Exhibit 1.1
E*TRADE FINANCIAL
CORPORATION
$150,000,000
Common Stock
($0.01 par value per share)
DISTRIBUTION
AGREEMENT
September 14, 2009
Sandler O'Neill & Partners,
L.P.
Ladies and Gentlemen:
E*TRADE Financial Corporation, a Delaware
corporation (the “ Company ”), confirms its
agreement with Sandler O’Neill & Partners, L.P., as agent
and/or principal under any Terms Agreement (as defined in Section
1(a) below) (“ Sandler ”), with respect to the
issuance and sale from time to time by the Company, in the manner
and subject to the terms and conditions described below (this
“ Agreement ”), of shares (the “
Shares ”) of common stock, $0.01 par value per share
(the “ Common Stock ”), of the Company having an
aggregate Gross Sales Price (as defined
in Section 2(b) below) of up to $150,000,000 (the “
Maximum Amount ”) on the terms set forth in Section 1
of this Agreement. The Shares are described in the
Prospectus referred to below .
The Company has filed with the Securities and
Exchange Commission (the “ Commission ”) a
registration statement on Form S-3 (No. 333-158636) for the
registration of the Shares under the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “ Securities Act ”); and such
registration statement sets forth the material terms of the
offering, sale and plan of distribution of the Shares and contains
additional information concerning the Company and its
business. As used herein, “ Registration
Statement ” means such registration statement, as amended
at the time of such registration statement’s effectiveness
for purposes of Section 11 of the Securities Act, as such section
applies to Sandler, including (1) all documents filed as a
part thereof or incorporated, or deemed to be incorporated, by
reference therein and (2) any information contained or
incorporated by reference in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act, to the extent
such information is deemed, pursuant to Rule 430B or Rule 430C
under the Securities Act, to be part of the registration statement
at the effective time. “ Basic Prospectus
” means the prospectus dated April 17, 2009, filed as part of
the Registration Statement, including the documents incorporated by
reference therein as of the date of such prospectus; “
Prospectus Supplement ” means the most recent
prospectus supplement relating to the Shares, to be filed by the
Company with the Commission pursuant to Rule 424(b) under the
Securities Act on or before the second business day after the date
hereof (or such earlier time as may be
required under the Securities Act), in the form furnished by the
Company to Sandler in connection
with the offering of the Shares; “ Prospectus ”
means the Prospectus Supplement (and any additional prospectus
supplement pre-
pared in accordance with
the provisions of Sections 4(b) or 4(g) of this Agreement and filed
in accordance with the provisions of Rule 424(b)) together with the
Basic Prospectus attached to or used with the Prospectus
Supplement; and “ Permitted Free Writing Prospectuses
” has the meaning set forth in Section 3(b). Any
reference herein to the Registration Statement, the Basic
Prospectus, the Prospectus Supplement or the Prospectus shall,
unless otherwise stated, be deemed to refer to and include the
documents, if any, incorporated, or deemed to be incorporated, by
reference therein (the “ Incorporated Documents
”), including, unless the context otherwise requires, the
documents, if any, filed as exhibits to such Incorporated
Documents. Any reference herein to the terms
“amend,” “amendment” or
“supplement” with respect to the Registration
Statement, the Basic Prospectus, the Prospectus Supplement, the
Prospectus or any Permitted Free Writing Prospectus shall, unless
stated otherwise, be deemed to refer to and include the filing of
any document under the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder
(collectively, the “ Exchange Act ”) on or after
the initial effective date of the Registration Statement or the
date of the Basic Prospectus, the Prospectus Supplement, the
Prospectus or such Permitted Free Writing Prospectus, as the case
may be, and deemed to be incorporated therein by
reference.
1.
