Exhibit 4.2


 


WARRANT TO
PURCHASE COMMON STOCK


 


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.  THIS
INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER
PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE
SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE
WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT.  ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE
WITH SAID AGREEMENT WILL BE VOID.


 


WARRANT

to purchase


 


3,199,988


Shares of
Common Stock


of TCF FINANCIAL CORPORATION


 


Issue Date: 
November 14, 2008


 


1.             Definitions. Unless the context otherwise
requires, when used herein the following terms shall have the meanings
indicated.


 


“Affiliate” has the meaning ascribed to it in the Purchase
Agreement.


 


“Appraisal Procedure” means a procedure whereby two independent
appraisers, one chosen by the Company and one by the Original Warrantholder,
shall mutually agree upon the determinations then the subject of
appraisal.  Each party shall deliver a
notice to the other appointing its appraiser within 15 days after the Appraisal
Procedure is invoked.  If within 30 days
after appointment of the two appraisers they are unable to agree upon the
amount in question, a third independent appraiser shall be chosen within 10
days thereafter by the mutual consent of such first two appraisers.  The decision of the third appraiser so
appointed and chosen shall be given within 30 days after the selection of such
third appraiser.  If three appraisers
shall be appointed and the determination of one appraiser is disparate from the
middle determination by more than twice the amount by which the other
determination is disparate from the middle determination, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be binding and
conclusive upon the 


 

















 


Company
and the Original Warrantholder; otherwise, the average of all three
determinations shall be binding upon the Company and the Original
Warrantholder.  The costs of conducting
any Appraisal Procedure shall be borne by the Company.


 


“Board of Directors” means the board of directors of the
Company, including any duly authorized committee thereof.


 


“Business Combination” means a merger, consolidation,
statutory share exchange or similar transaction that requires the approval of
the Company’s stockholders.


 


“business day” means 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.


 


“Capital Stock” means (A) with respect to any Person
that is a corporation or company, any and all shares, interests, participations
or other equivalents (however designated) of capital or capital stock of such
Person and (B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests of such Person.


 


“Charter” means, with respect to any Person, its certificate
or articles of incorporation, articles of association, or similar
organizational document.


 


“Common Stock” has the meaning ascribed to it in the Purchase
Agreement.


 


“Company” means the Person whose name, corporate or other
organizational form and jurisdiction of organization is set forth in Item 1 of
Schedule A hereto.


 


“conversion” has the meaning set forth in Section 13(B).


 


“convertible securities” has the meaning set forth in Section 13(B).


 


“CPP” has the meaning ascribed to it in the Purchase
Agreement.


 


“Exchange Act” means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.


 


“Exercise Price” means the amount set forth in Item 2 of
Schedule A hereto.


 


“Expiration
Time” has the meaning set forth in Section 3.


 


“Fair Market
Value” means, with respect to any security or other property, the
fair market value of such security or other property as determined by the Board
of Directors, acting in good faith or, with respect to Section 14, as
determined by the Original Warrantholder acting in good faith. For so long as
the Original Warrantholder holds this Warrant or any portion thereof, it may
object in writing to the Board of Director’s calculation of fair market value
within 10 days of receipt of written notice thereof.  If the Original Warrantholder and the Company
are unable to agree on fair market value during the 10-day period following the
delivery of the Original Warrantholder’s objection, the Appraisal Procedure may
be invoked by either party to 


 


2

















 


determine
Fair Market Value by delivering written notification thereof not later than the
30th day after delivery of the Original Warrantholder’s objection.


 


“Governmental Entities” has the meaning ascribed to it in the
Purchase Agreement.


 


“Initial Number” has the meaning set forth in Section 13(B).


 


“Issue Date” means the date set forth in
Item 3 of Schedule A hereto.


 


“Market Price” means, with respect to a particular security,
on any given day, the last reported sale price regular way or, in case no such
reported sale takes place on such day, the average of the last closing bid and
ask prices regular way, in either case on the principal national securities
exchange on which the applicable securities are listed or admitted to trading,
or if not listed or admitted to trading on any national securities exchange,
the average of the closing bid and ask prices as furnished by two members of
the Financial Industry Regulatory Authority, Inc. selected from time to
time by the Company for that purpose.  “Market
Price” shall be determined without reference to after hours or extended hours
trading. If such security is not listed and traded in a manner that the
quotations referred to above are available for the period required hereunder,
the Market Price per share of Common Stock shall be deemed to be (i) in
the event that any portion of the Warrant is held by the Original
Warrantholder, the fair market value per share of such security as determined
in good faith by the Original Warrantholder or (ii) in all other
circumstances, the fair market value per share of such security as determined
in good faith by the Board of Directors in reliance on an opinion of a
nationally recognized independent investment banking corporation retained by
the Company for this purpose and certified in a resolution to the
Warrantholder.  For the purposes of
determining the Market Price of the Common Stock on the “trading day”
preceding, on or following the occurrence of an event, (i) that trading
day shall be deemed to commence immediately after the regular scheduled closing
time of trading on the New York Stock Exchange or, if trading is closed at an
earlier time, such earlier time and (ii) that trading day shall end at the
next regular scheduled closing time, or if trading is closed at an earlier
time, such earlier time (for the avoidance of doubt, and as an example, if the
Market Price is to be determined as of the last trading day preceding a
specified event and the closing time of trading on a particular day is 4:00 p.m.
and the specified event occurs at 5:00 p.m. on that day, the Market Price
would be determined by reference to such 4:00 p.m. closing price).


