Document:

Exhibit 4.2

 

DEPOSIT AGREEMENT

 

among

 

MB FINANCIAL, INC.,

 

COMPUTERSHARE INC. and

 

COMPUTERSHARE TRUST COMPANY, N.A., collectively, as Depositary,

 

and

 

THE HOLDERS FROM TIME TO TIME OF

THE DEPOSITARY RECEIPTS DESCRIBED HEREIN

 

Dated as of November 22, 2017

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    
	
ARTICLE I DEFINED TERMS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II   FORM OF RECEIPTS, DEPOSIT OF SERIES C PREFERRED STOCK, EXECUTION AND   DELIVERY, TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS
    	
2
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Form and Transfer   of Receipts
    	
2
    
	
Section 2.2
    	
Deposit of   Series C Preferred Stock; Execution and Delivery of Receipts in Respect   Thereof
    	
3
    
	
Section 2.3
    	
Registration of   Transfer of Receipts
    	
4
    
	
Section 2.4
    	
Split-ups and   Combinations of Receipts; Surrender of Receipts and Withdrawal of   Series C Preferred Stock
    	
4
    
	
Section 2.5
    	
Limitations on   Execution and Delivery, Transfer, Surrender and Exchange of Receipts
    	
5
    
	
Section 2.6
    	
Lost   Receipts, etc.
    	
5
    
	
Section 2.7
    	
Cancellation and   Destruction of Surrendered Receipts
    	
5
    
	
Section 2.8
    	
Redemption of   Series C Preferred Stock
    	
5
    
	
Section 2.9
    	
Deposits
    	
6
    
	
Section 2.10
    	
Receipts Issuable in   Global Registered Form
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE III   CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE CORPORATION
    	
7
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Filing Proofs,   Certificates and Other Information
    	
7
    
	
Section 3.2
    	
Payment of Taxes or   Other Governmental Charges
    	
7
    
	
Section 3.3
    	
Warranty as to   Series C Preferred Stock
    	
7
    
	
Section 3.4
    	
Warranty as to Receipts
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE IV   THE DEPOSITED SECURITIES; NOTICES
    	
8
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Cash Distributions
    	
8
    
	
Section 4.2
    	
Distributions Other   than Cash, Rights, Preferences or Privileges
    	
8
    
	
Section 4.3
    	
Subscription Rights,   Preferences or Privileges
    	
8
    
	
Section 4.4
    	
Notice of   Dividends, etc.; Fixing Record Date for Holders of Receipts
    	
9
    
	
Section 4.5
    	
Voting Rights
    	
9
    
	
Section 4.6
    	
Changes Affecting   Deposited Securities and Reclassifications, Recapitalizations, etc.
    	
10
    
	
Section 4.7
    	
Delivery of Reports
    	
10
    
	
Section 4.8
    	
Lists of Receipt   Holders
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE V   THE DEPOSITARY, THE DEPOSITARY’S AGENTS, THE REGISTRAR AND THE CORPORATION
    	
10
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Maintenance of Offices,   Agencies and Transfer Books by the Depositary; Registrar
    	
10
    
	
Section 5.2
    	
Prevention of or Delay   in Performance by the Depositary, the Depositary’s Agents, the Registrar or   the Corporation
    	
11
    
	
Section 5.3
    	
Obligations of the   Depositary, the Depositary’s Agents, the Registrar and the Corporation
    	
11
    
	
Section 5.4
    	
Resignation and Removal   of the Depositary; Appointment of Successor Depositary
    	
12
    
	
Section 5.5
    	
Corporate Notices and   Reports
    	
13
    
	
Section 5.6
    	
Indemnification by the   Corporation
    	
13
    
	
Section 5.7
    	
Fees, Charges and   Expenses
    	
13
    

 

i

 

	
ARTICLE VI   AMENDMENT AND TERMINATION
    	
14
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
Amendment
    	
14
    
	
Section 6.2
    	
Termination
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE VII   MISCELLANEOUS
    	
14
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Counterparts
    	
14
    
	
Section 7.2
    	
Exclusive Benefit of   Parties
    	
14
    
	
Section 7.3
    	
Invalidity of   Provisions
    	
14
    
	
Section 7.4
    	
Notices
    	
15
    
	
Section 7.5
    	
Depositary’s Agents
    	
15
    
	
Section 7.6
    	
Appointment of   Registrar, Dividend Disbursing Agent and Redemption Agent in Respect of   Receipts
    	
15
    
	
Section 7.7
    	
Holders of Receipts Are   Parties
    	
15
    
	
Section 7.8
    	
Governing Law
    	
15
    
	
Section 7.9
    	
Inspection of Deposit   Agreement
    	
15
    
	
Section 7.10
    	
Headings
    	
16
    
	
Section 7.11
    	
Confidentiality
    	
16
    
	
Section 7.12
    	
Further Assurances
    	
16
    

 

ii

 

DEPOSIT AGREEMENT dated as of November 22, 2017, by and among (i) MB Financial, Inc., a Maryland corporation, (ii) Computershare Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary, Computershare Trust Company, N.A., a national banking association (the “Trust Company” and together with Computershare, collectively, the “Depositary”), and (iii) the Holders from time to time of the Receipts described herein.

 

WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit Agreement, for the deposit of shares of Series C Preferred Stock of the Corporation from time to time with the Depositary for the purposes set forth in this Deposit Agreement and for the issuance hereunder of Receipts evidencing Depositary Shares in respect of the Series C Preferred Stock so deposited; and

 

WHEREAS, the Receipts are to be substantially in the form of Exhibit A annexed hereto, with appropriate insertions, modifications and omissions, as hereinafter provided in this Deposit Agreement;

 

NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINED TERMS

 

Section 1.1 Definitions. The following definitions shall for all purposes, unless otherwise indicated, apply to the respective terms used in this Deposit Agreement:

 

“Articles Supplementary” shall mean the relevant Articles Supplementary to the Charter of the Corporation filed with the Department of Assessments and Taxation of State of Maryland establishing the Series C Preferred Stock as a series of preferred stock of the Corporation.

 

“Corporation” shall mean MB Financial, Inc., a Maryland corporation, and its successors.

 

“Deposit Agreement” shall mean this Deposit Agreement, as amended or supplemented from time to time in accordance with the terms hereof.

 

“Depositary” shall be defined as indicated in the preamble, above, and shall include any successor as Depositary hereunder.

 

“Depositary Shares” shall mean the depositary shares, each representing 1/40th of one share of the Series C Preferred Stock, evidenced by a Receipt.

 

“Depositary’s Agent” shall mean an agent appointed by the Depositary pursuant to Section 7.5.

 

“Depositary’s Office” shall mean the principal office of the Depositary at which at any particular time its depositary receipt business shall be administered, which is currently located at 480 Washington Blvd., 29th Floor, Jersey City, New Jersey 07310.

 

“DTC” shall mean The Depository Trust Company.

 

“Effective Date” shall mean the date first stated above.

 

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

 

“Exchange Event” shall mean with respect to any Global Registered Receipt:

 

(1) (A) the Global Receipt Depository which is the Holder of such Global Registered Receipt or Global Registered Receipts notifies the Corporation that it is no longer willing or able to properly discharge its responsibilities under any Letter of Representations or that it is no longer eligible or in good standing under the Exchange Act, and (B) the Corporation has not appointed a qualified successor Global Receipt Depository within 90 days after the Corporation received such notice, or

 

 

(2) the Corporation in its sole discretion notifies the Depositary in writing that the Receipts or portion thereof issued or issuable in the form of one or more Global Registered Receipts shall no longer be represented by such Global Registered Receipt or Global Registered Receipts.

 

“Global Receipt Depository” shall mean, with respect to any Receipt issued hereunder, DTC or such other entity designated as Global Receipt Depository by the Corporation in or pursuant to this Deposit Agreement, which entity must be, to the extent required by any applicable law or regulation, a clearing agency registered under the Exchange Act.

 

“Global Registered Receipts” shall mean a global registered Receipt registered in the name of a nominee of DTC.

 

“Letter of Representations” shall mean any applicable agreement among the Corporation, the Depositary and a Global Receipt Depository with respect to such Global Receipt Depository’s rights and obligations with respect to any Global Registered Receipts, as the same may be amended, supplemented, restated or otherwise modified from time to time and any successor agreement thereto.

 

“Officer’s Certificate” shall mean a certificate in substantially the form set forth as Exhibit B hereto, which is signed by an officer of the Corporation and which shall include the terms and conditions of the Series C Preferred Stock to be issued by the Corporation and deposited with the Depositary from time to time in accordance with the terms hereof.

 

“person” means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.

 

“Receipt” shall mean one of the depositary receipts issued hereunder, substantially in the form set forth as Exhibit A hereto, whether in definitive or temporary form, and evidencing the number of Depositary Shares with respect to the Series C Preferred Stock held of record by the Record Holder of such Depositary Shares.

 

“Record Holder” or “Holder” as applied to a Receipt shall mean the person in whose name such Receipt is registered on the books of the Depositary maintained for such purpose.

 

“Redemption Date” shall have the meaning set forth in Section 2.8.

 

“Registrar” shall mean the Trust Company or such other successor bank or trust company which shall be appointed by the Corporation to register ownership and transfers of Receipts and the deposited Series C Preferred Stock, as herein provided; and if a successor Registrar shall be so appointed, references herein to “the books” of or maintained by the Registrar shall be deemed, as applicable, to refer as well to the register maintained by such successor Registrar for such purpose.

 

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

 

“Series C Preferred Stock” shall mean the shares of the Corporation’s 6.000% Non-Cumulative Perpetual Preferred Stock, Series C, $0.01 par value, with a liquidation preference of $1,000 per share, designated in the Articles Supplementary.

 

“Transfer Agent” shall mean the Trust Company or such other successor bank or trust company which shall be appointed by the Corporation to transfer the Receipts and deposited Series C Preferred Stock, as the case may be, as herein provided.

 

2

 

ARTICLE II

 

FORM OF RECEIPTS, DEPOSIT OF SERIES C PREFERRED STOCK, EXECUTION AND

DELIVERY, TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS

 

Section 2.1 Form and Transfer of Receipts. The definitive Receipts shall be substantially in the form set forth in Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and omissions, as hereinafter provided and shall be engraved or otherwise prepared so as to comply with the applicable rules of the NASDAQ Stock Market. Pending the preparation of definitive Receipts, the Depositary, upon the written order of the Corporation, delivered in compliance with Section 2.2, shall execute and deliver temporary Receipts which may be printed, lithographed, typewritten, mimeographed or otherwise substantially of the tenor of the definitive Receipts in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the persons executing such Receipts may determine, as evidenced by their execution of such Receipts. If temporary Receipts are issued, the Corporation and the Depositary will cause definitive Receipts to be prepared without unreasonable delay. After the preparation of definitive Receipts, the temporary Receipts shall be exchangeable for definitive Receipts upon surrender of the temporary Receipts at an office described in the penultimate paragraph of Section 2.2. Upon surrender for cancellation of any one or more temporary Receipts, the Depositary shall execute and deliver in exchange therefor definitive Receipts representing the same number of Depositary Shares as represented by the surrendered temporary Receipt or Receipts. Such exchange shall be made at the Corporation’s expense and without any charge therefor. Until so exchanged, the temporary Receipts shall in all respects be entitled to the same benefits under this Deposit Agreement as definitive Receipts. Notwithstanding anything in this Deposit Agreement to the contrary, Receipts may be issued electronically or otherwise in book-entry format.

 

Receipts shall be executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose unless it shall have been executed manually or by facsimile signature by a duly authorized officer of the Depositary or, if a Registrar for the Receipts (other than the Depositary) shall have been appointed, by manual or facsimile signature of a duly authorized officer of the Depositary and countersigned by manual or facsimile signature by a duly authorized officer of such Registrar. The Depositary shall record on its books each Receipt so signed and delivered as hereinafter provided.

 

Receipts shall be in denominations of any number of whole Depositary Shares.  All Receipts shall be dated the date of their issuance.

 

Receipts may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Deposit Agreement all as may be required by the Depositary and approved by the Corporation or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange upon which the Series C Preferred Stock, the Depositary Shares or the Receipts may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts are subject (but which do not affect the rights, duties, obligations or immunities of the Depositary as set forth in this Deposit Agreement without the Depositary’s consent).

 

Title to Depositary Shares evidenced by a Receipt which is properly endorsed or accompanied by a properly executed instrument of transfer, shall be transferable by delivery with the same effect as in the case of a negotiable instrument; provided, however, that until transfer of any particular Receipt shall be registered on the books of the Depositary as provided in Section 2.3, the Depositary may, notwithstanding any notice to the contrary, treat the Record Holder thereof at such time as the absolute owner thereof for the purpose of determining the person entitled to dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes.

 

Section 2.2 Deposit of Series C Preferred Stock; Execution and Delivery of Receipts in Respect Thereof. Subject to the terms and conditions of this Deposit Agreement, the Corporation may from time to time deposit shares of Series C Preferred Stock under this Deposit Agreement by delivery to the Depositary of a certificate or certificates for such shares of Series C Preferred Stock to be deposited, properly endorsed or accompanied, if required by the Depositary, by a duly executed instrument of transfer or endorsement, in form satisfactory to the Depositary, together with an executed Officer’s Certificate attaching the Articles Supplementary and all other information required to be set forth therein, and together with a written order of the Corporation directing the Depositary to execute and deliver to, or upon the written order of, the person or persons stated in such order a Receipt or Receipts evidencing in the aggregate the number of Depositary Shares representing such deposited Series C Preferred Stock. Each Officer’s Certificate delivered to the Depositary in accordance with the terms of this Deposit Agreement shall be deemed to

 

3

 

be incorporated into this Deposit Agreement and shall be binding on the Corporation, the Depositary and the Holders of Receipts to which such Officer’s Certificate relates.

