company,
	 
	 	c.	 	screening and contacting prospective investors,
	 
	 	d.	 	assisting in negotiations with prospective investors, and
	 
	 	e.	 	advising and assisting the Company in structuring and pricing the Offering.

The Offering will be conducted pursuant to the terms and conditions of a customary placement
agency agreement acceptable to SMH Capital, the Company and their respective counsel. The
Company shall retain control of the Offering and shall have the right to determine (a) whether
to close the sale of the Securities to a specific investor, (b) whether to close or terminate
the Offering, and (c) the content of the Offering Materials. It is understood by both parties
that SMH Capital intends to solicit interest from a limited number of potential investors and
on a “best-

 

 

Franklin Bank Corp.

June 15, 2007

Page 2

	 	 	efforts” only basis. SMH Capital will, in its sole discretion, determine the reasonableness of
its efforts and is under no obligation to perform at any level other than what it deems
reasonable.
	 
	2.	 	Fees. In return for SMH Capital’s services in the placement of the Shares, the
Company will pay SMH Capital a placement agent fee equal to 5.0% of the gross proceeds of any shares placed by SMH Capital.
	 
	 	 	Any fee contemplated in the above sentence herein will be referred to as the “Financing Fees”.
Any Financing Fees payable to SMH Capital will be due at the closing date of the Offering and
shall be payable to SMH Capital by the Company. The Company shall also pay SMH Capital a
Financing Fee if shares of common stock are sold by the Company through a private placement
during the Residual Period to investors contacted by SMH Capital regarding the Offering.
	 
	3.	 	Expenses. In addition to the foregoing, the Company will, upon request, reimburse
SMH Capital for all reasonable out of pocket costs and expenses incurred by SMH Capital in
performing its obligations under this Agreement, which costs and expenses shall include, but
not be limited to, travel expenses, expenses incurred in performing due diligence in
connection with the transaction, background investigations, legal expenses (cap of $15,000),
information services fee of $5,000 per transaction, and all other expenses reasonably incurred
by SMH Capital in performing its obligations under this Agreement; provided, however, that SMH
Capital shall obtain the prior approval of the Company for any single expenditure in excess of
$2,500. In seeking reimbursement for expenses, SMH Capital shall provide to the Company a
written statement or statements detailing expenses for which reimbursement is sought and, upon
request by the Company, shall provide copies of invoices and other documentation supporting
such expenses. Reimbursable expenses shall be payable by the Company within 10 days of
receipt by the Company of such written statement or, if requested by the Company, copies of
supporting documentation.
	 
	4.	 	Term. The term of this Agreement shall begin on the date hereof and shall terminate
at the close of the Offering. A “Residual Period” shall extend for thirty (30) days from the
date of termination or expiration of this Agreement. SMH Capital reserves the right to
terminate this engagement on 10 days notice in writing.
	 
	5.	 	Company Information. The Company will furnish SMH Capital such information
concerning the Company as SMH Capital reasonable determines to be appropriate with respect to
the Offering (“Information”). The Company shall afford SMH Capital and its counsel and
representatives full and complete access to its books and records and will use commercially
reasonable efforts to afford SMH Capital will full and complete cooperation of management to
gather the Information. The Company recognizes and confirms that SMH Capital (a) will use and
rely on the Information in performing the services contemplated by this Agreement, without
independently verifying the accuracy and completeness of the same, (b) does not assume
responsibility for the accuracy or completeness of the Information, and (c) will not make an
appraisal of any assets or liability of the Company.
	 
	 	 	The Company hereby represents to SMH Capital that all solicitation materials prepared by the
Company and used in connection with the Offering (the “Offering Materials”) will not, as of the
date of any offer or sale in connection with the Offering, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained therein, not
misleading, in light of the circumstances under which they were made. If at any time an event
occurs as a result of which the Offering Materials, as then amended or supplemented, would
include an untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were made when

 

 

Franklin Bank Corp.

June 15, 2007

Page 3

	 	 	such Offering Materials are delivered to a prospective purchaser pursuant hereto, not
misleading, the Company will promptly notify SMH Capital to suspend solicitation of prospective
purchasers in connection with the Offering; and if the Company decides to amend or supplement
the Offering Materials, it will promptly advise SMH Capital by telephone (with confirmation in
writing) and will promptly prepare an amendment or supplement that will correct such statement
or omission.
	 
	 	 	SMH Capital will not violate, or cause the Company to violate, any applicable securities laws
in connection with the Offering.
	 