Issuance and Sale . The Company and Sandler agree
as follows:
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Upon the basis of the
representations, warranties and agreements and subject to the terms
and conditions set forth herein, on any Exchange Business Day (as
defined below) selected by the Company, the Company and Sandler
shall enter into an agreement in accordance with Section 2 hereof
regarding the number of Shares to be placed by Sandler and the
manner in which and other terms upon which such placement is to
occur (each such transaction being referred to as an “
Agency Transaction ”). The Company may also
offer to sell the Shares directly to Sandler, as principal, in
which event such parties shall enter into a separate agreement
(each, a “ Terms Agreement ”) in substantially
the form of Exhibit A hereto, relating to such sale in
accordance with Section 2(g) of this Agreement (each such
transaction being referred to as a “ Principal
Transaction ”). As used herein, (i) the
“ Term ” shall be the period commencing on the
date hereof and ending on the earliest of (x) the date on
which the Gross Sales Price of Shares issued and sold pursuant to
this Agreement and any Terms Agreements is equal to the Maximum
Amount and (y) any termination of this Agreement pursuant to
Section 8 (the “ Termination Date ”),
(ii) an “ Exchange Business Day ” means any
day during the Term that is a trading day for the Exchange, and
(iii) “ Exchange ” means the NASDAQ Global
Select Market.
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Subject to the terms and conditions
set forth below, the Company appoints Sandler as agent in
connection with the offer and sale of Shares in any Agency
Transactions entered into hereunder. Sandler shall use
commercially reasonable efforts to sell such Shares and any such
sales shall be made in accordance with the terms and conditions
hereof and of the applicable Transaction Notice (as defined in
Section 2(a)). Neither the Company nor Sandler shall
have any obligation to enter into an Agency
Transaction. The Company shall be obligated to issue and
sell through Sandler, and Sandler shall be obligated to use
commercially reasonable efforts, as provided herein and in the
applicable Transaction Notice, to place
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Shares issued by the Company only if
and when a Transaction Notice related to such an Agency Transaction
has been delivered by Sandler and accepted by the Company as
provided in Section 2 below.
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Sandler, as agent in any Agency
Transaction, hereby agrees not to make any sales of the Shares on
behalf of the Company, pursuant to this Agreement, other than (i)
by means of ordinary brokers’ transactions that qualify for
delivery of a Prospectus in accordance with Rule 153 under the
Securities Act and meet the definition of an “at the market
offering” under Rule 415(a)(4) under the Securities Act (such
transactions are hereinafter referred to as “ At the
Market Offerings ”) and (ii) such other sales of the
Shares on behalf of the Company in its capacity as agent of the
Company as shall be agreed by the Company and Sandler in
writing.
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Sandler shall confirm in writing to
the Company the number of Shares sold on any Exchange Business Day,
the related Gross Sales Price and, if Shares are to be sold in an
Agency Transaction in an At the Market Offering, the related Net
Sales Price (as defined in Section 2(b)
below) no later than the opening of trading on the immediately
following Exchange Business Day.
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If the Company shall default on its
obligation to deliver Shares to Sandler pursuant to the terms of
any Agency Transaction or Terms Agreement, the Company shall
(i) hold Sandler harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii)
notwithstanding any such default, pay to Sandler any fee to which
it would otherwise be entitled in connection with such
sale.
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The Company acknowledges and agrees
that (i) there can be no assurance that Sandler will be successful
in selling the Shares, (ii) Sandler shall incur no liability or
obligation to the Company or any other person or entity if it does
not sell Shares for any reason other than a failure by Sandler to
use its commercially reasonable efforts consistent with its normal
trading and sales practices and applicable law and regulations to
sell such Shares in accordance with the terms of this Agreement,
and (iii) Sandler shall be under no obligation to purchase Shares
on a principal basis pursuant to this Agreement, except as may
otherwise be specifically agreed by Sandler and the Company in a
Terms Agreement.
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2.
Transaction Notices and Terms Agreements .