 

The Series C Preferred Stock that is deposited shall be held by the Depositary at the Depositary’s Office or at such other place or places as the Depositary shall determine. The Depositary shall not lend any Series C Preferred Stock deposited hereunder.

 

Upon receipt by the Depositary of a certificate or certificates for Series C Preferred Stock deposited in accordance with the provisions of this Section 2.2, together with the other documents required as above specified, and upon recordation of the Series C Preferred Stock on the books of the Corporation (or its duly appointed transfer agent) in the name of the Depositary or its nominee, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall execute and deliver to or upon the order of the person or persons named in the written order delivered to the Depositary in accordance with the first paragraph of this Section 2.2, a Receipt or Receipts evidencing in the aggregate the number of Depositary Shares representing the Series C Preferred Stock so deposited and registered in such name or names as may be requested by such person or persons. The Depositary shall execute and deliver such Receipt or Receipts at the Depositary’s Office or such other offices, if any, as the Depositary may designate. Delivery at other offices shall be at the risk and expense of the person requesting such delivery.

 

Section 2.3 Registration of Transfer of Receipts. The Corporation hereby appoints the Depositary as depositary for the Series C Preferred Stock, and the Depositary hereby accepts such appointment on the express terms and conditions set forth in this Deposit Agreement.  Subject to the terms and conditions of this Deposit Agreement, the Depositary shall register on its books from time to time transfers of Receipts upon any surrender thereof by the Holder in person or by duly authorized attorney, properly endorsed or accompanied by a properly executed instrument of transfer. Such instrument of transfer shall include evidence of the authority of the party seeking transfer which shall include a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association, and any other reasonable evidence of authority that may be required by the Depositary, together with evidence of the payment by the applicable party of any taxes or charges as may be required by law. Thereupon, the Depositary shall execute a new Receipt or Receipts evidencing the same aggregate number of Depositary Shares as those evidenced by the Receipt or Receipts surrendered and deliver such new Receipt or Receipts to or upon the order of the person entitled thereto.

 

The Depositary shall not be required (a) to issue, transfer or exchange any Receipts for a period beginning at the opening of business 15 days next preceding any selection of Depositary Shares and Series C Preferred Stock to be redeemed and ending at the close of business on the day of the mailing of notice of redemption, or (b) to transfer or exchange for another Receipt any Receipt called or being called for redemption in whole or in part except as provided in Section 2.8.

 

Section 2.4 Split-ups and Combinations of Receipts; Surrender of Receipts and Withdrawal of Series C Preferred Stock. Upon surrender of a Receipt or Receipts at the Depositary’s Office or at such other offices as it may designate for the purpose of effecting a split-up or combination of such Receipt or Receipts, and subject to the terms and conditions of this Deposit Agreement, the Depositary shall execute a new Receipt or Receipts in the authorized denomination or denominations requested, evidencing the aggregate number of Depositary Shares evidenced by the Receipt or Receipts surrendered, and shall deliver such new Receipt or Receipts to or upon the order of the Holder of the Receipt or Receipts so surrendered.

 

Any Holder of a Receipt or Receipts may withdraw the number of whole shares of Series C Preferred Stock and all money and other property, if any, represented thereby by surrendering such Receipt or Receipts at the Depositary’s Office or at such other offices as the Depositary may designate for such withdrawals; provided, however, that a Holder of a Receipt or Receipts may not withdraw such whole shares of Series C Preferred Stock (or money and other property, if any, represented thereby) which has previously been called for redemption.  Upon such surrender and payment of all amounts due under Section 5.7 in connection with such surrender and withdrawal, the Depositary shall, without unreasonable delay, deliver to such Holder, or to the person or persons designated by such Holder as hereinafter provided, the number of whole shares of Series C Preferred Stock and all money and other property, if any, represented by the Receipt or Receipts so surrendered for withdrawal, but Holders of such whole shares of Series C Preferred Stock will not thereafter be entitled to deposit such Series C Preferred Stock hereunder or to receive a Receipt evidencing Depositary Shares therefor. If a Receipt delivered by the Holder to the Depositary in

 

4

 

connection with such withdrawal shall evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the number of whole shares of Series C Preferred Stock, the Depositary shall at the same time, in addition to such number of whole shares of Series C Preferred Stock and such money and other property, if any, to be so withdrawn, deliver to such Holder, or subject to Section 2.3 upon his order, a new Receipt evidencing such excess number of Depositary Shares.

 

In no event will fractional shares of Series C Preferred Stock (or any cash payment in lieu thereof) be delivered by the Depositary. Delivery of the Series C Preferred Stock and money and other property, if any, being withdrawn may be made by the delivery of such certificates, documents of title and other instruments as the Depositary may deem appropriate, which, if required by the Depositary, shall be properly endorsed or accompanied by proper instruments of transfer including, but not limited to, a signature guarantee.

 

If the Series C Preferred Stock and the money and other property, if any, being withdrawn are to be delivered to a person or persons other than the Record Holder of the related Receipt or Receipts being surrendered for withdrawal of such Series C Preferred Stock, such Holder shall execute and deliver to the Depositary a written order so directing the Depositary and the Depositary may require that the Receipt or Receipts surrendered by such Holder for withdrawal of such shares of Series C Preferred Stock and money and other property, if any, be properly endorsed in blank or accompanied by a properly executed instrument of transfer in blank.

 

Delivery of the Series C Preferred Stock and the money and other property, if any, represented by Receipts surrendered for withdrawal shall be made by the Depositary at the Depositary’s Office, except that, at the request, risk and expense of the Holder surrendering such Receipt or Receipts and for the account of the Holder thereof, such delivery may be made at such other place as may be designated by such Holder.

 

Section 2.5 Limitations on Execution and Delivery, Transfer, Surrender and Exchange of Receipts. As a condition precedent to the execution and delivery, registration of transfer, split-up, combination, surrender or exchange of any Receipt, the Depositary, any of the Depositary’s Agents or the Corporation may require payment to it of a sum sufficient for the payment (or, in the event that the Depositary or the Corporation shall have made such payment, the reimbursement to it) of any charges or expenses payable by the Holder of a Receipt pursuant to Section 5.7, may require the production of evidence satisfactory to it as to the identity and genuineness of any signature, including a signature guarantee, and any other reasonable evidence of authority that may be required by the Depositary, and may also require compliance with such regulations, if any, as the Depositary or the Corporation may establish consistent with the provisions of this Deposit Agreement and/or applicable law.

 

The deposit of the Series C Preferred Stock may be refused, the delivery of Receipts against Series C Preferred Stock may be suspended, the registration of transfer of Receipts may be refused and the registration of transfer, surrender or exchange of outstanding Receipts may be suspended (i) during any period when the register of stockholders of the Corporation is closed or (ii) if any such action is deemed necessary or advisable by the Depositary, any of the Depositary’s Agents or the Corporation at any time or from time to time because of any requirement of law or of any government or governmental body or commission or under any provision of this Deposit Agreement.

 

Section 2.6 Lost Receipts, etc. In case any Receipt shall have been mutilated, destroyed, lost or stolen, the Depositary in its discretion may execute and deliver a Receipt of like form and tenor in exchange and substitution for such mutilated Receipt upon cancellation thereof, or in lieu of and in substitution for such destroyed, lost or stolen Receipt, upon (i) the filing by the Holder thereof with the Depositary of evidence satisfactory to the Depositary of such destruction or loss or theft of such Receipt, of the authenticity thereof and of his or her ownership thereof, (ii) the Holder thereof furnishing the Depositary with an affidavit and an open penalty surety bond satisfactory to the Depositary, and (iii) the payment of any reasonable expense (including reasonable fees, charges and expenses of the Depositary) in connection with such execution and delivery. Applicants for such substitute Receipts shall also comply with such other reasonable regulations and pay such other reasonable charges as the Depositary may prescribe and as required by Section 8-405 of the Uniform Commercial Code in effect in the State of New York.

 

5

 

Section 2.7 Cancellation and Destruction of Surrendered Receipts. All Receipts surrendered to the Depositary or any Depositary’s Agent shall be cancelled by the Depositary. Except as prohibited by applicable law or regulation, the Depositary is authorized and directed to destroy all Receipts so cancelled.

 

Section 2.8 Redemption of Series C Preferred Stock. Whenever the Corporation shall be permitted and shall elect to redeem shares of Series C Preferred Stock in accordance with the terms of the Articles Supplementary, it shall (unless otherwise agreed to in writing with the Depositary) give or cause to be given to the Depositary, not less than 30 days and not more than 60 days prior to the Redemption Date (as defined below), notice of the date of such proposed redemption of Series C Preferred Stock, the number of such shares held by the Depositary to be so redeemed, the applicable redemption price, and the place or places where the certificates evidencing such shares, if any, are to be surrendered for payment of the redemption price, which notice shall be accompanied by a certificate from the Corporation stating that such redemption of Series C Preferred Stock is in accordance with the provisions of the Articles Supplementary. On the date of such redemption, provided that the Corporation shall then have paid or caused to be paid in full to Computershare the redemption price of the Series C Preferred Stock to be redeemed, plus an amount equal to any declared and unpaid dividends, without regard to, or accumulation of, any undeclared dividends, to but excluding the date fixed for redemption, in accordance with the provisions of the Articles Supplementary, the Depositary shall redeem the number of Depositary Shares representing such Series C Preferred Stock. The Depositary shall mail notice of the Corporation’s redemption of Series C Preferred Stock and the proposed simultaneous redemption of the number of Depositary Shares representing the Series C Preferred Stock to be redeemed by first-class mail, postage prepaid (or another reasonably acceptable transmission method), not less than 30 days and not more than 60 days prior to the date fixed for redemption of such Series C Preferred Stock and Depositary Shares (the “Redemption Date”), to the Record Holders of the Receipts evidencing the Depositary Shares to be so redeemed at their respective last addresses as they appear on the records of the Depositary; but neither failure to mail any such notice of redemption of Depositary Shares to one or more such Holders nor any defect in any notice of redemption of Depositary Shares to one or more such Holders shall affect the sufficiency of the proceedings for redemption as to the other Holders. Each such notice shall be prepared by the Corporation and shall state: (i) the Redemption Date; (ii) the number of Depositary Shares to be redeemed and, if less than all the Depositary Shares held by any such Holder are to be redeemed, the number of such Depositary Shares held by such Holder to be so redeemed; (iii) the redemption price; (iv) the place or places where Receipts evidencing such Depositary Shares are to be surrendered for payment of the redemption price; and (v) that dividends in respect of the Series C Preferred Stock represented by such Depositary Shares to be redeemed will cease to accrue on such Redemption Date. In case less than all the outstanding Depositary Shares are to be redeemed, the Depositary Shares to be so redeemed shall be selected either pro rata or by lot.

 

Notice having been mailed or transmitted by the Depositary as aforesaid, from and after the Redemption Date (unless the Corporation shall have failed to provide the funds necessary to redeem the Series C Preferred Stock evidenced by the Depositary Shares called for redemption) (i) dividends on the shares of Series C Preferred Stock so called for Redemption shall cease to accrue from and after such date, (ii) the Depositary Shares being redeemed from such proceeds shall be deemed no longer to be outstanding, (iii) all rights of the Holders of Receipts evidencing such Depositary Shares (except the right to receive the amounts described in clause (iv) of this paragraph) shall, to the extent of such Depositary Shares, cease and terminate, and (iv) upon surrender in accordance with such redemption notice of the Receipts evidencing any such Depositary Shares called for redemption (properly endorsed or assigned for transfer, if the Depositary or applicable law shall so require), such Depositary Shares shall be redeemed by the Depositary at a redemption price per Depositary Share equal to 1/40th of the redemption price per share of Series C Preferred Stock so redeemed plus all money and other property, if any, represented by such Depositary Shares, including all amounts paid by the Corporation in respect of dividends (and not previously distributed to the Holders of Depositary Shares) in accordance with the provisions of the Articles Supplementary.

 

If fewer than all of the Depositary Shares evidenced by a Receipt are called for redemption, the Depositary will deliver to the Holder of such Receipt upon its surrender to the Depositary, together with the redemption payment, a new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and not called for redemption.

 

Section 2.9 Deposits. All funds received by Computershare under this Deposit Agreement that are to be distributed or applied by Computershare in the performance of the services hereunder (the “Funds”) shall be held by Computershare as agent for the Corporation and deposited in one or more bank accounts to be maintained by Computershare in its name as agent for the Corporation. Until paid pursuant to this Deposit Agreement,

 

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Computershare may hold or invest the Funds through such accounts in: (i) obligations of, or guaranteed by, the United States of America, (ii) commercial paper obligations rated A-1 or P-1 or better by Standard & Poor’s Corporation (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), respectively, (iii) money market funds that comply with Rule 2a-7 of the Investment Company Act of 1940, or (iv) demand deposit accounts, short-term certificates of deposit, bank repurchase agreements or bankers’ acceptances, of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). Computershare shall have no responsibility or liability for any diminution of the Funds that may result from any deposit or investment made by Computershare in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. Computershare may from time to time receive interest, dividends or other earnings in connection with such deposits or investments. Computershare shall not be obligated to pay such interest, dividends or earnings to the Corporation, any holder or any other party.

 

Section 2.10 Receipts Issuable in Global Registered Form. If the Corporation shall determine in a writing delivered to the Depositary that the Receipts are to be issued in whole or in part in the form of one or more Global Registered Receipts, then the Depositary shall, in accordance with the other provisions of this Deposit Agreement, execute and deliver one or more Global Registered Receipts evidencing the Receipts, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Receipts to be represented by such Global Registered Receipt or Global Registered Receipts, and (ii) shall be registered in the name of the Global Receipt Depository therefor or its nominee.