 


“Ordinary Cash Dividends” means a regular quarterly cash
dividend on shares of Common Stock out of surplus or net profits legally
available therefor (determined in accordance with generally accepted accounting
principles in effect from time to time), provided that Ordinary Cash Dividends
shall not include any cash dividends paid subsequent to the Issue Date to the
extent the aggregate per share dividends paid on the outstanding Common Stock
in any quarter exceed the amount set forth in Item 4 of Schedule A hereto, as
adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.


 


“Original Warrantholder” means the United States Department
of the Treasury.  Any actions specified
to be taken by the Original Warrantholder hereunder may only be taken by such
Person and not by any other Warrantholder.


 


3

















 


“Permitted Transactions” has the meaning set forth in Section 13(B).


 


“Person” has the meaning given to it in Section 3(a)(9) of
the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act.


 


“Per Share Fair Market Value” has the meaning set forth in Section 13(C).


 


“Preferred Shares” means the
perpetual preferred stock issued to the Original Warrantholder on the Issue
Date pursuant to the Purchase Agreement.


 


“Pro Rata Repurchases” means any purchase of shares of Common
Stock by the Company or any Affiliate thereof pursuant to (A) any tender
offer or exchange offer subject to Section 13(e) or 14(e) of the
Exchange Act or Regulation 14E promulgated thereunder or (B) any other
offer available to substantially all holders of Common Stock, in the case of
both (A) or (B), whether for cash, shares of Capital Stock of the Company,
other securities of the Company, evidences of indebtedness of the Company or
any other Person or any other property (including, without limitation, shares
of Capital Stock, other securities or evidences of indebtedness of a
subsidiary), or any combination thereof, effected while this Warrant is
outstanding.  The “Effective Date” of a Pro Rata Repurchase
shall mean the date of acceptance of shares for purchase or exchange by the
Company under any tender or exchange offer which is a Pro Rata Repurchase or
the date of purchase with respect to any Pro Rata Repurchase that is not a
tender or exchange offer.


 


“Purchase Agreement” means the Securities Purchase Agreement —
Standard Terms incorporated into the Letter Agreement, dated as of the date set
forth in Item 5 of Schedule A hereto, as amended from time to time, between the
Company and the United States Department of the Treasury (the “Letter Agreement”), including all annexes
and schedules thereto.


 


“Qualified Equity Offering” has the meaning ascribed to it in
the Purchase Agreement.


 


“Regulatory Approvals” with respect to the Warrantholder,
means, to the extent applicable and required to permit the Warrantholder to
exercise this Warrant for shares of Common Stock and to own such Common Stock
without the Warrantholder being in violation of applicable law, rule or
regulation, the receipt of any necessary approvals and authorizations of,
filings and registrations with, notifications to, or expiration or termination
of any applicable waiting period under, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder.


 


“SEC” means the U.S. Securities and Exchange Commission.


 


“Securities Act” means the Securities Act of 1933, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.


 


“Shares” has the meaning set forth in Section 2.


 


“trading day” means (A) if the
shares of Common Stock are not traded on any national or regional securities
exchange or association or over-the-counter market,  a business day or (B) if the shares of
Common Stock are traded on any national or regional securities exchange or 


 


4

















 


association
or over-the-counter market, a business day on which such relevant exchange or
quotation system is scheduled to be open for business and on which the shares
of  Common Stock (i) are not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market for any period or periods aggregating
one half hour or longer; and (ii) have traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the shares of Common
Stock.


 


“U.S. GAAP” means United States generally accepted accounting
principles.


 


“Warrantholder” has the meaning set forth in Section 2.


 


“Warrant” means this Warrant, issued pursuant to the Purchase
Agreement.