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The Company may, from time to time
during the Term, propose to Sandler that such parties enter into an
Agency Transaction to be executed on a specified Exchange Business
Day or over a specified period of
Exchange Business Days . If Sandler agrees to the
terms of such proposed Agency Transaction or if the Company and
Sandler mutually agree to modified terms for such proposed Agency
Transaction, then Sandler shall promptly send to the Company by the
means set forth under Section 10 hereof a notice, substantially in
the form of Exhibit B hereto (each, a “ Transaction
Notice ”), confirming the agreed terms of such proposed
Agency Transaction. If the Company wishes such proposed
Agency Trans-
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action to become a binding agreement
between it and Sandler, the Company shall promptly indicate its
acceptance thereof by countersigning and returning such Transaction
Notice to Sandler or sending a written acceptance of such
Transaction Notice to Sandler, in each case by the means set forth
under Section 10 hereof. The terms reflected in a
Transaction Notice shall become binding on Sandler and the Company
only if accepted by the Company no later than the date and time
specified in such Transaction Notice. Each Transaction
Notice shall specify, among other things, the following:
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(i) the
Exchange Business Day(s) on which the Shares subject to such Agency
Transaction are intended to be sold (each, a “ Purchase
Date ”);
(ii) the
maximum number of Shares that the Company intends to sell (the
“ Specified Number of Shares ”) on, or over the
course of, such Purchase Date (s);
p rovided that the number of Shares sold on each such
Purchase Date shall be no mor e than 25% of the ADTV (as
defined in Rule 10b-18 of the Exchange Act) in the Common Stock on
the Exchange for the four calendar weeks preceding the week in
which the date of delivery of the Transaction Notice occurs, or as
otherwise agreed between the Company and Sandler and documented in
the relevant Transaction Notice; and
(iii) the
lowest price, if any, at which the Company is willing to sell
Shares on such Purchase Date(s) (each, a “ Floor Price
”).
The Company shall have responsibility for
maintaining records with respect to the aggregate dollar amount of
Shares sold, or for otherwise monitoring the availability of Shares
for sale under the Registration Statement. In the event
that more than one Transaction Notice with respect to any Purchase
Date(s) is accepted by the Company, the latest executed Transaction
Notice shall govern any sales of Shares for the relevant Purchase
Date, except to the extent of any action occurring pursuant to a
prior accepted Transaction Notice and prior to the acceptance of
such latest Transaction Notice. The Company or Sandler
may, upon notice to the other party hereto by telephone (confirmed
promptly by e-mail in “pdf” format or facsimile),
suspend the offering of the Shares; provided ,
however , that such suspension or termination shall
not affect or impair the parties’ respective obligations with
respect to the Shares sold hereunder prior to the giving of such
notice. Notwithstanding the foregoing, if the terms of
any Agency Transaction contemplate that Shares shall be sold on
more than one Purchase Date, then the Company and Sandler shall
mutually agree to such additional terms and conditions as they deem
necessary in respect of such multiple Purchase Dates, and such
additional terms and conditions shall be set forth in the relevant
Transaction Notice and be binding to the same extent as any other
terms contained therei n.
References herein to this Agreement shall,
unless the context otherwise requires, include all Transaction
Notices accepted by the Company.
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Sandler’s commission shall be
2.00% of the actual sales price of the Shares (the “ Gross
Sales Price ”) sold pursuant to this Agreement;
provided , however , that
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such commission shall not apply when
Sandler acts as principal, in which case such commission shall be
set forth in the applicable Terms Agreement. The Gross
Sales Price less Sandler’s commission is referred to herein
at the “ Net Sales Price .”
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Payment of the Net Sales Price for
Shares sold by the Company on any Purchase Date pursuant to a
Transaction Notice shall be made to the Company by federal funds
wire transfer to the account specified in Schedule 2 hereto against
delivery of such Shares to Sandler. Such payment and
delivery shall be made at or about 10:00 a.m. (New York city time)
on the third Exchange Business Day (or such other day as may, from
time to time, become standard industry practice for settlement of
such a securities issuance) following each Purchase Date (each, an
“ Agency Settlement Date ”).
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If, as provided in the related
Transaction Notice, a Floor Price has been agreed to by the parties
with respect to a Purchase Date, and Sandler thereafter determines
and notifies the Company that the Gross Sales Price for such Agency
Transaction would not be at least equal to such Floor Price, then
the Company shall not be obligated to issue and sell through
Sandler, and Sandler shall not be obligated to place , the Shares proposed to be sold pursuant to such
Agency Transaction on such Purchase Date .
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Under no circumstances shall the
aggregate Gross Sales Price of the Shares sold pursuant to this
Agreement and any Terms Agreement exceed the Maximum
Amount.
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If either party hereto has reason to
believe that the exemptive provisions set forth in
Rule 101(c)(1) of Regulation M under the Exchange Act are not
satisfied with respect to the Shares, it shall promptly notify the
other party and sales of the Shares under this Agreement, any
Transaction Notice or any Terms Agreement shall be suspended until
that or other exemptive provisions have been satisfied in the
judgment of each party. On or prior to the delivery of a
prospectus that is required (whether
physically or through compliance with Rule 172 under the Securities
Act or any similar rule) in connection with the offering or sale of
the Shares, Sandler shall
calculate the average daily trading volume (as defined by Rule 100
of Regulation M under the Exchange Act) of the Common Stock based
on market data provided by Bloomberg L.P. or such other sources as
agreed upon by Sandler and the
Company.
