Change of Control
 
 
December 23, 2003
 
 
Mr. Anthony J. Nocella
9800 Richmond Avenue
Suite 680
Houston, Texas  77042
 
Dear Tony:
 
This letter shall serve as a conditional offer of employment to you by Franklin
Bank S.S.B ("Franklin") and Franklin Bank Corp. This offer is conditional upon
the happening of the initial public offering of Franklin Bank Corp (the "IPO").
Thus, if you accept this offer and the IPO occurs, this letter agreement will
take effect and supersede the prior letter agreement between you and by Franklin
setting forth certain terms of your employment. If the IPO does not occur, this
letter will be null and void and of no force and effect.
 
The above referenced offer is as follows:
 
Position:         Chief Executive Officer
 
Salary & Bonus:   Your current salary is $300,000 per annum and you will
                  participate in Franklin's bonus program with a 2004 target
                  of $150,000.
 
Restricted Stock: In connection with the IPO, you will receive shares of
                  restricted stock of Franklin Bank Corp. as set forth in a
                  separate restricted stock award agreement
 
Expenses:         You will receive annual allowances as follows: auto --
                  $8,000, club dues $10,000, and executive physical
                  examination of $1,200.
 
Severance:        Generally, you will receive a severance of twelve months'
                  salary continuation, if terminated by Franklin without
                  cause prior to a change of control. However, after a
                  change of control, you will be provided with severance and
                  other benefits under a change of control employment
                  agreement in accordance with the terms of that agreement,
                  which is attached hereto.
<PAGE>
Please note that at no point in time will this letter or the offer that it
memorializes, serve as or be construed to grant you, a guarantee of employment
for any period of time. You will be at all times an employee at will.
 
Please also note that this offer, and the above particulars, are subject to
Franklin's policies, any Franklin Bank Corp. Board of Directors' resolution or
directive regarding the same and the approval of Franklin Bank Corp.'s Board of
Directors.
 
Please confirm your acceptance of this offer of employment by signing this
letter where indicated and returning the executed original to our offices.
Should you have any questions about this offer of employment or the company,
please call the company at the above phone number.
 
Very truly yours,
 
 
By:  ____________________________
Name:  Russell McCann
Title: Chief Financial Officer
 
ACCEPTED:
 
_____________________________________   Date:   _____________________
Anthony J. Nocella
 
 

                                                                    EXHIBIT 10.6

 

                           CHANGE OF CONTROL AGREEMENT

 

            CHANGE OF CONTROL AGREEMENT, dated as of the ____ day of

___________, 2003 (this "Agreement"), by and between Franklin Bank Corp., a

Delaware corporation, (the "Company"), and ______________ (the "Executive").

 

         WHEREAS, the Board of Directors of the Company (the "Board"), has

determined that it is in the best interests of the Company and its shareholders

to assure that the Company will have the continued dedication of the Executive,

notwithstanding the possibility, threat or occurrence of a Change of Control (as

defined herein). The Board believes it is imperative to diminish the inevitable

distraction of the Executive by virtue of the personal uncertainties and risks

created by a pending or threatened Change of Control and to encourage the

Executive's full attention and dedication to the current Company and in the

event of any threatened or pending Change of Control, and to provide the

Executive with compensation and benefits arrangements upon a Change of Control

that ensure that the compensation and benefits expectations of the Executive

will be satisfied and that are competitive with those of other corporations.

Therefore, in order to accomplish these objectives, the Board has caused the

Company to enter into this Agreement.

 

                 NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

            SECTION 1. CERTAIN DEFINITIONS. (a) "Effective Date" means the first

date during the Change of Control Period (as defined herein) on which a Change

of Control occurs. Notwithstanding anything in this Agreement to the contrary,

if a Change of Control occurs and if the Executive's employment with the Company

is terminated prior to the date on which the Change of Control occurs, and if it

is reasonably demonstrated by the Executive that such termination of employment

(1) was at the request of a third party that has taken steps reasonably

calculated to effect a Change of Control or (2) otherwise arose in connection

with or anticipation of a Change of Control, then "Effective Date" means the

date immediately prior to the date of such termination of employment.

 

            (b) "Change of Control Period" means the period commencing on the

date hereof and ending on the third anniversary of the date hereof; provided,

however, that, commencing on the date one year after the date hereof, and on

each annual anniversary of such date (such date and each annual anniversary

thereof, the "Renewal Date"), unless previously terminated, the Change of

Control Period shall be automatically extended so as to terminate three years

from such Renewal Date, unless, at least 60 days prior to the Renewal Date, the

Company shall give notice to the Executive that the Change of Control Period

shall not be so extended.

 

            (c) "Affiliated Company" means any company controlled by,

controlling or under common control with the Company.