 


2.             Number of Shares; Exercise Price. This certifies
that, for value received, the United States Department of the Treasury or its
permitted assigns (the “Warrantholder”)
is entitled, upon the terms and subject to the conditions hereinafter set
forth, to acquire from the Company, in whole or in part, after the receipt of
all applicable Regulatory Approvals, if any, up to an aggregate of the number
of fully paid and nonassessable shares of Common Stock set forth in Item 6 of
Schedule A hereto, at a purchase price per share of Common Stock equal to the
Exercise Price.  The number of shares of
Common Stock (the “Shares”) and
the Exercise Price are subject to adjustment as provided herein, and all
references to “Common Stock,” “Shares” and “Exercise Price” herein shall be
deemed to include any such adjustment or series of adjustments.


 


3.             Exercise of Warrant; Term. Subject to Section 2,
to the extent permitted by applicable laws and regulations, the right to
purchase the Shares represented by this Warrant is exercisable, in whole or in
part by the Warrantholder, at any time or from time to time after the execution
and delivery of this Warrant by the Company on the date hereof, but in no event
later than 5:00 p.m., New York City time on the tenth anniversary of the
Issue Date (the “Expiration Time”),
by (A) the surrender of this Warrant and Notice of Exercise annexed
hereto, duly completed and executed on behalf of the Warrantholder, at the
principal executive office of the Company located at the address set forth in
Item 7 of Schedule A hereto (or such other office or agency of the Company in
the United States as it may designate by notice in writing to the Warrantholder
at the address of the Warrantholder appearing on the books of the Company), and
(B) payment of the Exercise Price for the Shares thereby purchased:


 


(i)            by having the
Company withhold, from the shares of Common Stock that would otherwise be
delivered to the Warrantholder upon such exercise, shares of Common stock
issuable upon exercise of the Warrant equal in value to the aggregate Exercise
Price as to which this Warrant is so exercised based on the Market Price of the
Common Stock on the trading day on which this Warrant is exercised and the
Notice of Exercise is delivered to the Company pursuant to this Section 3,
or


 


(ii)           with the consent of
both the Company and the Warrantholder, by tendering in cash, by certified or
cashier’s check payable to the order of the Company, or by wire transfer of
immediately available funds to an account designated by the Company.


 


5
















 


If the Warrantholder does
not exercise this Warrant in its entirety, the Warrantholder will be entitled
to receive from the Company within a reasonable time, and in any event not exceeding three
business days, a new warrant in substantially identical form for the purchase
of that number of Shares equal to the difference between the number of Shares
subject to this Warrant and the number of Shares as to which this Warrant is so
exercised.  Notwithstanding anything in this
Warrant to the contrary, the Warrantholder hereby acknowledges and agrees that
its exercise of this Warrant for Shares is subject to the condition that the
Warrantholder will have first received any applicable Regulatory
Approvals.


 


4.             Issuance of Shares; Authorization; Listing.
Certificates for Shares issued upon exercise of this Warrant will be issued in
such name or names as the Warrantholder may designate and will be delivered to
such named Person or Persons within a reasonable time, not to exceed three
business days after the date on which this Warrant has been duly exercised in
accordance with the terms of this Warrant. 
The Company hereby represents and warrants that any Shares issued upon
the exercise of this Warrant in accordance with the provisions of Section 3
will be duly and validly authorized and issued, fully paid and nonassessable
and free from all taxes, liens and charges (other than liens or charges created
by the Warrantholder, income and franchise taxes incurred in connection with
the exercise of the Warrant or taxes in respect of any transfer occurring
contemporaneously therewith). The Company agrees that the Shares so issued will
be deemed to have been issued to the Warrantholder as of the close of business
on the date on which this Warrant and payment of the Exercise Price are
delivered to the Company in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Company may then be closed
or certificates representing such Shares may not be actually delivered on such
date.  The Company will at all times
reserve and keep available, out of its authorized but unissued Common Stock,
solely for the purpose of providing for the exercise of this Warrant, the
aggregate number of shares of Common Stock then issuable upon exercise of this
Warrant at any time.  The Company will (A) procure,
at its sole expense, the listing of the Shares issuable upon exercise of this
Warrant at any time, subject to issuance or notice of issuance, on all
principal stock exchanges on which the Common Stock is then listed or traded
and (B) maintain such listings of such Shares at all times after
issuance.  The Company will use
reasonable best efforts to ensure that the Shares may be issued without
violation of any applicable law or regulation or of any requirement of any
securities exchange on which the Shares are listed or traded.


 


5.             No Fractional Shares or Scrip. No fractional
Shares or scrip representing fractional Shares shall be issued upon any
exercise of this Warrant.  In lieu of any
fractional Share to which the Warrantholder would otherwise be entitled, the
Warrantholder shall be entitled to receive a cash payment equal to the Market
Price of the Common Stock on the last trading day preceding the date of
exercise less the pro-rated Exercise Price for such fractional share.


