Document:

Exhibit 10.4

 

AMENDED AND RESTATED

2010 EXCHANGE AND WARRANT PURCHASE AGREEMENT

 

Effective December 31, 2010

 

THIS AMENDED AND RESTATED 2010 EXCHANGE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is made as of December 31, 2010 by and between RICHARD E. WORKMAN 2001 TRUST, an Illinois trust dated July 4, 2001 (“Lender”), and MIDLAND STATES BANCORP, INC., a Delaware corporation (“Borrower”).

 

R E C I T A L S:

 

A.            Borrower and Lender are parties to that certain Credit Agreement dated as of May 29, 2009, as amended by Amendment No. 1 to Credit Agreement, dated as of March 31, 2010 (the “Existing Credit Agreement”) pursuant to which Lender made the 2009 Term Loan (as defined in the Existing Credit Agreement) and the 2010 Term Loan (as defined in the Existing Credit Agreement) to Borrower .

 

B.            Borrower and Lender entered into that certain 2010 Exchange Agreement, dated as of March 31, 2010 (the “Existing Exchange Agreement”).

 

C.            Concurrently herewith, Borrower and Lender are entering into an Amended and Restated Credit Agreement, dated as of December 31, 2010 (the “Amended and Restated Credit Agreement”), pursuant to which Lender has agreed to subordinate certain of its rights as a Lender under the Existing Credit Agreement, and Borrower is executing and delivering to Lender (i) two amended notes evidencing the 2009 Term Loan, one in the principal amount of $6,300,000 (the “Tranche A 2009 Note”) and the other in the principal amount of $5,000,000 (the “Tranche B 2009 Note) and (ii) a note evidencing the 2010 Term Loan in the principal amount of $5,000,000 (the “Amended 2010 Term Note”).

 

D.            Borrower and Lender wish to amend and restate the Existing Exchange Agreement in its entirety as set forth herein.

 

E.             Concurrently herewith, Borrower and Lender are also entering into an Amended and Restated 2009 Exchange and Warrant Purchase Agreement, dated the date hereof, pursuant to which the Borrower will issue and grant to the Lender a warrant to acquire shares of the Borrower’s Series C 9% Non-Cumulative Perpetual Convertible Preferred Stock on the terms and conditions specified therein (the “Series C Warrant”).

 

F.             The execution, delivery and effectiveness of this Agreement and the performance of Borrower’s obligations under Section 2 hereof are conditions to Lender’s agreement to subordinate certain of its rights as a Lender under the Existing Credit Agreement and to enter into the Amended and Restated Credit Agreement.

 

NOW, THEREFORE, in consideration of the premises, Lender’s execution and delivery of the Amended and Restated Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             Definitions. Capitalized terms used in this Agreement and not otherwise defined shall have the meanings given such terms in the Amended and Restated Credit Agreement.  Unless the

 

 

context requires otherwise, the term “including” when used in this Agreement means “including, without limitation,” and all references to Sections or Exhibits are to Sections or Exhibits of or to this Agreement.  The following term shall have the meaning set forth below:

 

“Series D Preferred Stock” shall mean Borrower’s Series D 9% Non-Cumulative Perpetual Convertible Preferred Stock.

 

2.             Note Exchange and Warrant Purchase Agreement.  Concurrently with the execution and delivery of this Agreement, Borrower shall issue and grant to Lender a Preferred Stock Purchase Warrant, substantially in the form of Exhibit A, pursuant to which Lender shall have the right to purchase up to 500 shares of Series D Preferred Stock, subject to adjustment as provided therein and on the terms and conditions specified therein (the “Series D Warrant” and, together with the Series C Warrant, the “Warrants”).  On or before January 21, 2011, Borrower and Lender also shall enter into a Registration Rights Agreement, substantially in the form of Exhibit B (the “Registration Rights Agreement” and, together with the Series D Warrant, the “Equity Agreements”).

 

3.             Federal Reserve Board Approval.  Borrower and Lender shall continue to attempt to obtain, as promptly as possible after the date hereof, any approval of the Board of Governors of the Federal Reserve System (“Federal Reserve Board Approval”) required to permit the Lender to exercise, in full, the Series D Warrant and to acquire all of the Series D Preferred Stock issuable upon such exercise; provided, however, that neither party will be liable for its failure to obtain such Federal Reserve Board Approval.  Lender hereby agrees to exercise the Series D Warrant promptly following the receipt of such Federal Reserve Board Approval but in no event later than 10 Business Days following the receipt thereof.  Nothing in this Section 3 shall require Lender to sell any shares of Common Stock currently owned by Lender in order to obtain the Federal Reserve Board Approval required to exercise the Series D Warrant.  Furthermore, nothing in this Section 3 shall preclude Lender from assigning or otherwise transferring the Amended 2010 Term Note and Series D Warrant in accordance with the terms and conditions of the Amended and Restated Credit Agreement and the Series D Warrant in the event that Lender reasonably determines that it will not be able to obtain, within six months of the date of this Agreement, Federal Reserve Board Approval to exercise the Series D Warrant; provided, however, that (i) the Series D Warrant may not be transferred to any “bank holding company” or “bank” as such terms are defined in the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and (ii) at least 10 Business Days prior to assigning or otherwise transferring the Series D Warrant, Lender shall provide written notice to Borrower of the name of the proposed assignee(s) or transferee(s).

 

4.             Partial Exercises of Warrant.  If Lender is unable to obtain the Federal Reserve Board Approval required to exercise, in full, both of the Warrants, Borrower shall have the right, from time to time, upon written notice to Lender, to require Lender to exercise, in part, one or both of the Warrants then held by the Lender, to the maximum extent possible without causing Lender or any of its Affiliates to be deemed, for purposes of the BHC Act or the Change in Bank Control Act of 1978, as amended (the “CBC Act”), to own 10% or more of the outstanding shares of any class of voting securities or to otherwise control Borrower, based on the number of outstanding shares of such class at the time of such notice.  Such written notice shall contain information or documentation reasonably sufficient to enable Lender to determine the extent to which the Warrants may be exercised under the BHC Act and the CBC Act without Federal Reserve Board Approval.  Any such determination shall take into account the appropriate regulatory treatment of convertible securities.  Upon the receipt of any such written notice, Lender shall first exercise one of the Warrants, to the maximum extent permitted under the BHC Act and the CBC Act without Federal Reserve Board Approval (in minimum increments of $100,000), before exercising its rights under the other Warrant.  Lender shall exercise such Warrant promptly following receipt of written notice from Borrower that complies with this Section 4 but in no event later

 

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than 10 Business Days following Lender’s receipt of such notice.  Lender shall have the right, in its sole discretion, to determine which of the two Warrants to exercise first.

