E*TRADE FINANCIAL CORPORATION, as Issuer
Exhibit
4.1
E*TRADE
FINANCIAL CORPORATION,
as
Issuer
and
Dated
as of July 9, 2009
8%
Senior Notes due 2011
THIRD
SUPPLEMENTAL INDENTURE, dated as of July 9, 2009 (the “Third Supplemental Indenture”) to
the Indenture dated as of June 8, 2004 (the “Base Indenture” and as supplemented by the
First Supplemental Indenture dated as of September 19, 2005 (the “First Supplemental Indenture”) and
the Second Supplemental Indenture dated as of November 1, 2006 (the “Second Supplemental
Indenture”), the “Indenture”), between E*TRADE
FINANCIAL CORPORATION (the “Company”), a Delaware
corporation, and THE BANK OF NEW YORK MELLON, a New York banking corporation, as
trustee (the “Trustee”).
WHEREAS,
the Company has duly authorized the execution and delivery of the Base
Indenture, the First Supplemental Indenture and the Second Supplemental
Indenture and up to $500,000,000 aggregate principal amount of the Company’s 8%
Senior Notes due 2011 (the “Notes”);
WHEREAS,
the Company now proposes to retire up to approximately $435,500,000 aggregate
principal amount of outstanding Notes and between $600,000,000 and
$1,310,000,000 of outstanding 12.5% Springing Lien Notes due 2017 (the “2017 Notes”) issued pursuant
to the Indenture dated as of November 29, 2007, as supplemented by the First
Supplemental Indenture dated as of December 27, 2007 and the Second Supplemental
Indenture dated as of January 18, 2008, each between the Company and the
Trustee, by issuing, in each case, a principal amount of zero-coupon convertible
debentures equal to the principal amount of Notes or 2017 Notes to be exchanged
(the “Exchange
Transaction”);
WHEREAS,
the Company has applied to raise additional cash proceeds by participating in
the TARP Capital Purchase Program (the “Program”) of the United States
Department of Treasury (“Treasury”) by issuing senior
perpetual preferred stock qualifying as Tier 1 Capital and associated warrants
to Treasury;
WHEREAS,
in connection with its proposed participation in the Program, (a) the Company
shall be permitted to (i) issue senior perpetual preferred stock to Treasury
qualifying as Tier 1 Capital and pay the dividends accruing and payable thereon
and issue warrants to purchase the Company’s Common Stock, (ii) issue preferred
stock or common stock in one or more Qualified Equity Offerings (as defined
below), pay dividends accruing and payable on any such preferred stock and use
the proceeds from one or more Qualified Equity Offerings to redeem or repurchase
the preferred stock and warrants initially issued to Treasury, (iii) issue
Substitution Permanent Equity (as defined below) and pay dividends accruing and
payable thereon to the extent required by the Program, (iv) otherwise comply
with the terms and conditions of the Program to the extent required by Treasury
for participation therein and (b) the Company proposes to amend the Indenture in
connection with the foregoing and as set forth herein;
WHEREAS,
Section 9.02(a) of the Base Indenture provides that the Company and the Trustee
may amend the Indenture with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Notes, provided certain conditions
are met;
WHEREAS,
the Holders of a majority in aggregate principal amount of the outstanding Notes
eligible to vote have consented to the amendments set forth herein;
WHEREAS,
the Company desires and has requested the Trustee to join it in the execution
and delivery of this Third Supplemental Indenture in connection with the
foregoing;
WHEREAS,
the conditions set forth in the Indenture for the execution and delivery of this
Third Supplemental Indenture have been complied with; and
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WHEREAS,
all things necessary to make this Third Supplemental Indenture a valid agreement
of the Company and the Trustee, in accordance with its terms, and a valid
amendment of, and supplement to, the Indenture have been done.
NOW,
THEREFORE:
The
Company agrees with the Trustee, for the equal and ratable benefit of the
holders of the Notes, that the Indenture is supplemented and amended, to the
extent expressed herein, as follows:
ARTICLE 1
SCOPE OF SUPPLEMENTAL INDENTURE; GENERAL
Section 1.01. Scope of Supplemental Indenture;
General. This Third Supplemental Indenture supplements the
provisions of the Indenture, to which provisions specific reference is hereby
made. Capitalized terms used but not defined herein have the meanings ascribed
to such terms in the Base Indenture.
ARTICLE 2
AMENDMENTS
Section 2.01. Amendments.
(a) Section
1.01 of the Base Indenture is hereby amended:
(i) to
add the following definitions:
“Exchange Securities” means up
to an aggregate of $435,500,000 principal amount of convertible senior
debentures of the Company issued in exchange for the Notes and up to an
aggregate of $1,310,000,000 principal amount of convertible senior debentures of
the Company issued in exchange for the 12.5% Springing Lien Notes due
2017.
“Program” means the TARP
Capital Purchase Program of Treasury.
“Program Documentation” means
the letter agreement between Treasury and the Company setting forth the terms
and conditions of the Program and all other documentation related thereto,
including, but not limited to, a securities purchase agreement, certificate of
designations for the TARP Preferred Stock and TARP Warrants.
