EXCHANGE AGREEMENT by and between MIDWEST BANC HOLDINGS, INC. AND THE UNITED STATES DEPARTMENT OF THE TREASURY Dated as of February 25, 2010
EXHIBIT
2.1
EXECUTION
COPY
by
and between
MIDWEST
BANC HOLDINGS, INC.
AND
THE
UNITED STATES DEPARTMENT OF THE TREASURY
Dated
as of February 25, 2010
TABLE OF
CONTENTS
Page
ARTICLE
I
THE
CLOSING; THE EXCHANGE OF CAPITAL SECURITIES FOR SERIES T PREFERRED
STOCK
|
Section
1.1
|
The
Capital Securities.
|
1
|
|
Section
1.2
|
The
Closing.
|
1
|
|
Section
1.3
|
Interpretation.
|
3
|
ARTICLE
II
EXCHANGE
|
Section
2.1
|
Exchange;
Dividend Exchange.
|
3
|
|
Section
2.2
|
Exchange
Documentation.
|
4
|
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
Section
3.1
|
Existence
and Power.
|
4
|
|
Section
3.2
|
Authorization
and Enforceability.
|
4
|
|
Section
3.3
|
Capital
Securities and Underlying Common Shares.
|
5
|
|
Section
3.4
|
Amended
Warrant and Warrant Shares.
|
5
|
|
Section
3.5
|
Non-Contravention.
|
5
|
|
Section
3.6
|
Anti-Takeover
Provisions and Rights Plan.
|
6
|
|
Section
3.7
|
No
Company Material Adverse Effect.
|
6
|
|
Section
3.8
|
Offering
of Securities.
|
6
|
|
Section
3.9
|
Brokers
and Finders.
|
6
|
ARTICLE
IV
COVENANTS
|
Section
4.1
|
Commercially
Reasonable Efforts.
|
7
|
|
Section
4.2
|
Expenses.
|
8
|
|
Section
4.3
|
Exchange
Listing.
|
8
|
|
Section
4.4
|
Access,
Information and Confidentiality.
|
8
|
|
Section
4.5
|
Executive
Compensation.
|
8
|
|
Section
4.6
|
Certain
Notifications Until Closing.
|
9
|
|
Section
4.7
|
Sufficiency
of Authorized Common Stock.
|
10
|
|
Section
4.8
|
Monthly
Lending Reports.
|
10
|
ARTICLE
V
ADDITIONAL
AGREEMENTS
|
Section
5.1
|
Unregistered
Capital Securities
|
10
|
|
Section
5.2
|
Legend.
|
10
|
|
Section
5.3
|
Certain
Transactions.
|
11
|
|
Section
5.4
|
Transfer
of Capital Securities; Underlying Common Shares and Warrant
Shares.
|
11
|
ii
|
Section
5.5
|
Registration
Rights.
|
11
|
|
Section
5.6
|
Voting
Rights.
|
11
|
|
Section
5.7
|
Restriction
on Dividends and Repurchases.
|
12
|
|
Section
5.8
|
Repurchase
of Investor Securities.
|
13
|
|
Section
5.9
|
Qualified
Equity Offering.
|
13
|
|
Section
5.10
|
Bank
or Thrift Holding Company Status.
|
13
|
|
Section
5.11
|
Compliance
with Employ American Workers Act.
|
14
|
ARTICLE
VI
MISCELLANEOUS
|
Section
6.1
|
Termination.
|
14
|
|
Section
6.2
|
Survival
of Representations and Warranties.
|
14
|
|
Section
6.3
|
Amendment.
|
14
|
|
Section
6.4
|
Waiver
of Conditions.
|
15
|
|
Section
6.5
|
Governing
Law; Submission to Jurisdiction, Etc.
|
15
|
|
Section
6.6
|
Notices.
|
15
|
|
Section
6.7
|
Definitions.
|
16
|
|
Section
6.8
|
Assignment.
|
17
|
|
Section
6.9
|
Severability.
|
17
|
|
Section
6.10
|
No
Third-Party Beneficiaries.
|
17
|
|
Section
6.11
|
Entire
Agreement, Etc.
|
17
|
|
Section
6.12
|
Counterparts
and Facsimile.
|
17
|
|
Section
6.13
|
Specific
Performance.
|
17
|
LIST
OF ANNEXES
ANNEX A:
FORM OF AMENDED WARRANT
ANNEX B:
FORM OF NEW CERTIFICATE OF DESIGNATIONS
ANNEX C:
FORM OF OPINION OF ▇▇▇▇▇▇ PRICE P.C.
ANNEX D:
FORM OF WAIVER
LIST
OF SCHEDULES
SCHEDULE
A: CAPITALIZATION
SCHEDULE
B: COMPANY MATERIAL ADVERSE EFFECT
(The
Company agrees to furnish supplementally a copy of any omitted schedule or
similar attachment to the Commission upon request.)
iii
Defined
Terms
|
Affiliate
|
Section
6.7(b)
|
|
Agreement
|
Preamble
|
|
Amended
Warrant
|
Preamble
|
|
Benefit
Plans
|
Section
1.2(d)(x)
|
|
Business
Combination
|
Section
5.6(c)
|
|
Capital
Securities
|
Recitals
|
|
Capitalization
Date
|
Section
3.1(b)
|
|
Charter
|
Section
1.2(d)(vi)
|
|
Closing
|
Section
1.2(a)
|
|
Closing
Date
|
Section
1.2(a)
|
|
Common
Stock
|
Section
1.2(d)(i)
|
|
Common
Stockholder Proposals
|
Section
4.1(b)
|
|
Company
|
Preamble
|
|
Company
Material Adverse Effect
|
Section
6.7(c)
|
|
Company
Subsidiaries
|
Section
4.4(a)
|
|
Compensation
Regulations
|
Section
1.2(d)(x)
|
|
Designated
Matters
|
Section
5.6(c)
|
|
Dividend
Exchange
|
Section
2.1(b)
|
|
EAWA
|
Section
5.11
|
|
EESA
|
Section
1.2(d)(x)
|
|
Exchange
|
Recitals
|
|
Governmental
Entities
|
Section
1.2(c)
|
|
Information
|
Section
4.4(c)
|
|
Investor
|
Preamble
|
|
Junior
Stock
|
Section
5.7(c)
|
|
New
Certificate of Designations
|
Section
1.2(d)(vi)
|
|
Old
Warrant
|
Recitals
|
|
Parity
Stock
|
Section
5.7(c)
|
|
Permitted
Repurchases
|
Section
5.7(a)(ii)
|
|
Preferred
Stockholder Proposal
|
Section
4.1(b)
|
|
Previously
Disclosed
|
Section
6.7(d)
|
|
Relevant
Period
|
Section
1.2(d)(x)
|
|
SEC
|
Section
1.2(d)(i)
|
|
Section
4.5 Employee
|
Section
4.5(b)
|
|
Securities
Purchase Agreement
|
Recitals
|
|
Senior
Executive Officers
|
Section
1.2(d)(x)
|
|
Series
A Exchange
|
Section
1.2(d)(i)
|
|
Series
A Preferred Stock
|
Section
1.2(d)(i)
|
|
Series
T Preferred Stock
|
Recitals
|
|
Series
T Shares
|
Section
2.1(a)
|
|
Share
Dilution Amount
|
Section
5.7(a)(ii)
|
|
Transfer
|
Section
5.4
|
|
Underlying
Common Shares
|
Section
1.2(d)(ii)
|
|
Warrant
Shares
|
Section
3.2(a)
|
iv
EXCHANGE
AGREEMENT, dated as of February 25, 2010 (this “Agreement”) by and between
Midwest Banc Holdings, Inc., a Delaware corporation (the “Company”) and the
United States Department of the Treasury (the “Investor”). All capitalized terms
used herein and not otherwise defined shall have the respective meanings
ascribed to them in the Securities Purchase Agreement.