 

            (d) "Change of Control" means:

 

 

<PAGE>

 

            (1) The acquisition by any individual, entity or group (within the

meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,

as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within

the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of

either (A) the then-outstanding shares of common stock of the Company (the

"Outstanding Company Common Stock") or (B) the combined voting power of the

then-outstanding voting securities of the Company entitled to vote generally in

the election of directors (the "Outstanding Company Voting Securities");

provided, however, that, for purposes of this Section 1(d), the following

acquisitions shall not constitute a Change of Control: (i) any acquisition

directly from the Company, (ii) any acquisition by the Company, (iii) any

acquisition by any employee benefit plan (or related trust) sponsored or

maintained by the Company or any Affiliated Company or (iv) any acquisition by

any corporation pursuant to a transaction that complies with Sections

1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C);

 

            (2) Any time at which individuals who, as of the date hereof,

constitute the Board (the "Incumbent Board") cease for any reason to constitute

at least a majority of the Board; provided, however, that any individual

becoming a director subsequent to the date hereof whose election, or nomination

for election by the Company's shareholders, was approved by a vote of at least a

majority of the directors then comprising the Incumbent Board shall be

considered as though such individual were a member of the Incumbent Board, but

excluding, for this purpose, any such individual whose initial assumption of

office occurs as a result of an actual or threatened election contest with

respect to the election or removal of directors or other actual or threatened

solicitation of proxies or consents by or on behalf of a Person other than the

Board;

 

            (3) Consummation of a reorganization, merger, statutory share

exchange or consolidation or similar corporate transaction involving the Company

or any of its subsidiaries, a sale or other disposition of all or substantially

all of the assets of the Company, or the acquisition of assets or stock of

another entity by the Company or any of its subsidiaries (each, a "Business

Combination"), in each case unless, following such Business Combination, (A) all

or substantially all of the individuals and entities that were the beneficial

owners of the Outstanding Company Common Stock and the Outstanding Company

Voting Securities immediately prior to such Business Combination beneficially

own, directly or indirectly, more than 50% of the then-outstanding shares of

common stock and the combined voting power of the then-outstanding voting

securities entitled to vote generally in the election of directors, as the case

may be, of the corporation resulting from such Business Combination (including,

without limitation, a corporation that, as a result of such transaction, owns

the Company or all or substantially all of the Company's assets either directly

or through one or more subsidiaries) in substantially the same proportions as

their ownership immediately prior to such Business Combination of the

Outstanding Company Common Stock and the Outstanding Company Voting Securities,

as the case may be, (B) no Person (excluding any corporation resulting from such

Business Combination or any employee benefit plan (or related trust) of the

Company or such corporation resulting from such Business Combination)

beneficially owns, directly or indirectly, 30% or more of, respectively, the

then-outstanding shares of common stock of the corporation resulting from such

Business Combination or the combined voting power of the then-outstanding voting

securities of such corporation, except to the extent that such ownership existed

prior to the Business Combination, and (C) at least a majority of the members of

the board of directors of the corporation resulting from such Business

Combination were members of the Incumbent Board at the time of the exe-

 

                                       2

<PAGE>

cution of the initial agreement or of the action of the Board providing for such

Business Combination; or

 

            (4) Approval by the shareholders of the Company of a complete

liquidation or dissolution of the Company.

 

            SECTION 2. EMPLOYMENT PERIOD. The Company hereby agrees to continue

the Executive in its employ, subject to the terms and conditions of this

Agreement, for the period commencing on the Effective Date and ending on the

third anniversary of the Effective Date (the "Employment Period"). The

Employment Period shall terminate upon the Executive's termination of employment

for any reason.

 

            SECTION 3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (1) During

the Employment Period, (A) the Executive's position (including status, offices,

titles and reporting requirements), authority, duties and responsibilities shall

be at least commensurate in all material respects with the most significant of

those held, exercised and assigned at any time during the 120-day period

immediately preceding the Effective Date and (B) the Executive's services shall

be performed at the office where the Executive was employed immediately

preceding the Effective Date or at any other location less than 35 miles from

such office.

 

            (2) During the Employment Period, and excluding any periods of

vacation and sick leave to which the Executive is entitled, the Executive agrees

to devote reasonable attention and time during normal business hours to the

business and affairs of the Company and, to the extent necessary to discharge

the responsibilities assigned to the Executive hereunder, to use the Executive's

reasonable best efforts to perform faithfully and efficiently such

responsibilities. It is expressly understood and agreed that, to the extent that

any such activities have been conducted by the Executive prior to the Effective

Date, the continued conduct of such activities (or the conduct of activities

similar in nature and scope thereto) subsequent to the Effective Date shall not

thereafter be deemed to interfere with the performance of the Executive's

responsibilities to the Company.

 

            (b) COMPENSATION. (1) BASE SALARY. During the Employment Period, the

Executive shall receive an annual base salary (the "Annual Base Salary") at an

annual rate at least equal to 12 times the highest monthly base salary paid or

payable, including any base salary that has been earned but deferred, to the

Executive by the Company and the Affiliated Companies in respect of the 12-month

period immediately preceding the month in which the Effective Date occurs. The

Annual Base Salary shall be paid at such intervals as the Company pays executive

salaries generally. During the Employment Period, the Annual Base Salary shall

be reviewed at least annually, beginning no more than 12 months after the last

salary increase awarded to the Executive prior to the Effective Date. Any

increase in the Annual Base Salary shall not serve to limit or reduce any other

obligation to the Executive under this Agreement. The Annual Base Salary shall

not be reduced after any such increase and the term "Annual Base Salary" shall

refer to the Annual Base Salary as so increased.

 

            (2) ANNUAL BONUS. In addition to the Annual Base Salary, the

Executive shall be awarded, for each fiscal year ending during the Employment

Period, an annual bonus (the "Annual Bonus") in cash at least equal to the

Executive's highest bonus earned under the Com-

 

                                       3

<PAGE>

pany's annual incentive plans, or any comparable bonus under any predecessor or

successor plan, for the last three full fiscal years prior to the Effective Date

(or for such lesser number of full fiscal years prior to the Effective Date for

which the Executive was eligible to earn such a bonus, and annualized in the

case of any bonus earned for a partial fiscal year) (the "Recent Annual Bonus").