“Qualified Equity Offering”
means the issuance or sale after the issue date of the TARP Preferred Stock of
Tier 1 qualifying perpetual Preferred Stock or Common Stock of the Company for
cash or any other offering defined as a Qualified Equity Offering in the Program
Documentation.
“Substitution Permanent
Equity” means an economic interest of the Company classified as permanent
equity under U.S. GAAP exchangeable for TARP Warrants at Treasury’s option if
either (1) stockholder approval is required for the issuance of TARP Warrants
but not obtained within 18 months of Treasury’s investment in the Company or (2)
in the future the Company’s Common Stock is no longer listed or traded on a
national securities exchange or securities association, equal to the fair market
value of the TARP Warrants so exchanged or any other instrument or security
required to be issued in the Program Documentation.
“TARP Preferred Stock” means
senior perpetual Preferred Stock initially issued to Treasury qualifying as Tier
1 capital pursuant to the Program Documentation.
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“TARP Warrants” means warrants
on the Common Stock of the Company initially issued to Treasury pursuant to the
Program Documentation.
“Treasury” means the United
States Department of Treasury.
(b) Section
4.04 of the Base Indenture is amended by:
(i)
(a)
deleting the word “or” after the semicolon in clause (b)(9), (b) replacing the
comma after the word “Notes” with a semicolon in clause (b)(10) and (c) adding
the following after such clause (b)(10):
“(11) any
payment of dividends with respect to the TARP Preferred Stock, any Substitution
Permanent Equity or any Capital Stock issued by the Company in any Qualified
Equity Offering; provided the aggregate face
amount of any Preferred Stock issued by the Company in all Qualified Equity
Offerings does not exceed $500,000,000 and the dividend rate on any Preferred
Stock issued in a Qualified Equity Offering does not exceed 9.9% per annum;
or
(12) any
redemption or repurchase of any shares of TARP Preferred Stock, any TARP
Warrants, any Substitution Permanent Equity or any Capital Stock issued by the
Company in any Qualified Equity Offering, in each case using the Net Cash
Proceeds of one or more Qualified Equity Offerings; provided the aggregate face
amount of any Preferred Stock issued by the Company in all Qualified Equity
Offerings does not exceed $500,000,000 and the dividend rate on any Preferred
Stock issued in a Qualified Equity Offering does not exceed 9.9% per
annum,”
(ii) amending and restating clause (c) in
its entirety as follows:
“Each
Restricted Payment permitted pursuant to the preceding paragraph (other than the
Restricted Payment referred to in clauses (10), (11) or (12) thereof, clause (2)
thereof, an exchange of Capital Stock for Capital Stock or Indebtedness referred
to in clause (3) or (4) thereof, an Investment acquired as a capital
contribution or in exchange for Capital Stock referred to in clause (6) thereof,
the repurchase of Capital Stock referred to in clause (7) thereof or the
repurchase of Common Stock referred to in clause (9) thereof), and the Net Cash
Proceeds from any issuance of Capital Stock referred to in clause (3), (4) or
(6), shall be included in calculating whether the conditions of clause (D) of
the first paragraph of this Section 4.04 have been met with respect to any
subsequent Restricted Payments. If the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes or any Note
Guarantee, then the Net Cash Proceeds of such issuance shall be included in
clause (D) of the first paragraph of this Section 4.04 only to the extent such
proceeds are not used for such redemption, repurchase or other acquisition of
Indebtedness.”
ARTICLE 3
MISCELLANEOUS
Section 3.01. Governing Law. This Third
Supplemental Indenture shall be governed by and construed in accordance
with the internal laws of the State of New York.
Section 3.02. Counterparts. This Third
Supplemental Indenture may be signed in various counterparts which
together shall constitute one and the same instrument.
Section 3.03. Full Force and Effect. Except
as amended hereby, each provision of the Indenture shall remain
in full force and effect and, as amended hereby, the Indenture is in all
respects agreed to, ratified, and confirmed by the Company and the Trustee. The
consent of the Holders to this Third Supplemental Indenture shall not constitute
an amendment or waiver of any provision of the Indenture except to the extent
expressly set forth herein, and shall not be construed as a waiver of or consent
to any further or future action on the part of the Company or waiver of any
Default or Event of Default, except to the extent expressly set forth
herein.
Section 3.04. Trustee Not Responsible For
Recitals. The recitals contained herein shall be taken as the statements
of the Company and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representation as to the validity or sufficiency of this
Third Supplemental Indenture except that the Trustee represents that it is duly
authorized to execute and deliver this Third Supplemental Indenture and perform
its obligations hereunder.
Section 3.05. This Third
Supplemental Indenture is an amendment supplemental to the Indenture and said
Indenture and this Third Supplemental Indenture shall henceforth be read
together.
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IN
WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed, all as of the date first written
above.
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E*TRADE
FINANCIAL CORPORATION
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| By: | /s/ Xxxxx X. Xxxxx | ||
| Name: | Xxxxx X. Xxxxx | ||
| Title: | Chief Financial Officer | ||
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THE
BANK OF NEW YORK MELLON, as Trustee
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| By: | /s/ Xxxxxxxx Xxxxxx | ||
| Name: | Xxxxxxxx Xxxxxx | ||
| Title: | Vice President | ||
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