E*TRADE Financial Corporation New York, NY 10022
Exhibit
99.12
E*TRADE
Financial Corporation
000
Xxxx 00xx
Xxxxxx
Xxx
Xxxx, XX 00000
January
18, 2008
Xxxxxxx
Capital Ltd.
c/o
Citadel Limited Partnership
000
Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxx Xxxxxx, Esq.
Reference
is made to the Master Investment and Securities Purchase Agreement, dated
as of
November 29, 2007 and as amended by that certain letter agreement dated December
12, 2007 (as so amended, the “Agreement”),
by
and between Xxxxxxx Capital Ltd. (“Purchaser”),
and
E*Trade Financial Corporation (the “Company”).
The
Purchaser and the Company desire to further amend the Agreement and the
Registration Rights Agreement as set forth in this letter agreement. Capitalized
terms used in this letter agreement but not defined herein shall have the
meanings given to such terms in the Agreement.
Purchaser
and the Company hereby agree as follows:
1. Purchaser
agrees to purchase, and the Company agrees to issue and sell, the $150,000,000
in aggregate principal amount of Springing Lien Notes to the Purchaser
contemplated by Section 2.01(b)(i)(B) of the Agreement subject to the
satisfaction of the conditions set forth in Sections 5.03 and 5.04 of the
Agreement. Notwithstanding the issuance and delivery of the Springing Lien
Notes
contemplated on the date hereof, the Company cannot deliver on the date hereof
the 46,684,890 shares of Purchased Common Stock contemplated to be delivered
at
the Final Closing by Sections 5.03(c) and 2.01(b)(i)(A) of the Agreement
and
such shares will be delivered to Citadel AC Investments, Ltd., as assignee
of
the Purchaser, in accordance with Section 2 below.
2. Notwithstanding
any other provision of the Agreement to the contrary, the 46,684,890 shares
of
Purchased Common Stock contemplated by Section 2.01(b)(i)(A) of the Agreement
shall be issued by the Company to Citadel AC Investments, Ltd., as assignee
of
the Purchaser, within three Business Days’ notice by Purchaser to the Company
that Citadel AC Investments, Ltd. has received all approvals from Governmental
Entities necessary for it to acquire such shares of Purchased Common Stock,
which notice shall be given within 30 days after receipt of such approvals.
Notwithstanding any other provision of the Agreement to the contrary, the
Purchaser’s right pursuant to Section 4.07(a) of the Agreement to have its
nominee appointed to the Board of Directors of the Company shall become
effective immediately following the issuance of the shares of Purchased Common
Stock described in the first sentence of this Section 2.
3. The
proviso to Section 4.15 of the Agreement is hereby deleted in its entirety
and
replaced with the following:
"provided
that:
(1)
notwithstanding the foregoing clauses (a) through (e), (i) any purchase or
agreement to purchase entered into prior to November 29, 2007 shall be
permitted, (ii) any purchase of securities issued by Federal National Mortgage
Association or Xxxxxxx Mac shall be permitted, (iii) a net balance sheet
investment not to exceed at any time 0.5% of the assets of E*Trade Bank (based
upon the most recent financial statements of E*Trade Bank available) in loans
or
securities made primarily by E*TRADE Bank in order to satisfy its lending
and
investment obligations under the Community Reinvestment Act of 1977, as amended,
and the rules and regulations promulgated thereunder (including 12 C.F.R.
Part
563e), shall be permitted and (iv) none of the restrictions in the foregoing
clauses (a) through (e) shall apply during any fiscal quarter of E*Trade
Bank
immediately following the quarter in which its regulatory capital exceeds
the
amount of regulatory capital required for it to be Well Capitalized by $500
million;
(2)
"purchase for its own account" shall mean purchases of assets subject to
E*TRADE
Bank's investment policy and included in an "investment portfolio" (as defined
in FASB 115); and
(3)
for
purposes of clauses (d) and (e) above, the term "purchase for its own account"
shall mean purchases in the secondary market and shall not include purchases
of
such mortgage loans or equity lines of credit originated by any Affiliate
of the
Company."