(If the Executive has not been eligible to earn such a bonus for any period

prior to the Effective Date, the "Recent Annual Bonus" shall mean the

Executive's target annual bonus for the year in which the Effective Date

occurs.) Each such Annual Bonus shall be paid no later than the end of the third

month of the fiscal year next following the fiscal year for which the Annual

Bonus is awarded, unless the Executive shall elect to defer the receipt of such

Annual Bonus.

 

            (3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment

Period, the Executive shall be entitled to participate in all cash incentive,

equity incentive, savings and retirement plans, practices, policies, and

programs applicable generally to other peer executives of the Company and the

Affiliated Companies, but in no event shall such plans, practices, policies and

programs provide the Executive with incentive opportunities (measured with

respect to both regular and special incentive opportunities, to the extent, if

any, that such distinction is applicable), savings opportunities and retirement

benefit opportunities, in each case, less favorable, in the aggregate, than the

most favorable of those provided by the Company and the Affiliated Companies for

the Executive under such plans, practices, policies and programs as in effect at

any time during the 120-day period immediately preceding the Effective Date or,

if more favorable to the Executive, those provided generally at any time after

the Effective Date to other peer executives of the Company and the Affiliated

Companies.

 

            (4) WELFARE BENEFIT PLANS. During the Employment Period, the

Executive and/or the Executive's family, as the case may be, shall be eligible

for participation in and shall receive all benefits under welfare benefit plans,

practices, policies and programs provided by the Company and the Affiliated

Companies (including, without limitation, medical, prescription, dental,

disability, employee life, group life, accidental death and travel accident

insurance plans and programs) to the extent applicable generally to other peer

executives of the Company and the Affiliated Companies, but in no event shall

such plans, practices, policies and programs provide the Executive with benefits

that are less favorable, in the aggregate, than the most favorable of such

plans, practices, policies and programs in effect for the Executive at any time

during the 120-day period immediately preceding the Effective Date or, if more

favorable to the Executive, those provided generally at any time after the

Effective Date to other peer executives of the Company and the Affiliated

Companies.

 

            (5) EXPENSES. During the Employment Period, the Executive shall be

entitled to receive prompt reimbursement for all reasonable expenses incurred by

the Executive in accordance with the most favorable policies, practices and

procedures of the Company and the Affiliated Companies in effect for the

Executive at any time during the 120-day period immediately preceding the

Effective Date or, if more favorable to the Executive, as in effect generally at

any time thereafter with respect to other peer executives of the Company and the

Affiliated Companies.

 

            (6) FRINGE BENEFITS. During the Employment Period, the Executive

shall be entitled to fringe benefits, including, without limitation, tax and

financial planning services,

 

                                       4

<PAGE>

payment of club dues, and, if applicable, use of an automobile and payment of

related expenses, in accordance with the most favorable plans, practices,

programs and policies of the Company and the Affiliated Companies in effect for

the Executive at any time during the 120-day period immediately preceding the

Effective Date or, if more favorable to the Executive, as in effect generally at

any time thereafter with respect to other peer executives of the Company and the

Affiliated Companies.

 

            (7) OFFICE AND SUPPORT STAFF. During the Employment Period, the

Executive shall be entitled to an office or offices of a size and with

furnishings and other appointments, and to exclusive personal secretarial and

other assistance, at least equal to the most favorable of the foregoing provided

to the Executive by the Company and the Affiliated Companies at any time during

the 120-day period immediately preceding the Effective Date or, if more

favorable to the Executive, as provided generally at any time thereafter with

respect to other peer executives of the Company and the Affiliated Companies.

 

            (8) VACATION. During the Employment Period, the Executive shall be

entitled to paid vacation in accordance with the most favorable plans, policies,

programs and practices of the Company and the Affiliated Companies as in effect

for the Executive at any time during the 120-day period immediately preceding

the Effective Date or, if more favorable to the Executive, as in effect

generally at any time thereafter with respect to other peer executives of the

Company and the Affiliated Companies.

 

            SECTION 4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The

Executive's employment shall terminate automatically if the Executive dies

during the Employment Period. If the Company determines in good faith that the

Disability (as defined herein) of the Executive has occurred during the

Employment Period (pursuant to the definition of "Disability"), it may give to

the Executive written notice in accordance with Section 11(b) of its intention

to terminate the Executive's employment. In such event, the Executive's

employment with the Company shall terminate effective on the 30th day after

receipt of such notice by the Executive (the "Disability Effective Date"),

provided that, within the 30 days after such receipt, the Executive shall not

have returned to full-time performance of the Executive's duties. "Disability"

means the absence of the Executive from the Executive's duties with the Company

on a full-time basis for 180 consecutive business days as a result of incapacity

due to mental or physical illness that is determined to be total and permanent

by a physician selected by the Company or its insurers and acceptable to the

Executive or the Executive's legal representative.

 

            (b) CAUSE. The Company may terminate the Executive's employment

      during the Employment Period for Cause. "Cause" means:

 

            (1) the willful and continued failure of the Executive to perform

      substantially the Executive's duties (as contemplated by Section

      3(a)(1)(A)) with the Company or any Affiliated Company (other than any

      such failure resulting from incapacity due to physical or mental illness

      or following the Executive's delivery of a Notice of Termination for Good

      Reason), after a written demand for substantial performance is delivered

      to the Executive by the Board or the Chief Executive Officer of the

      Company that specifically identifies the manner in which the Board or the

      Chief Executive Officer of the Company believes that the Executive has not

      substantially performed the Executive's duties, or

 

                                       5

<PAGE>

            (2) the willful engaging by the Executive in illegal conduct or

      gross misconduct that is materially and demonstrably injurious to the

      Company.