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If the Company wishes to issue and
sell the Shares pursuant to this Agreement but other than as set
forth in Section 2(a) of this Agreement, it will notify Sandler of
the proposed terms of the Principal Transaction. If
Sandler, acting as principal, wishes to accept such proposed terms
(which it may decline to do for any reason in its sole discretion)
or, following discussions with the Company, wishes to accept
amended terms, the Company and Sandler shall enter into a Terms
Agreement setting forth the terms of such Principal
Transaction.
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(ii) The
terms set forth in a Terms Agreement shall not be binding on the
Company or Sandler unless and until the Company and Sandler have
each executed such Terms Agreement accepting all of the terms of
such Terms Agreement. In the event of a conflict between
the terms of this Agreement and the terms of a Terms Agreement, the
terms of such Terms Agreement shall control.
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Each sale of the Shares to Sandler
in a Principal Transaction shall be made in accordance with the
terms of this Agreement and a Terms Agreement, which shall provide
for the sale of such Shares to, and the purchase thereof by,
Sandler. A Terms Agreement may also specify certain
provisions relating to the reoffering of such Shares by
Sandler. The commitment of Sandler to purchase the
Shares pursuant to any Terms Agreement shall be deemed to have been
made on the basis of the representations, warranties and agreements
of the Company herein contained and shall be subject to the terms
and conditions herein set forth. Any such Terms
Agreement shall specify the number of the Shares to be purchased by
Sandler pursuant thereto, the price to be paid to the Company for
such Shares, any provisions relating to rights of, and default by,
underwriters acting together with Sandler in the reoffering of the
Shares, and the time and date (each such time and date being
referred to herein as a “ Principal Settlement Date
” and, together with any Agency Settlement Date, a “
Settlement Date ”) and place of delivery of and
payment for such Shares.
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The Company shall provide Sandler
with a copy of its policy on insider trading (“ Insider
Trading Policy ”) and advise Sandler in writing of any
material changes thereto. Subject to the limitations set
forth herein and as may be mutually agreed upon by the Company and
Sandler, sales pursuant to this Agreement may not be requested by
the Company and need not be made by Sandler during any
“blackout period” under the Insider Trading Policy as
in effect from time to time. Notwithstanding the
foregoing, without the prior written consent of each of the Company
and Sandler, the Company shall not request the sale of any Shares
that would be sold, and Sandler need not make any sale of Shares,
during any period in which the Company is in possession of material
non-public information.
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3.
Representations, Warranties and Agreements of the Company
. The Company represents and warrants to, and agrees
with, Sandler, on and as of (i) the date hereof, (ii) each date on
which the Company accepts a Transaction Notice (the “ Time
of Acceptance ”) or executes and delivers a Terms
Agreement, (iii) each Time of Sale (as defined below), (iv) each
Settlement Date and (v) each Bring-Down Delivery Date (as defined
in Section 6(b)) (each such date listed in (i) through (v), a
“ Representation Date ”), as follows:
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The Registration Statement is an
“automatic shelf registration statement” as defined
under Rule 405 of the Securities Act that has been filed with the
Commission not earlier than three years prior to the date hereof;
there is no order preventing or suspending the use of the
Registration Statement, the Prospectus or any Permitted Free
Writing Prospectus, and, to the knowledge of the Company, no
proceeding for that purpose or pursuant to Section 8A of the
Securities Act against the Company or related to the offering has
been initiated or threatened by
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the Commission; no notice
of objection of the Commission to the use
of such Registration Statement pursuant to Rule 401(g)(2) under the
Securities Act has been received by the Company; the
Registration Statement complied when it initially became effective,
complies as of the date hereof and, as then amended or
supplemented, as of each other Representation Date will comply, in
all material respects, with the requirements of the Securities Act;
the conditions to the use of Form S-3 in connection with the
offering and sale of the Shares as contemplated hereby have been
satisfied; the Registration Statement meets, and the offering and
sale of the Shares as contemplated hereby complies with, the
requirements of Rule 415 under the Securities Act (including,
without limitation, Rule 415(a)(5));
the Prospectus complied or will comply, at the time it was or will
be filed with the Commission, and will comply, as then amended or