BACKGROUND
WHEREAS,
the Investor is, as of the date hereof, the beneficial owner of 84,784 shares of
the Company’s preferred stock designated as “Fixed Rate Cumulative
Perpetual Preferred Stock, Series T”, having a
liquidation amount of $1,000 per share (the “Series T Preferred
Stock”);
WHEREAS,
the Company issued the Series T Preferred Stock pursuant to that certain
Securities Purchase Agreement – Standard Terms incorporated into a Letter
Agreement, dated as of December 5, 2008, as amended from time to time, between
the Company and the Investor (the “Securities Purchase
Agreement”);
WHEREAS,
the Company and the Investor desire (i) to exchange 84,784 newly issued Fixed
Rate Cumulative Mandatorily Convertible Preferred Stock, Series G of the Company
(the “Capital
Securities”), with a liquidation amount of $1,000 per share, for the
84,784 shares of the Series T Preferred Stock beneficially owned and held by the
Investor, and (ii) to amend the terms of that certain warrant, dated December 5,
2008, to purchase 4,282,020 shares of Common Stock granted by the Company for
the benefit of the Investor (the “Old Warrant”)
pursuant to an amended and restated warrant to purchase 4,282,020 shares of
Common Stock, in substantially the form attached hereto as Annex A (the “Amended Warrant”), on
the terms and subject to the conditions set forth herein (the “Exchange”);
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained in
this Agreement, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE
I
THE CLOSING; THE EXCHANGE OF
CAPITAL SECURITIES FOR SERIES T PREFERRED
STOCK
Section
1.1 The
Capital Securities.
The Capital Securities are being issued
to the Investor in the Exchange pursuant to Article II hereof. The shares of
Series T Preferred Stock exchanged for the Capital Securities pursuant to
Article II hereof are being reacquired by the Company and shall have the status
of authorized but unissued shares of preferred stock of the Company undesignated
as to series and may be designated or redesignated and issued or reissued, as
the case may be, as part of any series of preferred stock of the Company; provided that such shares
shall not be reissued as shares of Series T Preferred Stock.
Section
1.2 The
Closing.
(a) The
closing of the Exchange (the “Closing”) will take
place at the offices of ▇▇▇▇▇▇ Price P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m., CST on the first business day immediately
following the day on which all of the conditions set forth in Sections 1.2(c)
and (d) are satisfied or waived (other than those conditions that by their terms
must be satisfied on the Closing Date, but subject to the satisfaction or waiver
of those conditions), or at such other place, time and date as shall be agreed
between the Company and the Investor. The time and date on which the Closing
occurs is referred to in this Agreement as the “Closing
Date”.
(b) Subject
to the fulfillment or waiver of the conditions to the Closing in this Section
1.2, at the Closing (i) the Company will deliver the Capital Securities to the
Investor, as evidenced by one or more certificates dated the Closing Date and
registered in the name of the Investor or its designee(s) and (ii) the Investor
will deliver the certificate representing the Series T Shares to the
Company.
1
(c) The
respective obligations of each of the Investor and the Company to consummate the
Exchange are subject to the fulfillment (or waiver by the Company and the
Investor, as applicable) prior to the Closing of the conditions that (i) any
approvals or authorizations of all United States and other governmental,
regulatory or judicial authorities (collectively, “Governmental
Entities”) required for the consummation of the Exchange shall have been
obtained or made in form and substance reasonably satisfactory to each party and
shall be in full force and effect and all waiting periods required by United
States and other applicable law, if any, shall have expired and (ii) no
provision of any applicable United States or other law and no judgment,
injunction, order or decree of any Governmental Entity shall prohibit
consummation of the Exchange as contemplated by this Agreement.
(d) The
obligation of the Investor to consummate the Exchange is also subject to the
fulfillment (or waiver by the Investor) at or prior to the Closing of each of
the following conditions:
(i) the
Securities and Exchange Commission (“SEC”) shall have
declared effective the Company’s Form S-4 Registration Statement (Registration
No. 333-160985) pertaining to the exchange (the “Series A Exchange”)
of the Company’s Series A Noncumulative Redeemable Convertible Perpetual
Preferred Stock (the “Series A Preferred
Stock”) for shares of the Company’s common stock, par value $0.01 per
share (“Common
Stock”);
(ii) the
holders of the Common Stock shall have duly approved, by proxy vote or
otherwise, (A) the increase of the number of authorized shares of Common Stock
from 64 million to 4 billion and (B) the issuance of the shares of Common Stock
issuable upon conversion of the Capital Securities (the “Underlying Common
Shares”) to the Investor upon the conversion of the Capital Securities to
shares of Common Stock;
(iii) the
holders of the Series A Preferred Stock shall have duly approved, by proxy vote
or otherwise, the issuance of the Capital Securities with rights senior to the
Series A Preferred Stock;
(iv) (A)
the representations and warranties of the Company set forth in (x) Sections 3.3,
3.4, 3.5 and 3.7 of this Agreement shall be true and correct in all respects as
though made on and as of the Closing Date and (y) Sections 3.1, 3.2, 3.6, 3.8
and 3.9 of this Agreement shall be true and correct in all material respects as
though made on and as of the Closing Date (other than representations and
warranties that by their terms speak as of another date, which representations
and warranties shall be true and correct in all material respects as of such
other date) and (B) the Company shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing;
(v) the
Investor shall have received a certificate signed on behalf of the Company by a
senior executive officer certifying to the effect that the conditions set forth
in Section 1.2(d)(iv) have been satisfied;
(vi) the
Company shall have duly adopted and filed with the Secretary of State of
Delaware the amendment to its certificate of incorporation (“Charter”) in
substantially the form attached hereto as Annex B (the “New Certificate of
Designations”) and such filing shall have been accepted;
(vii) the
Company shall have executed the Amended Warrant and delivered such executed
Amended Warrant to the Investor or its designee(s);
(viii) the
Company shall have delivered certificates in proper form or, with the prior
consent of the Investor, evidence in book-entry form, evidencing the Capital
Securities to the Investor or its designee(s);
(ix) the
Company shall have delivered to the Investor written opinions from outside
counsel to the Company, addressed to the Investor and dated as of the Closing
Date, in substantially the forms attached hereto as Annex C;
and
(x) (A)
the Company shall have effected such changes to its compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and
2
employment
agreements) (collectively, “Benefit Plans”) with
respect to its Senior Executive Officers and any other employee of the Company
or its Affiliates subject to Section 111 of the Emergency Economic Stabilization
Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009,
or otherwise from time to time (“EESA”), as implemented by any guidance, rule or
regulation thereunder, as the same shall be in effect from time to time
(collectively, the “Compensation Regulations”) (and to the extent necessary for
such changes to be legally enforceable, each of its Senior Executive Officers
and other employees shall have duly consented in writing to such changes), as
may be necessary, during the period in which any obligation of the Company
arising from financial assistance under the Troubled Asset Relief Program
remains outstanding (such period, as it may be further described in the
Compensation Regulations, the “Relevant Period”), in
order to comply with Section 111 of EESA or the Compensation Regulations and (B)
the Investor shall have received a certificate signed on behalf of the Company
by a Senior Executive Officer certifying to the effect that the condition set
forth in Section 1.2(d)(x)(A) has been satisfied; “Senior Executive
Officers” means the Company’s “senior executive officers” as defined in
Section 111 of the EESA and the Compensation Regulations.