 

For purposes of this Section 4(b), no act, or failure to act, on the part of the

Executive shall be considered "willful" unless it is done, or omitted to be

done, by the Executive in bad faith or without reasonable belief that the

Executive's action or omission was in the best interests of the Company. Any

act, or failure to act, based upon authority given pursuant to a resolution duly

adopted by the Board or upon the instructions of the Chief Executive Officer of

the Company or a senior officer of the Company or based upon the advice of

counsel for the Company shall be conclusively presumed to be done, or omitted to

be done, by the Executive in good faith and in the best interests of the

Company. The cessation of employment of the Executive shall not be deemed to be

for Cause unless and until there shall have been delivered to the Executive a

copy of a resolution duly adopted by the affirmative vote of not less than

three-quarters of the entire membership of the Board (excluding the Executive,

if the Executive is a member of the Board) at a meeting of the Board called and

held for such purpose (after reasonable notice is provided to the Executive and

the Executive is given an opportunity, together with counsel for the Executive,

to be heard before the Board), finding that, in the good faith opinion of the

Board, the Executive is guilty of the conduct described in Section 4(b)(1) or

4(b)(2), and specifying the particulars thereof in detail.

 

            (c) GOOD REASON. The Executive's employment may be terminated by the

Executive for Good Reason or by the Executive voluntarily without Good Reason.

"Good Reason" means:

 

            (1) the assignment to the Executive of any duties inconsistent in

      any respect with the Executive's position (including status, offices,

      titles and reporting requirements), authority, duties or responsibilities

      as contemplated by Section 3(a), or any other diminution in such position,

      authority, duties or responsibilities (whether or not occurring solely as

      a result of the Company's ceasing to be a publicly traded entity),

      excluding for this purpose an isolated, insubstantial and inadvertent

      action not taken in bad faith and that is remedied by the Company promptly

      after receipt of notice thereof given by the Executive;

 

            (2) any failure by the Company to comply with any of the provisions

      of Section 3(b), other than an isolated, insubstantial and inadvertent

      failure not occurring in bad faith and that is remedied by the Company

      promptly after receipt of notice thereof given by the Executive;

 

            (3) the Company's requiring the Executive (i) to be based at any

      office or location other than as provided in Section 3(a)(1)(B), (ii) to

      be based at a location other than the principal executive offices of the

      Company if the Executive was employed at such location immediately

      preceding the Effective Date, or (iii) to travel on Company business to a

      substantially greater extent than required immediately prior to the

      Effective Date;

 

            (4) any purported termination by the Company of the Executive's

      employment otherwise than as expressly permitted by this Agreement; or

 

                                       6

<PAGE>

            (5) any failure by the Company to comply with and satisfy Section

      10(c).

 

For purposes of this Section 4(c), any good faith determination of Good Reason

made by the Executive shall be conclusive. Anything in this Agreement to the

contrary notwithstanding, a termination by the Executive for any reason pursuant

to a Notice of Termination given during the 30-day period immediately following

the first anniversary of the Effective Date shall be deemed to be a termination

for Good Reason for all purposes of this Agreement. The Executive's mental or

physical incapacity following the occurrence of an event described above in

clauses (1) through (5) shall not affect the Executive's ability to terminate

employment for Good Reason.

 

            (d) NOTICE OF TERMINATION. Any termination by the Company for Cause,

or by the Executive for Good Reason, shall be communicated by Notice of

Termination to the other party hereto given in accordance with Section 11(b).

"Notice of Termination" means a written notice that (1) indicates the specific

termination provision in this Agreement relied upon, (2) to the extent

applicable, sets forth in reasonable detail the facts and circumstances claimed

to provide a basis for termination of the Executive's employment under the

provision so indicated, and (3) if the Date of Termination (as defined herein)

is other than the date of receipt of such notice, specifies the Date of

Termination (which Date of Termination shall be not more than 30 days after the

giving of such notice). The failure by the Executive or the Company to set forth

in the Notice of Termination any fact or circumstance that contributes to a

showing of Good Reason or Cause shall not waive any right of the Executive or

the Company, respectively, hereunder or preclude the Executive or the Company,

respectively, from asserting such fact or circumstance in enforcing the

Executive's or the Company's respective rights hereunder.

 

            (e) DATE OF TERMINATION. "Date of Termination" means (1) if the

Executive's employment is terminated by the Company for Cause, or by the

Executive for Good Reason, the date of receipt of the Notice of Termination or

any later date specified in the Notice of Termination, (which date shall not be

more than 30 days after the giving of such notice), as the case may be, (2) if

the Executive's employment is terminated by the Company other than for Cause or

Disability, the date on which the Company notifies the Executive of such

termination, and (3) if the Executive resigns without Good Reason, the date on

which the Executive notifies the Company of such termination, and (4) if the

Executive's employment is terminated by reason of death or Disability, the date

of death of the Executive or the Disability Effective Date, as the case may be.