 

5.             Representations, Warranties and Covenants.  Borrower represents and warrants to, and agrees with, Lender on the date hereof and on each date on which the Series D Warrant is exercised as follows: (a) Borrower is a Delaware corporation validly existing and in good standing under the laws of the State of Delaware (provided, however, that Borrower expects to reincorporate under the laws of the State of Illinois effective on December 31, 2010 at 11:59 p.m. and shall be, on each date on which the Series D Warrant is exercised after such time, an Illinois corporation validly existing and in good standing under the laws of the State of Illinois); (b) Borrower has all necessary power and authority to execute, deliver and perform its obligations under this Agreement and the Equity Agreements and to consummate the transactions contemplated hereby and thereby; (c) this Agreement and the Equity Agreements have been duly executed and delivered by Borrower; (d) the execution, delivery and performance of this Agreement and the Equity Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action of Borrower and do not violate or conflict with, or, with or without the giving of notice, the passage of time or both, constitute a default under, or result in any Lien, in or on property of Borrower under, any provision of Borrower’s charter or articles of incorporation or by-laws, any law, rule, regulation, order, writ, injunction or decree of any court, administrative agency or any other governmental authority applicable to Borrower or any of its properties or any agreement or other document or instrument to which Borrower is a party or by which Borrower or any of its property is bound; (e) this Agreement and the Equity Agreements constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms; (f) no notices, reports or other filings are required to be made by Borrower with, and no consents, registrations, approvals, permits, licenses, orders or authorizations are required to be obtained by Borrower from, any Governmental Authority or any other Person in connection with the execution, delivery and performance of this Agreement or the Equity Agreements, or the consummation of the transactions contemplated hereby or thereby; and (g) no Person acting on Borrower’s behalf has any claim for a brokerage commission, finder’s fee or other like payment in connection with this Agreement or the Equity Agreements or the transactions contemplated by this Agreement or the Equity Agreements. Lender represents and warrants to, and agrees with, Borrower that, on the date hereof and on each date on which the Series D Warrant is exercised, Lender is and shall be an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, unless Lender has provided Borrower with a Representation Notice under Section 10(1) of the Series D Warrant.  The representations, warranties and agreements made in this Agreement, or in any document delivered pursuant hereto, shall survive the execution and delivery of this Agreement and the consummation of the transactions described herein, including the exercise of one or both of the Warrants or the repayment of the Amended 2010 Term Note.

 

6.             Miscellaneous.  Any notices or other communications required or permitted hereby shall be given to the places and in the manner, and shall be effective, as set forth in the Amended and Restated Credit Agreement.  This Agreement, including any exhibits and schedules hereto, the Equity Agreements and all other documents and agreements referred to herein or to be delivered pursuant hereto, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior written or oral agreements and understandings between the parties hereto relating to the subject matter hereof.  In addition to the obligations expressly set forth in this Agreement and the Equity Agreements, Borrower shall execute and deliver, or cause to be executed and delivered, to Lender all such further instruments and documents as may reasonably be requested by Lender in order fully to carry out the intent, and to accomplish the purposes, of the transactions referred to herein and therein.  Captions used herein are inserted for reference purposes only and shall not affect the interpretation or construction of this Agreement.  This Agreement and the Equity Agreements shall be binding upon Borrower and its successors and assigns and shall inure to the benefit of Lender and its successors and assigns, including

 

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without limitation any Person or Persons to which Lender has transferred (i) the Series D Warrant, in whole or in part, in accordance with Section 9 of the Series D Warrant and (ii) any related rights of Lender under the Registration Rights Agreement.  Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party.  Each party shall bear its own expenses relating to the exchange or purchase of capital stock contemplated by this Agreement, including without limitation attorneys’ fees and costs.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision.  Borrower recognizes that in the event Borrower fails to perform, observe or discharge any of its obligations under this Agreement, any remedy at law may prove inadequate relief to Lender; therefore, Borrower agrees that, if Lender so requests, Lender shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages or the inadequacy of money damages and the granting of any such relief shall not preclude Lender from pursuing any other relief or remedies for such breach.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.  Delivery of a copy of an executed counterpart hereof by telecopy, email, pdf or other electronic means shall be effective as delivery of an originally executed counterpart hereof.  The Amended and Restated Credit Agreement (other than Sections 2 and 3 thereof) are incorporated herein by reference and shall continue for the purposes hereof notwithstanding termination of the Amended and Restated Credit Agreement.  This Agreement shall be governed by and interpreted under the laws of the State of Illinois applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws thereof.

 

7.             Notices.  Any notice required or desired to be served, given or delivered hereunder shall be in writing, and shall be deemed to have been validly served, given or delivered (i) three (3) Business Days after deposit in the United States mails, with proper postage prepaid, (ii) when sent after receipt of confirmation or answerback if sent by telecopy, or other similar facsimile transmission or electronic mail, (iii) one (1) Business Day after deposited with a reputable overnight courier with all charges prepaid, or (iv) when delivered, if hand-delivered by messenger, all of which shall be properly addressed to the party to be notified and sent to the address or number indicated as follows:

 

If to Borrower, at:

 

Midland States Bancorp, Inc.

133 West Jefferson Avenue

Effingham, Illinois  62401

Attention:  Douglas J. Tucker

Sr. Vice President and Corporate Counsel

Electronic Mail:  dtucker@midlandstatesbank.com

Telecopy:  (217) 342-9462

Confirmation:  (217) 342-7566

 

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With a copy to:

 

Barack Ferrazzano Kirschbaum & Nagelberg, LLP

200 West Madison Street, Suite 3900

Chicago, Illinois 60606

Attention:  Dennis R. Wendte

Electronic Mail:  Dennis.Wendte@bfkn.com

Telecopy:  (312) 984-3150

Confirmation:  (312) 984-3188

 

If to Lender, at:

 

Richard E.  Workman 2001 Trust

9800 Walzer Court

Windermere, Florida 34786

Attention:  Dr.  Richard Workman, Trustee

Electronic Mail:  rworkman@heartlanddentalcare.com

Telecopy:  (217) 540-5629

Confirmation:  (217) 540-5100

 

With a copy to:

 

Travis Franklin

1200 Network Centre Drive

Suite 2

Effingham, Illinois 62401

Electronic Mail:  tfranklin@heartlanddentalcare.com

Telecopy:  (217) 540-5629

Confirmation:  (217) 540-5155

 

Schiff Hardin, LLP

6600 Sears Tower

Chicago, Illinois 60606

Attention:  Robert R. Pluth

Electronic Mail:  rpluth@schiffhardin.com

Telecopy:  (312) 258-5600

Confirmation:  (312) 258-5535

 

or to such other address or number as each party designates to the other in the manner herein prescribed.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first written above.

