AMENDMENT NO. 1 TO EXCHANGE AGREEMENT
Exhibit
10.1
AMENDMENT
NO. 1 TO EXCHANGE AGREEMENT
This
AMENDMENT NO. 1, dated as of June 22, 2009 (this “Amendment”), between
E*TRADE Financial Corporation, a Delaware corporation (the “Company”), and
Citadel Equity Fund Ltd., a Cayman Islands company (together with any of its
permitted assignees pursuant to the Exchange Agreement, “CEFL”) amends that
certain Exchange Agreement, dated as of June 17, 2009 (the “Exchange Agreement”),
between the Company and CEFL.
RECITALS
WHEREAS, the Company and CEFL
are parties to the Exchange Agreement; and
WHEREAS, Section 6.8 of
the Exchange Agreement provides that the Exchange Agreement may be amended or
modified in whole or in part at any time by an agreement in writing between the
Company and CEFL executed in the same manner as the Exchange
Agreement.
NOW, THEREFORE, in
consideration of the premises and agreements set forth herein and in the
Exchange Agreement, the parties agree as follows:
ARTICLE
I
AMENDMENTS
1.1 Offer Document; Exhibit
B. CEFL and the Company hereby agree that the Offer to
Exchange attached as Exhibit B to this
Amendment shall be the Offer Document as defined in the Exchange
Agreement.
1.2 Amendment to Section
1.1. The following definition is added to Section 1.1 after
the definition of “Exchange Offer”:
““Failed Exchange Offer
Consent Fee” shall have the meaning set forth in Section
4.10(c).”
1.3 Amendment to Section
4.10(a). The first sentence of Section 4.10(a) of the
Exchange Agreement is hereby amended and restated in its entirety as
follows:
“The
Company shall commence the Exchange Offer on June 22, 2009.”
1.4 Amendment to Section
4.10(b). The first and second sentences of
Section 4.10(b) of the Exchange Agreement are hereby amended and restated
in their entirety and a new third sentence is added as follows:
“The
Early Tender Period shall expire at 12:00 midnight New York City time on July 1,
2009, or such later date as set by the Company with CEFL’s prior written consent
(the “Early
Tender
Period”). At or around 6:00 p.m. New York City time on the day
the Early Tender Period expires, the Company shall make a preliminary public
announcement of the aggregate principal amount of 2011 Notes and Springing Lien
Notes tendered, and not withdrawn, during the Early Tender Period up to the time
of such announcement. Following such announcement, the Company shall,
if requested by any holder tendering 2011 Notes and/or Springing Lien Notes or
delivering notices of guaranteed delivery in respect thereof after such
announcement and prior to the expiration of the Early Tender Period, promptly
confirm receipt of such tenders or notices, as applicable, to such
holder.”
1.5 Amendment to Section
4.10(c). Section 4.10(c) of the Exchange Agreement is
hereby amended and restated in its entirety as follows:
“The
Company shall use its reasonable best efforts to solicit and obtain valid and
binding consents from (i) all holders of Springing Lien Notes approving the
Company’s proposals to (x) amend the definition of “Change of Control” in the
indenture governing the Springing Lien Notes to make clause (1) of such
definition consistent with the analogous provision in the indentures relating to
the 2011 Notes and the Company’s 7.375% Senior Notes due 2013 and 7.875% Notes
due 2015; provided,
that if the Company does not receive such consent, the amount of Springing Lien
Notes that may be exchanged by CEFL in the Exchange Offer shall be limited as
set forth in the Offer Document such that, following the Closing, CEFL and its
Affiliates shall not own more than 49.9% of the fully diluted Common Stock of
the Company (assuming full conversion of all Convertible Debentures held by CEFL
and its Affiliates whether or not such Convertible Debentures can be converted
pursuant to their terms) and (y) amend the “Limitation of Restricted Payments”
covenant in the in the indenture governing the Springing Lien Notes to exempt
any payment of dividends on any preferred stock issued to the United States
Treasury, or any redemption or repurchase of any preferred stock or any warrants
issued to the United States Treasury with the proceeds of certain qualifying
issuances of capital stock, in each case, pursuant to a CPP Transaction and (ii)
all holders of 2011 Notes approving the Company’s proposal to amend the
“Limitation of Restricted Payments” covenant in the indenture governing the 2011
Notes to exempt any payment of dividends on any preferred stock issued to the
United States Treasury, or any redemption or repurchase of any preferred stock
or any warrants issued to the United States Treasury with the proceeds of
certain qualifying issuances of capital stock, in each case, pursuant to a CPP
Transaction. The Company shall pay, in accordance with the terms and
conditions set forth in the Offer Document, to each holder of 2011 Notes and/or
Springing Lien Notes who validly delivers and does not revoke a consent to the
amendments contemplated by this Section 4.10(c) prior to the expiration of the
Early Tender Period, a cash payment equal to $5.00 for each $1,000 in principal
amount of 2011 Notes or Springing Lien Notes in respect of which such consent
has been validly delivered (the “Consent Fee”); provided, however, all holders who
tender Springing Lien Notes and 2011 Notes in the Exchange Offer shall be deemed
to have consented to the amendments contemplated by this Section 4.10(c) and to