 

            SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD

REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment

Period, the Company terminates the Executive's employment other than for Cause

or Disability or the Executive terminates employment for Good Reason:

 

            (1)   the Company shall pay to the Executive, in a lump sum in cash

      within 30 days after the Date of Termination, the aggregate of the

      following amounts:

 

                  (A) the sum of (i) the Executive's Annual Base Salary through

            the Date of Termination to the extent not theretofore paid, (ii) the

            Executive's business expenses that are reimbursable pursuant to

            Section 3(b)(5) but have not been reimbursed by the Company as of

            the Date of Termination, (iii) the Executive's

 

                                       7

<PAGE>

            Annual Bonus for the fiscal year immediately preceding the fiscal

            year in which the Date of Termination occurs if such bonus has been

            determined but not paid as of the Date of Termination and (iv) the

            product of (x) the higher of (I) the Recent Annual Bonus and (II)

            the Annual Bonus paid or payable, including any bonus or portion

            thereof that has been earned but deferred (and annualized for any

            fiscal year consisting of less than 12 full months or during which

            the Executive was employed for less than 12 full months), for the

            most recently completed fiscal year during the Employment Period, if

            any (such higher amount, the "Highest Annual Bonus") and (y) a

            fraction, the numerator of which is the number of days in the

            current fiscal year through the Date of Termination and the

            denominator of which is 365, and (v) any compensation previously

            deferred by the Executive (together with any accrued interest or

            earnings thereon) and any accrued vacation pay, in each case, to the

            extent not theretofore paid (the sum of the amounts described in

            subclauses (i), (ii), (iii), (iv) and (v), the "Accrued

            Obligations");

 

                  (B) the amount equal to the product of (i) two and (ii) the

            sum of (x) the Executive's Annual Base Salary and (y) the Highest

            Annual Bonus; and

 

                  (C) an amount equal to the excess of (i) the actuarial

            equivalent of the benefit under any qualified defined benefit

            retirement plan maintained by the Company (the "Retirement Plan")

            (utilizing actuarial assumptions no less favorable to the Executive

            than those in effect under the Retirement Plan immediately prior to

            the Effective Date) and any excess or supplemental retirement plan

            in which the Executive participates (collectively, the "SERP") that

            the Executive would receive if the Executive's employment continued

            for two years after the Date of Termination, assuming for this

            purpose that all accrued benefits are fully vested and assuming that

            the Executive's compensation in each of the three years is that

            required by Sections 3(b)(1) and 3(b)(2), over (ii) the actuarial

            equivalent of the Executive's actual benefit (paid or payable), if

            any, under the Retirement Plan and the SERP as of the Date of

            Termination;

 

            (2) for two years after the Executive's Date of Termination, or such

      longer period as may be provided by the terms of the appropriate plan,

      program, practice or policy, the Company shall continue benefits to the

      Executive and/or the Executive's family at least equal to those that would

      have been provided to them in accordance with the plans, programs,

      practices and policies described in Section 3(b)(4) and 3(b)(6) if the

      Executive's employment had not been terminated or, if more favorable to

      the Executive, as in effect generally at any time thereafter with respect

      to other peer executives of the Company and the Affiliated Companies and

      their families; provided, however, that, if the Executive becomes

      reemployed with another employer and is eligible to receive such benefits

      under another employer provided plan, the medical and other welfare

      benefits described herein shall be secondary to those provided under such

      other plan, and such other benefits shall not be provided by the Company,

      during such applicable period of eligibility. For purposes of determining

      eligibility (but not the time of commencement of benefits) of the

      Executive for retiree benefits pursuant to such plans, practices, programs

      and policies, the Executive shall be considered to have remained employed

      until two years after the Date of Termination and to have retired on the

      last day of such period;

 

                                       8

<PAGE>

            (3) the Company shall, at its sole expense as incurred, provide the

      Executive with outplacement services the scope and provider of which shall

      be selected by the Executive in the Executive's sole discretion, provided

      that the cost of such outplacement shall not exceed $50,000; and

 

            (4) to the extent not theretofore paid or provided, the Company

      shall timely pay or provide to the Executive any Other Benefits (as

      defined in Section 6).

 

            (b) DEATH. If the Executive's employment is terminated by reason of

the Executive's death during the Employment Period, the Company shall provide

the Executive's estate or beneficiaries with the Accrued Obligations and the

timely payment or delivery of the Other Benefits, and shall have no other

severance obligations under this Agreement. The Accrued Obligations shall be

paid to the Executive's estate or beneficiary, as applicable, in a lump sum in

cash within 30 days of the Date of Termination. With respect to the provision of

the Other Benefits, the term "Other Benefits" as utilized in this Section 5(b)

shall include, without limitation, and the Executive's estate and/or

beneficiaries shall be entitled to receive, benefits at least equal to the most

favorable benefits provided by the Company and the Affiliated Companies to the

estates and beneficiaries of peer executives of the Company and the Affiliated

Companies under such plans, programs, practices and policies relating to death

benefits, if any, as in effect with respect to other peer executives and their

beneficiaries at any time during the 120-day period immediately preceding the

Effective Date or, if more favorable to the Executive's estate and/or the

Executive's beneficiaries, as in effect on the date of the Executive's death

with respect to other peer executives of the Company and the Affiliated

Companies and their beneficiaries.

