Document:

exhibit101.htm

    

      EXHIBIT
10.1

    

    
 

    SECOND
AMENDMENT

     

    TO AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT

     

    This
Second Amendment To Amended and Restated Loan And Security Agreement (this
“Amendment”)
dated as of February 17, 2009, is entered into by and among Bell Microproducts
Inc., a California corporation (“Administrative
Borrower”), Bell Microproducts – Future Tech, Inc., a California
corporation (“Future
Tech”), Rorke Data, Inc., a Minnesota corporation (“Rorke”), Bell
Microproducts Canada – Tenex Data ULC, a Nova Scotia unlimited liability company
(“Tenex”),
Total Tec Systems, Inc., a New Jersey corporation (“Total Tec”),
Forefront Graphics US Inc., an Ontario corporation (“Forefront” and
together with Administrative Borrower, Future-Tech, Rorke, Tenex and Total Tec,
individually, a “Borrower” and
collectively, “Borrowers”), Bell
Microproducts Canada Inc., a California corporation (“Bell Micro Canada”),
Bell Microproducts Mexico Shareholder, LLC, a Florida limited liability company
(“Mexico
Shareholder” and together with Bell Micro Canada, collectively, “Guarantors”),
Wachovia Capital Finance Corporation (Western), in its capacity as
administrative agent for the financial institutions from time to time parties to
the Loan Agreement (as defined below) as lenders (each individually, a “Lender” and
collectively, “Lenders”) (in such
capacity, “Agent”), and Required
Lenders (as defined in the Loan Agreement), with reference to the following
facts:

     

    RECITALS

     

    A.           Lenders
are extending various secured financial accommodations to Borrowers upon the
terms of that certain Amended and Restated Loan and Security Agreement dated as
of September 29, 2008 among Borrowers, Guarantors, Lenders, Wachovia Capital
Markets, LLC in its capacity as lead arranger and sole bookrunner, Agent and
Bank of America, N.A., in its capacity as co-agent, as amended by that certain
First Amendment to Amended and Restated Loan and Security Agreement dated as of
November 10, 2008 (the “Loan
Agreement”).

     

    B.           Borrowers,
Guarantors, Required Lenders and Agent now desire to amend the Loan Agreement
upon the terms and conditions set forth herein.

     

    AMENDMENT

     

    NOW
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged by each
party hereto, Borrowers, Guarantors, Required Lenders and Agent hereby agree as
follows:

     

    1. Defined
Terms.  Unless otherwise specified herein, any capitalized
terms defined in the Loan Agreement shall have the same respective meanings as
used herein.

     

    2. Amendments to Loan
Agreement.

     

    (a) Interest
Rate.  Clause (a) of the definition of “Interest Rate” in
Section 1.75 of the Loan Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(a)           Subject
to clause (b) below, (i) as to Prime Rate Loans, a rate per annum equal to the
greater of (A) five percent (5.0%) or (B) the applicable Prime Rate Margin plus
the Prime Rate, and (ii) as to Eurodollar Rate Loans, a rate per annum
equal to the greater of (A) five percent (5.0%) or (B) the applicable Eurodollar
Rate Margin plus the Adjusted Eurodollar Rate (based on the London Interbank
Offered Rate applicable for the Interest Period selected by a Borrower (or on
its behalf by Administrative Borrower) as in effect three (3) Business Days
after the date of receipt by Agent of the request by or on behalf of such
Borrower for such Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate previously quoted to such
Borrower or Administrative Borrower).”

     

    (b) Inventory
Appraisals.  The following is hereby added at the end of
Section 7.3(d) of the Loan Agreement:

     

    “In
addition to the foregoing appraisals, Borrowers shall, at their expense, deliver
or cause to be delivered to Agent desktop appraisals as to Inventory in form,
scope and methodology acceptable to Agent in its sole discretion, on a monthly
basis through and including December 2009 and, if requested by Agent in its sole
discretion, on a monthly basis thereafter; provided, however, that if
Borrowers furnish Agent with a full appraisal as to Inventory pursuant to the
foregoing provisions for any month, a desktop appraisal as to Inventory will not
be required for such month.”

     

    (c) Financial
Statements.  The proviso at the end of the first sentence in
Section 9.6(a) of the Loan Agreement is hereby amended and restated to read in
its entirety as follows:

     

    “provided, that, notwithstanding
anything contained in this Section 9.6(a) to the
contrary, Borrowers hereby agree that they shall deliver the audited
consolidated financial statements and associated documentation that would
otherwise be required under Clause (iii) above
for the 2007 and 2008 fiscal years, on or before June 30, 2009, and the Agent
and Lenders agree that the failure of Borrowers to deliver any such audited
consolidated financial statements and associated documentation prior to June 30,
2009 shall not constitute an Event of Default hereunder.”