 

	
Borrower:
    	
 
    	
Lender:
    
	
 
    	
 
    	
 
    
	
MIDLAND   STATES BANCORP, INC.
    	
 
    	
RICHARD   E. WORKMAN 2001 TRUST
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Jeff Ludwig
    	
 
    	
 
    
	
Name:   
    	
Jeff   Ludwig
    	
 
    	
By:   
    	
/s/   Richard E. Workman
    
	
Title:   
    	
Executive   Vice President and Chief Financial Officer
    	
 
    	
 
    	
Richard   E. Workman, Trustee
    

 

6Exhibit 10.5

 

Series E Preferred Stock

Warrant No. P-1

 

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.

 

MIDLAND STATES BANCORP, INC.

 

Preferred Stock Purchase Warrant
 Expiring April 1, 2016

 

Effingham, Illinois
 May 11, 2011

 

MIDLAND STATES BANCORP, INC., an Illinois corporation (the “Company”), for value received, hereby certifies that RICHARD E. WORKMAN 2001 TRUST (Richard E. Workman 2001 Trust and each Person to whom this Warrant has been assigned or transferred in accordance with the terms hereof is referred to herein as a “holder”) is entitled to purchase from the Company six hundred thirty (630) duly authorized, validly issued, fully paid and nonassessable shares of the Company’s Series E 9% Non-Cumulative Perpetual Convertible Preferred Stock, $2.00 par value per share (the “Original Preferred Stock”), at an initial exercise price per share of $10,000 per share, at any time or from time to time after the date of this Warrant and prior to 5:00 p.m., Chicago time, on April 1, 2016, subject to extension as provided in Section 1G (such time and date, as extended pursuant to Section 1G, if applicable, the “Expiration Date”), all subject to the terms, conditions and adjustments set forth below in this Warrant.

 

This Warrant (the “Warrant”, such term to include each Warrant issued in substitution herefor) is being issued in exchange for that certain Series C Preferred Stock Purchase Warrant, dated December 31, 2010, which was issued in connection with the issuance by the Company of the Company’s Tranche A 2009 Note due April 1, 2020, in the aggregate principal amount of $6,300,000 (the “Tranche A 2009 Note”) pursuant to that certain Amended and Restated Credit Agreement, dated as of December 31, 2010, between the Company and Richard E. Workman 2001 Trust, as Lender (as amended from time to time, the “Amended and Restated Credit Agreement”).  The Warrant originally issued hereby evidences rights to purchase six hundred thirty (630) shares of Original Preferred Stock, subject to adjustment as provided herein.  The term “Tranche A 2009 Note” as used herein shall include any note delivered in substitution or exchange for the Tranche A 2009 Note pursuant to the Amended and Restated Credit Agreement.  Certain capitalized terms used in this Warrant are defined in Section 15.

 

Section 1.              Exercise of Warrant.

 

1A.          Manner of Exercise.  This Warrant may be exercised by the holder hereof, in whole or in part, during normal business hours on any Business Day on or after the date of this Warrant to and including the Expiration Date, by surrender of this Warrant, with the form of subscription at the end hereof (or a reasonable facsimile thereof) duly executed by such holder, to the Company at its principal office at 133 West Jefferson Avenue, Effingham, Illinois 62401, Attention: Douglas J. Tucker, Senior Vice President and Corporate Counsel, or such other office or agency of the Company as the Company

 

 

may designate by notice in writing to the holder hereof at the address of such holder appearing on the books of the Company (or, if such exercise shall be in connection with an underwritten public offering of shares of Common Stock issuable upon the conversion of the Preferred Stock (or Other Securities) subject to this Warrant, at the location at which the underwriters shall have agreed to accept delivery thereof), accompanied by payment in the amount (the “Exercise Payment Amount”) obtained by multiplying (a) the number of shares of Original Preferred Stock (without giving effect to any adjustment therein) designated in such form of subscription by (b) $10,000.  If this Warrant is exercised before July 1, 2013, the Exercise Payment Amount may be paid solely by the exchange of an amount of the principal of the Tranche A 2009 Note then outstanding equal to the Exercise Payment Amount.  If this Warrant is exercised on or after July 1, 2013, the Exercise Payment Amount may be paid, at the option of the holder, (i) in cash, by certified or official bank check payable to the order of the Company or by wire transfer of funds to the Company, (ii) by the exchange of an amount of the principal of the Tranche A 2009 Note then outstanding equal to the Exercise Payment Amount, or (iii) in accordance with Section 1F.

 

1B.          Adjustment to Number of Shares of Preferred Stock.  The number of duly authorized, validly issued, fully paid and nonassessable shares of Preferred Stock which the holder of this Warrant shall be entitled to receive upon each exercise hereof shall be determined by multiplying the number of shares of Preferred Stock which would otherwise (but for the provisions of Section 2) be issuable upon such exercise, as designated by the holder hereof pursuant to Section 1A, by a fraction of which (x) the numerator is $10,000 and (y) the denominator is the Exercise Price in effect on the date of such exercise.  The “Exercise Price” shall initially be $10,000 per share, shall be adjusted and readjusted from time to time as provided in Section 2 and, as so adjusted and readjusted, shall remain in effect until a further adjustment or readjustment thereof is required by Section 2 (and the term “Exercise Price” at any time, as used herein, shall mean such price as last adjusted or readjusted).

 

1C.          When Exercise Effective.  Each exercise of this Warrant shall be deemed to have been effected and the Exercise Price shall be determined immediately prior to the close of business on the Business Day on which this Warrant shall have been surrendered to the Company as provided in Section 1A, and at such time the Person or Persons in whose name or names any certificate or certificates for shares of Original Preferred Stock (or Other Securities) shall be issuable upon such exercise as provided in Section 1D shall be deemed to have become the holder or holders of record thereof.  Notwithstanding the foregoing, if an exercise of all or any portion of this Warrant is being made in connection with (i) a proposed public offering of Common Stock issuable upon the conversion of the Preferred Stock (or Other Securities) subject to this Warrant, (ii) a proposed Transaction, or (iii) a proposed sale of outstanding shares of Preferred Stock (or Other Securities) or Common Stock issuable upon the conversion of Preferred Stock (or Other Securities) subject to this Warrant, then, at the election of the holder of this Warrant, such exercise may be conditioned upon the consummation of such public offering, Transaction or sale, in which case such exercise shall be effective concurrently with the consummation of such public offering, Transaction or sale.