 

Notwithstanding any other provision of this Deposit Agreement to the contrary, unless otherwise provided in the Global Registered Receipt, a Global Registered Receipt may only be transferred in whole and only by the applicable Global Receipt Depository for such Global Registered Receipt to a nominee of such Global Receipt Depository, or by a nominee of such Global Receipt Depository to such Global Receipt Depository or another nominee of such Global Receipt Depository, or by such Global Receipt Depository or any such nominee to a successor Global Receipt Depository for such Global Registered Receipt selected or approved by the Corporation or to a nominee of such successor Global Receipt Depository. Except as provided below, owners solely of beneficial interests in a Global Registered Receipt shall not be entitled to receive physical delivery of the Receipts represented by such Global Registered Receipt. Neither any such beneficial owner nor any direct or indirect participant of a Global Receipt Depository shall have any rights under this Deposit Agreement with respect to any Global Registered Receipt held on their behalf by a Global Receipt Depository and such Global Receipt Depository may be treated by the Corporation, the Depositary and any director, officer, employee or agent of the Corporation or the Depositary as the holder of such Global Registered Receipt for all purposes whatsoever. Unless and until definitive Receipts are delivered to the owners of the beneficial interests in a Global Registered Receipt, (1) the applicable Global Receipt Depository will make book-entry transfers among its participants and receive and transmit all payments and distributions in respect of the Global Registered Receipts to such participants, in each case, in accordance with its applicable procedures and arrangements, and (2) whenever any notice, payment or other communication to the holders of Global Registered Receipts is required under this Deposit Agreement, the Corporation and the Depositary shall give all such notices, payments and communications specified herein to be given to such holders to the applicable Global Receipt Depository.

 

If an Exchange Event has occurred with respect to any Global Registered Receipt, then the Depositary shall, upon receipt of a written order from the Corporation for the execution and delivery of individual definitive registered Receipts in exchange for such Global Registered Receipt, execute and deliver individual definitive registered Receipts, in authorized denominations and of like tenor and terms in an aggregate principal amount equal to the principal amount of the Global Registered Receipt so exchanged, in exchange for such Global Registered Receipt.

 

Definitive registered Receipts issued in exchange for a Global Registered Receipt pursuant to this Section 2.10 shall be registered in such names and in such authorized denominations as the Global Receipt Depository for such Global Registered Receipt, pursuant to instructions from its participants, shall instruct the Depositary in writing. The Depositary shall deliver such Receipts to the persons in whose names such Receipts are so registered.

 

Notwithstanding anything to the contrary in this Deposit Agreement, should the Corporation determine that the Receipts should be issued as a Global Registered Receipt, the parties hereto shall comply with the terms of any Letter of Representations.

 

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ARTICLE III

 

CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE CORPORATION

 

Section 3.1 Filing Proofs, Certificates and Other Information. Any Holder of a Receipt may be required from time to time to file such proof of residence, or other matters or other information, to execute such certificates and to make such representations and warranties as the Depositary or the Corporation may reasonably deem necessary or proper. The Depositary or the Corporation may withhold the delivery, or delay the registration of transfer or redemption, of any Receipt or the withdrawal of the Series C Preferred Stock and all money or other property, if any, represented by the Depositary Shares and evidenced by a Receipt or the distribution of any dividend or other distribution or the sale of any rights or of the proceeds thereof until such proof or other information is filed or such certificates are executed or such representations and warranties are made.

 

Section 3.2 Payment of Taxes or Other Governmental Charges. Holders of Receipts shall be obligated to make payments to the Depositary of certain charges and expenses, as provided in Section 5.7. Registration of transfer of any Receipt or any withdrawal of Series C Preferred Stock and all money or other property, if any, represented by the Depositary Shares evidenced by such Receipt may be refused until any such payment due is made, and any dividends, interest payments or other distributions may be withheld or any part of or all the Series C Preferred Stock or other property represented by the Depositary Shares evidenced by such Receipt and not theretofore sold may be sold for the account of the Holder thereof (after attempting by reasonable means to notify such Holder prior to such sale), and such dividends, interest payments or other distributions or the proceeds of any such sale may be applied to any payment of such charges or expenses, the Holder of such Receipt remaining liable for any deficiency.

 

Section 3.3 Warranty as to Series C Preferred Stock. The Corporation hereby represents and warrants that the Series C Preferred Stock, when issued, will be duly authorized, validly issued, fully paid and nonassessable. Such representation and warranty shall survive the deposit of the Series C Preferred Stock and the issuance of the related Receipts.

 

Section 3.4 Warranty as to Receipts. The Corporation hereby represents and warrants that the Receipts, when issued, will represent legal and valid interests in the Series C Preferred Stock. Such representation and warranty shall survive the deposit of the Series C Preferred Stock and the issuance of the Receipts.

 

ARTICLE IV

 

THE DEPOSITED SECURITIES; NOTICES

 

Section 4.1 Cash Distributions. Whenever Computershare shall receive any cash dividend or other cash distribution on the Series C Preferred Stock, Computershare shall, subject to Sections 3.1 and 3.2, distribute to Record Holders of Receipts on the record date fixed pursuant to Section 4.4 such amounts of such dividend or distribution as are, as nearly as practicable, in proportion to the respective numbers of Depositary Shares evidenced by the Receipts held by such Holders; provided, however, that in case the Corporation or Computershare shall be required to withhold and shall withhold from any cash dividend or other cash distribution in respect of the Series C Preferred Stock an amount on account of taxes, the amount made available for distribution or distributed in respect of Depositary Shares shall be reduced accordingly. Computershare shall distribute or make available for distribution, as the case may be, only such amount, however, as can be distributed without attributing to any Holder of Receipts a fraction of one cent, and any balance not so distributable shall be held by the Depositary (without liability for interest thereon) and shall be added to and be treated as part of the next sum received by Computershare for distribution to Record Holders of Receipts then outstanding. Each Holder of a Receipt shall provide the Depositary with its certified tax identification number on a properly completed Form W-8 or W-9, as may be applicable. Each Holder of a Receipt acknowledges that, in the event of non-compliance with the preceding sentence, the provisions of the Internal Revenue Code of 1986, as amended, may require withholding by the Depositary of a portion of any of the distributions thereto to be made hereunder.

 

Section 4.2 Distributions Other than Cash, Rights, Preferences or Privileges. Whenever the Depositary shall receive any distribution other than cash, rights, preferences or privileges upon the Series C Preferred Stock, the Depositary

 

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shall, at the direction of the Corporation, subject to Sections 3.1 and 3.2, distribute to Record Holders of Receipts on the record date fixed pursuant to Section 4.4 such amounts of the securities or property received by it as are, as nearly as practicable, in proportion to the respective numbers of Depositary Shares evidenced by such Receipts held by such Holders, in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution. If in the opinion of the Depositary such distribution cannot be made proportionately among such Record Holders in accordance with the direction of the Corporation, or if for any other reason (including any requirement that the Corporation or the Depositary withhold an amount on account of taxes) the Depositary deems, after consultation with the Corporation, such distribution not to be feasible, the Depositary may, with the approval of the Corporation, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including the sale (at public or private sale) of the securities or property thus received, or any part thereof, in a commercially reasonable manner. The net proceeds of any such sale shall, subject to Sections 3.1 and 3.2, be distributed or made available for distribution, as the case may be, by Computershare to Record Holders of Receipts as provided by Section 4.1 in the case of a distribution received in cash. The Corporation shall not make any distribution of any such securities or property to the Depositary and the Depositary shall not make any distribution of any such securities or property to the Holders of Receipts unless the Corporation shall have provided an opinion of counsel reasonably satisfactory to the Depositary stating that such securities or property have been registered under the Securities Act or do not need to be registered in connection with such distributions.

 

Section 4.3 Subscription Rights, Preferences or Privileges. If the Corporation shall at any time offer or cause to be offered to the persons in whose names the Series C Preferred Stock is recorded on the books of the Corporation any rights, preferences or privileges to subscribe for or to purchase any securities or any rights, preferences or privileges of any other nature, such rights, preferences or privileges shall in each such instance be communicated promptly to the Depositary and thereafter such rights, options or privileges shall be made available by the Depositary to the Record Holders of Receipts in such manner as the Corporation shall direct and the Depositary shall agree, either by the issue to such Record Holders of warrants representing such rights, preferences or privileges or by such other method as may be approved by the Depositary and the Corporation; provided, however, that (i) if at the time of issue or offer of any such rights, preferences or privileges the Depositary determines that it is not lawful or (after consultation with the Corporation) not feasible to make such rights, preferences or privileges available to Holders of Receipts by the issue of warrants or otherwise, or (ii) if and to the extent so instructed by Holders of Receipts who do not desire to exercise such rights, preferences or privileges, then the Depositary, in its discretion (with approval of the Corporation, in any case where the Depositary has determined that it is not feasible to make such rights, preferences or privileges available), may, if applicable laws or the terms of such rights, preferences or privileges permit such transfer, sell such rights, preferences or privileges at public or private sale, at such place or places and upon such terms as it may deem proper. The net proceeds of any such sale shall, subject to Sections 3.1 and 3.2, be distributed by the Depositary to the Record Holders of Receipts entitled thereto as provided by Section 4.1 in the case of a distribution received in cash. The Depositary shall not make any distribution of such rights, preferences or privileges, unless the Corporation shall have provided to the Depositary an opinion of counsel stating that such rights, preferences or privileges have been registered under the Securities Act or do not need to be registered.

 

The Corporation shall notify the Depositary whether registration under the Securities Act of the securities to which any rights, preferences or privileges relate is required in order for Holders of Receipts to be offered or sold the securities to which such rights, preferences or privileges relate, and the Corporation agrees with the Depositary that it will file promptly a registration statement pursuant to the Securities Act with respect to such rights, preferences or privileges and securities and use its best efforts and take all steps available to it to cause such registration statement to become effective sufficiently in advance of the expiration of such rights, preferences or privileges to enable such Holders to exercise such rights, preferences or privileges. In no event shall the Depositary make available to the Holders of Receipts any right, preference or privilege to subscribe for or to purchase any securities unless and until such registration statement shall have become effective, or the Corporation shall have provided to the Depositary an opinion of counsel to the effect that the offering and sale of such securities to the Holders are exempt from registration under the provisions of the Securities Act.

 

The Corporation shall notify the Depositary whether any other action under the laws of any jurisdiction or any governmental or administrative authorization, consent or permit is required in order for such rights, preferences or privileges to be made available to Holders of Receipts, and the Corporation agrees with the Depositary that the Corporation will use its reasonable best efforts to take such action or obtain such authorization, consent or permit

 

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sufficiently in advance of the expiration of such rights, preferences or privileges to enable such Holders to exercise such rights, preferences or privileges.

 

Section 4.4 Notice of Dividends, etc.; Fixing Record Date for Holders of Receipts. Whenever any cash dividend or other cash distribution shall become payable or any distribution other than cash shall be made, or if rights, preferences or privileges shall at any time be offered, with respect to the Series C Preferred Stock, or whenever the Depositary shall receive notice of any meeting at which holders of the Series C Preferred Stock are entitled to vote or of which holders of the Series C Preferred Stock are entitled to notice, or whenever the Depositary and the Corporation shall decide it is appropriate, the Depositary shall in each such instance fix a record date (which shall be the same date as the record date fixed by the Corporation with respect to or otherwise in accordance with the terms of the Series C Preferred Stock) for the determination of the Holders of Receipts who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof, or to give instructions for the exercise of voting rights at any such meeting, or who shall be entitled to notice of such meeting or for any other appropriate reasons.

 

Section 4.5 Voting Rights. Subject to the provisions of the Articles Supplementary, upon receipt of notice of any meeting at which the holders of the Series C Preferred Stock are entitled to vote, the Depositary shall, as soon as practicable thereafter, mail to the Record Holders of Receipts a notice prepared by the Corporation which shall contain (i) such information as is contained in such notice of meeting and (ii) a statement that the Holders may, subject to any applicable restrictions, instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Series C Preferred Stock represented by their respective Depositary Shares (including an express indication that instructions may be given to the Depositary to give a discretionary proxy to a person designated by the Corporation) and a brief statement as to the manner in which such instructions may be given. Upon the written request of the Holders of Receipts on the relevant record date, the Depositary shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such requests, the maximum number of whole shares of Series C Preferred Stock represented by the Depositary Shares evidenced by all Receipts as to which any particular voting instructions are received. The Corporation hereby agrees to take all reasonable action which may be deemed necessary by the Depositary in order to enable the Depositary to vote such Series C Preferred Stock or cause such Series C Preferred Stock to be voted. In the absence of specific instructions from the Holder of a Receipt, the Depositary will not vote (but, at its discretion, may appear at any meeting with respect to such Series C Preferred Stock unless directed to the contrary by the Holders of all the Receipts) to the extent of the Series C Preferred Stock represented by the Depositary Shares evidenced by such Receipt.

 

Section 4.6 Changes Affecting Deposited Securities and Reclassifications, Recapitalizations, etc. Upon any change in par or stated value, split-up, combination or any other reclassification of the Series C Preferred Stock, subject to the provisions of the Articles Supplementary, or upon any recapitalization, reorganization, merger or consolidation affecting the Corporation or to which it is a party, the Depositary may in its discretion with the approval of, and shall upon the instructions of, the Corporation, and (in either case) in such manner as the Depositary may deem equitable, (i) make such adjustments as are certified by the Corporation in the fraction of an interest in one share of Series C Preferred Stock represented by one Depositary Share and in the ratio of the redemption price per Depositary Share to the redemption price per share of Series C Preferred Stock, in each case as may be necessary fully to reflect the effects of such change in par or stated value, split-up, combination or other reclassification of the Series C Preferred Stock, or of such recapitalization, reorganization, merger or consolidation and (ii) treat any securities which shall be received by the Depositary in exchange for or upon conversion of or in respect of the Series C Preferred Stock as new deposited securities so received in exchange for or upon conversion of or in respect of such Series C Preferred Stock. In any such case the Depositary may in its discretion, with the approval of the Corporation, execute and deliver additional Receipts or may call for the surrender of all outstanding Receipts to be exchanged for new Receipts specifically describing such new deposited securities. Anything to the contrary herein notwithstanding, Holders of Receipts shall have the right from and after the effective date of any such change in par or stated value, split-up, combination or other reclassification of the Series C Preferred Stock or any such recapitalization, reorganization, merger or consolidation to surrender such Receipts to the Depositary with instructions to convert, exchange or surrender the Series C Preferred Stock represented thereby only into or for, as the case may be, the kind and amount of shares and other securities and property and cash into which the Series C Preferred Stock represented by such Receipts might have been converted or for which such Series C Preferred Stock might have been exchanged or surrendered immediately prior to the effective date of such transaction.