	6.	 	Confidentiality. In connection with this engagement, it is contemplated that SMH
Capital will receive from the Company certain information (including certain business
planning, product, marketing, technical, financial, and other information and materials) the
Company considers confidential. SMH Capital shall use this confidential information solely
for the purpose of providing services to the Company and will not disclose to any party (other
than SMH Capital’s officers, directors, employees, affiliates, and counsel who have a need to
know such information, herein “Representatives”) any such confidential information, except
with the prior written approval of the Company; provided, however, that the foregoing
restrictions shall not apply to any information that: (a) is included in the Offering
Materials and disclosed pursuant to the distribution of the Offering Materials as permitted by
the Company, (b) the Company consents to having disclosed in connection with the Offering, (c)
is publicly available when provided or thereafter becomes publicly available other than
through disclosure by SMH Capital or its Representatives, or (d) is required to be disclosed
by SMH Capital by judicial or administrative process in connection with any action, suit,
proceeding, or investigation; and provided, further, however, that SMH Capital shall give the
Company notice of any such requirement immediately upon the becoming aware of same and shall
not disclose such information except only to the extent required after the maximum time
permitted. Information shall be deemed “publicly available” if it becomes a matter of public
knowledge or is contained in materials available to the public or is obtained by SMH Capital
from any source other than the Company or its representatives, provided that such source was
not to SMH Capital’s actual knowledge subject to a confidentiality agreement with the Company.
SMH Capital will take reasonable steps to assure that the Offering Materials are not
distributed to any persons not permitted to receive them pursuant to the terms hereof.
	 
	7.	 	Indemnification. The Company acknowledges that SMH Capital will be acting on behalf
of the Company and will require indemnification by the Company. The Company further
acknowledges that SMH Capital’s indemnification provisions attached hereto as Exhibit A are
incorporated by reference herein or are made a part hereof for all purposes as though set
forth entirely herein.
	 
	8.	 	Miscellaneous. The Shares will be issued and sold pursuant to the Company’s shelf
registration on Form S-3, as amended, (file number 333-141039).
	 
	 	 	The parties agree that their relationship under this Agreement is an advisory relationship
only, and nothing herein shall cause SMH Capital to be partners, agents or fiduciaries of, or
joint venture partners with, the Company or with each other.
	 
	 	 	The Company agrees that, following the closing of the Offering, SMH Capital shall have the
right to place advertisements in financial and other newspapers and journals at its own expense
describing its services to the Company hereunder, provided that SMH Capital will submit a copy
of any such advertisement to the Company for its approval, which approval shall not be
unreasonably withheld or delayed.

 

 

Franklin Bank Corp.

June 15, 2007

Page 4

This Agreement may not be amended or modified except in writing and shall be governed by, and
construed in accordance with the laws of the State of New York.

If this Agreement reflects our mutual understanding, please execute two copies in the space
indicated below and return one to us.

Very truly yours,

SMH Capital, Inc.

/s/
Richard J. Kelly

 

Richard J. Kelly

Managing Director-Financial Services

Accepted
and agreed to as of June 19, 2007:

Franklin Bank Corp.

/s/
Anthony J. Nocella

 

Anthony J. Nocella

President & Chief Executive Officer

 

 

Franklin Bank Corp.

June 15, 2007

Page 5

Exhibit A

Indemnification

Franklin Bank Corporation, Inc., a Delaware corporation (the “Company”), agrees to indemnify and
hold harmless SMH Capital, Inc. (“SMH Capital”), a subsidiary of Sanders Morris Harris Inc., a
Texas corporation (“SMH”), together with its affiliates, directors, officers, agents, employees,
SMH Capital within the meaning of the federal securities laws, and the respective successors,
assigns, heirs, beneficiaries, and legal representatives of each of the foregoing (SMH Capital and
each such entity or person, an “Indemnified Person”), from and against any and all losses, claims,
damages, judgments, and liabilities, expenses, or costs (and all actions in respect thereof and any
legal or other expenses in giving testimony or furnishing documents in response to a subpoena or
otherwise), including the cost of investigating, preparing for, or defending any such action or
claim, whether or not in connection with litigation in which an Indemnified Person is a party, as
and when incurred, directly or indirectly caused by, relating to, based upon, or arising out of SMH
Capital’s performance of its engagement by the Company under the letter agreement dated as of June
15, 2007, as it may be amended from time to time (the “Agreement”), or otherwise arising out of (A)
any untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement (as defined below) (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated therein or necessary to make the statements
therein not misleading, or (B) any untrue statement or alleged untrue statement of any material
fact contained in either the Base Prospectus, the Prospectus, or any amendment or supplement
thereto, or arises out of or is based upon any omission or alleged omission to state a 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, such indemnity
agreement shall not apply to any such loss, claim, damage, liability, or cost incurred by any
Indemnified Person to the extent it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross
negligence or willful misconduct or bad faith of such Indemnified Person. The Company also agrees
that no Indemnified Person shall have any liability (whether direct or indirect, in contract or
tort or otherwise) to the Company for or in connection with the any advice or services provided by
any Indemnified Persons in connection with the Agreement, the transactions contemplated by the
Agreement, or any Indemnified Persons’ actions or inactions in connection with any such advice,
services, or transactions except for any such liability for losses, claims, damages, liabilities,
or costs found in a final judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted primarily and directly from such Indemnified Person’s gross negligence or
willful misconduct or bad faith in connection with such advice, actions, inactions, or services.
“Registration Statement” means such registration statement referred to in the first
paragraph of Section 8 of this Agreement, including exhibits and financial statements and any
prospectus supplement relating to the Shares that is filed with the Securities and Exchange
Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended, and the rules
promulgated thereunder (the “Securities Act”), and deemed part of such registration statement
pursuant to Rule 430B under the Securities Act; “Base Prospectus” means the base prospectus
contained in the Registration Statement; and “Prospectus” means the prospectus supplement relating
to the Shares fi
led pursuant to Rule 424(b) under the Securities Act in connection with the
transactions contemplated by this Agreement, together with the Base Prospectus.