 

1D.          Delivery of Stock Certificates, etc.  Promptly after the exercise of this Warrant, in whole or in part, and in any event within three Business Days thereafter (unless such exercise shall be in connection with a public offering of shares of Common Stock issuable upon the conversion of the Preferred Stock (or Other Securities) or in connection with any Transaction or sale of outstanding shares of Preferred Stock (or Other Securities) or Common Stock issuable upon the conversion of the Preferred Stock (or Other Securities), in which event, at the election of the holder of this Warrant, concurrently with the effectiveness of such exercise, as provided in Section 1C, the Company at its expense will cause to be issued in the name of and delivered to the holder hereof or, subject to Section 8, as such holder may direct,

 

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(1)           a certificate or certificates for the number of duly authorized, validly issued, fully paid and nonassessable shares of Preferred Stock (or Other Securities) to which such holder shall be entitled upon such exercise, and

 

(2)           in case such exercise is in part only, a new Warrant or Warrants of like tenor, specifying the aggregate on the face or faces thereof the number of shares of Preferred Stock equal to the number of such shares specified on the face of this Warrant minus the number of such shares designated by the holder upon such exercise as provided in Section 1A.

 

1E.           Fractional Shares.  No fractional shares shall be issued upon exercise of this Warrant and no payment or adjustment shall be made upon any exercise on account of any cash dividends on the Preferred Stock or Other Securities issued upon such exercise.  If any fractional interest in a share of Preferred Stock would, except for the provisions of the first sentence of this Section 1E, be deliverable upon the exercise of this Warrant, the Company shall, in lieu of delivering the fractional share therefor, pay to the holder exercising this Warrant an amount in cash equal to the Market Price of such fractional interest.

 

1F.           Cashless Exercise.  The holder of this Warrant may exercise its right to purchase some or all of the shares of Preferred Stock pursuant to this Warrant on a net basis without the exchange of any funds (a “Cashless Exercise”), such that, upon the exercise hereof, the holder hereof receives that number of shares of Preferred Stock subscribed to pursuant to this Warrant less that number of shares of Preferred Stock, valued at Market Price at the time of exercise, equal to the aggregate Exercise Price that would otherwise have been paid by the holder of this Warrant for such shares of Preferred Stock subscribed to.  (For example: a holder exercises the right to purchase 100 shares.  At that time the Market Price is $12,000 and the exercise price is $10,000.  The aggregate Exercise Price for 100 shares would be $1,000,000.  Therefore $1,000,000 ÷ $12,000 = 83.3.  The holder would receive 16.7 shares [100-83.3] under a Cashless Exercise).

 

1G.          Notice of Expiration Date.  The Company shall provide the holder of this Warrant with written notice of its expiration no more than 45 days before April 1, 2016, and this Warrant shall not expire until the later of (i) April 1, 2016 or (ii) the 30th day after the date such notice of expiration is given to the holder by the Company.

 

Section 2.              Protection Against Impairment of Rights; Adjustment of Exercise Price.

 

2A.          Adjustments for Combinations of Stock Dividends or Stock Splits.  In case the outstanding shares of Preferred Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Preferred Stock, the Exercise Price in effect immediately prior to such combination or consolidation shall be proportionately increased.  In case the Company shall, at any time or from time to time after the date hereof, pay a dividend or make a distribution in respect of its Preferred Stock, in each case in shares of its Preferred Stock, or subdivide its outstanding shares of Preferred Stock, by reclassification or otherwise, into a greater number of shares of Preferred Stock, the Exercise Price in effect immediately prior to such dividend, distribution, or subdivision shall be proportionately reduced.  Such adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a combination, consolidation, or subdivision.  Such adjustments shall be made successively whenever any such event shall occur.

 

2B.          Minimum Adjustment of Exercise Price.  If the amount of any adjustment of the Exercise Price required hereunder would be less than one percent of the Exercise Price in effect at the time such adjustment is otherwise so required to be made, such amount shall be carried forward and adjustment with respect thereto made at the time of and together with any subsequent adjustment which,

 

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together with such amount and any other amount or amounts so carried forward, shall aggregate at least one percent of such Exercise Price; provided, that upon the exercise of this Warrant, all adjustments carried forward and not theretofore made up to and including the date of such exercise shall be made to the nearest .00001 of a cent.

 

2C.          Changes in Preferred Stock.  If any capital reorganization or reclassification of the capital stock of the Company, any consolidation or merger of the Company with another Person (regardless of which entity is the surviving entity), the sale of all or substantially all of the assets of the Company to another Person, any liquidation of the Company or any other transaction (each such transaction being herein called a “Transaction”) shall be effected in such a way that holders of Preferred Stock shall be entitled to receive stock, securities or assets (including cash) upon conversion of or in exchange for Preferred Stock, then, as a condition of the consummation of the Transaction, lawful and adequate provisions (in form satisfactory to the Required Holders) shall be made whereby the holder of this Warrant shall thereafter have the right to receive upon the exercise hereof, upon the basis and upon the terms and conditions specified in this Warrant and in lieu of the shares of the Preferred Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, and this Warrant shall thereafter represent the right to receive, such shares of stock, securities or assets (including cash) as may be issued or payable upon conversion of or in exchange for a number of outstanding shares of Preferred Stock equal to the number of shares of Preferred Stock which immediately theretofore were purchasable and receivable upon the exercise of the rights represented hereby had such Transaction not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets (including cash) thereafter deliverable upon the exercise hereof.  In the event of a merger or consolidation of the Company with or into another Person as a result of which a number of shares of Preferred stock or other equity interests of the surviving Person greater or less than the number of shares of Preferred Stock of the Company outstanding immediately prior to such merger or consolidation are issuable to holders of Preferred Stock of the Company, then the Exercise Price in effect immediately prior to such merger or consolidation shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of Preferred Stock of the Company.  Notwithstanding anything contained herein to the contrary, the Company shall not effect any Transaction unless prior to the consummation thereof each corporation or entity (other than the Company) which may be required to deliver any securities or other property upon the exercise of Warrants shall assume, by written instrument delivered to each holder of Warrants, the obligation to deliver to such holder such securities or other property as to which, in accordance with the foregoing provisions, such holder may be entitled, and such corporation or entity shall have similarly delivered to each holder of Warrants an opinion of counsel for such corporation or entity, satisfactory to each holder of Warrants, which opinion shall state that all the outstanding Warrants shall thereafter continue in full force and effect and shall be enforceable against such corporation or entity of the Warrants in accordance with the terms hereof and thereof, together with such other matters as such holders may reasonably request.  If a purchase, tender or exchange offer is made to and accepted by the holders of more than 50% of the outstanding shares of Preferred Stock of the Company, the Company shall not effect any consolidation, merger or sale with the Person having made such offer or with any Affiliate of such Person, unless prior to the consummation of such consolidation, merger or sale, the holder of this Warrant shall have been given a reasonable opportunity to then elect to receive upon the exercise of this Warrant either the stock, securities or assets then issuable with respect to the Preferred Stock of the Company or the stock, securities or assets (including cash), or the equivalent, issued to previous holders of the Preferred Stock in accordance with such offer as if the shares of Preferred Stock issued upon the exercise of this Warrant had been issued.