 

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Section 4.7 Delivery of Reports. The Depositary shall furnish to Holders of Receipts any reports and communications received from the Corporation which is received by the Depositary and which the Corporation is required to furnish to the holders of the Series C Preferred Stock.

 

Section 4.8 Lists of Receipt Holders. Reasonably promptly upon request from time to time by the Corporation, at the sole expense of the Corporation, the Depositary shall furnish to it a list, as of the most recent practicable date, of the names, addresses and holdings of Depositary Shares of all registered Holders of Receipts.

 

ARTICLE V

 

THE DEPOSITARY, THE DEPOSITARY’S AGENTS, THE REGISTRAR AND THE

CORPORATION

 

Section 5.1 Maintenance of Offices, Agencies and Transfer Books by the Depositary; Registrar. Upon execution of this Deposit Agreement, the Depositary shall maintain at the Depositary’s Office, facilities for the execution and delivery, registration and registration of transfer, surrender and exchange of Receipts, and at the offices of the Depositary’s Agents, if any, facilities for the delivery, registration of transfer, surrender and exchange of Receipts, all in accordance with the provisions of this Deposit Agreement.

 

The Depositary shall keep books at the Depositary’s Office for the registration and registration of transfer of Receipts, which books at all reasonable times during regular business hours shall be open for inspection by the Record Holders of Receipts; provided that any such Holder requesting to exercise such right shall certify to the Depositary that such inspection shall be for a proper purpose reasonably related to such person’s interest as an owner of Depositary Shares evidenced by the Receipts.

 

The Depositary may close such books, at any time or from time to time, when deemed expedient by it in connection with the performance of its duties hereunder, or because of any requirement of law or of any government, governmental body or commission, stock exchange or any applicable self-regulatory body.

 

The Depositary may, with the approval of the Corporation, appoint a Registrar for registration of the Receipts or the Depositary Shares evidenced thereby. If the Receipts or the Depositary Shares evidenced thereby or the Series C Preferred Stock represented by such Depositary Shares shall be listed on one or more national securities exchanges, the Depositary will appoint a Registrar (acceptable to the Corporation) for registration of the Receipts or Depositary Shares in accordance with any requirements of such exchange. Such Registrar (which may be the Depositary if so permitted by the requirements of any such exchange) may be removed and a substitute registrar appointed by the Depositary upon the request or with the approval of the Corporation. If the Receipts, Depositary Shares or Series C Preferred Stock are listed on one or more other securities exchanges, the Depositary will, at the request of the Corporation, arrange such facilities for the delivery, registration, registration of transfer, surrender and exchange of the Receipts, Depositary Shares or Series C Preferred Stock as may be required by law or applicable securities exchange regulation.

 

Section 5.2 Prevention of or Delay in Performance by the Depositary, the Depositary’s Agents, the Registrar, the Transfer Agent or the Corporation. Neither the Depositary nor any Depositary’s Agent nor any Registrar nor any Transfer Agent nor the Corporation shall incur any liability to any Holder of a Receipt or any beneficial owner thereof if by reason of any provision of any present or future law, or regulation thereunder, of the United States of America or of any other governmental authority or, in the case of the Depositary, the Depositary’s Agent or the Registrar or any Transfer Agent, by reason of any provision, present or future, of the Corporation’s charter, as amended or supplemented (including the Articles Supplementary), or by reason of any act of God or war or other circumstance beyond the control of the relevant party, the Depositary, the Depositary’s Agent, the Registrar, any Transfer Agent, or the Corporation shall be prevented or forbidden from, or subjected to any penalty on account of, doing or performing any act or thing which the terms of this Deposit Agreement provide shall be done or performed; nor shall the Depositary, any Depositary’s Agent, any Registrar, any Transfer Agent or the Corporation, as the case may be, incur liability to any Holder of a Receipt or any beneficial owner thereof (i) by reason of any nonperformance or delay, caused as aforesaid, in the performance of any act or thing which the terms of this Deposit Agreement shall provide shall or may be done or performed, or (ii) by reason of any exercise of, or failure to

 

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exercise, any discretion provided for in this Deposit Agreement except as otherwise explicitly set forth in this Deposit Agreement.

 

Section 5.3 Obligations of the Depositary, the Depositary’s Agents, the Registrar, the Transfer Agent and the Corporation. Neither the Depositary nor any Depositary’s Agent nor any Registrar nor any Transfer Agent nor the Corporation assumes any obligation or shall be subject to any liability to any person under this Deposit Agreement to Holders of Receipts other than for its willful misconduct, fraud or bad faith (each as determined by a final non-appealable judgment of a court of competent jurisdiction) in the performance of the such duties as are specifically set forth in this Deposit Agreement.

 

Notwithstanding anything in this Deposit Agreement to the contrary, neither the Depositary, nor the Depositary’s Agent nor any Registrar nor any Transfer Agent nor the Corporation, as the case may be, shall be liable in any event for special, punitive, incidental, indirect or consequential losses or damages of any kind whatsoever (including but not limited to lost profits) even if that party has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

Neither the Depositary nor any Depositary’s Agent nor any Registrar nor the Corporation shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of the Series C Preferred Stock, the Depositary Shares or the Receipts which in its opinion may involve it in expense or liability unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required.

 

Neither the Depositary nor any Depositary’s Agent nor any Registrar nor any Transfer Agent nor the Corporation shall be liable for any action or any failure to act by it in reliance upon the written advice of legal counsel or accountants, or information from any person presenting Series C Preferred Stock for deposit, any Holder of a Receipt or any other person believed by it in good faith to be competent to give such information. The Depositary, any Depositary’s Agent, any Registrar or Transfer Agent and the Corporation may each rely and shall each be protected in acting upon or omitting to act upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

The Depositary shall not be responsible for any failure to carry out any instruction to vote any of the shares of Series C Preferred Stock or for the manner or effect of any such vote made, as long as any such action or non-action is not taken in bad faith. The Depositary undertakes, and any Registrar and Transfer Agent shall be required to undertake, to perform such duties and only such duties as are specifically set forth in this Deposit Agreement, and no implied covenants or obligations shall be read into this Deposit Agreement against the Depositary or any Registrar or any Transfer Agent.

 

The Depositary, the Depositary’s Agents, and any Registrar and Transfer Agent may own and deal in any class of securities of the Corporation and its affiliates and in Receipts. The Depositary may also act as transfer agent or registrar of any of the other securities of the Corporation and its affiliates.

 

The Depositary shall not be under any liability for interest on any monies at any time received by it pursuant to any of the provisions of this Deposit Agreement or of the Receipts, the Depositary Shares or the Series C Preferred Stock, nor shall it be obligated to segregate such monies from other monies held by it, except as required by law. The Depositary shall not be responsible for advancing funds on behalf of the Corporation and shall have no duty or obligation to make any payments if it has not timely received sufficient funds to make timely payments.

 

It is intended that none of the Depositary, any Depositary’s Agent, any Registrar or any Transfer Agent, as the case may be, shall be deemed to be an “issuer” of the securities under the federal securities laws or applicable state securities laws, it being expressly understood and agreed that the Depositary, any Depositary’s Agent, any Registrar and any Transfer Agent are acting only in a ministerial capacity as Depositary, Registrar or Transfer Agent, as applicable, for the deposited Depositary Shares.

 

Neither the Depositary, any Depositary’s Agent, any Registrar nor any Transfer Agent (or their respective officers, directors, employees or agents) makes any representation or has any responsibility as to the validity of any registration statement pursuant to which any securities may be registered under the Securities Act, the deposited

 

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Series C Preferred Stock, the Depositary Shares, the Receipts (except its countersignature thereon) or any instruments referred to therein or herein, or as to the correctness of any statement made in any such registration statement or herein; provided, however, that the Depositary is responsible for its representations in this Deposit Agreement, and for any information provided by the Depositary to the Company in writing for the purpose of including such information in any such registration statement.

 

The Depositary assumes no responsibility for the correctness of the description that appears in the Receipts. Notwithstanding any other provision herein or in the Receipts, the Depositary makes no warranties or representations as to the validity or genuineness of any Series C Preferred Stock at any time deposited with the Depositary hereunder or of the Depositary Shares, as to the validity or sufficiency of this Deposit Agreement (except as to due authorization and due execution by the Depositary), as to the value of the Depositary Shares or as to any right, title or interest of the record holders of Receipts in and to the Depositary Shares. The Depositary shall not be accountable for the use or application by the Corporation of the Depositary Shares or the Receipts or the proceeds thereof.

 

In the event the Depositary, the Depositary’s Agent, any Registrar or any Transfer Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by it hereunder, or in the administration of any of the provisions of this Deposit Agreement, the Depositary shall deem it necessary or desirable that a matter be proved or established prior to taking, omitting or suffering to take any action hereunder, the Depositary, the Depositary’s Agent, any Registrar or any Transfer Agent, as the case may be, may in its sole discretion upon written notice to the Corporation, refrain from taking any action and shall be fully protected and shall not be liable in any way to the Corporation, any Holders of Receipts or any other person for refraining from taking such action, unless the Depositary, the Depositary’s Agent, the Registrar or Transfer Agent, as applicable, receives written instructions or a certificate signed by the Corporation which (x) eliminates such ambiguity or uncertainty or (y) proves or establishes the applicable matter, in each case to the satisfaction of the Depositary, the Depositary’s Agent, any Registrar or Transfer Agent, as applicable.

 

In the event the Depositary, any Depositary’s Agent, any Registrar or any Transfer Agent shall receive conflicting claims, requests or instructions from any Holders of Receipts, on the one hand, and the Corporation, on the other hand, the Depositary, any Depositary’s Agent, any Registrar or any Transfer Agent, shall be entitled to act on such claims, requests or instructions received from the Corporation, and shall be entitled to the indemnification set forth in Section 5.6 hereof in connection with any action so taken.

 

From time to time, the Corporation may provide the Depositary, any Depositary’s Agent, any Registrar or any Transfer Agent with instructions concerning the services performed by the Depositary under this Deposit Agreement. In addition, at any time, the Depositary, any Depositary’s Agent, any Registrar or any Transfer Agent may apply to any officer of the Corporation for instruction, and may consult with legal counsel for the Depositary or the Corporation with respect to any matter arising in connection with the services to be performed by the Depositary, Depositary’s Agent, Registrar or Transfer Agent, as applicable, under this Deposit Agreement. The Depositary, Depositary’s Agent, Registrar or Transfer Agent, as applicable, and their respective agents and subcontractors shall not be liable and shall be indemnified by the Corporation for any action taken or omitted by them in reliance upon any instructions from the Corporation or upon the advice or opinion of such counsel. None of the Depositary, Depositary’s Agent, Registrar or Transfer Agent, as applicable, shall be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Corporation.

 

Notwithstanding anything contained herein to the contrary, excluding the Depositary’s willful misconduct, fraud or bad faith, the aggregate liability of the Depositary, any Depositary’s Agent, Transfer Agent, and Registrar during any term of this Deposit Agreement with respect to, arising from, or arising in connection with this Deposit Agreement, or from all services provided or omitted to be provided under this Deposit Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Corporation to Depositary as fees and charges, but not including reimbursable expenses, during the twelve (12) months immediately preceding the event for which recovery from Depositary is being sought.

 

The Depositary, any Depositary’s Agent, Transfer Agent, and Registrar hereunder:

 

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(i)                                     shall have no duties or obligations other than those specifically set forth herein (and no implied duties or obligations), or as may subsequently be agreed to in writing by the parties;

 

(ii)                                  shall have no obligation to make payment hereunder unless the Corporation shall have provided the necessary federal or other immediately available funds or securities or property, as the case may be, to pay in full amounts due and payable with respect thereto;

 

(iii)                               shall not be obligated to institute any legal or other proceeding; if, however, the Depositary, any Depositary’s Agent, the Transfer Agent or the Registrar determines to institute any legal or other proceeding, and, where the taking of such action might in such person’s reasonable judgment subject or expose it to any expense or liability, it shall not be required to act unless it shall have been furnished with an indemnity satisfactory to it;

 

(iv)                              may rely on and shall be authorized and protected in acting or omitting to act upon any certificate, instrument, opinion, notice, letter, facsimile transmission or other document or security delivered to it and believed by it to be genuine and to have been signed by the proper party or parties, and shall have no responsibility for determining the accuracy thereof;

 

(v)                                 may rely on and shall be authorized and protected in acting or omitting to act upon the written, telephonic, electronic and oral instructions of officers of the Corporation given in accordance with this Deposit Agreement, with respect to any matter relating to its actions as Depositary, Transfer Agent or Registrar covered by this Agreement (or supplementing or qualifying any such actions), of officers of the Corporation;

 

(vi)                              may consult counsel satisfactory to it (who may be an employee of the Depositary or the Registrar or counsel to the Corporation), and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in accordance with the advice of such counsel;

 

(vii)                           shall not be called upon at any time to advise any person with respect to the Series C Preferred Stock, Depositary Shares or Receipts;

 

(viii)                        shall not be liable or responsible for any recital or statement contained in any documents relating hereto or to the Series C Preferred Stock, the Depositary Shares or Receipts; and

 

(ix)                              shall not be liable in any respect on account of the identity, authority or rights of the parties (other than the Depositary) executing or delivering or purporting to execute or deliver this Agreement or any documents or papers deposited or called for under this Agreement.