 


6.             No Rights as Stockholders; Transfer Books. This
Warrant does not entitle the Warrantholder to any voting rights or other rights
as a stockholder of the Company prior to the date of exercise hereof. The
Company will at no time close its transfer books against transfer of this
Warrant in any manner which interferes with the timely exercise of this
Warrant.


 


6

















 


7.             Charges, Taxes and Expenses. Issuance of
certificates for Shares to the Warrantholder upon the exercise of this Warrant
shall be made without charge to the Warrantholder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificates,
all of which taxes and expenses shall be paid by the Company.


 


8.             Transfer/Assignment.


 


(A)          Subject to compliance with clause (B) of this Section 8,
this Warrant and all rights hereunder are transferable, in whole or in part,
upon the books of the Company by the registered holder hereof in person or by
duly authorized attorney, and a new warrant shall be made and delivered by the
Company, of the same tenor and date as this Warrant but registered in the name
of one or more transferees, upon surrender of this Warrant, duly endorsed, to
the office or agency of the Company described in Section 3.  All expenses (other than stock transfer
taxes) and other charges payable in connection with the preparation, execution
and delivery of the new warrants pursuant to this Section 8 shall be paid
by the Company.


 


(B)           The transfer of the Warrant and the Shares issued upon
exercise of the Warrant are subject to the restrictions set forth in Section 4.4
of the Purchase Agreement.  If and for so
long as required by the Purchase Agreement, this Warrant shall contain the
legends as set forth in Sections 4.2(a) and 4.2(b) of the Purchase
Agreement.


 


9.             Exchange and Registry of Warrant. This Warrant is
exchangeable, upon the surrender hereof by the Warrantholder to the Company,
for a new warrant or warrants of like tenor and representing the right to
purchase the same aggregate number of Shares. 
The Company shall maintain a registry showing the name and address of
the Warrantholder as the registered holder of this Warrant. This Warrant may be
surrendered for exchange or exercise in accordance with its terms, at the
office of the Company, and the Company shall be entitled to rely in all
respects, prior to written notice to the contrary, upon such registry.


 


10.           Loss, Theft, Destruction or Mutilation of Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in the case of any
such loss, theft or destruction, upon receipt of a bond, indemnity or security
reasonably satisfactory to the Company, or, in the case of any such mutilation,
upon surrender and cancellation of this Warrant, the Company shall make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the same aggregate
number of Shares as provided for in such lost, stolen, destroyed or mutilated
Warrant.


 


11.           Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a business day, then such action may be
taken or such right may be exercised on the next succeeding day that is a
business day.


 


12.           Rule 144 Information. The Company covenants
that it will use its reasonable best efforts to timely file all reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations promulgated by the SEC
thereunder (or, if the Company is not required to file such reports, it will,
upon the request of any 


 


7

















 


Warrantholder,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 under the Securities Act), and it will use reasonable best
efforts to take such further action as any Warrantholder may reasonably
request, in each case to the extent required from time to time to enable such
holder to, if permitted by the terms of this Warrant and the Purchase
Agreement, sell this Warrant without registration under the Securities Act
within the limitation of the exemptions provided by (A) Rule 144
under the Securities Act, as such rule may be amended from time to time,
or (B) any successor rule or regulation hereafter adopted by the SEC.
Upon the written request of any Warrantholder, the Company will deliver to such
Warrantholder a written statement that it has complied with such requirements.


 


13.           Adjustments and Other Rights. The Exercise Price
and the number of Shares issuable upon exercise of this Warrant shall be
subject to adjustment from time to time as follows; provided, that if more than one subsection of this Section 13
is applicable to a single event, the subsection shall be applied that produces
the largest adjustment and no single event shall cause an adjustment under more
than one subsection of this Section 13 so as to result in duplication:


 


(A)          Stock Splits, Subdivisions, Reclassifications or
Combinations. If the Company shall (i) declare and pay a dividend or
make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide
or reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding shares of Common
Stock into a smaller number of shares, the number of Shares issuable upon
exercise of this Warrant at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Warrantholder
after such date shall be entitled to purchase the number of shares of Common
Stock which such holder would have owned or been entitled to receive in respect
of the shares of Common Stock subject to this Warrant after such date had this
Warrant been exercised immediately prior to such date.  In such event, the Exercise Price in effect
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall be
adjusted to the number obtained by dividing (x) the product of (1) the
number of Shares issuable upon the exercise of this Warrant before such
adjustment and (2) the Exercise Price in effect immediately prior to the
record or effective date, as the case may be, for the dividend, distribution,
subdivision, combination or reclassification giving rise to this adjustment by (y) the
new number of Shares issuable upon exercise of the Warrant determined pursuant
to the immediately preceding sentence.