have waived the Consent Fee with respect to all 2011 Notes and Springing Lien
Notes tendered by such holders in the Exchange Offer; and provided, further, that if
(i) the Company has paid the Consent Fee in respect of which consents have been
delivered and (ii) the Exchange Offer has not been consummated on prior to
October 31, 2009 or this Agreement has been earlier terminated in accordance
with its terms, then the Company shall pay to each holder of 2011 Notes and/or
Springing
2
Lien
Notes that validly tendered 2011 Notes and/or Springing Lien Notes in the
Exchange Offer (including, for the avoidance of doubt, CEFL) an amount in cash
equal to the Consent Fee for each $1,000 in principal amount of 2011 Notes or
Springing Lien Notes that have been validly tendered by such holder in the
Exchange Offer, notwithstanding that tendered 2011 Notes and Springing Lien
Notes have not been accepted by the Company in the Exchange Offer by reason of
the failure of the Exchange Offer to be consummated (the “Failed Exchange Offer
Consent Fee”). Unless this Agreement has been terminated
pursuant to Section 5.1, CEFL hereby agrees that it shall affirmatively consent
by tendering the CEFL Exchanged Notes held by it, and cause each of its
respective Affiliates who are holders of 2011 Notes or Springing Lien Notes to
consent by tendering the CEFL Exchanged Notes held by it, to the amendments
contemplated by this Section 4.10(c). CEFL hereby agrees to waive the
Consent Fee with respect to its 2011 Notes and Springing Lien Notes, whether or
not such Notes are tendered in the Exchange Offer; provided, however, that CEFL
shall receive the Failed Exchange Offer Consent Fee if such fee is
payable. Unless this agreement has been terminated pursuant to
Section 5.1, CEFL hereby agrees that it shall, and shall cause its Affiliates
who are holders of 2011 Notes or Springing Lien Notes to, affirmatively consent
to the amendments contemplated by this Section 4.10(c) by submitting consents in
respect of all 2011 Notes and Springing Lien Notes such that CEFL shall have
ensured that more than 50% of the 2011 Notes and the Springing Lien Notes have
submitted consents. At such time as CEFL shall have satisfied its
obligations with respect to the consents contemplated by this Section 4.10(c),
CEFL shall be permitted to freely transfer, sell or assign any Springing Lien
Notes not tendered.”
ARTICLE
II
MISCELLANEOUS
2.1 Effect of
Amendment. Except as expressly set forth herein, the Exchange
Agreement shall not by implication or otherwise be supplemented or amended by
virtue of this Amendment, but shall remain in full force and effect, as amended
hereby. This Amendment shall be construed in accordance with and as a
part of the Exchange Agreement, and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Exchange Agreement and
each other instrument or agreement referred to therein, except as herein
amended, are hereby ratified and confirmed. To the extent that there
is a conflict between the terms and provisions of the Exchange Agreement and
this Amendment, the terms and provisions of this Amendment shall govern for
purposes of the subject matter of this Amendment only.
2.2 Waiver of
Notice. The Company and CEFL hereby waive any notice
requirement with respect to each other under the Exchange Agreement, if any,
pertaining to the matters covered by this Amendment.
2.3 Counterparts and
Facsimile. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same
document. Executed signature pages to this Amendment may be delivered
by facsimile and such facsimiles will be deemed as sufficient as if actual
signature pages had been delivered.
3
2.4 Governing
Law. This Amendment shall be governed by, and interpreted in
accordance with, the laws of the State of New York.
2.5 Headings. The
headings of Articles and Sections contained in this Amendment are for reference
purposes only and are not part of this Amendment.
2.6 Severability. If
any provision of this Amendment is determined to be invalid, illegal or
unenforceable, the remaining provisions of this Amendment shall remain in full
force and effect; provided
that the economic and legal substance of any of the Transactions is not
affected in any manner materially adverse to any party. In the event
of any such determination, the parties agree to negotiate in good faith to
modify this Amendment to fulfill as closely as possible the original intent and
purpose hereof. To the extent permitted by law, the parties hereby to
the same extent waive any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
2.7 Definitions. Capitalized
terms used by not defined herein shall have the respective meanings ascribed to
them in the Exchange Agreement.
* * *
4
IN WITNESS WHEREOF, this
Amendment has been duly executed and delivered by the duly authorized officers
of the parties hereto as of the date first herein above written.
E*TRADE FINANCIAL CORPORATION | ||||
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By:
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/s/ Xxxxxx X. Xxxxxx | ||
Name: | Xxxxxx X. Xxxxxx | |||
Title: | Chairman and Chief Executive Officer | |||
CITADEL EQUITY FUND LTD. | ||||
By: |
Citadel
Advisors LLC, its Portfolio Manager
|
|||
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By:
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/s/ Xxxx Xxxxx | ||
Name: | Xxxx Xxxxx | |||
Title: | Authorized Signatory | |||
5
Exhibit
B
Offer
Document