Section
1.3 Interpretation.
When a reference is made in this
Agreement to “Recitals,” “Articles,” “Sections,” “Annexes” or “Schedules” such
reference shall be to a Recital, Article or Section of, or Annex or Schedule to,
this Agreement, unless otherwise indicated. The terms defined in the singular
have a comparable meaning when used in the plural, and vice versa. References to
“herein”, “hereof”, “hereunder” and the like refer to this Agreement as a whole
and not to any particular section or provision, unless the context requires
otherwise. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed followed by the words “without limitation.” No rule of
construction against the draftsperson shall be applied in connection with the
interpretation or enforcement of this Agreement, as this Agreement is the
product of negotiation between sophisticated parties advised by counsel. All
references to “$” or “dollars” mean the lawful currency of the United States of
America. Except as expressly stated in this Agreement, all references to any
statute, rule or regulation are to the statute, rule or regulation as amended,
modified, supplemented or replaced from time to time (and, in the case of
statutes, include any rules and regulations promulgated under the statute) and
to any section of any statute, rule or regulation include any successor to the
section. References to a “business day” shall mean any day except Saturday,
Sunday and any day on which banking institutions in the State of New York
generally are authorized or required by law or other governmental actions to
close.
ARTICLE
II
EXCHANGE
Section
2.1 Exchange;
Dividend Exchange.
(a) On
the terms and subject to the conditions set forth in this Agreement, (i) the
Company agrees to issue the Capital Securities to the Investor in exchange for
84,784 shares of Series T Preferred Stock beneficially owned and held by the
Investor (such shares, the “Series T Shares”), and the
Investor agrees to deliver to the Company the Series T Shares in exchange for
the Capital Securities, and (ii) the Company and the Investor mutually agree to
amend and restate the Old Warrant to reflect the terms and conditions of the
Amended Warrant.
(b) Simultaneously
with the Exchange, all accrued and unpaid dividends under the Series T Shares
outstanding immediately prior to the Closing Date (such dividends accruing
daily) shall be exchanged for additional fully paid and nonassessable shares of
the Capital Securities legally available for such purpose (the “Dividend Exchange”).
Accrued and unpaid dividends paid in shares of Capital Securities shall be paid
by delivering to the Investor a number of shares of Capital Securities (rounded
to the nearest whole number) determined by dividing the total amount of the cash
payment of accrued and unpaid dividends that would otherwise be payable to the
Investor (rounded to the nearest whole cent) by $1,000, representing the
liquidation amount per share of the Capital Securities. For the avoidance of
doubt, if the Closing Date were February 19, 2010, the total amount of the cash
payment of accrued and unpaid dividends that would otherwise be payable to the
Investor (rounded to the nearest
3
whole
cent) would equal $4,319,349.00, and the number of shares of Capital Securities
issuable to Treasury in exchange for such amount would equal 4,319
shares. The issuance of any such shares of Capital Securities in such
amount shall constitute full payment of the cash dividends that would otherwise
have been payable.
Section
2.2 Exchange
Documentation.
Settlement of the Exchange will take
place on the Closing Date, at which time the Investor will cause delivery of the
Series T Shares to the Company or its designated agent and the Company will
cause delivery of the Capital Securities (including any additional shares of
Capital Securities to be delivered pursuant to the Dividend Exchange) to the
Investor or its designated agent.
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except
as Previously Disclosed, the Company represents and warrants to the Investor as
of the date hereof and as of the Closing Date that:
Section
3.1 Existence
and Power.
(a) Organization, Authority and
Significant Subsidiaries. The Company is duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
necessary power and authority to own, operate and lease its properties and to
carry on its business in all material respects as it is being currently
conducted, and except as has not, individually or in the aggregate, had and
would not reasonably be expected to have a Company Material Adverse Effect, has
been duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification; each subsidiary of the Company that is a “significant subsidiary”
within the meaning of Rule 1-02(w) of Regulation S-X under the Securities Act,
including, without limitation, Midwest Bank and Trust Company and Midwest
Financial and Investment Services, Inc., has been duly organized and is validly
existing in good standing under the laws of its jurisdiction of organization.
The Charter and bylaws of the Company, copies of which have been provided to the
Investor prior to the date hereof, are true, complete and correct copies of such
documents as in full force and effect as of the date hereof.
(b) Capitalization. The
authorized capital stock of the Company, and the outstanding capital stock of
the Company (including securities convertible into, or exercisable or
exchangeable for, capital stock of the Company) as of the most recent fiscal
month-end preceding the date hereof (the “Capitalization Date”)
is set forth on Schedule A. The
outstanding shares of capital stock of the Company have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable, and subject to
no preemptive rights (and were not issued in violation of any preemptive
rights). Except as provided in the Old Warrant, as of the date hereof, the
Company does not have outstanding any securities or other obligations providing
the holder the right to acquire Common Stock that is not reserved for issuance
as specified on Schedule A, and the
Company has not made any other commitment to authorize, issue or sell any Common
Stock. Since the Capitalization Date, the Company has not issued any shares of
Common Stock other than (i) shares issued upon the exercise of stock options or
delivered under other equity-based awards or other convertible securities or
warrants which were issued and outstanding on the Capitalization Date and
disclosed on Schedule
A and (ii) shares disclosed on Schedule
A.
Section
3.2 Authorization
and Enforceability.
(a) The
Company has the corporate power and authority to execute and deliver this
Agreement and the Amended Warrant and, subject to the approvals of its
stockholders, to
carry out its obligations hereunder and thereunder (which includes the issuance
of the Capital Securities, Underlying Common Shares, Amended Warrant and the
shares of Common Stock issuable upon exercise of the Amended Warrant (the “Warrant
Shares”)).
(b) The
execution, delivery and performance by the Company of this Agreement and the
Amended Warrant and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by
4
all
necessary corporate action on the part of the Company and its stockholders, and
no further approval or authorization is required on the part of the Company,
subject, in each case, to the approvals of its stockholders. This
Agreement is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, subject to the Bankruptcy
Exceptions.
Section
3.3 Capital
Securities and Underlying Common Shares.
The Capital Securities have been duly
and validly authorized by all necessary action, and, when issued and delivered
pursuant to this Agreement, such Capital Securities will be duly and validly
issued and fully paid and nonassessable, will not be issued in violation of any
preemptive rights, will represent nonassessable undivided beneficial interests
in the assets of the Company, will not subject the holder thereof to personal
liability and will rank senior to all other series or classes of Preferred
Stock, whether or not issued or outstanding, and senior to the Series A
Preferred Stock with respect to the payment of dividends and the distribution of
assets in the event of any dissolution, liquidation or winding up of the
Company. The shares of Underlying Common Stock have been duly authorized and
reserved for issuance upon conversion of the Capital Securities and when so
issued in accordance with the terms of the New Certificate of Designations will
be validly issued, fully paid and nonassessable, subject to the approvals of its
stockholders.
Section
3.4 Amended
Warrant and Warrant Shares.
The Amended Warrant has been duly and
validly authorized and, when executed and delivered as contemplated hereby, will
constitute a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by applicable Bankruptcy Exceptions. The Warrant Shares have been duly
authorized and reserved for issuance by the Company and when so issued and
delivered in accordance with the terms of the Amended Warrant will be validly
issued, fully paid and non-assessable, without the necessity of any approval of
its stockholders.
