AMENDMENT NO. 1 TO EXCHANGE AGREEMENT
EXHIBIT
99.27
Execution
Version
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amount of 2011 Notes and Springing Lien Notes tendered, and not withdrawn,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
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of 2011
Notes and/or Springing 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.
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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
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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.
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E*TRADE
FINANCIAL CORPORATION
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By: /s/
Xxxxxx X.
Xxxxxx
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Name:
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Title:
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CITADEL
EQUITY FUND LTD.
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By:
Citadel Advisors LLC, its Portfolio Manager
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By:
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Name:
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Title:
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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.
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E*TRADE
FINANCIAL CORPORATION
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By:
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Name:
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Title:
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CITADEL
EQUITY FUND LTD.
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By:
Citadel Advisors LLC, its Portfolio Manager
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By:
/s/ Xxxx
Xxxxx
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Name:
XXXX XXXXX
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Title:
Authorized Signatory
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