4. Purchaser
and the Company agree to amend the Registration Rights Agreement by deleting
the
definition of “Covered Securities” in the Registration Rights Agreement and
replacing it with the following:
“Covered
Securities”
means
the Purchased Common Stock and any other shares of Common Stock held as of
January 18, 2008 or shares of Common Stock underlying options with respect
to
shares of Common Stock held as of January 18, 2008 by the Purchaser, Citadel
AC
Investments, Ltd. as assignee of the Purchaser or any of their Affiliates
and
any Notes.
5. Except
as
expressly set forth in this letter agreement, this letter agreement shall
not
constitute an amendment, modification or waiver of any other provision of
the
Agreement or the Registration Rights Agreement or waiver of any rights of
the
parties under the Agreement or the Registration Rights Agreement, and all
terms,
conditions and covenants contained in the Agreement and the Registration
Rights
Agreement shall remain in full force and effect in accordance with their
terms.
Each reference to “hereof”, “hereunder”, “herein”, “hereby” and each other
similar reference, and each reference to “this Agreement” and each other similar
reference contained in the Agreement or the Registration Rights Agreement
shall
refer to the Agreement and/or the Registration Rights Agreement, as applicable,
as amended by this letter agreement; provided
that
each reference in the Agreement to “the date of this Agreement” or “the date
hereof” (or any words of like import) shall be deemed to refer to November
29, 2007.
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6. The
Purchaser hereby represents and warrants to the Company and the Company hereby
represents and warrants to the Purchaser that:
(a) It
has
the power to execute, deliver and perform this letter agreement, and has
taken
all necessary action, corporate or otherwise (including approval of such
entity’s Board of Directors (or equivalent governing body)), to authorize the
execution, delivery and performance of this letter agreement.
(b) This
letter agreement has been duly executed and delivered and constitutes the
valid
and legally binding obligation of the Company (in the case of the Company’s
representations and warranties to the Purchaser) or the Purchaser (in the
case
of the Purchaser’s representations and warranties to the Company), enforceable
in accordance with its terms, except as such enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization or moratorium laws, now
or
hereafter in effect, relating to or affecting the enforcement of creditors'
rights generally, and further subject to the discretion of the court in granting
the remedy of specific performance.
In
addition, in each case as of the date hereof and as of the date the 46,684,890
shares of Purchased Common Stock contemplated by Section 2.01(b)(i)(A) of
the
Agreement are issued by the Company, (i) the Purchaser hereby represents
and
warrants that the matters set forth in Sections 3.02(d) and 3.02(j) are true
and
correct and hereby acknowledges the matters set forth in Section 4.04(a)
and (b)
of the Agreement, and (ii) the Company hereby represents and warrants that
the
matters set forth in Sections 3.01(w) are true and correct.
7. This
letter agreement shall be governed by, and interpreted in accordance with,
the
laws of the State of New York.
8. This
letter agreement 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.
[Signature
Page follows]
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Please
confirm your agreement to the foregoing by executing a counterpart to this
letter agreement in the space provided below.
Very
truly yours,
E*TRADE
FINANCIAL CORPORATION
By:
/s/
Xxxxxx X.
Xxxxxx
Name:
Xxxxxx
X.
Xxxxxx
Title:
Chief
Financial Officer
ACCEPTED
AND AGREED
as
of the
date first set forth above:
XXXXXXX
CAPITAL LTD.
By:
/s/
Xxxx X.
Xxxxxx
Name:
Xxxx
X.
Xxxxxx
Title:
Authorized
Signatory
| cc: |
Xxxxxx
X. Xxxxxxxxx (Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
LLP)
Xxxxxx
X. Xxxxxxxxx (Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
LLP)
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