 

            (c) DISABILITY. If the Executive's employment is terminated by

reason of the Executive's Disability during the Employment Period, the Company

shall provide the Executive with the Accrued Obligations and the timely payment

or delivery of the Other Benefits, and shall have no other severance obligations

under this Agreement. The Accrued Obligations shall be paid to the Executive in

a lump sum in cash within 30 days of the Date of Termination. With respect to

the provision of the Other Benefits, the term "Other Benefits" as utilized in

this Section 6(c) shall include, and the Executive shall be entitled after the

Disability Effective Date to receive, disability and other benefits at least

equal to the most favorable of those generally provided by the Company and the

Affiliated Companies to disabled executives and/or their families in accordance

with such plans, programs, practices and policies relating to disability, if

any, as in effect generally with respect to other peer executives and their

families at any time during the 120-day period immediately preceding the

Effective Date or, if more favorable to the Executive and/or the Executive's

family, as in effect at any time thereafter generally with respect to other peer

executives of the Company and the Affiliated Companies and their families.

 

            (d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment

is terminated for Cause during the Employment Period, the Company shall provide

to the Executive (1) the Executive's Annual Base Salary through the Date of

Termination, (2) the amount of any compensation previously deferred by the

Executive, and (3) the Other Benefits, in each case, to the extent theretofore

unpaid, and shall have no other severance obligations under this Agreement. If

the Executive voluntarily terminates employment during the Employment Period,

excluding a termination for Good Reason, the Company shall provide to the

Executive the Accrued Obligations and the timely payment or delivery of the

Other Benefits, and shall have no other

 

                                       9

<PAGE>

severance obligations under this Agreement. In such case, all the Accrued

Obligations shall be paid to the Executive in a lump sum in cash within 30 days

of the Date of Termination.

 

            SECTION 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement

shall prevent or limit the Executive's continuing or future participation in any

plan, program, policy or practice provided by the Company or the Affiliated

Companies and for which the Executive may qualify, nor, subject to Section

11(f), shall anything herein limit or otherwise affect such rights as the

Executive may have under any other contract or agreement with the Company or the

Affiliated Companies. Amounts that are vested benefits or that the Executive is

otherwise entitled to receive under any plan, policy, practice or program of or

any other contract or agreement with the Company or the Affiliated Companies at

or subsequent to the Date of Termination ("Other Benefits") shall be payable in

accordance with such plan, policy, practice or program or contract or agreement,

except as explicitly modified by this Agreement. Notwithstanding the foregoing,

if the Executive receives payments and benefits pursuant to Section 5(a) of this

Agreement, the Executive shall not be entitled to any severance pay or benefits

under any severance plan, program or policy of the Company and the Affiliated

Companies, unless otherwise specifically provided therein in a specific

reference to this Agreement.

 

            SECTION 7. FULL SETTLEMENT. The Company's obligation to make the

payments provided for in this Agreement and otherwise to perform its obligations

hereunder shall not be affected by any set-off, counterclaim, recoupment,

defense, or other claim, right or action that the Company may have against the

Executive or others. In no event shall the Executive be obligated to seek other

employment or take any other action by way of mitigation of the amounts payable

to the Executive under any of the provisions of this Agreement, and such amounts

shall not be reduced whether or not the Executive obtains other employment. The

Company agrees to pay as incurred (within 10 days following the Company's

receipt of an invoice from the Executive), to the full extent permitted by law,

all legal fees and expenses that the Executive may reasonably incur as a result

of any contest (regardless of the outcome thereof) by the Company, the Executive

or others of the validity or enforceability of, or liability under, any

provision of this Agreement or any guarantee of performance thereof (including

as a result of any contest by the Executive about the amount of any payment

pursuant to this Agreement), plus, in each case, interest on any delayed payment

at the applicable federal rate provided for in Section 7872(f)(2)(A) of the

Internal Revenue Code of 1986, as amended (the "Code").

 

            SECTION 8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

 

            (a) Anything in this Agreement to the contrary notwithstanding and

except as set forth below, in the event it shall be determined that any Payment

would be subject to the Excise Tax, then the Executive shall be entitled to

receive an additional payment (the "Gross-Up Payment") in an amount such that,

after payment by the Executive of all taxes (and any interest or penalties

imposed with respect to such taxes), including, without limitation, any income

taxes (and any interest and penalties imposed with respect thereto) and Excise

Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the

Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

Notwithstanding the foregoing provisions of this Section 8(a), if it shall be

determined that the Executive is entitled to the Gross-Up Payment, but that the

Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount,

then no Gross-Up Payment shall be made to the Executive and the amounts payable

under this Agree-

 

                                       10

<PAGE>

ment shall be reduced so that the Parachute Value of all Payments, in the

aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable

hereunder, if applicable, shall be made by first reducing the payments under

Section 5(a)(i)(B), unless an alternative method of reduction is elected by the

Executive, and in any event shall be made in such a manner as to maximize the

Value of all Payments actually made to the Executive. For purposes of reducing

the Payments to the Safe Harbor Amount, only amounts payable under this

Agreement (and no other Payments) shall be reduced. If the reduction of the

amount payable under this Agreement would not result in a reduction of the

Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable

under the Agreement shall be reduced pursuant to this Section 8(a). The

Company's obligation to make Gross-Up Payments under this Section 8 shall not be

conditioned upon the Executive's termination of employment.