 

The rights and obligations of the parties under this Section 5.3 shall survive the replacement, removal, resignation or any succession of any Depositary, Registrar, Transfer Agent or Depositary’s Agent or the termination of this Deposit Agreement.

 

Section 5.4 Resignation and Removal of the Depositary; Appointment of Successor Depositary. The Depositary may at any time resign as Depositary hereunder by delivering notice of its election to do so to the Corporation, such resignation to take effect upon the appointment of a successor Depositary and its acceptance of such appointment as hereinafter provided.

 

The Depositary may at any time be removed by the Corporation by notice of such removal delivered to the Depositary, such removal to take effect upon the appointment of a successor Depositary hereunder and its acceptance of such appointment as hereinafter provided.

 

In case at any time the Depositary acting hereunder shall resign or be removed, the Corporation shall, within 60 days after the delivery of the notice of resignation or removal, as the case may be, appoint a successor Depositary, which shall be (i) a bank or trust company having its principal office in the United States of America and having a combined capital and surplus, along with its affiliates, of at least $50,000,000 or (ii) an affiliate of such person. If no successor Depositary shall have been so appointed and have accepted appointment within 60 days after delivery of

 

14

 

such notice, the resigning or removed Depositary may petition any court of competent jurisdiction for the appointment of a successor Depositary. Every successor Depositary shall execute and deliver to its predecessor and to the Corporation an instrument in writing accepting its appointment hereunder, and thereupon such successor Depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor and for all purposes shall be the Depositary under this Deposit Agreement, and such predecessor, upon payment of all sums due it and on the written request of the Corporation, shall promptly execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all right, title and interest in the Series C Preferred Stock and any moneys or property held hereunder to such successor, and shall deliver to such successor a list of the Record Holders of all outstanding Receipts and such records, books and other information in its possession relating thereto. Any successor Depositary shall promptly mail notice of its appointment to the Record Holders of Receipts at the Corporation’s sole expense.

 

Any entity into or with which the Depositary may be merged, consolidated or converted shall be the successor of the Depositary without the execution or filing of any document or any further act, and notice thereof shall not be required hereunder. Such successor Depositary may authenticate the Receipts in the name of the predecessor Depositary or its own name as successor Depositary.

 

The provisions of this Section 5.4 as they apply to the Depositary apply to the Registrar and Transfer Agent, as if specifically enumerated herein.

 

Section 5.5 Corporate Notices and Reports. The Corporation agrees that it will deliver to the Depositary, and the Depositary will, promptly after receipt thereof, transmit to the Record Holders of Receipts, in each case at the addresses recorded in the Depositary’s books, copies of all notices and reports (including without limitation financial statements) required by law, by the rules of any national securities exchange upon which the Series C Preferred Stock, the Depositary Shares or the Receipts are listed or by the Corporation’s Charter, as amended or supplemented (including the Articles Supplementary), to be furnished to the Record Holders of Receipts. Such transmission will be at the Corporation’s expense and the Corporation will provide the Depositary with such number of copies of such documents as the Depositary may reasonably request. In addition, the Depositary will transmit to the Record Holders of Receipts at the Corporation’s expense such other documents as may be requested by the Corporation.

 

Section 5.6 Indemnification by the Corporation. Notwithstanding Section 5.3 to the contrary, the Corporation shall indemnify the Depositary, any Depositary’s Agent, any Transfer Agent and any Registrar (including each of their officers, directors, agents and employees) against, and hold each of them harmless from, any loss, damage, cost, penalty, liability or expense (including the reasonable costs and expenses of defending itself) which may arise out of acts performed, suffered or omitted to be taken in connection with this Deposit Agreement and the Receipts by the Depositary, any Transfer Agent, any Registrar or any of their respective agents (including any Depositary’s Agent) and any transactions or documents contemplated hereby, except for any liability arising out of gross negligence, willful misconduct or bad faith on the respective parts of any such person or persons. The obligations of the Corporation and the rights of the Depositary set forth in this Section 5.6 shall survive the replacement, removal, resignation or any succession of any Depositary, Registrar or Depositary’s Agent or the termination of this Deposit Agreement.

 

Section 5.7 Fees, Charges and Expenses. The Corporation agrees promptly to pay the Depositary the compensation to be agreed upon with the Corporation for all services rendered by the Depositary hereunder and to reimburse the Depositary for its reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) incurred by the Depositary without gross negligence, willful misconduct or bad faith on its part (or on the part of any agent or Depositary Agent) in connection with the services rendered by it (or such agent or Depositary Agent) hereunder. The Corporation shall pay all charges of the Depositary in connection with the initial deposit of the Series C Preferred Stock and the initial issuance of the Depositary Shares, all withdrawals of shares of Series C Preferred Stock by Holders of Receipts, and any redemption or exchange of the Series C Preferred Stock at the option of the Corporation. The Corporation shall pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. All other transfer and other taxes and governmental charges shall be at the expense of Holders of Depositary Shares evidenced by Receipts. If, at the request of a Holder of Receipts, the Depositary incurs charges or expenses for which the Corporation is not otherwise liable hereunder, such Holder will

 

15

 

be liable for such charges and expenses; provided, however, that the Depositary may, at its sole option, require a Holder of a Receipt to prepay the Depositary any charge or expense the Depositary has been asked to incur at the request of such Holder. The Depositary shall present its statement for charges and expenses to the Corporation at such intervals as the Corporation and the Depositary may agree.

 

ARTICLE VI

 

AMENDMENT AND TERMINATION

 

Section 6.1 Amendment. The form of the Receipts and any provisions of this Deposit Agreement may at any time and from time to time be amended by agreement between the Corporation and the Depositary; provided, however, that no such amendment which shall materially and adversely alter the rights of the Holders of Receipts shall be effective against the Holders of Receipts unless such amendment shall have been approved by the Holders of Receipts representing in the aggregate at least a majority of the Depositary Shares then outstanding. Every Holder of an outstanding Receipt at the time any such amendment becomes effective shall be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right, subject to the provisions of Sections 2.5 and 2.6 and Article III, of any owner of Depositary Shares to surrender any Receipt evidencing such Depositary Shares to the Depositary with instructions to deliver to the Holder the Series C Preferred Stock and all money and other property, if any, represented thereby, except in order to comply with mandatory provisions of applicable law or the rules and regulations of any governmental body, agency or commission, or applicable securities exchange. As a condition precedent to the Depositary’s execution of any amendment, the Corporation shall deliver to the Depositary a certificate from a duly authorized officer of the Corporation that states that the proposed amendment is in compliance with the terms of this Section 6.1.

 

Section 6.2 Termination. This Deposit Agreement may be terminated by the Corporation or the Depositary if (i) all outstanding Depositary Shares issued hereunder have been redeemed pursuant to Section 2.8, (ii) there shall have been made a final distribution in respect of the Series C Preferred Stock in connection with any liquidation, dissolution or winding up of the Corporation and such distribution shall have been distributed to the Holders of Receipts representing Depositary Shares pursuant to Sections 4.1 or 4.2, as applicable, or (iii) upon the consent of Holders of Receipts representing in the aggregate not less than a majority of the Depositary Shares outstanding. In addition, either the Corporation or the Depositary may terminate this Depositary Agreement at any time upon a material breach of this Deposit Agreement by the other that is not cured within thirty days after the date of written notice thereof by the terminating party to the breaching party.

 

Upon the termination of this Deposit Agreement, the Corporation shall be discharged from all obligations under this Deposit Agreement except for its obligations to the Depositary, any Depositary’s Agent, any Transfer Agent and any Registrar under Sections 5.3, 5.6 and 5.7.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1 Counterparts. This Deposit Agreement may be executed in any number of counterparts, and by each of the parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed an original, but all such counterparts taken together shall constitute one and the same instrument. A signature to this Deposit Agreement transmitted electronically shall have the same authority, effect, and enforceability as an original signature.

 

Section 7.2 Exclusive Benefit of Parties. This Deposit Agreement is for the exclusive benefit of the parties hereto, and their respective successors hereunder, and shall not be deemed to give any legal or equitable right, remedy or claim to any other person whatsoever.

 

Section 7.3 Invalidity of Provisions. In case any one or more of the provisions contained in this Deposit Agreement or in the Receipts should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or

 

16

 

disturbed thereby; provided, however, that if such provision affects the rights, duties, liabilities or obligations of the Depositary, the Transfer Agent or the Registrar, such person shall be entitled to resign immediately.

 

Section 7.4 Notices. Any and all notices to be given to the Corporation hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail or overnight delivery service, or by facsimile transmission (receipt confirmed) or electronic mail (receipt confirmed), addressed to the Corporation at:

 

MB Financial, Inc.

6111 N. River Road

Rosemont, IL 60018

Attention: Legal Department

 

or at any other addresses of which the Corporation shall have notified the Depositary in writing. Any and all notices to be given to the Depositary hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail or overnight delivery service, or by facsimile transmission (receipt confirmed) or electronic mail (receipt confirmed), addressed to the Depositary at:

 

Computershare Trust Company, N.A.

Computershare Inc.

250 Royall Street

Canton, MA  02021

Attn: General Counsel

Facsimile: (781) 575-2916

 

or at any other addresses of which the Depositary shall have notified the Corporation in writing.

 

Any and all notices to be given to any Record Holder of a Receipt hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail or facsimile transmission, confirmed by letter, addressed to such Record Holder at the address of such Record Holder as it appears on the books of the Depositary, or if such Holder shall have timely filed with the Depositary a written request that notices intended for such Holder be mailed to some other address, at the address designated in such request; or in the case of any Global Receipt Depository, in accordance with its applicable procedures.

 

Notices will be deemed to have been given hereunder when personally delivered or sent by facsimile transmission or electronic mail (receipt confirmed), five days after deposit in the U.S. mail and one day after deposit with an overnight delivery service.

 

Section 7.5 Depositary’s Agents. The Depositary may from time to time appoint Depositary’s Agents to act in any respect for the Depositary for the purposes of this Deposit Agreement and may at any time appoint additional Depositary’s Agents and vary or terminate the appointment of such Depositary’s Agents. The Depositary will promptly notify the Corporation of any such appointment or variation or termination of such appointment. The Depositary shall not be answerable or accountable for any act, default, neglect or misconduct of any such Depositary’s Agent or for any loss to the Corporation or any other person resulting from any such act, default, neglect or misconduct, absent willful misconduct, gross negligence or bad faith in the selection and continued employment thereof (each as determined by a final non-appealable order of a court of competent jurisdiction).

 

Section 7.6 Appointment of Registrar, Dividend Disbursing Agent, Transfer Agent and Redemption Agent in Respect of Receipts. The Corporation hereby appoints Trust Company as Transfer Agent, Registrar and as dividend disbursing agent and redemption agent in respect of the Series C Preferred Stock deposited hereunder and the Receipts, and Trust Company hereby accepts such respective appointments, on the express terms and conditions set forth in this Deposit Agreement.

 

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Section 7.7 Holders of Receipts Are Parties. The Holders of Receipts from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions hereof and of the Receipts and of the Officer’s Certificate by acceptance of delivery of said Receipts.

 

Section 7.8 Governing Law. This Deposit Agreement and the Receipts of each series and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable conflicts of law principles.

 

Section 7.9 Inspection of Deposit Agreement. Copies of this Deposit Agreement shall be filed with the Depositary and the Depositary’s Agents and shall be open to inspection during business hours at the Depositary’s Office and the respective offices of the Depositary’s Agents, if any, by any Holder of a Receipt.

 

Section 7.10 Headings. The headings of articles and sections in this Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto have been inserted for convenience only and are not to be regarded as a part of this Deposit Agreement or the Receipts or to have any bearing upon the meaning or interpretation of any provision contained herein or in the Receipts.

 

Section 7.11 Confidentiality. The Depositary and the Corporation agree that all books, records, information and data pertaining to the business of the other party, including without limitation personal, non-public Holder information and the fees for services, which are exchanged or received pursuant to the negotiation or the carrying out of this Deposit Agreement, shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law or legal process.

 

Section 7.12 Further Assurances. The Corporation agrees that it will perform, acknowledge, and deliver or cause to be performed, acknowledged or delivered, all such further and other acts, documents, instruments and assurances as the Depositary may reasonably require to perform the provisions of this Deposit Agreement.

 

[Remainder of page intentionally left blank; signature page follows.]

 

18

 

IN WITNESS WHEREOF, the Corporation and the Depositary have duly executed this Deposit Agreement as of the day and year first above set forth, and all Holders of Receipts shall become parties hereto by and upon acceptance by them of delivery of Receipts issued in accordance with the terms hereof.