supplemented, as of each Representation Date (other than the date
hereof), in all material respects, with the requirements of the
Securities Act; the Registration Statement did not, as of the time
of its initial effectiveness, and does not or will not, as then
amended or supplemented, as of each Representation Date, contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; as of each Representation Date
(other than the date hereof), the Prospectus, as then amended or
supplemented, together with all of the then issued Permitted Free
Writing Prospectuses, if any, will not contain an untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided , however , that the
Company makes no representation or warranty with respect to any
statement or omission in the Registration Statement, the Prospectus
or any Permitted Free Writing Prospectus in reliance upon and in
conformity with information concerning Sandler and furnished in
writing by or on behalf of Sandler expressly for use in the
Registration Statement, the Prospectus or such Permitted Free
Writing Prospectus (it being understood that such information
consists solely of the information specified in Section
9(b)). As used herein, “ Time of Sale
” means (i) with respect to each offering of Shares
pursuant to this Agreement, the time of Sandler’s initial
entry into contracts with investors for the sale of such Shares and
(ii) with respect to each offering of Shares pursuant to any
relevant Terms Agreement, the time of sale of such
Shares.
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Prior to the execution of this
Agreement, the Company has not, directly or indirectly, offered or
sold any of the Shares by means of any “prospectus”
(within the meaning of the Securities Act) or used any
“prospectus” (within the meaning of the Securities Act)
in connection with the offer or sale of the Shares, in each case
other than the Basic Prospectus. The Company represents
and agrees that, unless it obtains the prior consent of Sandler,
until the termination of this Agreement, it has not made and will
not make any offer relating to the Shares that would constitute an
“issuer free writing prospectus” (as defined in Rule
433 under the Securities Act) or that would otherwise constitute a
“free writing prospectus” (as defined in Rule 405 under
the Securities Act). Any such free writing prospectus
relating to the Shares consented to by Sandler is hereinafter
referred to as a “ Permitted Free Writing Prospectus
.” The Company represents that it has complied and
will
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comply in all material respects with
the requirements of Rule 433 under the Securities Act applicable to
any Permitted Free Writing Prospectus, including timely filing with
the Commission where required, legending and record
keeping. The conditions set forth in one or more of
subclauses (i) through (iv), inclusive, of Rule 433(b)(1) under the Securities Act are satisfied, and
the registration statement relating to the offering of the Shares
contemplated hereby, as initially filed with the Commission,
includes a prospectus that, other than by reason of Rule 433 or
Rule 431 under the Securities Act, satisfies the requirements of
Section 10 of the Securities Act; neither the Company nor Sandler
is disqualified, by reason of Rule 164(f) or (g) under the
Securities Act, from using, in connection with the offer and sale
of the Shares, “ free writing prospectuses ” (as
defined in Rule 405 under the Securities Act) pursuant to Rules 164
and 433 under the Securities Act; the Company is not an “
ineligible issuer ” (as defined in Rule 405 under the
Securities Act) as of the eligibility determination date for
purposes of Rules 164 and 433 under the Securities Act with respect
to the offering of the Shares contemplated by the Registration
Statement.
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The Incorporated Documents, when
they were filed with the Commission, conformed in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading; and any further documents so filed and incorporated
by reference in the Registration Statement, the Prospectus or any
Permitted Free Writing Prospectus, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
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The financial statements and the
related notes thereto included or incorporated by reference in the
Registration Statement, the Prospectus and any Permitted Free Writing Prospectus
comply in all material respects with the applicable requirements of
the Securities Act and the Exchange Act, as applicable, and present
fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and their results of
operations, stockholders’ equity and cash flows for the
periods specified, and such financial statements have been prepared
in conformity with the generally accepted accounting principles in
the United States (“ GAAP ”) applied on a
consistent basis throughout the periods involved. The
other historical financial and statistical information and data
included in the Registration Statement, Prospectus or any Permitted
Free Writing Prospectus are, in all material respects, fairly
presented.