These Indemnification Provisions shall be in addition to any liability that the Company may
otherwise have to any Indemnified Person and shall extend to the following: SMH Capital, its
affiliated entities, directors, officers, employees, agents, legal counsel and controlling persons
of

 

 

Franklin Bank Corp.

June 15, 2007

Page 6

SMH Capital within the meaning of the federal securities laws, and the respective successors,
assigns, heirs, beneficiaries, and legal representatives of each of the foregoing indemnified
persons or entities. All references to SMH Capital or Indemnified Persons in these Indemnification
Provisions shall be understood to include any and all of the foregoing indemnified persons or
entities.

If any action, proceeding, or investigation is commenced, as to which an Indemnified Person
proposes to demand such indemnification, it will notify the Company with reasonable promptness;
provided, however, that any failure by an Indemnified Person to notify the Company will not relieve
the Company from its obligations hereunder except if and only to the extent that the Company’s
defense of such action, proceeding or investigation is actually prejudiced by the Indemnified
Person’s failure so to notify the Company. SMH Capital will have the right to retain counsel of
its own choice to represent it; however, such firm shall be acceptable to the Company, which
acceptance shall not be unreasonably withheld, and unless the Company assumes SMH Capital’s defense
as provided below, the Company will pay the reasonable fees and expenses of such counsel, and such
counsel shall to the fullest extent consistent with its professional responsibilities cooperate
with the Company and any counsel designated by it. The Company will be entitled to participate at
its own expense in the defense, or if it so elects, to assume and control the defense of any
action, proceeding, or investigation, but, if the Company elects to assume the defense, such
defense shall be conducted by counsel reasonably acceptable to SMH Capital. Any Indemnified Person
may retain additional counsel of its own choice to represent it but shall bear the fees and
expenses of such counsel unless the Company shall have specifically authorized the retaining of
such counsel. The Company will not be liable for any settlement of any claim against an
Indemnified Person made without its written consent.

In order to provide for just and equitable contribution, if a claim for indemnification pursuant to
these Indemnification Provisions is made but it is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) that such indemnification may not be
enforced in such case, even though the express provisions hereof provide for indemnification in
such case, then the Company, on the one hand, and any Indemnified Person, on the other hand, shall
contribute to the losses, claims, damages, liabilities, or costs to which the Indemnified Persons
may be subject in accordance with the relative benefits received by the Company, on the one hand,
and SMH Capital, on the other hand, and also the relative fault of the Company, on the one hand,
and SMH Capital, on the other hand, in connection with the statements, acts or omissions that
resulted in such losses, claims, damages, liabilities, or costs, and the relevant equitable
considerations shall also be considered. No person found liable for a fraudulent misrepresentation
shall be entitled to contribution from any person who is not also found liable for such
misrepresentation. Notwithstanding the foregoing, SMH Capital shall not be obligated to contribute
any amount hereunder that exceeds the amount of fees received by SMH Capital pursuant to the
Agreement.

Neither termination nor completion of the engagement of SMH Capital or any Indemnified Person under
the Agreement shall affect the provisions of these Indemnification Provisions, which shall then
remain operative and in full force and effect.

If any provision contained in this Exhibit A is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable, or against its regulatory policy, the remainder of
the provisions contained in this Exhibit A shall remain in full force and effect and shall in no
way be affected, impaired, or invalidated. These Indemnification Provisions may not be amended or
modified in any way, except by subsequent agreement executed in writing.

 

 

Franklin Bank Corp.

June 15, 2007

Page 7

Accepted
and agreed to as of June 19, 2007:

Franklin Bank Corp.

/s/
Anthony J. Nocella

 

Anthony J. Nocella

President & Chief Executive Officer

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