 

	
 
    	
MB FINANCIAL, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Randall T. Conte
    
	
 
    	
Name:
    	
Randall T. Conte
    
	
 
    	
Title:
    	
Vice President and   Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
COMPUTERSHARE TRUST   COMPANY, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dennis V. Moccia
    
	
 
    	
Name:
    	
Dennis V. Moccia
    
	
 
    	
Title:
    	
Manager, Contract   Administration
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
COMPUTERSHARE INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dennis V. Moccia
    
	
 
    	
Name:
    	
Dennis V. Moccia
    
	
 
    	
Title:
    	
Manager, Contract Administration
    

 

[Signature Page to Deposit Agreement]

 

19

 

EXHIBIT A

 

[FORM OF DEPOSITARY RECEIPT]

 

A-1

 

DEPOSITARY   RECEIPT DEPOSITARY RECEIPT CERTIFICATE NUMBER D-1 8,000,000 DEPOSITARY SHARES   CUSIP 55264U 405 MB FINANCIAL, INC. INCORPORATED UNDER THE LAWS OF THE STATE   OF MARYLAND THIS CERTIFIES THAT CEDE & CO. IS THE OWNER OF 8,000,000   DEPOSITARY SHARES EACH REPRESENTING A 1/40TH INTEREST IN A SHARE OF 6.00%   NON-CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES C Unless this receipt is   presented by an authorized representative of The Depository Trust Company, a   New York corporation (“DTC”), to MB Financial, Inc., or its agent for   registration of transfer, exchange or payment and any certificate issued is   registered in the name of Cede & Co. or in such other names as is   requested by an authorized representative of DTC and any payment is made to   Cede & Co. or to such other entity as is requested by an authorized   representative of DTC, ANY TRANSFER PLEDGE OR OTHER USE HEREOF FOR SALE OR   OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner   hereof, Cede & Co. has an interest herein. COMPUTERSHARE INC. AND   COMPUTERSHARE TRUST COMPANY, N.A., as Depositary (the “Depositary”), hereby   certifies that Cede & Co. is a registered owner of 8,000,000 DEPOSITARY   SHARES ("Depositary Shares"), each Depositary Share representing a   1/40th interest in a share of 6.00% Non-Cumulative Perpetual Preferred Stock,   Series C, $0.01 par value per share, with a liquidation preference of $1,000   per share (the "Preferred Shares"), of MB Financial, Inc., a   Maryland corporation (the "Company"), on deposit with the   Depositary, subject to the terms and entitled to the benefits of the Deposit   Agreement dated as of November 22, 2017 (the "Deposit Agreement"),   among the Company, the Depositary and the holders from time to time of   Receipts for Depositary Shares. By accepting this Receipt, the holder hereof   becomes a party to and agrees to be bound by all the terms and conditions of   the Deposit Agreement. This Depositary Receipt shall not be valid or   obligatory for any purpose or entitled to any benefits under the Deposit   Agreement unless it shall have been executed by the Depositary by the manual   or facsimile signature of a duly authorized officer, or if executed in   facsimile by the Depositary, countersigned by a Registrar in respect of the   Depositary Receipts by the manual or facsimile signature of a duly authorized   officer thereof. President and Chief Executive Officer DATED: November 22,   2017 COUNTERSIGNED AND REGISTERED: COMPUTERSHARE INC. COMPUTERSHARE TRUST   COMPANY, N.A. DEPOSITARY AND REGISTRAR Corporate Secretary By: Authorized   Signature DM_US 86863450-2.086857.0014 

    

 

MB FINANCIAL,   INC., A MARYLAND CORPORATION (THE “COMPANY”) THE COMPANY WILL FURNISH TO ANY   RECEIPTHOLDER ON REQUEST AND WITHOUT CHARGE A FULL STATEMENT OF THE   DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS,   RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS, AND TERMS AND   CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE COMPANY IS   AUTHORIZED TO ISSUE, OF THE DIFFERENCES IN THE RELATIVE RIGHTS AND   PREFERENCES BETWEEN THE SHARES OF EACH SERIES OF PREFERRED OR SPECIAL CLASS   IN SERIES WHICH THE COMPANY IS AUTHORIZED TO ISSUE, TO THE EXTENT THEY HAVE   BEEN SET, AND OF THE AUTHORITY OF THE BOARD OF DIRECTORS TO SET THE RELATIVE   RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES OF A PREFERRED OR SPECIAL CLASS   OF STOCK, SUCH REQUEST MAY BE MADE TO THE SECRETARY OF THE CORPORATION OR TO   THE COMPANY’S TRANSFER AGENT. THE BOARD OF DIRECTORS OF THE COMPANY MAY   REQUIRE THE OWNER OF A LOST OR DESTROYED RECEIPT, OR HIS LEGAL   REPRESENTATIVES, TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND THE   DEPOSITARY AND REGISTRAR IN RESPECT OF THE DEPOSITARY RECEIPTS AGAINST ANY   CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR   DESTRUCTION OF ANY SUCH DEPOSITARY RECEIPT. The following abbreviations, when   used in the inscription on the face of this receipt, shall be construed as   though they were written out in full according to applicable laws or   regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian   (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to   Minors Act (State) UNIF TRF MIN ACT - Custodian (until age ) JT TEN - as   joint tenants with right of survivorship and not as tenants in common (Cust)   under Uniform Transfers to Minors Act (Minor) (State) Additional   abbreviations may also be used though not in the above list. PLEASE INSERT   SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE For value received,   hereby sells, assigns and transfers unto (PLEASE PRINT OR TYPEWRITE NAME AND   ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) of the Depositary Shares   represented by the within Depositary Receipt, and do hereby irrevocably   constitute and appoint Attorney to transfer the said stock on the books of   the within-named Depositary with full power of substitution in the premises.   Dated: 20 Signature: Signature: DM_US 86863450-2.086857.0014 Signature(s)   Guaranteed: Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED   BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan   Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE   GUARANTEE MEDALLION PROGRAM, PURSUANT TO SEC RULE 17Ad-15. 

    

 

EXHIBIT B I, [   ], [ TITLE] of MB Financial, Inc., a Maryland corporation (the   “Corporation”), hereby certify that pursuant to the terms of the Articles   Supplementary to the charter of the Corporation, filed with the Department of   Assessments and Taxation of the State of Maryland on , 2017 (the “Articles   Supplementary”) and attached hereto as Annex A, and pursuant to resolutions   adopted by the Board of Directors of the Corporation and the Pricing   Committee of the Board of Directors of the Corporation on October 26, 2017   and November 15, 2017, respectively, the Corporation has established the   Series C Preferred Stock which the Corporation desires to deposit with the   Depositary pursuant to the terms and conditions of the Deposit Agreement,   dated as of November 22, 2017, by and among the Corporation, Computershare   Trust Company, N.A., Computershare Inc. and the Holders of Receipts issued   thereunder from time to time (the “Deposit Agreement”). In connection   therewith, the Board of Directors of the Corporation or a duly authorized   committee thereof has authorized the terms and conditions with respect to the   Series C Preferred Stock as described in the Articles Supplementary. Any   terms of the Series C Preferred Stock that are not described in the Articles   Supplementary and any terms of the Receipts representing such Series C   Preferred Stock that are not described in the Deposit Agreement are described   below: Aggregate Number of shares of Series C Preferred Stock issued on the   day hereof: 200,000 CUSIP Number for Receipt: 55264U405 Denomination of   Depositary Share per share of Series C Preferred Stock (if different than   1/40th of a share of Series C Preferred Stock): N/A Redemption Provisions (if   different than as set forth in the Deposit Agreement): N/A Name of Global   Receipt Depositary: The Depository Trust Company All capitalized terms used but   not defined herein shall have such meaning as ascribed thereto in the Deposit   Agreement. [Remainder of Page Intentionally Left Blank] DM_US   86956518-1.086857. 0014B-1 

    

 

MB Financial,   Inc. This certificate is dated: By: Name: [ ] Title: [ TITLE] DM_US   86956518-1.086857. 0014B-2Exhibit 10.1

 

Final Version

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”), dated as of November 17, 2017, which shall become effective on January 1, 2018 (the “Effective Date”), is by and between ZelnickMedia Corporation, a New York corporation (“ZelnickMedia”), and Take-Two Interactive Software, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company desires to continue to receive financial and management consulting services from ZelnickMedia, and to obtain the benefit of the experience of ZelnickMedia in business and financial management of companies engaged in businesses similar to the Company’s;

 

WHEREAS, ZelnickMedia desires to continue to provide financial and management consulting services to the Company and the compensation arrangements set forth in this Agreement are designed to compensate ZelnickMedia for such services;

 

WHEREAS, ZelnickMedia and the Company are parties to that certain Management Agreement, dated as of March 10, 2014, and effective as of April 1, 2014, by and between ZelnickMedia and the Company (the “2014 Agreement”), which sets forth the terms of the existing management services agreement between ZelnickMedia and the Company and which superseded and replaced that certain Management Agreement, dated as of May 20, 2011, by and between ZelnickMedia and the Company (the “2011 Agreement”), which in turn superseded and replaced that certain Management Agreement, dated as of March 30, 2007, by and between ZelnickMedia and the Company, as amended by that certain Amendment to Management Agreement, dated as of July 27, 2007, and that certain Second Amendment to Management Agreement, dated as of February 14, 2008 (as amended, the “Original Agreement”);

 

WHEREAS, ZelnickMedia and the Company desire to supersede and replace the 2014 Agreement in its entirety (except as otherwise expressly contemplated herein and therein and thereunder), effective as of the Effective Date; and

 

WHEREAS, until the Effective Date, the Company and ZelnickMedia will continue to abide by and operate under the terms and conditions of the 2014 Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective agreements hereinafter set forth, and the mutual benefits to be derived herefrom, ZelnickMedia and the Company agree as follows:

 

1.                                      Engagement.  The Company hereby engages ZelnickMedia as its financial and management consultant, and ZelnickMedia hereby agrees to provide financial and management consulting services to the Company, all on the terms and subject to the conditions set forth below.

 

2.                                      Services of ZelnickMedia.  ZelnickMedia hereby agrees during the term of this engagement to consult with the board of directors (the “Board”) and management of the Company and its subsidiaries in such manner and on such business, financial and operational

 

 

matters as may be reasonably requested from time to time by the Board, including but not limited to:

 

(i)                                     oversee and supervise the operations of the Company and its subsidiaries in accordance with policies established by the Board and usual and customary standards of efficient operation and maintenance;

 

(ii)                                  assist in the preparation of operating budgets and business plans;

 

(iii)                               advise and assist the Company and its subsidiaries regarding their corporate and financial structure;

 

(iv)                              advise and assist the Company and its subsidiaries in formulating long-term business strategies;

 

(v)                                 assist the Company in recruiting senior management;

 

(vi)                              advise and assist the Company in securing equity and/or debt financing and negotiating and structuring the terms of such financing;

 

(vii)                           assist the Company and its subsidiaries with mergers and acquisitions with, and of, third party entities;

 

(viii)                        advise and assist the Company in evaluating potential sale or exit opportunities, structuring and negotiating a sale of the Company, or leveraged recapitalization;

 

(ix)                              provide consulting services in connection with the business and operations of the Company as requested by the Board; and

 

(x)                                 respond to Board requests concerning, and perform any other management services incidental to, the foregoing, or any other management or advisory services reasonably requested by the Board from time to time and to which ZelnickMedia agrees (such agreement not to be unreasonably withheld, conditioned or delayed).

 

3.                                      Personnel.

 

(i)                                     ZelnickMedia shall provide and devote to the performance of this Agreement such employees, agents and representatives of ZelnickMedia, and for such time, as ZelnickMedia shall deem appropriate for the furnishing of the services required hereunder.  Notwithstanding the generality of the foregoing, it is agreed that in the performance of its duties hereunder, subject to Section 3(ii) below, ZelnickMedia shall make available the following individuals to provide the described services:

 

(A)                               during the term of this Agreement, Strauss Zelnick shall serve as the Executive Chairman of the Board and Chief Executive Officer of the Company, and shall devote a sufficient amount of his business time to the performance of his duties during the term of this Agreement, consistent with past practice;

 

2

 

(B)                               Karl Slatoff shall serve as President of the Company pursuant to the employment agreement by and between the Company and Mr. Slatoff, dated as of February 14, 2008, and as amended from time to time by mutual agreement of the Company and Mr. Slatoff; and

 

(C)                               other ZelnickMedia personnel, as appropriate, shall provide services and serve as consultants to the Company on a project-by-project, as-needed basis.

 

(ii)                                  In the event that Mr. Zelnick, Mr. Slatoff or any other employee of ZelnickMedia acting in an executive capacity for the Company is unable or unavailable to serve in the applicable capacities set forth in Section 3(i) above, ZelnickMedia shall provide a qualified individual to serve in such capacity, who must be reasonably satisfactory to the Board.  If ZelnickMedia does not provide a qualified replacement reasonably acceptable to the Board within a reasonable period of time, the Company may fill such position with a person not affiliated with ZelnickMedia and deduct the costs of such person’s compensation (including cash and equity compensation) from ZelnickMedia’s compensation under this Agreement; provided, however, that such costs shall not be deducted from ZelnickMedia’s compensation hereunder if Mr. Zelnick, Mr. Slatoff or such other employee of ZelnickMedia, as applicable, is terminated by the Company without Cause or resigns for Good Reason (in the case of Mr. Zelnick, each as defined in Section 8 of this Agreement, or, in the case of Mr. Slatoff or any other employee of ZelnickMedia, each as defined in such person’s employment or consulting agreement with the Company); provided further, however, that (A) in no event shall any termination by the Company without Cause or resignation by an individual for Good Reason caused by any action or inaction taken not in good faith by ZelnickMedia, Mr. Zelnick, Mr. Slatoff or any other individual appointed by ZelnickMedia pursuant to Section 3(i) for the purpose of giving rise to such a termination by the Company without Cause or a resignation by an individual for Good Reason, be deemed a termination of such individual’s employment by the Company without Cause or a resignation by such individual for Good Reason, as applicable, in either case for purposes of this Section 3(ii), and (B) no more than 60% of the cash and equity compensation payable to ZelnickMedia hereunder shall be deducted if the Company replaces Mr. Zelnick in accordance with this Section 3(ii) and no more than 40% of the cash and equity compensation payable to ZelnickMedia hereunder shall be deducted if the Company replaces Mr. Slatoff in accordance with this Section 3(ii).  The Compensation Committee of the Board (the “Committee”) shall reasonably and in good faith determine the value of the equity awarded to such replacement person and the appropriate deductions from the cash and equity compensation payable to ZelnickMedia (including the Management Fee and Annual Bonus and the equity awards pursuant to Section 6 below); provided, however, that, except as provided in Section 8 or Section 24 hereof, in no event shall ZelnickMedia be required to forfeit any cash compensation paid to ZelnickMedia or any vested equity awards, whether granted pursuant to Section 6 below or otherwise.