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Except in each case as otherwise
disclosed in the Registration Statement, the Prospectus and any
Permitted Free Writing Prospectus, since the date of the most
re-
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cent financial statements of the
Company included or incorporated by reference in the Registration
Statement, the Prospectus and any Permitted Free Writing
Prospectus, (i) there has not been any material change in the
capital stock or long-term debt of the Company or any of its
subsidiaries and there has not been a Material Adverse Effect (as
defined below), (ii) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement that is
material to the Company and its subsidiaries, taken as a whole, or
incurred any liability or obligation, direct or contingent, except
for such liabilities or obligations that, individually or in the
aggregate, would not have a Material Adverse Effect and (iii)
neither the Company nor any of its subsidiaries has sustained any
loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor disturbance or dispute or any action, order or decree of any
court or arbitrator or governmental or regulatory authority, except
for such losses that, individually or in the aggregate, would not
have a Material Adverse Effect. As used herein, “
Material Adverse Effect ” means a material adverse
effect on the earnings, business, properties, condition (financial
or otherwise), results of operations or prospects of the Company
and its subsidiaries taken as a whole.
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The Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the state of Delaware, has the corporate power
and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect.
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Each of the subsidiaries of the
Company listed on Schedule 1 hereto (the “ Named
Subsidiaries ”) has been duly organized, and is validly
existing and in good standing under the laws of its respective
jurisdictions of formation or organization, has the corporate power
and authority to own, lease and operate its property and to conduct
its business as described in Registration Statement and the
Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect; all of the issued shares of capital stock of each Named
Subsidiary have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities
or claims (“ Liens ”), except as to Liens
disclosed in the Prospectus. Each significant subsidiary (as
defined in Rule 1-02(w) of Regulation S-X) of the Company is a
Named Subsidiary.
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The Company has an authorized
capitalization as set forth in the Registration Statement, the
Prospectus and any Permitted Free Writing Prospectus; all the
outstanding shares of capital stock of the Company have been duly
and validly au-
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thorized and issued and are fully
paid and non-assessable and are not subject to any pre-emptive or
similar rights; except as described in or expressly contemplated by
the Registration Statement, the Prospectus or any Permitted Free
Writing Prospectus, there are no outstanding rights (including,
without limitation, pre-emptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interests in the Company or
any of its significant subsidiaries, nor any contracts,
commitments, agreements, understandings or arrangements of any kind
relating to the issuance of any capital stock of the Company or any
such significant subsidiary, any such convertible or exchangeable
securities or any such rights, warrants or options; and the capital
stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement, the
Prospectus and any Permitted Free Writing Prospectus.
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The Shares to be issued and sold by
the Company under this Agreement or under any Terms Agreement have
been duly authorized by the Company and, when issued and delivered
and paid for as provided under this Agreement or in any Terms
Agreement, will be duly and validly issued, will be fully paid and
nonassessable and will conform to the description thereof in the
Registration Statement, the Prospectus, and any Permitted Free
Writing Prospectus; and the shareholders of the Company do not have
any preemptive or similar rights with respect to the
Shares.
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The Company has full right, power
and authority to execute and deliver this Agreement and any Terms
Agreement and perform its obligations hereunder or thereunder; and
all action required to be taken for the due and proper
authorization, execution and delivery by it of this Agreement and
any Terms Agreement and the consummation by it of the transactions
contemplated hereby and thereby has been duly and validly taken
(or, in the case of any Terms Agreement, such action will have been
duly and validly authorized), subject, in the case of the issuance
and sale of the Shares, to the execution and delivery of a
Transaction Notice by the persons specified in the resolutions of
the pricing committee of the board of directors.
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This Agreement has been, and any
Terms Agreement will have been, duly authorized, executed and
delivered by the Company.
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This Agreement conforms in all
material respects to the description thereof contained in the
Registration Statement, the Prospectus and any Permitted Free
Writing Prospectus.