 

            (b) Subject to the provisions of Section 8(c), all determinations

required to be made under this Section 8, including whether and when a Gross-Up

Payment is required, the amount of such Gross-Up Payment and the assumptions to

be utilized in arriving at such determination, shall be made by Deloitte &

Touche LLP, or such other nationally recognized certified public accounting firm

as may be designated by the Executive (the "Accounting Firm"). The Accounting

Firm shall provide detailed supporting calculations both to the Company and the

Executive within 15 business days of the receipt of notice from the Executive

that there has been a Payment or such earlier time as is requested by the

Company. In the event that the Accounting Firm is serving as accountant or

auditor for the individual, entity or group effecting the Change of Control, the

Executive may appoint another nationally recognized accounting firm to make the

determinations required hereunder (which accounting firm shall then be referred

to as the Accounting Firm hereunder). All fees and expenses of the Accounting

Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined

pursuant to this Section 8, shall be paid by the Company to the Executive within

5 days of the receipt of the Accounting Firm's determination. Any determination

by the Accounting Firm shall be binding upon the Company and the Executive. As a

result of the uncertainty in the application of Section 4999 of the Code at the

time of the initial determination by the Accounting Firm hereunder, it is

possible that Gross-Up Payments that will not have been made by the Company

should have been made (the "Underpayment"), consistent with the calculations

required to be made hereunder. In the event the Company exhausts its remedies

pursuant to Section 8(c) and the Executive thereafter is required to make a

payment of any Excise Tax, the Accounting Firm shall determine the amount of the

Underpayment that has occurred and any such Underpayment shall be promptly paid

by the Company to or for the benefit of the Executive.

 

            (c) The Executive shall notify the Company in writing of any claim

by the Internal Revenue Service that, if successful, would require the payment

by the Company of the Gross-Up Payment. Such notification shall be given as soon

as practicable, but no later than 10 business days after the Executive is

informed in writing of such claim. The Executive shall apprise the Company of

the nature of such claim and the date on which such claim is requested to be

paid. The Executive shall not pay such claim prior to the expiration of the

30-day period following the date on which the Executive gives such notice to the

Company (or such shorter period ending on the date that any payment of taxes

with respect to such claim is due). If the Company notifies the Executive in

writing prior to the expiration of such period that the Company desires to

contest such claim, the Executive shall:

 

                                       11

<PAGE>

            (1) give the Company any information reasonably requested by the

Company relating to such claim,

 

            (2) take such action in connection with contesting such claim as the

Company shall reasonably request in writing from time to time, including,

without limitation, accepting legal representation with respect to such claim by

an attorney reasonably selected by the Company,

 

            (3) cooperate with the Company in good faith in order effectively to

contest such claim, and

 

            (4) permit the Company to participate in any proceedings relating to

such claim;

 

provided, however, that the Company shall bear and pay directly all costs and

expenses (including additional interest and penalties) incurred in connection

with such contest, and shall indemnify and hold the Executive harmless, on an

after-tax basis, for any Excise Tax or income tax (including interest and

penalties) imposed as a result of such representation and payment of costs and

expenses. Without limitation on the foregoing provisions of this Section 8(c),

the Company shall control all proceedings taken in connection with such contest,

and, at its sole discretion, may pursue or forgo any and all administrative

appeals, proceedings, hearings and conferences with the applicable taxing

authority in respect of such claim and may, at its sole discretion, either pay

the tax claimed to the appropriate taxing authority on behalf of the Executive

and direct the Executive to sue for a refund or contest the claim in any

permissible manner, and the Executive agrees to prosecute such contest to a

determination before any administrative tribunal, in a court of initial

jurisdiction and in one or more appellate courts, as the Company shall

determine; provided, however, that, if the Company pays such claim and directs

the Executive to sue for a refund, the Company shall indemnify and hold the

Executive harmless, on an after-tax basis, from any Excise Tax or income tax

(including interest or penalties) imposed with respect to such payment or with

respect to any imputed income in connection with such payment; and provided,

further, that any extension of the statute of limitations relating to payment of

taxes for the taxable year of the Executive with respect to which such contested

amount is claimed to be due is limited solely to such contested amount.

Furthermore, the Company's control of the contest shall be limited to issues

with respect to which the Gross-Up Payment would be payable hereunder, and the

Executive shall be entitled to settle or contest, as the case may be, any other

issue raised by the Internal Revenue Service or any other taxing authority.

 

            (d) If, after the receipt by the Executive of a Gross-Up Payment or

payment by the Company of an amount on the Executive's behalf pursuant to

Section 8(c), the Executive becomes entitled to receive any refund with respect

to the Excise Tax to which such Gross-Up Payment relates or with respect to such

claim, the Executive shall (subject to the Company's complying with the

requirements of Section 8(c), if applicable) promptly pay to the Company the

amount of such refund (together with any interest paid or credited thereon after

taxes applicable thereto). If, after payment by the Company of an amount on the

Executive's behalf pursuant to Section 8(c), a determination is made that the

Executive shall not be entitled to any refund with respect to such claim and the

Company does not notify the Executive in writing of its intent to contest such

denial of refund prior to the expiration of 30 days after such determination,

then the

 

                                       12

<PAGE>

amount of such payment shall offset, to the extent thereof, the amount of

Gross-Up Payment required to be paid.

 

            (e) Notwithstanding any other provision of this Section 8, the

Company may, in its sole discretion, withhold and pay over to the Internal

Revenue Service or any other applicable taxing authority, for the benefit of the

Executive, all or any portion of any Gross-Up Payment, and the Executive hereby

consents to such withholding.

 

            (f) Definitions. The following terms shall have the following

meanings for purposes of this Section 8.

 

            (i) "Excise Tax" shall mean the excise tax imposed by Section 4999

of the Code, together with any interest or penalties imposed with respect to

such excise tax.