     

    (d) Fixed Charge Coverage
Ratio.  Section 9.13 of the Loan Agreement is hereby amended
and restated to read in its entirety as follows:

     

    “9.13                      Fixed Charge Coverage
Ratio.  Administrative Borrower and its Subsidiaries, on a
consolidated basis, shall achieve, when measured for each fiscal period of
Administrative Borrower set forth below, a Fixed Charge Coverage Ratio of not
less than the ratio set forth opposite such fiscal period:

     

    

      
        
          
            	
                    Fiscal Period

                  	
                    Minimum Fixed Charge Coverage
      Ratio

                  
	
                    For
      the 3 month period ending March 31, 2009

                  	
                    0.35
      to one

                  
	
                    For
      the 3 month period ending June 30, 2009

                  	
                    0.75
      to one

                  
	
                    For
      the 3 month period ending September 30, 2009

                  	
                    1.10
      to one

                  
	
                    For
      the 6 month period ending December 31, 2009

                  	
                    1.10
      to one

                  
	
                    For
      the 9 month period ending March 31, 2010

                  	
                    1.10
      to one

                  
	
                    For
      each 12 month period ending on the last day of each fiscal quarter after
      March 31, 2010

                  	
                    1.10
      to one”

                  

          

        

      

     

    (e) Excess
Availability.  Section 9.14 of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:

     

    “9.14                      Excess
Availability.  Borrowers shall maintain an average daily Excess
Availability during each calendar month, as calculated at the end of such
calendar month, of not less than ten percent (10%) of the lesser of (a) the
Revolving Loan Limit or (b) the average daily Borrowing Base during such
calendar month; provided, however, that Excess Availability shall not be less
than $15,000,000 at any time.”

     

    3. Conditions to
Effectiveness.  The effectiveness of this Amendment is subject
to the receipt by Agent or the satisfaction of the following conditions
precedent:

     

    (a) Counterparts
of this Amendment duly executed and delivered by Borrowers, Guarantors, Agent
and Required Lenders;

     

    (b) A stock
pledge agreement duly executed and delivered by Bell Micro Canada in favor of,
and in form and substance satisfactory to, Agent with respect to 65% of the
issued and outstanding shares of Capital Stock of Tenex;

     

    (c) Original
stock certificates representing all of the issued and outstanding shares of
Capital Stock of Future Tech, Rorke, Tenex and Forefront in which Agent holds a
security interest, together with stock powers duly executed in blank
therefor;

     

    (d) A fee
letter duly executed and delivered by Borrowers and Guarantors in favor of, and
in form and substance satisfactory to, Agent with respect to the agreed upon fee
payable to Agent for its own account;

     

    (e) No Event
of Default or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist;

     

    (f) The
representations and warranties set forth herein and in the Loan Agreement shall
be true and correct; and

     

    (g) All other
documents and legal matters in connection with the transactions contemplated by
this Amendment shall have been delivered or executed or recorded and shall be in
form and substance satisfactory to Agent.

     

    4. Guarantors’
Acknowledgement.  Guarantors each hereby acknowledge and
consent to the terms, conditions and provisions of this Amendment and to the
transactions contemplated hereby.  Bell Micro Canada hereby reaffirms
its obligations under its Guarantee, dated as of May 14, 2001, and agrees
that it is and shall remain responsible for the Obligations of Borrowers under
the Loan Agreement as amended by this Amendment.  Mexico Shareholder
hereby reaffirms its obligations under its Guarantee, dated as of October 9,
2003, and agrees that it is and shall remain responsible for the Obligations of
Borrowers under the Loan Agreement as amended by this Amendment.

     

    5. Amendment
Fee.  Borrowers shall pay an amendment fee in the amount of
$300,000 to Agent for the benefit of Lenders based upon their respective Pro
Rata Shares, which amendment fee shall be due and payable by Borrowers, and
fully earned by Lenders, on the date of this Amendment.

     

    6. Representations and
Warranties.  Each Borrower and Guarantor reaffirms that the
representations and warranties made to Lenders and Agent in the Loan Agreement
and other Financing Agreements are true and correct in all material respects as
of the date of this Amendment as though made as of such date and after giving
effect to this Amendment.  In addition, each Borrower and Guarantor
makes the following representations and warranties to Lenders and Agent, which
shall survive the execution of this Amendment.

     

    (a) The
execution, delivery and performance of this Amendment are within each Borrower’s
and Guarantor’s powers, have been duly authorized by all necessary actions, have
received all necessary governmental approvals, if any, and do not contravene any
law or any contractual restrictions binding on any Borrower or
Guarantor.

     

    (b) This
Amendment is the legal, valid and binding obligation of each Borrower and
Guarantor enforceable against each Borrower and Guarantor in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the rights of creditors
generally.