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Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or
similar organizational documents, (ii) in default, and no event has
occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the
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property or assets of the Company or
any of its subsidiaries is subject, or (iii) in violation of any
law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (ii) and (iii) above, for any such
default or violation that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
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The execution, delivery and
performance by the Company of this Agreement or any Terms
Agreement, the issuance and sale of the Shares, the compliance by
the Company with the terms hereof or of any Terms Agreement and the
consummation of the transactions contemplated hereby or by any
Terms Agreement will not (i) contravene, conflict with or result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument
to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its
subsidiaries is subject, (ii) contravene or result in any violation
of the provisions of the charter or bylaws of the Company or (iii)
contravene or result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of
clauses (i) and (iii) above, for any such conflict, breach,
violation or default that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the execution, delivery
and performance by the Company of this Agreement or any Terms
Agreement, the issuance and sale of the Shares and compliance by
the Company with the terms hereof or of any Terms Agreement and the
consummation of the transactions contemplated hereby or by any
Terms Agreement, except as have been made or obtained and except as
may be required by and made with or obtained from state securities
laws or regulations.
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The execution and delivery by the
Company of, and the performance by the Company of its obligations
under, this Agreement, including without limitation, the issuance
and sale of the Shares, do not require any consent or approval of
any shareholders or any other securityholders of the
Company.
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The Company and its subsidiaries own
or possess, or can acquire on reasonable terms, adequate patents,
patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual
property (collectively, “ Intellectual Property
”) necessary to carry on the business now operated by them,
and neither the Company nor its subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest
of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any
unfavorable
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decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
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Except as set forth in the
Registration Statement, the Prospectus or any Permitted Free
Writing Prospectus, each of the Company and its Named Subsidiaries
holds, and is in compliance in all material respects with, all
material permits, licenses, authorizations, exemptions, orders and
approvals (“ Permits ”), necessary for the
operation of their respective businesses, and there are no
proceedings pending to which the Company or any of its Named
Subsidiaries is a party or, to the knowledge of the Company,
threatened by any governmental entity seeking to terminate, revoke
or limit any such Permits, nor, to the knowledge of the Company, do
grounds exist for any such action by any governmental
entities.
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Each of the Company and its
subsidiaries (i) has not violated its charter, by-laws or any other
applicable organizational documents, (ii) has not defaulted, and no
event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject, (iii)
is in compliance, in the conduct of its business, with all
applicable laws, ordinances, governmental rules, capital regulatory
requirements, regulations or court decrees to which it or its
property or assets may be subject, including, but not limited to,
the laws, regulations and rules administered by the Commission, the
Financial Industry Regulatory Authority, Inc. (“ FINRA
”), the Federal Reserve, the Office of Thrift Supervision
(the “ OTS ”), the Federal Deposit Insurance
Corporation (the “ FDIC ”), any applicable
state, federal or self regulatory organization and the Office of
Foreign Assets Control of the U.S. Department of the Treasury
(“ OFAC ”), the Equal Credit Opportunity Act,
the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act, the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of 2001, all other applicable fair
lending and fair housing laws or other laws relating to
discrimination (including, without limitation, anti-redlining,
equal credit opportunity and fair credit reporting),
truth-in-lending, real estate settlement procedures, adjustable
rate mortgages disclosures or consumer credit (including, without
limitation, the federal Consumer Credit Protection Act, the federal
Truth-in Lending Act and Regulation Z thereunder, the federal Real
Estate Settlement Procedures Act of 1974 and Regulation X
thereunder, and the federal Equal Credit Opportunity Act and
Regulation B thereunder) or with respect to the Flood Disaster
Protection Act and the Bank Secrecy Act, except, in the case of
clause (ii) and (iii) for any default or violation that is
accurately described in all material respects in the Registration
Statement, the Prospectus or any Permitted Free Writing Prospectus
and any default or violation that would not have a Material Adverse
Effect.
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Each of the Company and ETB
Holdings, Inc. is duly registered with the OTS as a savings and
loan holding company under the Home Owners Loan Act, as
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amended (“ HOLA
”); E*TRADE Bank continues to hold a valid charter to do
business as a federal savings bank; E*TRADE Bank meets the
qualified thrift lender test under Section 10(m) of HOLA; and the
Company is a savings and loan holding company under Section 10 of
HOLA, as amended; and the direct and indirect activities of the
Company and its subsidiaries comply with restrictions on holding
company activities provided in Section 10 of
HOLA. E*TRADE Bank is well capitalized according to the
capital standards set forth by the OTS. E*TRADE Bank and
its deposits are insured by FDIC to the fullest extent permitted by
law.