Section
3.5 Non-Contravention.
(a) The
execution, delivery and performance by the Company of this Agreement, the
Amended Warrant, and the consummation of the transactions contemplated hereby
and thereby, and compliance by the Company with the provisions hereof and
thereof, will not (A) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of, any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any Company Subsidiary under any of the terms, conditions or
provisions of (i) subject to the approvals of the Company's stockholders, its
organizational documents or (ii) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which it or any Company
Subsidiary may be bound, or to which the Company or any Company Subsidiary or
any of the properties or assets of the Company or any Company Subsidiary may be
subject, or (B) subject to compliance with the statutes and regulations referred
to in the next paragraph, violate any statute, rule or regulation or any
judgment, ruling, order, writ, injunction or decree applicable to the Company or
any Company Subsidiary or any of their respective properties or assets except,
in the case of clauses (A)(ii) and (B), for those occurrences that, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(b) Other
than the filing of the New Certificate of Designations with the Delaware
Secretary of State, any current report on Form 8-K required to be filed with the
SEC, such filings and approvals as are required to be made or obtained under any
state “blue sky” laws and such consents and approvals that have been made or
obtained, no notice to, filing with, exemption or review by, or authorization,
consent or approval of, any Governmental Entity is required to be made or
obtained by the Company in connection with the consummation by the Company of
the Exchange except for any such notices, filings, exemptions, reviews,
authorizations, consents and approvals the failure of which to make or obtain
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
5
(c) Except as
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, (A) the execution, delivery and performance by
the Company of this Agreement and the consummation of the transactions
contemplated hereby (including for this purpose the consummation of the
Exchange) and compliance by the Company with the provisions hereof will not (1)
result in any payment (including any severance payment, payment of unemployment
compensation, “excess parachute payment” (within the meaning of the Code),
“golden parachute payment” (as defined in the EESA, as implemented by the
Compensation Regulations) or forgiveness of indebtedness or otherwise) becoming
due to any current or former employee, officer or director of the Company or any
Company Subsidiary from the Company or any Company Subsidiary under any benefit
plan or otherwise, (2) increase any benefits otherwise payable under any benefit
plan, (3) result in any acceleration of the time of payment or vesting of any
such benefits, (4) require the funding or increase in the funding of any such
benefits or (5) result in any limitation on the right of the Company or any
Company Subsidiary to amend, merge, terminate or receive a reversion of assets
from any benefit plan or related trust and (B) neither the Company nor any
Company Subsidiary has taken, or permitted to be taken, any action that
required, and no circumstances exist that will require the funding, or increase
in the funding, of any benefits or resulted, or will result, in any limitation
on the right of the Company or any Company Subsidiary to amend, merge, terminate
or receive a reversion of assets from any benefit plan or related
trust.
Section
3.6 Anti-Takeover
Provisions and Rights Plan.
The Board of Directors has taken all
necessary action to ensure that the transactions contemplated by this Agreement
and the Amended Warrant and the consummation of the transactions contemplated
hereby and thereby, including the conversion of the Capital Securities in
accordance with the terms of the New Certificate of Designations and the
exercise of the Amended Warrant in accordance with its terms, will be exempt
from any anti-takeover or similar provisions of the Company’s Charter and
bylaws, and any other provisions of any applicable “moratorium”, “control
share”, “fair price”, “interested stockholder” or other anti-takeover laws and
regulations of any jurisdiction. The Company has taken all actions
necessary to render any stockholders’ rights plan of the Company inapplicable to
this Agreement, the Capital Securities and the Amended Warrant and the
consummation of the transactions contemplated hereby and thereby, including the
conversion of the Capital Securities in accordance with the terms of the New
Certificate of Designations and the exercise of the Amended Warrant by the
Investor in accordance with its terms.
Section
3.7 No
Company Material Adverse Effect.
Since September 30, 2009, no fact,
circumstance, event, change, occurrence, condition or development has occurred
that, individually or in the aggregate, has had or would reasonably be likely to
have a Company Material Adverse Effect, except as disclosed on Schedule
B.
Section
3.8 Offering
of Securities.
Neither the Company nor any person
acting on its behalf has taken any action (including any offering of any
securities of the Company under circumstances which would require the
integration of such offering with the offering of the Capital Securities under
the Securities Act and the rules and regulations of the SEC promulgated
thereunder), which might subject the offering, issuance or sale of the Capital
Securities to the Investor pursuant to this Agreement to the registration
requirements of the Securities Act.
Section
3.9 Brokers
and Finders.
No broker, finder or investment banker
is entitled to any financial advisory, brokerage, finder’s or other fee or
commission in connection with this Agreement or the transactions contemplated
hereby based upon arrangements made by or on behalf of the Company or any
Company Subsidiary for which the Investor could have any liability.
6
ARTICLE
IV
COVENANTS
Section
4.1 Commercially
Reasonable Efforts.
(a) Subject
to the terms and conditions of this Agreement, each of the parties will use its
commercially reasonable efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Exchange as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall use commercially reasonable
efforts to cooperate with the other party to that end.
(b) The
Company shall call a special meeting of the holders of its Common Stock to vote
on various proposals, including proposals (collectively, the “Common Stockholder
Proposals”) to approve (i) the increase of the number of authorized
shares of Common Stock from 64 million to 4 billion and (ii) the issuance of
shares of Underlying Common Stock to the Investor upon the conversion of the
Capital Securities to shares of Common Stock and comply with the other
provisions of this Section 4.1(b) and Section 4.1(c). In addition, the Company
shall call a special meeting of the holders of its Series A Preferred Stock to
vote on various proposals, including the proposal (the “Preferred Stockholder
Proposal”) to approve the issuance
of the Capital Securities with rights senior to the Series A Preferred Stock and
comply with the other provisions of this Section 4.1(b) and Section 4.1(c). In
connection with such meetings, the Company shall (and the Investor will
reasonably cooperate with the Company to) use its reasonable best efforts to
respond to any comments of the SEC or its staff on the Preliminary Proxy
Statements filed on August 3, 2009, October 26, 2009 and November 12, 2009 and
to cause definitive proxy statements related to such stockholders’ meetings to
be mailed to the appropriate stockholders of the Company not more than five
business days after clearance thereof by the SEC, and shall use its reasonable
best efforts to solicit proxies for such stockholder approval of the Common
Stockholder Proposals and the Preferred Stockholder Proposal. The Company shall notify
the Investor promptly of the receipt of any comments from the SEC or its staff
with respect to the proxy statements and of any request by the SEC or its staff
for amendments or supplements to such proxy statements or for additional
information and will supply the Investor with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to such proxy
statements. If at any time prior to such stockholders’ meetings there
shall occur any event that is required to be set forth in an amendment or
supplement to the proxy statements, the Company shall as promptly as practicable
prepare and mail to the appropriate stockholders such an amendment or
supplement. Each of the Investor and the Company agrees promptly to correct any
information provided by it or on its behalf for use in the proxy statements if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company shall as promptly as practicable prepare
and mail to the appropriate stockholders an amendment or supplement to correct
such information to the extent required by applicable laws and
regulations. The Company shall consult with the Investor prior to
filing any additional proxy statements, or any amendments or supplements
thereto, and provide the Investor with a reasonable opportunity to comment
thereon. In the event that the approval of any of the Common
Stockholder Proposals or Preferred Stockholder Proposal is not obtained at such
special stockholders’ meeting(s), the Company shall include a proposal to
approve (and the Board of Directors shall recommend approval of) each such
proposal at a meeting of the appropriate stockholders no less than once in each
subsequent six-month period beginning on the first of the month next succeeding
the date of such special stockholders’ meeting until all such approvals are
obtained or made.
(c) None
of the information supplied by the Company or any of the Company Subsidiaries
for inclusion in any proxy statement in connection with any such stockholders’
meetings of the Company will, at the date it is filed with the SEC, when first
mailed to the Company's stockholders and at the time of any stockholders’
meeting, and at the time of any amendment or supplement thereof, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading.
7
Section
4.2 Expenses.
If
requested by the Investor, the Company shall pay all reasonable out of pocket
and documented costs and expenses associated with the Exchange, including, but
not limited to, the reasonable fees, disbursements and other charges of the
Investor’s legal counsel and financial advisors.
Section
4.3 Exchange
Listing.