 

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2D.          Notice of Adjustment.  Upon the occurrence of any event requiring an adjustment of the Exercise Price, then and in each such case the Company shall promptly deliver to the holder of this Warrant an Officer’s Certificate stating the Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Preferred Stock issuable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.  Within 90 days after each fiscal year in which any such adjustment shall have occurred, or within 30 days after any request therefor by the holder of this Warrant stating that such holder contemplates the exercise of such Warrant, the Company will obtain and deliver to the holder of this Warrant the opinion of its regular independent auditors or another firm of independent public accountants of recognized national or regional standing selected by the Company’s Board of Directors, which opinion shall confirm the statements in the most recent Officer’s Certificate delivered under this Section 2D.

 

2E.           Other Notices.  In case at any time:

 

(1)           the Company shall declare or pay to the holders of Preferred Stock any dividend, other than a cash dividend in accordance with Section 2(a) of the Certificate of Designation;

 

(2)           the Company shall offer for subscription pro rata to the holders of Preferred Stock any additional shares of stock of any class or other rights;

 

(3)           any matter shall be submitted to the holders of the Preferred Stock for their vote or written consent;

 

(4)           there shall be any capital reorganization, or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or other entity;

 

(5)           there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

(6)           the Company, subject to Section 2G(2), shall (i) exercise its right to call and convert all of the then outstanding shares of Preferred Stock into shares of Common Stock pursuant to Section 3(c) of the Certificate of Designation (the “Mandatory Conversion Right”), or (ii) exercise its right to call and redeem all of the then outstanding shares of Preferred Stock pursuant to Section 5 of the Certificate of Designation (the “Mandatory Redemption Right”);

 

(7)           there shall be made any tender offer for any shares of capital stock of the Company; or

 

(8)           there shall be any other Transaction;

 

then, in any one or more of such cases, the Company shall give to the holder of this Warrant, (i) at least 15 days prior to (A) the date on which the books of the Company shall close or a record shall be taken (each, a “Record Date”) with respect to any event referred to in subsections (1) through (6) above or, if no Record Date is fixed for an event referred to in subsection (6), (B) the date on which it gives notice of exercise of the Mandatory Conversion Right or notice of exercise of the Mandatory Redemption Right, and within five days after it has knowledge of any pending tender offer or other Transaction, written notice of the Record Date for such dividend, distribution or  subscription rights, for the exercise of the Mandatory Conversion Right or Mandatory Redemption Right or for determining rights to vote in respect of any matter submitted to the holders of Preferred Stock for their vote or written consent or in respect of

 

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such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or Transaction or of the date by which shareholders must tender shares in any tender offer and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or tender offer or Transaction known to the Company, at least 30 days prior written notice of the date (or, if not then known, a reasonable approximation thereof by the Company) when the same shall take place.  Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Preferred Stock shall be entitled thereto, or in the case of the exercise of the Mandatory Conversion Right or Mandatory Redemption Right, the conversion date or redemption date, as applicable, and such notice in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up, tender offer or Transaction, as the case may be.  Such notice shall also state that the action in question or the record date is subject to the effectiveness of a registration statement under the Securities Act or to a favorable vote of security holders, if either is required.

 

2F.           Certain Events.  If any event occurs as to which, in the good faith judgment of the Board of Directors of the Company, the other provisions of this Warrant are not strictly applicable or if strictly applicable would not fairly protect the exercise rights of the holders of the Warrants in accordance with the essential intent and principles of such provisions, then the Board of Directors of the Company shall appoint its regular independent auditors or another firm of independent public accountants of recognized national or regional standing which shall give their opinion upon the adjustment, if any, on a basis consistent with such essential intent and principles, necessary to preserve, without dilution, the rights of the holders of the Warrants.  Upon receipt of such opinion, the Board of Directors of the Company shall forthwith make the adjustments described therein; provided, that no such adjustment shall have the effect of increasing the Exercise Price as otherwise determined pursuant to this Warrant.  The Company may make such reductions in the Exercise Price as it deems advisable, including any reductions necessary to ensure that any event treated for Federal income tax purposes as a distribution of stock or stock rights not be taxable to recipients.

 

2G.          Prohibition of Certain Actions.

 

(1)           The Company shall not, without the prior written consent of the Required Holders:

 

(a)           amend the Certificate of Designation;

 

(b)           declare or pay any dividend or distribution on the Preferred Stock in excess of the dividends payable thereon under Section 2(a) of the Certificate of Designation; or

 

(c)           take any action that requires, under the Certificate of Designation, the vote or written consent of the holders of at least 75% of the shares of Preferred Stock if, as of the record date for such vote or the date of such written consent, the shares of Preferred Stock issuable upon exercise of the Warrants would constitute, after giving effect to such exercise, more than 25% of the then outstanding Preferred Stock.

 

(2)           The Company shall not exercise (a) the Mandatory Conversion Right, or (b) the Mandatory Redemption Right prior to the fifth anniversary of the date on which the Company first issues one or more shares of Preferred Stock upon the exercise of the Warrant.

 

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(3)           For so long as any Warrant is outstanding, the Company shall not, by amendment of its certificate of incorporation 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 shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant.  Without limiting the generality of the foregoing, the Company

 

(a)           shall take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Preferred Stock upon the exercise of all Warrants from time to time outstanding; and

 

(b)           shall not take any action which results in any adjustment of the Exercise Price if the total number of shares of Preferred Stock or Other Securities issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of Preferred Stock or Other Securities then authorized by the Company’s certificate of incorporation and available for the purpose of issue upon such conversion.

 

Section 3.              Stock to be Reserved.  The Company will at all times reserve and keep available out of the authorized Preferred Stock, solely for the purpose of issue upon the exercise of the Warrants as herein provided, such number of shares of Preferred Stock as shall then be issuable upon the exercise of all outstanding Warrants, and the Company will maintain at all times all other rights and privileges sufficient to enable it to fulfill all its obligations hereunder.  The Company covenants that all shares of Preferred Stock which shall be so issuable shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and that the issuance of such shares of Preferred Stock shall be free from preemptive or similar rights on the part of the holders of any shares of capital stock or securities of the Company or any other Person, and free from all taxes, liens and charges with respect to the issue thereof (not including any income taxes payable by the holders of Warrants being exercised in respect of gains thereon), and the Exercise Price will be credited to the capital and surplus of the Company.  The Company will take all such action as may be necessary to assure that such shares of Preferred Stock may be so issued without violation of any applicable law or regulation, or of any applicable requirements of the National Association of Securities Dealers, Inc. and of any domestic securities exchange upon which the Preferred Stock may be listed.