 

4.                                      Management Fee.  In consideration for the services to be provided by ZelnickMedia hereunder, the Company shall, commencing on the Effective Date, pay to ZelnickMedia a management fee of $3,100,000 per annum during the term of this Agreement (the “Management Fee”) payable on the first day of each month during the term of this 

 

3

 

Agreement in equal monthly installments of $258,333.33 in immediately available funds.  The Management Fee shall not be decreased during the term of this Agreement.

 

5.                                      Annual Bonus.  In addition to the Management Fee, ZelnickMedia shall have an annual bonus opportunity subject to performance goals (the “Annual Bonus”) for each of the fiscal years of the Company ending March 31, 2018 (“Fiscal 2018”), March 31, 2019, March 31, 2020, March 31, 2021, March 31, 2022, March 31, 2023 and March 31, 2024 (each, an “Applicable Fiscal Year” and collectively the “Applicable Fiscal Years”).  The target annual bonus opportunity for each Applicable Fiscal Year (other than for the 2017 Portion of Fiscal 2018 (as defined below)) has been set at 120% of the Management Fee, or $3,720,000 per annum (the “Target Bonus Amount”).  With respect to Fiscal 2018, the Annual Bonus for the period from April 1, 2017 to December 31, 2017 (the “2017 Portion of Fiscal 2018”) will be determined in accordance with the terms and conditions of Section 5 of the 2014 Agreement (i.e., based on 75% of $2,376,000), and the Annual Bonus for the period from January 1, 2018 to March 31, 2018 will be determined in accordance with this Section 5 (i.e., based on 25% of the Target Bonus Amount), in each case, based on Fiscal 2018 performance.  The actual amount of the Annual Bonus shall be determined reasonably and in good faith by the Committee with respect to each Applicable Fiscal Year  subject to the terms set forth herein, and shall be paid within the 15-day period immediately following the Company’s receipt of its audited financial statements for the Applicable Fiscal Year, but in all events in the fiscal year immediately following the Applicable Fiscal Year to which the Annual Bonus relates and within seventy-five (75) days following the end of the Applicable Fiscal Year, as follows:

 

(i)                                     In the event actual results in an Applicable Fiscal Year (or portion thereof) are less than 80% of the Target (as defined below), the Annual Bonus shall be zero.

 

(ii)                                  In the event actual results in an Applicable Fiscal Year (or portion thereof) are equal to or greater than 80% of the Target but less than 100% of the Target, the Annual Bonus shall be between zero and the Target Bonus Amount, pro-rated on a straight-line basis between such amounts based upon the actual percentage of the Target achieved.

 

(iii)                               In the event actual results in an Applicable Fiscal Year (or portion thereof) are equal to or greater than 100% of the Target but less than 120% of the Target, the Annual Bonus shall be between the Target Bonus Amount and $5,314,286 (the “120% Bonus Amount”), prorated on a straight-line basis between the Target Bonus Amount and the 120% Bonus Amount based upon the actual percentage of the Target achieved.

 

(iv)                              In the event actual results in an Applicable Fiscal Year (or portion thereof) are equal to or greater than 120% of the Target but less than 150% of the Target, the Annual Bonus shall be between the 120% Bonus Amount and $7,440,000 (the “Maximum Bonus Amount”), prorated on a straight-line basis between 120% Bonus Amount and the Maximum Bonus Amount based upon the actual percentage of the Target achieved.

 

(v)                                 In the event actual results in an Applicable Fiscal Year (or portion thereof) are equal to or greater than 150% of the Target, the Annual Bonus shall be the Maximum Bonus Amount.

 

4

 

For illustration, the following table sets forth the amount of Annual Bonus that would be payable to ZelnickMedia for each 10% increment of achievement of the Target:

 

	
Percentage of Target Obtained
    	
 
    	
Amount of Annual Bonus
    	
 
    
	
80%
    	
 
    	
Zero
    	
 
    
	
90%
    	
 
    	
$
    	
1,860,000
    	
 
    
	
100%
    	
 
    	
$
    	
3,720,000
    	
 
    
	
110%
    	
 
    	
$
    	
4,517,143
    	
 
    
	
120%
    	
 
    	
$
    	
5,314,286
    	
 
    
	
130%
    	
 
    	
$
    	
6,022,857
    	
 
    
	
140%
    	
 
    	
$
    	
6,731,429
    	
 
    
	
150%
    	
 
    	
$
    	
7,440,000
    	
 
    

 

The term “Target” shall mean budgeted adjusted EBITDA of the Company (or other measurement of financial performance reasonably determined by the members of the Board (excluding any member of the Board who is a shareholder, affiliate, member and/or partner of ZelnickMedia), on the one hand, and ZelnickMedia, on the other hand, with respect to an Applicable Fiscal Year), determined within 30 days of the beginning of that Applicable Fiscal Year by mutual agreement of the Company and ZelnickMedia, each acting reasonably and in good faith, and measured without giving effect to any payments under this Agreement.

 

For purposes of this Agreement, if budgeted adjusted EBITDA is used as the Target, the term “EBITDA” shall be calculated consistent with the Company’s past practices and on the same basis as utilized by the Company for other employee compensation purposes; and actual adjusted EBITDA with respect to each Applicable Fiscal Year shall be calculated by the Company acting reasonably and in good faith, after meaningful consultation with ZelnickMedia, in the same manner as the budgeted adjusted EBITDA for such Applicable Fiscal Year.

 

The Committee shall, acting reasonably and in good faith, after meaningful consultation with ZelnickMedia, make such adjustments to the calculation of actual or budgeted adjusted EBITDA as it deems equitable in the event the circumstances upon which budgeted adjusted EBITDA is initially calculated change during any Applicable Fiscal Year.  If requested by the Company, ZelnickMedia shall discuss with the Company in good faith whether any adjustments are necessary for the Annual Bonus and any equity awards granted under the Grant Agreements to achieve beneficial tax treatment for the parties.

 

6.                                      Company Equity.

 

(i)                                     Equity Award.  On April 13, 2018 (the “Initial Grant Date”), ZelnickMedia (or upon three (3) days prior written notice of ZelnickMedia to the Company, an affiliate or partner of ZelnickMedia that agrees to be bound by the provisions of this Section 6), shall be entitled to receive that number of time-based restricted units of the Company as is 

 

5

 

determined by dividing $8,775,000 by the average of the closing prices of the Company’s common stock for each trading day during the 10 trading day period immediately prior to April 1, 2018 and that number of performance-based restricted units of the Company as is determined by dividing  $10,725,000 by the average of the closing prices of the Company’s common stock for each trading day during the 10 trading day period immediately prior to April 1, 2018 (such awards, the “Equity Awards”), pursuant to and in accordance with the terms and conditions of the agreement attached as Exhibit A hereto (the “New Grant Agreement”).  The New Grant Agreement, together with (A) any grant agreements entered into with respect to additional grants by the Company in accordance with this Section 6, and (B) the grant agreements relating to the restricted units described in Section 6 of the 2014 Agreement, shall be referred to collectively as the “Grant Agreements.”  Following the grant on the Initial Grant Date, additional equity awards may be granted, in amounts determined at the discretion of the Committee in accordance with Section 3 hereof, to ZelnickMedia (or an affiliate or partner thereof in accordance with this Section 6) annually on each anniversary of the Initial Grant Date.

 

(ii)                                  Stock Ownership Requirement — 6X Management Fee.  Until the earlier of (A) March 31, 2024, (B) a Change in Control (as defined below) or (C) the termination of this Agreement pursuant to Section 8 below, ZelnickMedia shall not, and shall cause each Subject Person (as defined below) to agree in writing not to, sell or otherwise dispose of (other than, upon not less than three (3) days’ prior written notice to the Company, to a Subject Person that agrees to be bound by the provisions of this Section 6) any shares of the Company’s common stock if, after giving effect to such proposed sale or other disposition, the shares of Company common stock (including options, restricted stock and restricted units, which restricted units will be counted at the target number of shares if subject to performance-based vesting) owned by ZelnickMedia and each Subject Person in the aggregate (collectively, “Applicable Shares”), as of the trading day immediately preceding the date of the proposed sale or disposition, would have a Market Value (as defined below) less than six times (6X) the Management Fee; provided, however, that the foregoing shall not limit the right of ZelnickMedia and/or the Subject Persons to sell or otherwise dispose of that number of shares of common stock of the Company necessary to satisfy any taxes imposed on ZelnickMedia or such Subject Person as a result of the exercise of options, vesting of restricted stock or restricted units, or in connection with the transfer by ZelnickMedia to a Subject Person of any Applicable Shares in accordance with this paragraph.

 

For purposes of this Agreement, (A) the term “Subject Person” shall mean shareholders, partners, members, employees and other affiliates of ZelnickMedia who hold any Applicable Shares, including any person to whom any Applicable Shares were transferred in accordance with this Section 6(ii) and (B) “Market Value” of a number of shares of the Company’s common stock shall equal the number of shares of common stock multiplied by the average of the closing prices of the Company’s common stock for each trading day during the 10 trading day period ending on the day as of which Market Value is being determined (which, in the case of a sale or other disposition, shall be the trading day immediately preceding the date of such sale or other disposition).

 

(iii)                               Securities Trading Policy.  ZelnickMedia hereby acknowledges the Company’s “Securities Trading Policy” (as in effect from time to time, the “Trading Policy”) 

 

6

 

and shall, and shall cause its Subject Persons who own Applicable Shares, and shall use commercially reasonable efforts to cause its employees (including by making compliance a condition to the employees’ continued employment), to comply at all times with the Trading Policy as if such Persons (as defined below) were executive officers of the Company under the terms of the Trading Policy.

 

(iv)                              Allocation of Compensation.  In order to ensure that the persons providing services under this Agreement are properly incentivized, ZelnickMedia covenants and agrees that the aggregate compensation payable to ZelnickMedia or any person providing services on its behalf hereunder (whether in the form of Management Fee, Annual Bonus or Equity Awards) shall only be paid, payable or otherwise conveyed (directly or indirectly), whether by the Company, ZelnickMedia or otherwise, such that (A) no more than 60% of such aggregate compensation shall be received by or conveyed to Mr. Zelnick (or such other employee of ZelnickMedia that serves as Executive Chairman and Chief Executive Officer of the Company in accordance with Section 3(ii)) and (B) no more than 40% of such aggregate compensation shall be received by or conveyed to Mr. Slatoff (or such other employee of ZelnickMedia that serves as President of the Company in accordance with Section 3(ii)).

 

7.                                      Expenses.  The Company shall (i) promptly reimburse ZelnickMedia for all reasonable out-of-pocket fees and expenses as have been or may be incurred (before or after the date of this Agreement) by ZelnickMedia, its partners, shareholders, members, officers, employees, affiliates, counsel, agents and representatives in connection with ZelnickMedia’s engagement hereunder and the rendering of services hereunder (including, but not limited to, attorneys’ fees in connection with the negotiation and performance of this Agreement and fees and expenses incurred in attending Company-related meetings) and (ii) reimburse ZelnickMedia for all travel expenses in accordance with the Company’s “Travel and Entertainment Policy”.  The Company shall reimburse ZelnickMedia for all reasonable and documented attorneys’ fees incurred by ZelnickMedia in connection with the negotiation of this Agreement as soon as practicable after the date hereof.

 

8.                                      Term.  This Agreement will continue from the Effective Date through March 31, 2024 (the “Initial Term”), unless earlier terminated by either ZelnickMedia or the Company in accordance with this Section 8.  This Agreement may be terminated immediately by the Company for Cause (as defined below) or by ZelnickMedia for Good Reason (as defined below), and may be terminated by the Company without Cause or by ZelnickMedia without Good Reason, in each case upon 30 days’ written notice (which requirement for written notice will be waived following a Change in Control).  If this Agreement is terminated by the Company or ZelnickMedia prior to March 31, 2024, ZelnickMedia will be entitled to the following: (a) if this Agreement is terminated by the Company for Cause or by ZelnickMedia without Good Reason, all unvested equity granted under the Grant Agreements shall be forfeited for no consideration and ZelnickMedia shall be paid on the date of termination (i) the earned but unpaid portion of the Management Fee and (ii) any accrued but unpaid Annual Bonus for a completed fiscal year, and ZelnickMedia and/or any Subject Persons, as applicable, shall retain the vested portion of all equity granted pursuant to the Grant Agreements; (b) if this Agreement is terminated by the Company without Cause or by ZelnickMedia for Good Reason (whether before or after a Change in Control), (i) ZelnickMedia shall be paid on the date of termination (x) 

 

7

 

the earned but unpaid portion of the Management Fee, (y) any accrued but unpaid Annual Bonus for a completed fiscal year, and (z) three times (3X) the sum of (A) the Management Fee plus (B) the Target Bonus Amount; (ii) all unvested time-based restricted units granted pursuant to the Grant Agreements shall vest; and (iii) all performance-based restricted units granted pursuant to the Grant Agreements will vest in accordance with the terms of the applicable Grant Agreement, provided that the vesting of any such performance-based restricted units granted on or following the Initial Grant Date shall be  determined based on the assumption that the applicable performance measure was achieved at the target level of performance for the applicable performance period or, prior to a Change in Control, based on the actual level of performance achieved for each applicable performance measure as of the date of termination.  Notwithstanding anything to the contrary contained in this Agreement, if the parties fail to enter into a new agreement with respect to services by ZelnickMedia provided hereunder on substantially similar terms in the aggregate upon the expiration of the Initial Term or otherwise agree to extend the Initial Term, all unvested time-based restricted units granted pursuant to the Grant Agreements shall vest, and all performance-based restricted units granted pursuant to the Grant Agreements shall vest in accordance with the terms of the applicable Grant Agreement upon such expiration; provided that the vesting of any such performance-based restricted units granted on or following the Initial Grant Date shall be determined based on the assumption that the applicable performance measure was achieved at the target level of performance for the applicable performance period or, prior to a Change in Control, based on the actual level of performance achieved for each applicable performance measure as of such vesting date. Upon a Change in Control, (i) this Agreement shall not terminate, and any termination of this Agreement (which, if done by the Company for any reason other than for Cause, shall be deemed a termination of this Agreement by the Company without Cause) shall only be in accordance with this Section 8, and (ii) all unvested restricted units granted pursuant to the Grant Agreements (including time-based and performance-based restricted units) will vest in accordance with the terms of the applicable Grant Agreement; provided, that (a) the vesting of any such restricted units granted on or following the Initial Grant Date shall occur upon the earlier of (x) a termination of this Agreement by the Company without Cause or by ZelnickMedia for Good Reason or (y) the second anniversary of the date such awards were granted pursuant to the Grant Agreements (irrespective of whether this Agreement has been terminated for any reason after such date) and (b) the vesting of any such performance-based restricted units granted on or following the Initial Grant Date shall be determined based on the assumption that the applicable performance measure was achieved at the target level of performance for the applicable performance period.