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Each of E*TRADE Securities LLC,
E*TRADE Clearing LLC and E*TRADE Capital Markets, LLC is duly
registered as a broker-dealer with the Commission, and is
registered as a broker-dealer with each state and is a member in
good standing of each self-regulatory organization where its
business so requires.
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None of the Company and its Named
Subsidiaries (or E*TRADE Asset Management, Inc., E*TRADE Capital
Management, LLC, Kobren Insight Management, Inc., Howard Capital
Management, Inc. and E*TRADE Financial Advisory Services, Inc.
(together, the “ Advisers ”)) (i) is subject or
is party to, or has received any notice or advice that any of them
may become subject or party to, any legal or governmental
proceedings pending or threatened, including but not limited to,
any investigation with respect to any cease-and-desist order,
consent agreement, any commitment letter or similar undertaking to,
memorandum of understanding or other regulatory enforcement action,
proceeding or order with or by, other than proceedings accurately
described in all material respects in the Registration Statement,
the Prospectus or any Permitted Free Writing Prospectus and
proceedings that would not have a Material Adverse Effect, or on
the power or ability of the Company to perform its obligations
under this Agreement or to consummate the transactions contemplated
hereby or (ii) is subject to any directive by, or has been a
recipient of any supervisory letter from, or has adopted any board
resolutions at the request of, any Regulatory Agency (as defined
below) that currently restricts in any material respect the conduct
of their business or that in any material manner relates to their
capital adequacy, their credit policies, their management or their
business (each, a “ Regulatory Agreement ”), nor
has the Company or any of its subsidiaries been advised by any
Regulatory Agency that it is considering issuing or requesting any
such Regulatory Agreement or that they may be subject to an
investigation, audit or other examination which is likely to lead
to the imposition of any civil monetary or other penalties that
would have a Material Adverse Effect, and there is no unresolved
violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of
the Company or any of its subsidiaries which, in the reasonable
judgment of the Company, is expected to result in a Material
Adverse Effect. As used herein, the term “
Regulatory Agency ” means OTS, FDIC, the Federal
Reserve Bank, and any other federal or state agency charged with
the supervision or regulation of depository institutions or holding
companies of depository institutions, or engaged in the insurance
of depository institution deposits, or the Commission, FINRA or any
other applicable self regulatory organization, or any court,
admin-
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istrative agency or commission or
other governmental agency, authority or instrumentality having
supervisory or regulatory authority with respect to the Company or
any of its subsidiaries.
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The Company, E*TRADE Bank and each
of the Company’s applicable subsidiaries have duly filed with
the OTS and the FDIC, as the case may be, in correct form the
reports required to be filed under applicable laws and regulations
and such reports were in all material respects complete and
accurate and in compliance with the requirements of applicable laws
and regulations; provided that information as of a later
date shall be deemed to modify information as of an earlier date;
and the Company has previously delivered or made available to
Sandler which has requested the same accurate and complete copies
of all such reports. Except as disclosed in the
Registration Statement and the Prospectus, neither the Company nor
E*TRADE Bank is subject to, or expects to be subject to, any formal
or informal enforcement or supervisory action by the OTS or the
FDIC. Neither the Company nor E*TRADE Bank has been
required by the OTS or the FDIC to make material corrections or
changes in its management, operations or policies or procedures,
which to the knowledge of the Company or E*TRADE Bank, have not
been substantially corrected or changed to the satisfaction of the
regulators.
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The Company has delivered or made
available to Sandler, a true and complete copy of the
Company’s and its subsidiaries’ currently effective
Forms BD and ADV as filed with the Commission and all other similar
forms required to be filed with governmental
entities. The information contained in such forms and
reports was or will be, in the case of any forms and reports filed
after the date of this Agreement, complete and accurate in all
material respects as of the time of filing thereof.
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Except for such as would not,
individually or in the aggregate, have a Material Adverse Effect,
neither the Company nor any of its subsidiaries nor any of their
respective officers, directors or employees has been the subject of
any disciplinary proceedings or orders of any governmental entity
arising under applicable laws or regulations which would be
required to be disclosed on Forms BD or ADV except as disclosed
thereon, and no such disciplinary proceeding or order is pending
or, to the knowledge of the Company, threatened, nor, to the
knowledge of the Company, do grounds exist for any such material
action by any governmental ent
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