 

Section 4.              Federal Reserve Board and Other Approvals.

 

(a)           Notwithstanding any other provision of this Warrant, the holder shall not have the right to exercise this Warrant, and the Company shall have no obligation to deliver shares of Preferred Stock upon the exercise hereof, if the issuance of such shares to the holder requires the approval of the Board of Governors of the Federal Reserve System (including, without limitation, any approval pursuant to the Bank Holding Company Act of 1956, as amended, or the Change in Bank Control Act of 1978, as amended, of the holder’s ownership of 10% or more of the outstanding shares of any class of voting securities or control of the Company) (“Federal Reserve Board Approval”) and such approval is not obtained on or before the date of exercise of the Warrant.  The Company will, at its expense and as expeditiously as possible, cooperate with the holder to obtain any required Federal Reserve Board Approval.

 

(b)           At any such time as the Preferred Stock is listed on any national securities exchange, the Company will, at its expense, obtain promptly and maintain the approval for listing on each such exchange, upon official notice of issuance, the shares of Preferred Stock issuable upon exercise of

 

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the then outstanding Warrants and maintain the listing of such shares after their issuance so long as the Preferred Stock is so listed or quoted; and the Company will also cause to be so listed, will register under the Exchange Act and will maintain such listing of, any Other Securities that at any time are issuable upon exercise of the Warrants, if and at the time that any securities of the same class shall be listed on such national securities exchange by the Company.

 

Section 5.              Issue Tax.  The issuance of certificates for shares of Preferred Stock upon exercise of this Warrant shall be made without charge to the holders hereof for any issuance tax in respect thereto.

 

Section 6.              Closing of Books.  The Company will at no time close its transfer books against the transfer of any Warrant or of any share of Preferred Stock (or Other Securities) issued or issuable upon the exercise of any Warrant in any manner which interferes with the timely exercise of such Warrant.

 

Section 7.              No Rights or Liabilities as Stockholders.  This Warrant shall not entitle the holder thereof to any of the rights of a stockholder of the Company, except as expressly contemplated herein.  No provision of this Warrant, in the absence of the actual exercise of such Warrant and receipt by the holder thereof of Preferred Stock issuable upon such conversion, shall give rise to any liability on the part of such holder as a stockholder of the Company, whether such liability shall be asserted by the Company or by creditors of the Company.

 

Section 8.              Restrictive Legends.  Except as otherwise permitted by this Section 8, each Warrant originally issued and each Warrant issued upon direct or indirect transfer of, or in substitution for, any Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“This Warrant and any shares acquired upon the exercise of this Warrant have not been registered under the Securities Act of 1933 and may not be transferred in the absence of such registration or an exemption therefrom under such Act.”

 

Except as otherwise permitted by this Section 8, (a) each certificate for Preferred Stock (or Other Securities) issued upon the exercise of any Warrant, and (b) each certificate issued upon the direct or indirect transfer of any such Preferred Stock (or Other Securities) shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred in the absence of such registration or an exemption therefrom under such Act.”

 

The holder of any Restricted Securities shall be entitled to receive from the Company, without expense, new securities of like tenor not bearing the applicable legend set forth above in this Section 8 when such securities shall have been (a) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering such Restricted Securities, (b) sold to the public pursuant to Rule 144 or any comparable rule under the Securities Act, or (c) when, in the opinion of independent counsel for the holder thereof experienced in Securities Act matters, such restrictions are no longer required in order to insure compliance with the Securities Act.

 

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Section 9.              Transfers.

 

9A.          Transfers Prior to the Initial Exercise Date.  Subject to Section 9C, prior to July 1, 2013, this Warrant may not be transferred in whole, or in part, except to one or more Persons to whom all or a portion of the indebtedness evidenced by the Tranche A 2009 Note has been transferred.  If, prior to July 1, 2013, less than all of the principal amount of the Tranche A 2009 Note is transferred to any Person, then the holder of this Warrant may transfer to such Person only Warrants for that number of shares of Preferred Stock equal to the product of (a) the number of shares of Original Preferred Stock times (b) a fraction, the numerator of which is the principal amount of the Tranche A 2009 Note transferred to such Person, and the denominator of which is $6,300,000.

 

9B.          Transfers On or After July 1, 2013.  Subject to Section 9C, on or after July 1, 2013, this Warrant is detachable from the Tranche A 2009 Note and may be transferred, in whole or in part, to one or more Persons, separate from the Tranche A 2009 Note.

 

9C.          Requirement that Transfers Be Made Only to Accredited Investors.  Notwithstanding the provisions of Section 9A and 9B, this Warrant (i) may be transferred only to one or more “accredited investors” as such term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an “Accredited Investor”) and (ii) may not be transferred to any “bank holding company” or “bank” as such terms are defined in the Bank Holding Company Act of 1956, as amended.  At least 10 Business Days prior to transferring this Warrant, in whole or in part, the holder shall provide written notice to the Company of the name of the proposed transferee(s).

 

Section 10.  Representations and Warranties of the Holder.  The holder of this Warrant, by the acceptance hereof, represents and warrants and agrees as follows:

 

(1)           Such holder is an Accredited Investor, is acquiring this Warrant and, upon exercise hereof, will acquire the shares of Preferred Stock (or Other Securities) and any shares of Common Stock into which such shares of Preferred Stock are convertible (collectively, the “Warrant Securities”), for such holder’s own account and not with a view towards, or for resale in connection with, the public sale or distribution of the Warrant Securities, except pursuant to sales registered or exempted from registration under the Securities Act.  The delivery of this Warrant for exercise shall constitute confirmation at such time by the holder of the representations concerning the Warrant Securities set forth in the preceding sentence, unless contemporaneous with the delivery of this Warrant for exercise, the holder notifies the Company in writing that it is not making such representation (a “Representation Notice”).  If a holder delivers a Representation Notice in connection with an exercise, it shall be a condition to such holder’s exercise of this Warrant and the Company’s obligations under Section 1 in connection with such exercise, that the Company receive such other representations as the Company reasonably considers necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or state securities laws, and the time periods for the Company’s compliance with its obligations under Section 1D shall be tolled until such holder provides the Company with such other representations;

 

(2)           Such holder understands that the Warrant Securities are “restricted securities” under the federal securities laws in as much as they are being or will be acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations neither this Warrant nor the Warrant Securities issuable upon its exercise may be resold without registration under the Securities Act or an exemption from such registration;

 

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(3)           Such holder will not offer or sell this Warrant or any of the Warrant Securities in the absence of an effective registration statement for the Warrant or the Warrant Securities, as applicable, under the Securities Act and such state or other laws as may be applicable, or receipt by the Company of a written opinion of counsel, in form and substance reasonably acceptable to the Company, that such registration is not required; provided, however, that no such opinion shall be required in connection with (i) a transaction pursuant to Rule 144 in which the holder provides the Company with certifications reasonably requested by the Company regarding compliance with the terms and provisions of Rule 144 or (ii) a distribution of any Warrant Securities to an Affiliate of the holder, so long as such Affiliate does not pay any consideration in connection with such distribution (other than the issuance of equity securities in such Affiliate) and the holder provides the Company with certifications reasonably requested by the Company in connection therewith.