     

    (c) No event
has occurred and is continuing, after giving effect to this Amendment, which
constitutes an Event of Default under the Loan Agreement or any other of the
Financing Agreements, or would constitute such an Event of Default but for the
requirement that notice be given or time elapse or both.

     

    7. Continuing Effect of
Financing Agreements.  To the extent of any inconsistencies
between the terms of this Amendment and the Loan Agreement, this Amendment shall
govern.  In all other respects, the Loan Agreement and other Financing
Agreements shall remain in full force and effect and are hereby ratified and
confirmed.

     

    8. References.  Upon
the effectiveness of this Amendment, each reference in any Financing Agreements
to “the Agreement”, “hereunder,” “herein,” “hereof,” or of like import referring
to the Loan Agreement shall mean and be a reference to the Loan Agreement as
amended hereby.

     

    9. Governing
Laws.  This Amendment, upon becoming effective, shall be deemed
to be a contract made under, governed by, and subject to, and shall be construed
in accordance with, the internal laws of the State of California.

     

    [remainder
of page intentionally left blank]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have
executed this Amendment as of the date first set forth above, to become
effective in the manner set forth above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  “Borrowers”

                                	
                                  “Guarantors”

                                
	
                                  BELL
      MICROPRODUCTS INC.

                                  By: /s/ W. Donald
      Bell                                                              

                                  Name:
      W. Donald
      Bell                                                               

                                  Title:
      President &
      Chief Executive
      Officer                              

                                   

                                  BELL
      MICROPRODUCTS – FUTURE TECH, INC.

                                  By: /s/ Andrew S.
      Hughes                                                         

                                  Name:
      Andrew S.
      Hughes                                                         

                                  Title:
      Vice President
      &
      Secretary                                              
      

                                   

                                	
                                  BELL
      MICROPRODUCTS CANADA INC.

                                  By: /s/
      Andrew S. Hughes                                                            

                                  Name:
      Andrew S.
      Hughes                                                                   

                                  Title:
      Vice President &
      Secretary                                                                    

                                   

                                  BELL
      MICROPRODUCTS MEXICO SHAREHOLDER, LLC

                                  By: /s/ W.
      Donald Bell                                                                   

                                  Name:
      W.
      Donald
      Bell                                         
                                

                                  Title:
      Authorized
      Representative                                                                    

                                
	
                                  RORKE
      DATA, INC.

                                  By: /s/ Andrew S.
      Hughes                                                        

                                  Name:
      Andrew S.
      Hughes                                                                                                                       

                                  Title:
      Vice President
      &
      Secretary                                          
       

                                   

                                	 
	
                                  BELL
      MICROPRODUCTS CANADA – TENEX DATA ULC

                                  By: /s/ Andrew S.
      Hughes    
                                                         

                                  Name:
      Andrew S.
      Hughes                                                                   

                                  Title:
      Vice President
      &
      Secretary                                            
      

                                   

                                	 
      
	
                                  TOTAL
      TEC SYSTEMS, INC.

                                  By: /s/
      Andrew S.
      Hughes                                                                                                                          

                                  Name:
      Andrew S.
      Hughes                                                                   

                                  Title:
      Vice President
      &
      Secretary                                            
      

                                   

                                	 
      
	
                                  FOREFRONT
      GRAPHICS US, INC.

                                  By: /s/ Andrew S.
      Hughes                                                        

                                  Name:
      Andrew S.
      Hughes                                                                                                                        

                                  Title:
      Vice President
      &
      Secretary                                            
      

                                   

                                	 
      
	
                                  “Agent
      and Lenders”

                                   

                                  WACHOVIA
      CAPITAL FINANCE CORPORATION (WESTERN), as Agent and Lender

                                  By: /s/ Gary Whitaker   
                                                                  

                                  Name:
      Gary
      Whitaker                                                       
               

                                  Title:
      Director                                                                             
      

                                                                                                    

                                	 
      
	
                                  BANK
      OF AMERICA, N.A., as Lender

                                  By:                                                                                            
         

                                  Name:                                                                              
                  
      

                                  Title:                                                                                             
      

                                                                                                

                                	 
      
	
                                  THE
      CIT GROUP/BUSINESS CREDIT, INC., as Lender

                                  By: /s/ Kirk
      Wolverton                                                             

                                  Name:
      Kirk
      Wolverton                                                                   

                                  Title:
      Vice
      President                                                                  
      

                                                                                                     

                                	 
      
	
                                  WELLS
      FARGO FOOTHILL,
      LLC, as Lender

                                  By: /s/
      Ilene Silberman                                                                  

                                  Name:
      Ilene
      Silberman                                                                   

                                  Title:
      Vice
      PresidentExhibit 4.1 - Warrant (W0200567).DOC

Exhibit 4.1

WARRANT TO PURCHASE PREFERRED 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

500.00500 Shares of Preferred Stock

of Mid-Wisconsin Financial Services, Inc.