 

            (ii) "Parachute Value" of a Payment shall mean the present value as

of the date of the change of control for purposes of Section 280G of the Code of

the portion of such Payment that constitutes a "parachute payment" under Section

280G(b)(2), as determined by the Accounting Firm for purposes of determining

whether and to what extent the Excise Tax will apply to such Payment.

 

            (iii) A "Payment" shall mean any payment or distribution in the

nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to

or for the benefit of the Executive, whether paid or payable pursuant to this

Agreement or otherwise.

 

            (iv) The "Safe Harbor Amount" means 2.99 times the Executive's "base

amount," within the meaning of Section 280G(b)(3) of the Code.

 

            (v) "Value" of a Payment shall mean the economic present value of a

Payment as of the date of the change of control for purposes of Section 280G of

the Code, as determined by the Accounting Firm using the discount rate required

by Section 280G(d)(4) of the Code.

 

            SECTION 9. CONFIDENTIAL INFORMATION. The Executive shall hold in a

fiduciary capacity for the benefit of the Company all secret or confidential

information, knowledge or data relating to the Company or the Affiliated

Companies, and their respective businesses, which information, knowledge or data

shall have been obtained by the Executive during the Executive's employment by

the Company or the Affiliated Companies and which information, knowledge or data

shall not be or become public knowledge (other than by acts by the Executive or

representatives of the Executive in violation of this Agreement). After

termination of the Executive's employment with the Company, the Executive shall

not, without the prior written consent of the Company or as may otherwise be

required by law or legal process, communicate or divulge any such information,

knowledge or data to anyone other than the Company and those persons designated

by the Company. In no event shall an asserted violation of the provisions of

this Section 9 constitute a basis for deferring or withholding any amounts

otherwise payable to the Executive under this Agreement.

 

            SECTION 10. SUCCESSORS. (a) This Agreement is personal to the

Executive, and, without the prior written consent of the Company, shall not be

assignable by the Executive

 

                                       13

<PAGE>

other than by will or the laws of descent and distribution. This Agreement shall

inure to the benefit of and be enforceable by the Executive's legal

representatives.

 

            (b) This Agreement shall inure to the benefit of and be binding upon

the Company and its successors and assigns. Except as provided in Section 10(c),

without the prior written consent of the Executive this Agreement shall not be

assignable by the Company.

 

            (c) The Company will require any successor (whether direct or

indirect, by purchase, merger, consolidation or otherwise) to all or

substantially all of the business and/or assets of the Company to assume

expressly and agree to perform this Agreement in the same manner and to the same

extent that the Company would be required to perform it if no such succession

had taken place. "Company" means the Company as hereinbefore defined and any

successor to its business and/or assets as aforesaid that assumes and agrees to

perform this Agreement by operation of law or otherwise.

 

            SECTION 11. MISCELLANEOUS. (a) This Agreement shall be governed by

and construed in accordance with the laws of the State of Delaware, without

reference to principles of conflict of laws. The captions of this Agreement are

not part of the provisions hereof and shall have no force or effect. This

Agreement may not be amended or modified other than by a written agreement

executed by the parties hereto or their respective successors and legal

representatives.

 

            (b) All notices and other communications hereunder shall be in

writing and shall be given by hand delivery to the other party or by registered

or certified mail, return receipt requested, postage prepaid, addressed as

follows:

 

            if to the Executive:

 

            At the most recent address on file for the Executive at the Company.

 

 

 

            if to the Company:

 

            Franklin Bank Corp.

            9800 Richmond Avenue

            Suite 680

            Houston, Texas 77042

            Facsimile: (713) 339-8918

 

            Attention: General Counsel

 

or to such other address as either party shall have furnished to the other in

writing in accordance herewith. Notice and communications shall be effective

when actually received by the addressee.

 

            (c) The invalidity or unenforceability of any provision of this

Agreement shall not affect the validity or enforceability of any other provision

of this Agreement.

 

 

 

                                       14

<PAGE>

 

            (d) The Company may withhold from any amounts payable under this

Agreement such United States federal, state or local or foreign taxes as shall

be required to be withheld pursuant to any applicable law or regulation.

 

            (e) The Executive's or the Company's failure to insist upon strict

compliance with any provision of this Agreement or the failure to assert any

right the Executive or the Company may have hereunder, including, without

limitation, the right of the Executive to terminate employment for Good Reason

pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver

of such provision or right or any other provision or right of this Agreement.

 

            (f) The Executive and the Company acknowledge that, except as may

otherwise be provided under any other written agreement between the Executive

and the Company, the employment of the Executive by the Company is "at will"

and, subject to Section 1(a), prior to the Effective Date, the Executive's

employment may be terminated by either the Executive or the Company at any time

prior to the Effective Date, in which case the Executive shall have no further

rights under this Agreement. From and after the Effective Date, except as

specifically provided herein, this Agreement shall supersede any other agreement

between the parties with respect to the subject matter hereof, including without

limitation the letter agreement between the Executive and the Company dated as

of ______________.

 

 

 

                                       15

<PAGE>

            IN WITNESS WHEREOF, the Executive has hereunto set the Executive's

hand and, pursuant to the authorization from the Board, the Company has caused

these presents to be executed in its name on its behalf, all as of the day and

year first above written.

 

 

 

                                        FRANKLIN BANK CORP.

 

 

 

 

 

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

                                        By:

                                        Title:

 

 

 

 

 

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

                                        EXECUTIVE