 


(B)           Certain Issuances of Common Shares or Convertible
Securities. Until the earlier of (i) the date on which the Original
Warrantholder no longer holds this Warrant or any portion thereof and (ii) the
third anniversary of the Issue Date, if the Company shall issue shares of
Common Stock (or rights or warrants or other securities exercisable or convertible
into or exchangeable (collectively, a “conversion”)
for shares of Common Stock) (collectively, “convertible
securities”) (other than in Permitted Transactions (as defined
below) or a transaction to which subsection (A) of this Section 13 is
applicable) without consideration or at a consideration per share (or having a
conversion price per share) that is less than 90% of the Market Price on the
last trading day preceding the date of the agreement on pricing such shares (or
such convertible securities) then, in such event:


 


8

















 


(A)                              the number of
Shares issuable upon the exercise of this Warrant immediately prior to the date
of the agreement on pricing of such shares (or of such convertible securities)
(the “Initial Number”) shall be
increased to the number obtained by multiplying the Initial Number by a
fraction (A) the numerator of which shall be the sum of (x) the
number of shares of Common Stock of the Company outstanding on such date and (y) the
number of additional shares of Common Stock issued (or into which convertible
securities may be exercised or convert) and (B) the denominator of which
shall be the sum of (I) the number of shares of Common Stock outstanding
on such date and (II) the number of shares of Common Stock which the
aggregate consideration receivable by the Company for the total number of
shares of Common Stock so issued (or into which convertible securities may be
exercised or convert) would purchase at the Market Price on the last trading
day preceding the date of the agreement on pricing such shares (or such
convertible securities); and


 


(B)                                the Exercise
Price payable upon exercise of the Warrant shall be adjusted by multiplying
such Exercise Price in effect immediately prior to the date of the agreement on
pricing of such shares (or of such convertible securities) by a fraction, the
numerator of which shall be the number of shares of Common Stock issuable upon
exercise of this Warrant prior to such date and the denominator of which shall
be the number of shares of Common Stock issuable upon exercise of this Warrant
immediately after the adjustment described in clause (A) above.


 


For purposes of the
foregoing, the aggregate consideration receivable by the Company in connection
with the issuance of such shares of Common Stock or convertible securities
shall be deemed to be equal to the sum of the net offering price (including the
Fair Market Value of any non-cash consideration and after deduction of any
related expenses payable to third parties) of all such securities plus the
minimum aggregate amount, if any, payable upon exercise or conversion of any
such convertible securities into shares of Common Stock; and “Permitted Transactions” shall mean
issuances (i) as consideration for or to fund the acquisition of
businesses and/or related assets, (ii) in connection with employee benefit
plans and compensation related arrangements in the ordinary course and
consistent with past practice approved by the Board of Directors, (iii) in
connection with a public or broadly marketed offering and sale of Common Stock
or convertible securities for cash conducted by the Company or its affiliates
pursuant to registration under the Securities Act or Rule 144A thereunder
on a basis consistent with capital raising transactions by comparable financial
institutions and (iv) in connection with the exercise of preemptive rights
on terms existing as of the Issue Date. 
Any adjustment made pursuant to this Section 13(B) shall
become effective immediately upon the date of such issuance.


 


(C)           Other Distributions. In case the Company shall fix
a record date for the making of a distribution to all holders of shares of its
Common Stock of securities, evidences of indebtedness, assets, cash, rights or
warrants (excluding Ordinary Cash Dividends, dividends of its Common Stock and
other dividends or distributions referred to in Section 13(A)), in each
such case, the Exercise Price in effect prior to such record date shall be
reduced immediately thereafter to the price determined by multiplying the
Exercise Price in effect immediately prior to the reduction by the quotient of (x) the
Market Price of the Common Stock on the last trading day preceding the first
date on which the Common Stock trades regular way on the principal 


 