If requested by the Investor, the
Company shall, at the Company’s expense, cause the Capital Securities and the
Amended Warrant, to the extent the Capital Securities and the Amended Warrant
comply with applicable listing requirements, to be listed on the Nasdaq Global
Market, subject to official notice of issuance, and shall maintain such listing
for so long as any Common Stock is listed on such exchange. At the Investor’s
request, the Company agrees to take such action as may be necessary to change
the minimum denominations of the Capital Securities to $25 or such other amount
as the Investor shall reasonably request. As soon as reasonably practicable
following the Closing, the Company shall, at its expense, cause the Underlying
Common Shares and the Warrant Shares to be listed on the same national
securities exchange on which the Common Stock is listed, subject to official
notice of issuance, and shall maintain such listing for so long as any Common
Stock is listed on such exchange.
Section
4.4 Access,
Information and Confidentiality.
(a) From
the date hereof until the date when the Investor no longer holds any debt or
equity securities of the Company or an Affiliate of the Company acquired
pursuant to this Agreement or the Amended Warrant, the Company will permit the
Investor and its agents, consultants, contractors and advisors (i) acting
through the Company’s Appropriate Federal Banking Agency, to examine the
corporate books and make copies thereof and to discuss the affairs, finances and
accounts of the Company and the subsidiaries of the Company (the “Company
Subsidiaries”) with the principal officers of the Company, all upon
reasonable notice and at such reasonable times and as often as the Investor may
reasonably request and (ii) to review any information material to the Investor’s
investment in the Company provided by the Company to its Appropriate Federal
Banking Agency.
(b) From
the date hereof until the date when the Investor no longer holds any debt or
equity securities of the Company or an Affiliate of the Company acquired
pursuant to this Agreement or the Amended Warrant, the Company will permit, and
will cause the Company Subsidiaries to permit the Investor and its agents,
consultants, contractors access to personnel and any books, papers, records or
other data, in each case, to the extent relevant to ascertaining compliance with
the financing terms and conditions.
(c) The
Investor will use reasonable best efforts to hold, and will use reasonable best
efforts to cause its agents, consultants, contractors, advisors, and United
States executive branch officials and employees, to hold, in confidence all
non-public records, books, contracts, instruments, computer data and other data
and information (collectively, “Information”)
concerning the Company furnished or made available to it by the Company or its
representatives pursuant to this Agreement (except to the extent that such
information can be shown to have been (i) previously known by such party on a
non-confidential basis, (ii) in the public domain through no fault of such party
or (iii) later lawfully acquired from other sources by the party to which it was
furnished (and without violation of any other confidentiality obligation));
provided that nothing
herein shall prevent the Investor from disclosing any Information to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process. The Investor understands that the Information may contain commercially
sensitive confidential information entitled to an exception from a Freedom of
Information Act request.
(d) Nothing
in this Section shall be construed to limit the authority that the Special
Inspector General of the Troubled Asset Relief Program, the Comptroller General
of the United States or any other applicable regulatory authority has under
law.
Section
4.5 Executive
Compensation.
(a) Benefit
Plans. During the Relevant Period, the Company shall take all
necessary action to ensure that the Benefit Plans of the Company and its
Affiliates comply in all respects with, and shall take all other actions
necessary to comply with, Section 111 of the EESA, as implemented by
the Compensation Regulations, and neither
8
the
Company nor any Affiliate shall adopt any new Benefit Plan (i) that does not
comply therewith or (ii) that does not expressly state and require that such
Benefit Plan and any compensation thereunder shall be subject to any relevant
Compensation Regulations adopted, issued or released on or after the date any
such Benefit Plan is adopted. To the extent that EESA and/or the Compensation
Regulations are amended or otherwise change during the Relevant Period in a
manner that requires changes to then-existing Benefit Plans, or that requires
other actions, the Company and its Affiliates shall effect such changes to its
or their Benefit Plans, and take such other actions, as promptly as practicable
after it has actual knowledge of such amendments or changes in order to be in
compliance with this Section 4.5(a) (and shall be deemed to be in compliance for
a reasonable period to effect such changes). In addition, the Company
and its Affiliates shall take all necessary action, other than to the extent
prohibited by applicable law or regulation applicable outside of the United
States, to ensure that the consummation of the transactions contemplated by this
Exchange Agreement will not accelerate the vesting, payment or distribution of
any equity-based awards, deferred cash awards or any nonqualified deferred
compensation payable by the Company or any of its Affiliates.
(b) Additional
Waivers. After the Closing Date, in connection with the hiring
or promotion of a Section 4.5 Employee and/or the promulgation of applicable
Compensation Regulations or otherwise, to the extent any Section 4.5 Employee
shall not have executed a waiver with respect to the application to such Section
4.5 Employee of the Compensation Regulations, the Company shall use its best
efforts to (i) obtain from such Section 4.5 Employee a waiver in substantially
the form attached hereto as Annex D and (ii)
deliver such waiver to the Investor as promptly as possible, in each case,
within sixty days of the Closing Date or, if later, within sixty days of such
Section 4.5 Employee becoming subject to the requirements of this section.
“Section 4.5
Employee” means (A) each Senior Executive Officer and (B) any other
employee of the Company or its Affiliates determined at any time to be subject
to section 111 of EESA and the Compensation Regulations.
(c) Clawback. In
the event that any Section 4.5 Employee receives a payment in contravention of
the provisions of this Section 4.5, the Company shall promptly provide such
individual with written notice that the amount of such payment must be repaid to
the Company in full within fifteen business days following receipt of such
notice or such earlier time as may be required by the Compensation Regulations
and shall promptly inform the Investor (i) upon discovering that a payment in
contravention of this Section 4.5 has been made and (ii) following the repayment
to the Company of such amount and shall take such other actions as may be
necessary to comply with the Compensation Regulations.
(d) Limitation on
Deductions. During the Relevant Period, the Company agrees
that it shall not claim a deduction for remuneration for federal income tax
purposes in excess of $500,000 for each Senior Executive Officer that would not
be deductible if Section 162(m)(5) of the Code applied to the
Company.
(e) Amendment to Prior
Agreement. The parties agree that, effective as of the date hereof,
Section 4.10 of the Securities Purchase Agreement shall be amended in its
entirety by replacing such Section 4.10 with the provisions set forth in this
Section 4.5 and any terms included in this Section 4.5 that are not otherwise
defined in the Securities Purchase Agreement shall have the meanings ascribed to
such terms in this Agreement.
Section
4.6 Certain
Notifications Until Closing.
From the date hereof until the Closing,
the Company shall promptly notify the Investor of (i) any fact, event or
circumstance of which it is aware and which would reasonably be likely to cause
any representation or warranty of the Company contained in this Agreement to be
untrue or inaccurate in any material respect or to cause any covenant or
agreement of the Company contained in this Agreement not to be complied with or
satisfied in any material respect and (ii) except as Previously Disclosed, any
fact, circumstance, event, change, occurrence, condition or development of which
the Company is aware and which, individually or in the aggregate, has had or
would reasonably be likely to have a Company Material Adverse Effect;
provided, however, that delivery of any
notice pursuant to this Section 4.6 shall not limit or affect any rights of or
remedies available to the Investor; provided, further, that a failure to
comply with this Section 4.6 shall not constitute a breach of this Agreement or
the failure of any condition set forth in Section 1.2 to be satisfied unless the
underlying Company Material Adverse Effect or material breach would
independently result in the failure of a condition set forth in Section 1.2 to
be satisfied.
9
Section
4.7 Sufficiency
of Authorized Common Stock.