Issue Date:  February 20, 2009

1.

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

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

“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.

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

“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.

“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.

-1-

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

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

“Liquidation Amount” means the amount set forth in Item 4 of Schedule A hereto.

“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.

“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.

“Preferred Stock” means the series of perpetual preferred stock set forth in Item 5 of Schedule A hereto.

“Purchase Agreement” means the Securities Purchase Agreement – Standard Terms incorporated into the Letter Agreement, dated as of the date set forth in Item 6 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.

“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 Preferred Stock and to own such Preferred 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.

“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 Preferred Stock set forth in Item 7 of Schedule A hereto (the “Shares”), at a purchase price per share of Preferred Stock equal to the Exercise Price.

-2-

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 8 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, by having the Company withhold, from the shares of Preferred Stock that would otherwise be delivered to the Warrantholder upon such exercise, shares of Preferred Stock issuable upon exercise of the Warrant with an aggregate Liquidation Amount equal in value to the aggregate Exercise Price as to which this Warrant is so exercised.

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.  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 preferred stock, solely for the purpose of providing for the exercise of this Warrant, the aggregate number of shares of Preferred Stock then issuable upon exercise of this Warrant at any time.  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.

-3-

5.

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.

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.

7.

Transfer/Assignment.

(A)

Subject to compliance with clause (B) of this Section 7, 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 7 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 Section 4.2(a) of the Purchase Agreement.

8.

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.

9.

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.

10.

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.

-4-

11.

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 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.

12.

Adjustments and Other Rights.  For so long as the Original Warrantholder holds this Warrant or any portion thereof, if any event occurs that, in the good faith judgment of the Board of Directors of the Company, would require adjustment of the Exercise Price or number of Shares into which this Warrant is exercisable in order to fairly and adequately protect the purchase rights of the Warrants in accordance with the essential intent and principles of the Purchase Agreement and this Warrant, 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.

Whenever the Exercise Price or the number of Shares into which this Warrant is exercisable shall be adjusted as provided in this Section 12, 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.

13.

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.

14.

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 17 below and upon the Warrantholder at the address for the Warrantholder set forth in the registry maintained by the Company pursuant to Section 8 hereof.  To the extent permitted by applicable law, each of the Company and the Warrantholder hereby 

-5-

unconditionally waives trial by jury in any civil legal action or proceeding relating to the Warrant or the transactions contemplated hereby or thereby.

15.

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

16.

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.

17.

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

18.

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]

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[Form of Notice of Exercise]

Date:  __________

TO:

Mid-Wisconsin Financial Services, Inc.

RE:

Election to Purchase Preferred Stock

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees to subscribe for and purchase such number of shares of Preferred Stock covered by the Warrant such that after giving effect to an exercise pursuant to Section 3(B) of the Warrant, the undersigned will receive the net number of shares of Preferred Stock set forth below.  The undersigned, in accordance with Section 3 of the Warrant, hereby agrees to pay the aggregate Exercise Price for such shares of Preferred Stock in the manner set forth in Section 3(B) of the Warrant

Number of Shares of Preferred Stock: 1

The undersigned agrees that it is exercising the attached Warrant in full and that, upon receipt by the undersigned of the number of shares of Preferred Stock set forth above, such Warrant shall be deemed to be cancelled and surrendered to the Company.

Holder: 

By:       

Name:  

Title:   

____________________________

1.

Number of shares to be received by the undersigned upon exercise of the attached Warrant pursuant to Section 3(B) thereof.

-7-

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

Dated:  February 20, 2009

MID-WISCONSIN FINANCIAL SERVICES, INC.

By:

JAMES F. WARSAW

Name:  James F. Warsaw

Title:  President & CEO

Attest:

By:

WILLIAM A. WEILAND

Name:  William A. Weiland

Title:  Executive Vice President & 

Secretary

[Signature Page to Warrant]

-8-

SCHEDULE A

Item 1

Name:

Mid-Wisconsin Financial Services, Inc.

Corporate or other organizational form:

Corporation

Jurisdiction of organization:

Wisconsin

Item 2

Exercise Price:

$.01

Item 3 

Issue Date:

February 20, 2009

Item 4

Liquidation Amount:

$1,000

Item 5

Series of Perpetual Preferred Stock:

Fixed Rate Cumulative Perpetual

Preferred Stock, Series B

Item 6

Date of Letter Agreement between the Company

and the United States Department of the Treasury:

February 20, 2009

Item 7

Number of shares of Preferred Stock:

500.00500

Item 8

Company’s address:

132 West State Street

Medford, WI 54451

Item 9

Notice information:

James F. Warsaw, President & CEO

132 West State Street

Medford, WI 54451

Phone - (715) 748-8300

Fax – (715) 748-8338

Rhonda R. Kelley, Principal Accounting

Officer

(address same as James F. Warsaw)

-9-

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