9

















 


national
securities exchange on which the Common Stock is listed or admitted to trading
without the right to receive such distribution, minus the amount of cash and/or
the Fair Market Value of the securities, evidences of indebtedness, assets,
rights or warrants to be so distributed in respect of one share of Common Stock
(such amount and/or Fair Market Value, the “Per
Share Fair Market Value”) divided by (y) such Market Price on
such date specified in clause (x); such adjustment shall be made successively
whenever such a record date is fixed.  In
such event, the number of Shares issuable upon the exercise of this Warrant
shall be increased to the number obtained by dividing (x) the product of (1) the
number of Shares issuable upon the exercise of this Warrant before such
adjustment, and (2) the Exercise Price in effect immediately prior to the
distribution giving rise to this adjustment by (y) the new Exercise Price
determined in accordance with the immediately preceding sentence.  In the case of adjustment for a cash dividend
that is, or is coincident with, a regular quarterly cash dividend, the Per
Share Fair Market Value would be reduced by the per share amount of the portion
of the cash dividend that would constitute an Ordinary Cash Dividend. In the
event that such distribution is not so made, the Exercise Price and the number
of Shares issuable upon exercise of this Warrant then in effect shall be
readjusted, effective as of the date when the Board of Directors determines not
to distribute such shares, evidences of indebtedness, assets, rights, cash or
warrants, as the case may be, to the Exercise Price that would then be in
effect and the number of Shares that would then be issuable upon exercise of
this Warrant if such record date had not been fixed.


 


(D)          Certain Repurchases of Common Stock. In case the
Company effects a Pro Rata Repurchase of Common Stock, then the Exercise Price
shall be reduced to the price determined by multiplying the Exercise Price in
effect immediately prior to the Effective Date of such Pro Rata Repurchase by a
fraction of which the numerator shall be (i) the product of (x) the
number of shares of Common Stock outstanding immediately before such Pro Rata
Repurchase and (y) the Market Price of a share of Common Stock on the
trading day immediately preceding the first public announcement by the Company
or any of its Affiliates of the intent to effect such Pro Rata Repurchase,
minus (ii) the aggregate purchase price of the Pro Rata Repurchase, and of
which the denominator shall be the product of (i) the number of shares of
Common Stock outstanding immediately prior to such Pro Rata Repurchase minus
the number of shares of Common Stock so repurchased and (ii) the Market
Price per share of Common Stock on the trading day immediately preceding the
first public announcement by the Company or any of its Affiliates of the intent
to effect such Pro Rata Repurchase.  In
such event, the number of shares of Common Stock issuable upon the exercise of
this Warrant shall be increased to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment, and (2) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence.  For the avoidance of doubt, no
increase to the Exercise Price or decrease in the number of Shares issuable
upon exercise of this Warrant shall be made pursuant to this Section 13(D).


 


(E)           Business Combinations. In case of any Business
Combination or reclassification of Common Stock (other than a reclassification
of Common Stock referred to in Section 13(A)), the Warrantholder’s right
to receive Shares upon exercise of this Warrant shall be converted into the
right to exercise this Warrant to acquire the number of shares of stock or
other securities or property (including cash) which the Common Stock issuable
(at the time of such Business Combination or reclassification) upon exercise of
this Warrant immediately prior to such 


 


10

















 


Business
Combination or reclassification would have been entitled to receive upon
consummation of such Business Combination or reclassification; and in any such
case, if necessary, the provisions set forth herein with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted
so as to be applicable, as nearly as may reasonably be, to the Warrantholder’s
right to exercise this Warrant in exchange for any shares of stock or other
securities or property pursuant to this paragraph.  In determining the kind and amount of stock,
securities or the property receivable upon exercise of this Warrant following
the consummation of such Business Combination, if the holders of Common Stock
have the right to elect the kind or amount of consideration receivable upon
consummation of such Business Combination, then the consideration that the
Warrantholder shall be entitled to receive upon exercise shall be deemed to be
the types and amounts of consideration received by the majority of all holders
of the shares of common stock that affirmatively make an election (or of all
such holders if none make an election).


 


(F)           Rounding of Calculations; Minimum Adjustments. All
calculations under this Section 13 shall be made to the nearest one-tenth
(1/10th) of a cent or to the nearest one-hundredth (1/100th) of a share, as the
case may be.  Any provision of this Section 13
to the contrary notwithstanding, no adjustment in the Exercise Price or the
number of Shares into which this Warrant is exercisable shall be made if the
amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a
share of Common Stock, but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time of and together with
any subsequent adjustment which, together with such amount and any other amount
or amounts so carried forward, shall aggregate $0.01 or 1/10th of a share of
Common Stock, or more.


 


(G)           Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of this Section 13
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (i) issuing to the Warrantholder of this Warrant exercised after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such exercise by reason of the adjustment
required by such event over and above the shares of Common Stock issuable upon
such exercise before giving effect to such adjustment and (ii) paying to
such Warrantholder any amount of cash in lieu of a fractional share of Common
Stock; provided, however, that the Company upon request
shall deliver to such Warrantholder a due bill or other appropriate instrument
evidencing such Warrantholder’s right to receive such additional shares, and
such cash, upon the occurrence of the event requiring such adjustment.