During the period from the Closing Date
(or, if the approval of the Common Stockholder Proposals and
Preferred Stockholder Proposals is required, the date of such approval) until the date on which
all the Capital Securities have been converted and the Amended Warrant has been
fully exercised, the Company shall at all times have reserved for issuance, free
of preemptive or similar rights, a sufficient number of authorized and unissued
shares of Common Stock to effectuate such conversion and
exercise. Nothing in this Section 4.7 shall preclude the Company from
satisfying its obligations in respect of the conversion of Capital Securities or
the exercise of the Amended Warrant by delivery of shares of Common Stock which
are held in the treasury of the Company.
Section
4.8 Monthly
Lending Reports.
During the Relevant Period, the Company
will detail in monthly reports submitted to the Investor the information
required by the CPP Monthly Lending Reports, as published on
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ from time to time.
ARTICLE
V
ADDITIONAL
AGREEMENTS
Section
5.1 Unregistered
Capital Securities.
The Investor acknowledges that the
Capital Securities, the Underlying Common Shares and the Warrant Shares have not
been registered under the Securities Act or under any state securities
laws. The Investor (a) is acquiring the Capital Securities pursuant
to an exemption from registration under the Securities Act solely for investment
with no present intention to distribute them to any person in violation of the
Securities Act or any applicable U.S. state securities laws, (b) will not sell
or otherwise dispose of any of the Capital Securities, the Underlying Common
Shares or the Warrant Shares, except in compliance with the registration
requirements or exemption provisions of the Securities Act and any applicable
U.S. state securities laws, and (c) has such knowledge and experience in
financial and business matters and in investments of this type that it is
capable of evaluating the merits and risks of the Exchange and of making an
informed investment decision.
Section
5.2 Legend.
(a) The
Investor agrees that all certificates or other instruments representing the
Amended Warrant, the Underlying Common Shares and the Warrant Shares will bear a
legend substantially to the following effect:
“THE SECURITIES REPRESENTED BY THIS
INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS
IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.”
(b) The
Investor agrees that all certificates or other instruments representing the
Capital Securities will bear a legend substantially to the following
effect:
“THE
SECURITIES REPRESENTED BY THIS INSTRUMENT ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED
OF
10
EXCEPT
WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR SUCH LAWS. EACH PURCHASER OF THE SECURITIES REPRESENTED BY
THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. ANY TRANSFEREE
OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE
TRANSFER THE SECURITIES REPRESENTED BY THIS INSTRUMENT EXCEPT (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR
SO LONG AS THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (C) TO THE ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS INSTRUMENT
ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.”
(c) In
the event that any Capital Securities, Underlying Common Shares or Warrant
Shares (i) become registered under the Securities Act or (ii) are eligible to be
transferred without restriction in accordance with Rule 144 or another exemption
from registration under the Securities Act (other than Rule 144A), the Company
shall issue new certificates or other instruments representing such Capital
Securities, Underlying Common Shares or Warrant Shares, which shall not contain
the applicable legend in Section 5.2(a) above; provided that the Investor
surrenders to the Company the previously issued certificates or other
instruments.
Section
5.3 Certain
Transactions.
The Company will not merge or
consolidate with, or sell, transfer or lease all or substantially all of its
property or assets to, any other party unless the successor, transferee or
lessee party (or its ultimate parent entity), as the case may be (if not the
Company), expressly assumes the due and punctual performance and observance of
each and every covenant, agreement and condition of this Agreement and the
Amended Warrant to be performed and observed by the Company.
Section
5.4 Transfer
of Capital Securities; Underlying Common Shares and Warrant
Shares.
Subject to compliance with applicable
securities laws, the Investor shall be permitted to transfer, sell, assign or
otherwise dispose of (“Transfer”)
all or a portion of the Capital Securities, Amended Warrant, Underlying Common
Shares or Warrant Shares at any time, and the Company shall take all steps as
may be reasonably requested by the Investor to facilitate the Transfer of the
Capital Securities, the Underlying Common Shares and the Warrant
Shares.
Section
5.5 Registration
Rights.
The Capital Securities, Amended
Warrant, Underlying Common Shares and Warrant Shares shall be Registrable
Securities and, upon their issuance, the provisions of Section 4.5 of the
Securities Purchase Agreement shall be applicable to them, including with the
benefit, to the extent available, of the tacking of any holding period from the
date of issuance of the Series T Preferred Stock.
Section
5.6 Voting
Rights.
(a) The
Investor agrees that it will vote, or cause to be voted, or exercise its right
to consent (or cause its right to consent to be exercised) with respect to, all
Underlying Common Shares and Warrant Shares beneficially owned by it and its
controlled Affiliates (and which are entitled to vote on such matter) with
respect to each matter
11
on which
holders of Common Stock are entitled to vote or consent, other than a Designated
Matter, in the same proportion (for, against or abstain) as all other shares of
the Company’s Common Stock are voted or consents are given with respect to each
such matter. The Investor agrees to attend all meetings of the Company’s
stockholders in person or by proxy for purposes of obtaining a quorum. In order
to effectuate the foregoing agreements, to the maximum extent permitted by
applicable law, the Investor hereby grants a proxy appointing each of the Chief
Executive Officer and Chairman of the Company
attorney-in-fact and proxy for it and its controlled Affiliates with full power
of substitution, for and in the name of it and its controlled Affiliates, to
vote, express consent or dissent, or otherwise to utilize such voting power in
the manner and solely on the terms provided by this Section 5.6 with respect to
the Underlying Common Shares and the Warrant Shares and the Investor hereby
revokes any and all previous proxies granted with respect to the Underlying
Common Shares and the Warrant Shares for purposes of the matters contemplated in
this Section 5.6; provided that such proxy may
only be exercised if the Investor fails to comply with the terms of this Section
5.6. The proxy granted hereby is irrevocable prior to the termination of this
Agreement, is coupled with an interest and is granted in consideration of the
Company entering into this Agreement and issuing the Capital Securities and
Amended Warrant to the Investor.
(b) The
Investor shall retain the right to vote in its sole discretion all Underlying
Common Shares and Warrant Shares beneficially owned by it and its controlled
Affiliates (and which are entitled to vote on such matter) on any Designated
Matter.
(c) “Business Combination”
means a merger, consolidation, statutory share exchange or similar transaction
that requires the approval of the Company’s stockholders. “Designated Matters”
means (i) the election and removal of directors, (ii) the approval of any
Business Combination, (iii) the approval of a sale of all or substantially all
of the assets or property of the Company, (iv) the approval of a dissolution of
the Company, (v) the approval of any issuance of any securities of the Company
on which holders of Common Stock are entitled to vote, (vi) the approval of any
amendment to the Charter or bylaws of the Company on which holders of Common
Stock are entitled to vote and (vii) the approval of any other matters
reasonably incidental to the foregoing subclauses (i) through (vi) as determined
by the Investor.
Section
5.7 Restriction
on Dividends and Repurchases.