 

(4)           Such holder acknowledges and understands that the Warrant and each certificate for the Warrant and Warrant Securities will bear the legends set forth in Section 8 under the terms and circumstances set forth therein; and

 

(5)           Such holder acknowledges and understands that the holder shall not have the right to exercise this Warrant, and the Company shall have no obligation to deliver shares of Preferred Stock upon the exercise hereof, if any Federal Reserve Board Approval required in connection with the issuance of such shares of Preferred Stock to the holder is not obtained by the holder on or before the date of exercise of the Warrant.

 

Section 11.            Information Required By Rule 144A.  The Company will, upon the request of the holder of this Warrant or of any shares of Preferred Stock issued upon the exercise of this Warrant, provide such holder, and any qualified institutional buyer designated by such holder, such financial and other information as such holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Warrants or shares of Preferred Stock, except at such times as the Company is subject to and in compliance with the reporting requirements of Section 13 or 15(d) of the Exchange Act.  For the purpose of this Section 11, the term “qualified institutional buyer” shall have the meaning specified in Rule 144A under the Securities Act.

 

Section 12.            Ownership, Transfer and Replacement of Warrants.

 

12A.        Ownership of Warrants.  Except as otherwise required by law, the Company may treat the Person in whose name any Warrant is registered on the register kept at the principal office of the Company as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the Company, in its discretion, may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes, notwithstanding any notice to the Company to the contrary.  Subject to Section 8, a Warrant, if properly assigned, may be exercised by a new holder without first having a new Warrant issued.

 

12B.        Transfer and Exchange of Warrants.  Upon the surrender of any Warrant, properly endorsed, for registration of transfer or for exchange at the principal office of the Company, the Company at its expense will (subject to compliance with Section 8, if applicable, and Section 10), execute and deliver to or upon the order of the holder thereof a new Warrant or Warrants of like tenor, in the name of such holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Original Preferred Stock called for on the face or faces of the Warrant or Warrants so surrendered.

 

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12C.        Replacement of Warrants.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant held by a Person other than any institutional investor, upon delivery of its unsecured indemnity or, in the case of any such mutilation, upon surrender of such Warrant for cancellation at the principal office of the Company, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

Section 13.            Registration Rights.  The holder of this Warrant shall be entitled to certain registration rights under a registration rights agreement to be entered into between the Company or its successor and the Richard E. Workman 2001 Trust (the “Registration Rights Agreement”) in connection with the offer and sale of shares of Common Stock issuable upon the conversion of Preferred Stock (or Other Securities) issued upon exercise of this Warrant, upon the execution and delivery by the holder of the Registration Rights Agreement or a joinder to the Registration Rights Agreement.

 

Section 14.            Information Rights.  Each holder of Warrants shall be entitled to receive audited annual financial statements of the Company, as soon as such statements become available.

 

Section 15.            Definitions.  As used herein, unless the context otherwise requires, the following terms have the following respective meanings:

 

“Affiliate” shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise.  The grantor of a revocable trust shall be deemed to control such revocable trust.

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Chicago, Illinois are authorized or required by law to close.

 

“Cashless Exercise” shall have the meaning specified in Section 1F.

 

“Certificate of Designation” shall mean the Statement of Resolution Establishing Series of Series E 9% Non-Cumulative Perpetual Convertible Preferred Stock of the Company, as filed with the Secretary of State of the State of Illinois prior to the date hereof.

 

“Common Stock” shall mean the common stock of the Company, $0.01 par value per share, or the common equity securities of any successor to the Company, including any surviving Person in a Transaction.

 

“Company” shall have the meaning specified in the opening paragraphs of this Warrant.

 

“Current Market Value” shall mean on any date specified herein, with respect to the Common Stock, (a) if the Common Stock is listed or admitted to trading on any securities exchange, the closing price, regular way, on such day on the principal exchange on which such Common Stock is traded, or if no sale takes place on such day, the average of the closing bid and asked prices on such day; (b) if the Common Stock is not then listed or admitted to trading on any securities exchange, the last reported sale price on such day, or if there is no such last reported sale price on such day, the average of the closing bid and the asked prices on such day, as reported by a reputable quotation source designated by the Company, (c) if neither clause (a) nor (b) is applicable, the average of the reported high bid and low asked prices on such day, as reported by a reputable quotation service designated by the Company, or

 

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(d) if no such reported prices are available, the value of the Common Stock determined in good faith by the Board of Directors of the Company and certified in a board resolution, based, where possible, on the most recently completed arm’s length transaction between the Company and a person other than an Affiliate of the Company in which such determination is necessary.

 

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

 

“Exercise Price” shall have the meaning specified in Section 1B.

 

“Liquidation Preference” shall mean for each share of Preferred Stock, the liquidation preference then in effect for each such share of Preferred Stock, as provided for in the Certificate of Designation.

 

“Market Price” shall mean on any date specified herein, with respect to Preferred Stock, the amount per share equal to the greater of (a) the sum of the Liquidation Preference of such Preferred Stock plus all authorized, declared and unpaid dividends thereon as of such date and (b) the aggregate Current Market Value of the aggregate number of shares of Common Stock into which such share of Preferred Stock is convertible as of such date.

 

“Officer’s Certificate” shall mean a certificate signed in the name of the Company by its President, one of its Vice Presidents or its Treasurer.

 

“Original Preferred Stock” shall have the meaning specified in the opening paragraphs of this Warrant.

 

“Other Securities” shall mean any stock (other than Preferred Stock) and any other securities of the Company or any other Person (corporate or otherwise) which the holders of the Warrants at any time shall be entitled to receive, or shall have received, upon the exercise of the Warrants, in lieu of or in addition to Preferred Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Preferred Stock or Other Securities pursuant to Section 2C or otherwise.