 


(H)          Completion of Qualified Equity Offering. In the
event the Company (or any successor by Business Combination) completes one or
more Qualified Equity Offerings on or prior to December 31, 2009 that
result in the Company (or any such successor) receiving aggregate gross
proceeds of not less than 100% of the aggregate liquidation preference of the
Preferred Shares (and any preferred stock issued by any such successor to the
Original Warrantholder under the CPP), the number of shares of Common Stock
underlying the portion of this Warrant then held by the Original Warrantholder
shall be thereafter reduced by a number of shares of Common Stock equal to the
product of (i) 0.5 and (ii) the number of shares underlying


 


11
















 


 the Warrant on the Issue Date (adjusted to
take into account all other theretofore made adjustments pursuant to this Section 13).


 


(I)            Other Events. For so long as the Original
Warrantholder holds this Warrant or any portion thereof, if any event occurs as
to which the provisions of this Section 13 are not strictly applicable or,
if strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly and adequately protect the purchase rights of
the Warrants in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make such adjustments in the
application of such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith opinion of the
Board of Directors, to protect such purchase rights as aforesaid.  The Exercise Price or the number of Shares
into which this Warrant is exercisable shall not be adjusted in the event of a
change in the par value of the Common Stock or a change in the jurisdiction of
incorporation of the Company.


 


(J)            Statement Regarding Adjustments. Whenever the
Exercise Price or the number of Shares into which this Warrant is exercisable
shall be adjusted as provided in Section 13, the Company shall forthwith
file at the principal office of the Company a statement showing in reasonable
detail the facts requiring such adjustment and the Exercise Price that shall be
in effect and the number of Shares into which this Warrant shall be exercisable
after such adjustment, and the Company shall also cause a copy of such
statement to be sent by mail, first class postage prepaid, to each
Warrantholder at the address appearing in the Company’s records.


 


(K)          Notice of Adjustment Event. In the event that the
Company shall propose to take any action of the type described in this Section 13
(but only if the action of the type described in this Section 13 would
result in an adjustment in the Exercise Price or the number of Shares into
which this Warrant is exercisable or a change in the type of securities or
property to be delivered upon exercise of this Warrant), the Company shall give
notice to the Warrantholder, in the manner set forth in Section 13(J),
which notice shall specify the record date, if any, with respect to any such
action and the approximate date on which such action is to take place.  Such notice shall also set forth the facts
with respect thereto as shall be reasonably necessary to indicate the effect on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require
the fixing of a record date, such notice shall be given at least 10 days prior
to the date so fixed, and in case of all other action, such notice shall be
given at least 15 days prior to the taking of such proposed action. Failure to
give such notice, or any defect therein, shall not affect the legality or
validity of any such action.


 


(L)           Proceedings Prior to Any Action Requiring Adjustment.
As a condition precedent to the taking of any action which would require an
adjustment pursuant to this Section 13, the Company shall take any action
which may be necessary, including obtaining regulatory, New York Stock
Exchange, NASDAQ Stock Market or other applicable national securities exchange
or stockholder approvals or exemptions, in order that the Company may
thereafter validly and legally issue as fully paid and nonassessable all shares
of Common Stock that the Warrantholder is entitled to receive upon exercise of
this Warrant pursuant to this Section 13.


 


12

















 


(M)         Adjustment Rules. Any adjustments pursuant to this Section 13
shall be made successively whenever an event referred to herein shall
occur.  If an adjustment in Exercise
Price made hereunder would reduce the Exercise Price to an amount below par
value of the Common Stock, then such adjustment in Exercise Price made
hereunder shall reduce the Exercise Price to the par value of the Common Stock.


 


14.           Exchange. At any time following the date on which
the shares of Common Stock of the Company are no longer listed or admitted to
trading on a national securities exchange (other than in connection with any Business
Combination), the Original Warrantholder may cause the Company to exchange all
or a portion of this Warrant for an economic interest (to be determined by the
Original Warrantholder after consultation with the Company) of the Company
classified as permanent equity under U.S. GAAP having a value equal to the Fair
Market Value of the portion of the Warrant so exchanged.  The Original Warrantholder shall calculate
any Fair Market Value required to be calculated pursuant to this Section 14,
which shall not be subject to the Appraisal Procedure.


 


15.           No Impairment. The Company will not, by amendment
of its Charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Warrant and in taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrantholder.


 


16.           Governing Law. This
Warrant 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 Company and the
Warrantholder agrees (a) to submit to the exclusive jurisdiction and venue
of the United States District Court for the District of Columbia for any civil
action, suit or proceeding arising out of or relating to this Warrant or the
transactions contemplated hereby, and (b) that notice may be served upon
the Company at the address in Section 20 below and upon the Warrantholder
at the address for the Warrantholder set forth in the registry maintained by
the Company pursuant to Section 9 hereof. To the extent permitted by
applicable law, each of the Company and the Warrantholder hereby unconditionally
waives trial by jury in any civil legal action or proceeding relating to the
Warrant or the transactions contemplated hereby or thereby.