(a) Until
the earlier of (i) December 5, 2011 or (ii) such time as the Investor ceases to
own any debt or
equity securities of the Company or an Affiliate of the Company acquired
pursuant to this Agreement or the Amended Warrant, neither the Company nor any
Company Subsidiary shall, without the consent of the Investor:
(i) declare
or pay any dividend or make any distribution on the Common Stock (other than (A)
regular quarterly cash dividends of not more than the amount of the last
quarterly cash dividend per share declared or, if lower, publicly announced an
intention to declare, on the Common Stock prior to October 14, 2008, as adjusted
for any stock split, stock dividend, reverse stock split, reclassification or
similar transaction, (B) dividends payable solely in shares of Common Stock and
(C) dividends or distributions of
rights or Junior Stock in connection with a stockholders’ rights plan); or
(ii) redeem,
purchase or acquire any shares of Common Stock or other capital stock or other
equity securities of any kind of the Company, or any trust preferred securities
issued by the Company or any Affiliate of the Company, other than (A)
redemptions, purchases or other acquisitions of the Capital Securities (which
purchases shall be made on a pro rata basis, as provided in Section 5.7(b)), (B)
redemptions, purchases or other acquisitions of shares of Common Stock or other
Junior Stock, in each case in this clause (B) in connection with the
administration of any employee benefit plan in the ordinary course of business
(including purchases to offset the Share Dilution Amount (as defined below)
pursuant to a publicly announced repurchase plan) and consistent with past
practice; provided that any purchases to offset the Share Dilution Amount shall
in no event exceed the Share Dilution Amount, (C) purchases or other
acquisitions by a broker-dealer subsidiary of the Company solely for the purpose
of market-making, stabilization or customer facilitation transactions in trust
preferred securities of the Company or an Affiliate of the Company, Junior Stock
or Parity Stock in the ordinary course of its business, (D) purchases by a
broker-dealer subsidiary of the Company of trust preferred securities or capital
stock of the Company or an Affiliate of the Company for resale pursuant to an
offering by the Company of such trust preferred securities or capital stock
underwritten by such broker-dealer subsidiary, (E) any redemption or
repurchase
12
of rights
pursuant to any stockholders’ rights plan, (F) the acquisition by the Company or
any of the Company Subsidiaries of record ownership in Junior Stock, Parity
Stock or trust preferred securities of the Company or an Affiliate of the
Company for the beneficial ownership of any other persons (other than the
Company or any other Company Subsidiary), including as trustees or custodians,
and (G) the exchange or conversion of Junior Stock for or into other Junior
Stock, including, without limitation, the Company’s previously announced
proposed exchange of Series A Preferred Stock for Common Stock, or of Parity
Stock or trust preferred securities of the Company or an Affiliate of the
Company for or into other Parity Stock (with the same or lesser aggregate
liquidation amount) or Junior Stock, in each case set forth in this clause (G),
solely to the extent required pursuant to binding contractual agreements entered
into prior to the date hereof or any subsequent agreement for the accelerated
exercise, settlement or exchange thereof for Common Stock (clauses (C) and (F),
collectively, the “Permitted
Repurchases”). “Share Dilution
Amount” means the increase in the number of diluted shares outstanding
(determined in accordance with GAAP, and as measured from the date of the
Company’s most recently filed consolidated financial statements prior to the
Closing Date) resulting from the grant, vesting or exercise of equity-based
compensation to employees and equitably adjusted for any stock split, stock
dividend, reverse stock split, reclassification or similar
transaction.
(b) Until
such time as the Investor ceases to own any Capital Securities, the Company
shall not repurchase any Capital Securities from any holder thereof, whether by
means of open market purchase, negotiated transaction, or otherwise, other than
Permitted Repurchases, unless it offers to repurchase a ratable portion of the
Capital Securities then held by the Investor on the same terms and
conditions.
(c) “Junior Stock” means
the Common Stock, the Series A Preferred Stock and any other class or series of
stock of the Company the terms of which expressly provide that it ranks junior
to the Capital Securities as to dividend rights and/or as to rights on
liquidation, dissolution or winding up of the Company. “Parity Stock” means
any class or series of stock of the Company the terms of which do not expressly
provide that such class or series will rank senior or junior to the Capital
Securities as to dividend rights and/or as to rights on liquidation, dissolution
or winding up of the Company (in each case without regard to whether dividends
accrue cumulatively or non-cumulatively).
(d) The
parties agree that, effective as of the date hereof, Section 4.8 of the
Securities Purchase Agreement shall be amended in its entirety by replacing such
Section 4.8 with the provisions set forth in this Section 5.7 and any terms
included in this Section 5.7 that are not otherwise defined in the Securities
Purchase Agreement shall have the meanings ascribed to such terms in this
Agreement.
Section
5.8 Repurchase
of Investor Securities.
From and after the date of this
Agreement, the agreements set forth in Section 4.9 of the Securities Purchase
Agreement shall be applicable (including to the Amended Warrant) following the
redemption in whole of the Capital Securities held by the Investor or the
Transfer by the Investor of all of the Capital Securities held by the Investor
to one or more third parties not affiliated with the Investor.
Section
5.9 Qualified
Equity Offering.
The Company and the Investor agree, for
the avoidance of doubt, that none of the transactions contemplated by this
Agreement shall be deemed a Qualified Equity Offering under the Securities
Purchase Agreement or the Amended Warrant.
Section
5.10 Bank or
Thrift Holding Company Status.
(a) The
Company shall maintain its status (or, if permitted to become a Savings and Loan
Holding Company in accordance with Subsection (b) below, such status) for as
long as the Investor owns any debt or equity securities of the Company or an
Affiliate of the Company acquired pursuant to this Agreement.
(b) The
Company may become a Savings and Loan Holding Company in accordance with the
requirements of the Home Owners’ Loan Act and applicable regulations, provided
that it has duly fulfilled any
13
commitments
to or other requirements or obligations imposed by the Board of Governors of the
Federal Reserve System.
Section
5.11 Compliance
with Employ American Workers Act.
Until the Company is no longer deemed a
recipient of funding under Title I of EESA or Section 13 of the Federal Reserve
Act for purposes of the EAWA, as the same may be determined pursuant to any
regulations or other legally binding guidance promulgated under EAWA, the
Company shall comply, and the Company shall take all necessary action to ensure
that its subsidiaries comply, in all respects with the provisions of the EAWA
and any regulations or other legally binding guidance promulgated under the
EAWA. “EAWA”
means the Employ American Workers Act (Section 1611 of Division A, Title XVI of
the American Recovery and Reinvestment Act of 2009), Public Law No. 111-5,
effective as of February 17, 2009, as may be amended and in effect from time to
time.
ARTICLE
VI
MISCELLANEOUS
Section
6.1 Termination.
This Agreement may be terminated at any
time prior to the Closing:
(a) by
either the Investor or the Company if the Closing shall not have occurred by the
60th calendar day following the date hereof; provided, however, that in the event
the Closing has not occurred by such 60th calendar day, the parties will consult
in good faith to determine whether to extend the term of this Agreement, it
being understood that the parties shall be required to consult only until the
fifth day after such 60th calendar day and not be under any obligation to extend
the term of this Agreement thereafter; provided further that the
right to terminate this Agreement under this Section 6.1(a) shall not be
available to any party whose breach of any representation or warranty or failure
to perform any obligation under this Agreement shall have caused or resulted in
the failure of the Closing to occur on or prior to such date;
(b) by
either the Investor or the Company in the event that any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; or
(c) by
the mutual written consent of the Investor and the Company.
In
the event of termination of this Agreement as provided in this Section 6.1, this
Agreement shall forthwith become void and there shall be no liability on the
part of either party hereto except that nothing herein shall relieve either
party from liability for any breach of this Agreement.
Section
6.2 Survival
of Representations and Warranties.
The representations and warranties of
the Company made herein or in any certificates delivered in connection with the
Closing shall survive the Closing without limitation.
Section
6.3 Amendment.
No amendment of any provision of this
Agreement will be effective unless made in writing and signed by an officer or a
duly authorized representative of each of the Company and the Investor; provided that the Investor
may unilaterally amend any provision of this Agreement to the extent required to
comply with any changes after the date hereof in applicable federal statutes. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right,
power or privilege. The rights and remedies herein provided shall be cumulative
of any rights or remedies provided by law.
14
Section
6.4 Waiver of
Conditions.
The conditions to each party’s
obligation to consummate the Exchange are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law. No waiver will be effective unless it is in a writing signed by
a duly authorized officer of the waiving party that makes express reference to
the provision or provisions subject to such waiver.
Section
6.5 Governing
Law; Submission to Jurisdiction, Etc.