 

“Person” shall mean and include an individual, a partnership, an association, a joint venture, a corporation, a trust, a limited liability company, an unincorporated organization and a government or any department or agency thereof.

 

“Preferred Stock” shall mean the Original Preferred Stock, any stock into which such stock shall have been converted or changed or any stock resulting from any reclassification of such stock.

 

“Required Holders” shall mean the holders of at least a majority of all the Warrants at the time outstanding, determined on the basis of the number of shares of Preferred Stock then purchasable upon the exercise of all Warrants then outstanding.

 

“Restricted Securities” shall mean (a) any Warrants bearing the applicable legend set forth in Section 8 and (b) any shares of Preferred Stock (or Other Securities) which have been issued upon the exercise of Warrants and which are evidenced by a certificate or certificates bearing the applicable legend set forth in such section, and (c) unless the context otherwise requires, any shares of Preferred Stock (or Other Securities) which are at the time issuable upon the exercise of Warrants and which, when so issued, will be evidenced by a certificate or certificates bearing the applicable legend set forth in such section.

 

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“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Tranche A 2009 Note” shall have the meaning specified in the opening paragraphs of this Warrant.

 

“Transaction” shall have the meaning specified in Section 2C.

 

“Warrant” shall have the meaning specified in the opening paragraphs of this Warrant.

 

Section 16.            Remedies.  The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

 

Section 17.            Notices.  Any notice required or desired to be served, given or delivered hereunder shall be in writing, and shall be deemed to have been validly served, given or delivered (i) three (3) Business Days after deposit in the United States mails, with proper postage prepaid, (ii) when sent after receipt of confirmation or answerback if sent by telecopy, or other similar facsimile transmission or electronic mail, (iii) one (1) Business Day after deposited with a reputable overnight courier with all charges prepaid, or (iv) when delivered, if hand-delivered by messenger, all of which shall be properly addressed to the party to be notified and sent to the address or number indicated as follows:

 

(i)            if to the Company, to

 

Midland States Bancorp, Inc.

133 West Jefferson Avenue

Effingham, Illinois  62401

Attention:  Douglas J. Tucker

Sr. Vice President and Corporate Counsel

Electronic Mail:  dtucker@midlandstatesbank.com

Telecopy:  (217) 342-9462

Confirmation:  (217) 342-7566

 

With a copy to:

 

Barack Ferrazzano Kirschbaum & Nagelberg, LLP

200 West Madison Street, Suite 3900

Chicago, Illinois 60606

Attention:  Dennis R. Wendte

Electronic Mail:    Dennis.Wendte@bfkn.com

Telecopy:  (312) 984-3150

Confirmation:  (312) 984-3188

 

(ii)           if to any holder of any Warrant or any holder of any Preferred Stock (or Other Securities), at the registered address of such holder as set forth in the applicable register kept at the principal office of the Company;

 

provided that the exercise of any Warrant shall be effected in the manner provided in Section 1.

 

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Section 18.            Miscellaneous.

 

(a)           This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

(b)           The agreements of the Company contained in this Warrant other than those applicable solely to the Warrants and the holders thereof shall inure to the benefit of and be enforceable by any holder or holders at the time of any Preferred Stock (or Other Securities) issued upon the exercise of Warrants, whether so expressed or not, and shall survive the exercise of this Warrant.

 

(c)           THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS WARRANT TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER JURISDICTION).

 

(d)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS WARRANT MAY BE BROUGHT IN STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS, AND BY EXECUTION AND DELIVERY OF THIS WARRANT, THE COMPANY HEREBY IRREVOCABLY ACCEPTS, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING.  THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 17, SUCH SERVICE TO BECOME EFFECTIVE UPON RECEIPT.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A WARRANT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS WARRANT BROUGHT IN ANY OF THE AFORESAID COURTS AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(e)           The section headings in this Warrant are for purposes of convenience only and shall not constitute a part hereof.

 

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IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the day and year first above written.

 

	
 
    	
 
    	
MIDLAND STATES BANCORP, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Douglas J. Tucker
    
	
 
    	
 
    	
 
    	
Name:   Douglas J. Tucker
    
	
 
    	
 
    	
 
    	
Title:   Senior Vice President and Corporate Counsel
    
					

 

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FORM OF SUBSCRIPTION
  (To be executed only upon exercise of Warrant)

 

To:  Midland States Bancorp, Inc.:

 

The undersigned registered holder of the within Warrant hereby irrevocably exercises such Warrant for, and purchases thereunder,            shares(1) of Original Preferred Stock of Midland States Bancorp, Inc., [and herewith makes payment of $                               in cash therefor](2)/[surrenders $                       in principal amount of the Tranche A 2009 Note] (3)/[in a Cashless Exercise pursuant to Section 1F of the within Warrant](4), and requests that the certificates for such shares be issued in the name of, and delivered to                                                    whose address is                                                   .

 

	
Dated:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature must conform in all respects to name of holder   as specified on the face of this Warrant)
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Street Address)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(City)
    	
 
    	
(State)
    	
(Zip Code)
    
							

 

(1)           Insert here the number of shares called for on the face of this Warrant (or, in the case of a partial exercise, the portion thereof as to which this Warrant is being exercised), in either case without making any adjustment for additional Preferred Stock or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of this Warrant, may be delivered upon exercise.  In the case of a partial exercise, a new Warrant or Warrants will be issued and delivered, representing the unexercised portion of this Warrant, to the holder surrendering the same.

 

(2)           Use in connection with an exercise involving a delivery of funds to the Company.

 

(3)           Use in connection with an exercise involving the exchange of all or a portion of the principal amount of the Tranche A 2009 Note.

 

(4)           Use in connection with a Cashless Exercise.

 

 

FORM OF ASSIGNMENT
  (To be executed only upon transfer of Warrant)

 

For value received, the undersigned registered holder of the within Warrant hereby sells, assigns and transfers unto                                                    the right represented by such Warrant to purchase                                                   (1) shares of Original Preferred Stock of Midland States Bancorp, Inc., to which such Warrant relates, and appoints                                                                                              its Attorney to make such transfer on the books of Midland States Bancorp, Inc., maintained for such purpose, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature must conform in all respects to name of   holder as specified on the face of this Warrant)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Street Address)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(City)
    	
(State)
    	
(Zip Code)
    

 

Signed in the presence of:

 

(1)           Insert here the number of shares called for on the face of the within Warrant (or, in the case of a partial assignment, the portion thereof as to which this Warrant is being assigned), in either case without making any adjustment for additional Preferred Stock or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of the within Warrant, may be delivered upon exercise.  In the case of a partial assignment, a new Warrant or Warrants will be issued and delivered, representing the portion of the within Warrant not being assigned, to the holder assigning the same.

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