 


17.           Binding Effect. This Warrant shall be binding upon
any successors or assigns of the Company.


 


18.           Amendments. This Warrant may be amended and the
observance of any term of this Warrant may be waived only with the written
consent of the Company and the Warrantholder.


 


19.           Prohibited Actions. The Company agrees that it will
not take any action which would entitle the Warrantholder to an adjustment of
the Exercise Price if the total number of shares of Common Stock issuable after
such action upon exercise of this Warrant, together with 


 


13

















 


all
shares of Common Stock then outstanding and all shares of Common Stock then
issuable upon the exercise of all outstanding options, warrants, conversion and
other rights, would exceed the total number of shares of Common Stock then
authorized by its Charter.


 


20.           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 in Item 8 of Schedule A hereto, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice.


 


21.           Entire Agreement. This Warrant, the forms attached
hereto and Schedule A hereto (the terms of which are incorporated by reference
herein), and the Letter Agreement (including all documents incorporated
therein), contain the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous arrangements
or undertakings with respect thereto.


 


[Remainder of page intentionally left blank]


 


14

















 


[Form of
Notice of Exercise]




Date:                        


 


 


TO:         TCF Financial Corporation


 


RE:          Election to Purchase
Common Stock


 


The undersigned, pursuant to
the provisions set forth in the attached Warrant, hereby agrees to subscribe
for and purchase the number of shares of the Common Stock set forth below
covered by such Warrant.  The
undersigned, in accordance with Section 3 of the Warrant, hereby agrees to
pay the aggregate Exercise Price for such shares of Common Stock in the manner
set forth below. A new warrant evidencing the remaining shares of Common Stock
covered by such Warrant, but not yet subscribed for and purchased, if any,
should be issued in the name set forth below.


 


Number of Shares of Common Stock                                                            


 


Method of Payment of Exercise Price (note if
cashless exercise pursuant to Section 3(i) of the Warrant or cash
exercise pursuant to Section 3(ii) of the Warrant, with consent of the
Company and the Warrantholder)                                                            


 


Aggregate Exercise Price:                                                            


 


	
   

  	
  Holder:

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


15

















 


IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by a duly authorized
officer.


 


Dated:  November 14, 2008


 


	
   

  	
  TCF FINANCIAL
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James S. Broucek

  
	
   

  	
   

  	
  Name: James S. Broucek

  
	
   

  	
   

  	
  Title: Senior Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory J. Pulles

  
	
   

  	
   

  	
  Name: Gregory J. Pulles

  
	
   

  	
   

  	
  Title: Vice Chairman,
  General Counsel, and Secretary

  



 


[Signature Page to Warrant]


 


16

















 


SCHEDULE A


 


Item 1


 


Name: TCF Financial Corporation


Corporate or other organizational form: Corporation


Jurisdiction of organization: Delaware


 


Item 2


 


Exercise Price: $16.93(1)


 


Item 3


 


Issue Date: November 14, 2008


 


Item 4


 


Amount of last dividend declared prior to the Issue Date:  $0.25


 


Item 5


 


Date of Letter Agreement between the Company and the United States
Department of the Treasury: November 14, 2008


 


Item 6


 


Number of shares of Common Stock: 3,199,988


 


Item 7


 


	
  Company’s address:

  	
  200 Lake Street East

  
	
   

  	
  Wayzata, MN 55391 — 1693

  



 


Item 8


 


Notice information:


 


	
   

  	
   

  	
  If to the Company:

  	
   

  	
  TCF Financial Corporation

  
	
   

  	
   

  	
   

  	
   

  	
  200 Lake Street East, MAILCODE EX0-03-F

  
	
   

  	
   

  	
   

  	
   

  	
  Wayzata, MN 55391 — 1693

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Gregory J.
  Pulles, Vice Chairman, General Counsel and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (952) 475-7975

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If to the Warrantholder:

  	
   

  	
  United States Department of the Treasury

  
	
   

  	
   

  	
   

  	
   

  	
  1500 Pennsylvania Avenue, NW Room 2312

  
	
   

  	
   

  	
   

  	
   

  	
  Washington, D.C. 20220

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Assistant General Counsel (Banking and Finance)

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (202) 622-1974

  



 






(1) Initial exercise price to be calculated based on the average
of closing prices of the Common Stock on the 20 trading days ending on the last
trading day prior to the date the Company’s application for participation in
the Capital Purchase Program was approved by the United States Department of
the Treasury.


 


17