This Agreement will be governed by and
construed in accordance with the federal law of the United States if and to the
extent such law is applicable, and otherwise in accordance with the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State. Each of the parties hereto agrees (a) to submit to the
exclusive jurisdiction and venue of the United States District Court for the
District of Columbia and the United States Court of Federal Claims for any and
all civil actions, suits or proceedings arising out of or relating to this
Agreement or the Amended Warrant or the Exchange contemplated hereby and (b)
that notice may be served upon (i) the Company at the address and in the manner
set forth for notices to the Company in Section 6.6 and (ii) the Investor at the
address and in the manner set forth for notices to the Company in Section 6.6,
but otherwise in accordance with federal law. To the extent permitted by
applicable law, each of the parties hereto hereby unconditionally waives trial
by jury in any civil legal action or proceeding relating to this Agreement or
the Amended Warrant or the Exchange contemplated hereby.
Section
6.6 Notices.
Any notice, request, instruction or
other document to be given hereunder by any party to the other will be in
writing and will be deemed to have been duly given (a) on the date of delivery
if delivered personally, or by facsimile, upon confirmation of receipt, or (b)
on the second business day following the date of dispatch if delivered by a
recognized next day courier service. All notices hereunder shall be delivered as
set forth below or pursuant to such other instructions as may be designated
in writing by the party to receive such notice.
If to the
Company:
Midwest
Banc Holdings, Inc.
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Attention: ▇▇▇▇▇▇▇
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Facsimile:
email:
Telephone:
With a
copy to:
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Price P.C.
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Facsimile: (▇▇▇)
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email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Telephone: (▇▇▇)
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Facsimile: (▇▇▇)
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Telephone: (▇▇▇)
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If to the
Investor:
United
States Department of the Treasury
15
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Attention: Chief
Counsel Office of Financial Stability
Facsimile: (▇▇▇)
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Email:
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Section
6.7 Definitions.
(a) When
a reference is made in this Agreement to a subsidiary of a person, the term
“subsidiary” means any corporation, partnership, joint venture, limited
liability company or other entity (x) of which such person or a subsidiary of
such person is a general partner or (y) of which a majority of the voting
securities or other voting interests, or a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a
majority of the board of directors or persons performing similar functions with
respect to such entity, is directly or indirectly owned by such person and/or
one or more subsidiaries thereof.
(b) The
term “Affiliate” means,
with respect to any person, any person directly or indirectly controlling,
controlled by or under common control with, such other person. For purposes of
this definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”) when used with respect to any
person, means the possession, directly or indirectly, of the power to cause the
direction of management and/or policies of such person, whether through the
ownership of voting securities by contract or otherwise.
(c) The
term “Company Material
Adverse Effect” means a material adverse effect on (i) the business,
results of operation or financial condition of the Company and its consolidated
subsidiaries taken as a whole; provided, however, that Company Material
Adverse Effect shall not be deemed to include the effects of (A) changes after
the date hereof in general business, economic or market conditions (including
changes generally in prevailing interest rates, credit availability and
liquidity, currency exchange rates and price levels or trading volumes in the
United States or foreign securities or credit markets), or any outbreak or
escalation of hostilities, declared or undeclared acts of war or terrorism, in
each case generally affecting the industries in which the Company and its
subsidiaries operate, (B) changes or proposed changes after the date hereof in
GAAP or regulatory accounting requirements, or authoritative interpretations
thereof, (C) changes or proposed changes after date hereof in securities,
banking and other laws of general applicability or related policies or
interpretations of Governmental Entities (in the case of each of these clauses
(A), (B) and (C), other than changes or occurrences to the extent that such
changes or occurrences have or would reasonably be expected to have a materially
disproportionate adverse effect on the Company and its consolidated subsidiaries
taken as a whole relative to comparable U.S. banking or financial services
organizations), or (D) changes in the market price or trading volume of the
Common Stock or any other equity, equity-related or debt securities of the
Company or its consolidated subsidiaries (it being understood and agreed that
the exception set forth in this clause (D) does not apply to the underlying
reason giving rise to or contributing to any such change); or (ii) the ability
of the Company to consummate the Exchange and the other transactions
contemplated by this Agreement and perform its obligations hereunder on a timely
basis.
(d) The
term “Previously
Disclosed” means information set forth or incorporated in the Company’s
Annual Report on Form 10-K for the most recently completed fiscal year of the
Company filed with SEC prior to the date hereof or in its other reports and
forms filed with or furnished to the SEC under Sections 13(a), 14(a) or 15(d) of
the Exchange Act on or after the last day of the most recently completed fiscal
year of the Company and prior to the date hereof.
(e) To
the extent any securities issued pursuant to this Agreement or the transactions
contemplated hereby are registered in the name of a designee of the Investor
pursuant to Sections 1.2 or 6.8(c) or transferred to an Affiliate of the
Investor, all references herein to the Investor holding or owning any debt or
equity securities of the Company, Capital Securities or Registrable Securities
(and any like variations thereof) shall be deemed to refer to the Investor,
together with such designees and/or Affiliates, holding or owning any debt or
equity securities, Capital Securities or Registrable Securities (and any like
variations thereof), as applicable.
16
Section
6.8 Assignment.
Neither this Agreement nor any right,
remedy, obligation nor liability arising hereunder or by reason hereof shall be
assignable by any party hereto without the prior written consent of each other
party, and any attempt to assign any right, remedy, obligation or liability
hereunder without such consent shall be void, except (a) an assignment, in the
case of a Business Combination where such party is not the surviving entity, or
a sale of substantially all of its assets, to the entity which is the survivor
of such Business Combination or the purchaser in such sale, (b) as provided in
Sections 5.4 and 5.5 and (c) an assignment by the Investor of this Agreement to
an Affiliate of the Investor; provided that if the Investor
assigns this Agreement to an Affiliate, the Investor shall be relieved of its
obligations under this Agreement but (i) all rights, remedies and obligations of
the Investor hereunder shall continue and be enforceable and exercisable by such
Affiliate, and (ii) the Company’s obligations and liabilities hereunder shall
continue to be outstanding.
Section
6.9 Severability.
If any provision of this Agreement, or
the application thereof to any person or circumstance, is determined by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.
Section
6.10 No
Third-Party Beneficiaries.
Nothing contained in this Agreement,
expressed or implied, is intended to confer upon any person or entity other than
the Company and the Investor any benefit, right or remedies, except that (i) the
provisions of Section 4.4 shall inure to the benefit of the persons referred to
in that Section and (ii) the provisions of Section 5.5 shall inure to the
benefit of the persons holding Capital Securities during any tacked holding
period, as contemplated by that Section.
Section
6.11 Entire
Agreement, Etc.
This Agreement (including the Annexes
and Schedules hereto) constitute the entire agreement, and supersede all other
prior agreements, understandings, representations and warranties, both written
and oral, between the parties, with respect to the subject matter
hereof.
Section
6.12 Counterparts
and Facsimile.
For the convenience of the parties
hereto, this Agreement may be executed in any number of separate counterparts,
each such counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement. Executed signature
pages to this Agreement may be delivered by facsimile and such facsimiles will
be deemed as sufficient as if actual signature pages had been
delivered.
Section
6.13 Specific
Performance.
The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms. It is accordingly
agreed that the parties shall be entitled (without the necessity of posting a
bond) to specific performance of the terms hereof, this being in addition to any
other remedies to which they are entitled at law or equity.
[Remainder of Page Intentionally Left
Blank]
17
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
|
MIDWEST
BANC HOLDINGS, INC.
By: /s/▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Title: Chief
Executive Officer
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|
|
UNITED
STATES DEPARTMENT OF THE TREASURY
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇.
Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Assistant
Secretary for Financial Stability
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[Signature
Page to Exchange Agreement]