 

“Cause” means (a) the conviction of, or a plea of guilty or nolo contendere by any of the individuals provided by ZelnickMedia to serve in the positions set forth in Section 3(i)(A)-(B) (which positions are currently filled by Strauss Zelnick or Karl Slatoff, respectively) of any felonious criminal act (other than traffic-related offenses or as a result of vicarious liability), (b) fraud, or (c) any act or omission involving malfeasance or gross negligence by ZelnickMedia in the performance of its obligations hereunder, in the case of each of clauses (b) through (c) above, that relates to and damages the Company and, if capable of being cured so that the Company is not materially damaged, is not so cured within 15 days after receipt by ZelnickMedia of written notice thereof.

 

8

 

“Good Reason” means (a) a condition that materially impairs the ability of ZelnickMedia, Strauss Zelnick, Karl Slatoff or any other individual appointed by ZelnickMedia pursuant to Section 3(i)(A)-(B) (other than a condition solely created by ZelnickMedia or such individuals) to perform their respective duties or responsibilities, as applicable, as contemplated herein, (b) assigning Strauss Zelnick, Karl Slatoff or any other individual appointed by ZelnickMedia pursuant to Section 3(i)(A)-(B) duties materially inconsistent with their respective positions (including status, offices, titles and reporting requirements), authorities or responsibilities or any other action by the Company which results in a material diminution of their respective positions, authorities, duties or  responsibilities (and in making this determination with respect to Mr. Zelnick, factors may include Mr. Zelnick ceasing to be the most senior executive in any controlled group containing the Company), (c) the failure by the Company to perform any of its material obligations under this Agreement or (d) the requirement that ZelnickMedia’s place of service be located outside a 30-mile radius of New York City, NY; provided, however, that in each ZelnickMedia provides not less than 30 days’ written notice to the Company (within 60 days of ZelnickMedia, Strauss Zelnick, Karl Slatoff or any other individual appointed by ZelnickMedia pursuant to Section 3(i)(A)-(B) becoming aware of the initial existence of the facts or circumstances constituting Good Reason) of its intention to terminate this Agreement for Good Reason, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Good Reason is based, and such termination shall be effective at the expiration of such 30 day notice period only if the Company has not fully cured such act or acts or failure or failures to act that give rise to Good Reason during such period.

 

A “Change in Control” means any transaction or occurrence (or series of related transactions or occurrences) which results at any time in any of (i) a sale of all or substantially all of the consolidated assets of the Company and of its subsidiaries, or a consolidation, reorganization, merger, or other business combination of the Company with or into, any other Person (as defined below) if, after such transaction the stockholders of the Company immediately prior to such transaction beneficially hold, directly or indirectly, less than a majority of the outstanding voting units of the purchasing or surviving parent entity in such transaction, on a fully diluted basis, (ii) a change in the majority of the members of the Board to Persons who were neither (x) nominated or appointed by the current Board nor (y) nominated or appointed by directors so nominated or appointed, or (iii) an acquisition by any individual, general partnership, limited partnership, limited liability company, corporation, trust, estate, real estate investment trust association or any other entity (each, a “Person”) or group of Persons (other than the Company or any subsidiary of the Company or any of their affiliates) of the outstanding securities of the Company in a transaction or series of transactions, if immediately thereafter such acquiring Person or group has, or would have, beneficial ownership of more than fifty percent (50%) of the combined equity interests or voting power of the Company; provided that mere formation of a group will not itself constitute a Change in Control.  A Change in Control shall be deemed to occur as of the effective date of the first event, action or transaction leading to one of the results described above.

 

As the parties hereto do not intend that actions taken by ZelnickMedia or any of its employees, shareholders, members, partners or other affiliates could give rise to a right on the part of ZelnickMedia to terminate this Agreement for Good Reason, the Company and ZelnickMedia 

 

9

 

hereby agree that, in no event shall any conduct or actions undertaken by ZelnickMedia or any of its employees, shareholders, members, partners or other affiliates, or any failure by such persons to act, give rise to or constitute Good Reason hereunder or, to the extent that such conduct, actions, or failure to act results in a termination of this Agreement, be deemed a termination of this Agreement by the Company without Cause.

 

No termination of this Agreement shall affect the Company’s obligations with respect to any and all reasonable fees, costs and expenses incurred by ZelnickMedia in rendering services hereunder and not reimbursed by the Company as of the effective date of such termination or the Company’s indemnification and contribution obligations.  

 

9.                                      Confidentiality; Non-Solicitation.  ZelnickMedia shall not at any time during or after the term of this Agreement, directly or indirectly, except as in good faith deemed necessary or desirable to perform any of its obligations hereunder, to defend its own rights or as required by applicable law or legal process, disclose or use for its own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets, information, data, or other information, including, without limitation, relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans, or the business and affairs of the Company, or of any subsidiary or affiliate of the Company; provided, that the foregoing shall not apply to information which is generally known to the industry or the public (other than as a result of ZelnickMedia’s breach of this covenant) or information obtained by ZelnickMedia prior to March 30, 2007 or not in connection with its performance of its obligations under this Agreement.  ZelnickMedia agrees that upon termination of this Agreement, upon the Company’s request, it shall immediately return to the Company all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its affiliates, except that ZelnickMedia may retain such personal notes, notebooks and diaries that do not contain confidential information of the type described above.  For a period beginning on the date of this Agreement and ending one year after the date of termination of this Agreement, except in the event this Agreement is terminated by the Company without Cause or by ZelnickMedia for Good Reason, ZelnickMedia shall not in any capacity, either individually or in association with others, employ or solicit for employment (other than in any general solicitation) any person who is an employee of the Company or its affiliates at the level of vice president or higher immediately prior to such employment or during such solicitation.

 

10.                               Liability.  Neither ZelnickMedia nor any of its affiliates, directors, officers, employees, counsel, agents or representatives shall be liable to the Company or its subsidiaries or affiliates for any loss, claim, liability, damage or expense arising out of or in connection with the performance of services contemplated by this Agreement, other than any loss, claim, liability, damage or expense to the extent determined by the final judgment of a court of competent jurisdiction to have been caused from the gross negligence, fraud, bad faith or willful misfeasance of ZelnickMedia or its affiliates.

 

10

 

11.                               Indemnification; D&O Insurance.  To the fullest extent permitted by applicable law, the Company shall indemnify and hold harmless ZelnickMedia and its affiliates, and each of their respective members, managers, directors, officers, employees, counsel, agents, representatives, contractors and affiliates (each such individual or entity to be referred to hereinafter as an “Indemnified Person”), from and against any loss, claim, damage or liability, joint or several, and any action in respect thereof, whether or not involving a third party, to which an Indemnified Person may be subject, insofar as such loss, claim, damage, liability or action relates to, arises out of or results from any Covered Event (as such term is defined below) or alleged Covered Event, and will reimburse such Indemnified Person upon request for all expenses (including, without limitation, reasonable attorneys’ fees and disbursements) incurred by such Indemnified Person in connection with investigating, defending or preparing to defend against any such loss, claim, damage, liability or action, as such expenses are incurred or paid.  The term “Covered Event” shall mean (a) any action taken, or services performed, by an Indemnified Person, related to or consistent with the terms of this Agreement, the 2014 Agreement, the 2011 Agreement or the Original Agreement, or (b) any action taken, or omitted to be taken, by the Company or any of its managers, directors, officers, employees, agents or affiliates, in connection with any matter in which an Indemnified Person has been involved pursuant to this Agreement, the 2014 Agreement, the 2011 Agreement or the Original Agreement; provided, that the term “Covered Event,” with respect to an Indemnified Person, shall exclude any loss, claim, damage, liability or expense to the extent determined by the final judgment of a court of competent jurisdiction to have been caused from the gross negligence, fraud, bad faith or willful misfeasance of such Indemnified Person or any affiliate thereof.  The Company shall cover the designees of ZelnickMedia under directors and officers’ liability insurance both during and, while potential liability exists, after the term of this Agreement in amounts reasonably requested by ZelnickMedia.

 

12.                               Independent Contractor.  ZelnickMedia and the Company agree that ZelnickMedia shall perform services hereunder as an independent contractor, retaining control and direction over and responsibility for its own operations and personnel.  Neither ZelnickMedia nor their directors, officers or employees shall be considered employees or agents of the Company or its subsidiaries as a result of this Agreement nor shall any of them have authority to contract in the name of or bind the Company, except as expressly agreed to in writing by the Company, including as provided in this Agreement.

 

13.                               Notices.  Any notice, report or payment required or permitted to be given or made under this Agreement by one party to the other shall be deemed to have been duly given or made if personally delivered or, if mailed, when mailed by registered or certified mail, postage prepaid, to the other party at the following addresses (or at such other address as shall be given in writing by one party to the other):

 

If to ZelnickMedia:

 

ZelnickMedia Corporation
  110 East 59th Street, 24th Floor
 New York, NY 10022

11

 

Telephone:  (212) 223-1383
 Attention:  Strauss Zelnick

 

with a copy to (which shall not constitute notice):

 

Sidley Austin LLP
 1999 Avenue of the Stars, 17th Floor
  Los Angeles, CA 90067
 Telephone: (310) 595-9525
  Attention: Daniel Clivner

 

If to the Company:

 

Take-Two Interactive Software, Inc.
  110 West 44th Street
 New York, NY 10036
 Telephone:  (646) 536-2842
 Attention:  General Counsel

 

with a copy to (which shall not constitute notice):

 

Willkie Farr & Gallagher LLP
 787 Seventh Avenue
 New York, NY 10019
 Telephone:  (212) 728-8129
 Attention:  Adam Turteltaub

 

14.                               Entire Agreement; Modification.  Effective as of the Effective Date, this Agreement and the Grant Agreements shall (a) contain the complete and entire understanding and agreement of ZelnickMedia and the Company with respect to the subject matter hereof; and (b) supersede all prior and contemporaneous understandings, conditions and agreements, oral or written, express or implied, respecting the engagement of ZelnickMedia in connection with the subject matter hereof, including the 2014 Agreement, the 2011 Agreement and the Original Agreement; provided that, notwithstanding the foregoing, (i) with respect to Fiscal 2018, the Annual Bonus for the period from April 1, 2017 to December 31, 2017 shall be determined in accordance with Section 5 of the 2014 Agreement based on Fiscal 2018 performance, (ii) Section 23 (Registration Statement) of both the 2014 Agreement and the 2011 Agreement shall survive the execution of this Agreement and (iii) to the extent expressly provided therein, each of the grant agreements attached as Exhibit A to the 2014 Agreement relating to the restricted units described in Section 6 of the 2014 Agreement (which, for the avoidance of doubt, shall include the (1) Restricted Unit Agreement, dated as of April 1, 2014, as amended by the Amendment to the Restricted Unit Agreement, effective as of March 31, 2016, (2) Amended and Restated Restricted Unit Agreement, dated as of June 30, 2015, as amended by the Amendment to the Amended and Restated Restricted Unit Agreement, dated as of February 7, 2017, effective as of December 8, 2016, (3) Restricted Unit Agreement, dated as of May 20, 2016, and (4) the Restricted Unit Agreement, dated as of May 25, 2017) shall remain in full force and effect in accordance with the terms thereof and shall not be superseded by this Agreement or by the New 

 

12

 

Grant Agreement, including without limitation with respect to the grant, vesting or termination of any equity awards contemplated therein.  This Agreement may be amended or modified, or any of the terms, covenants or conditions hereof may be waived, only by a written instrument executed by ZelnickMedia and the Company, or in the case of a waiver, by the party or parties waiving compliance.  Any waiver by any party of any condition, or of the breach of any provision, term or covenant contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as a further or continuing waiver of any such condition, or the breach of any other provision, term or covenant of this Agreement.

 

15.                               Waiver of Breach.  The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of that provision or any other provision hereof.

 

16.                               Assignment.  ZelnickMedia may assign its rights or obligations under this Agreement only with the express written consent of the Company, such consent not to be unreasonably withheld.  The Company may not assign its rights or obligations under this Agreement.  The Company hereby agrees to the assignment by ZelnickMedia of all of its rights and obligations under this Agreement to ZM Capital Advisors, LLC, a Delaware limited liability company (“ZM Capital”); provided, however, that ZelnickMedia shall remain liable for all of the obligations hereunder and under this Agreement.  In the event ZelnickMedia elects to effect such assignment to ZM Capital, it shall cause ZM Capital to execute a joinder agreement to this Agreement in form and substance reasonably acceptable to the Company.

 

17.                               Successors.  This Agreement and all the obligations and benefits hereunder shall inure to the successors and permitted assigns of the parties.

 

18.                               Failure to Pay.  If for any reason the Company does not pay the Management Fee, Annual Bonus or any other amount due under this Agreement when due, then such amount shall accrue interest at a rate of 1% per month and shall continue to be payable and shall be paid by the Company as soon as it can be paid.  The preceding sentence shall not limit any other remedies of ZelnickMedia in the event amounts are not paid when due.

 

19.                               Counterparts.  This Agreement may be executed and delivered by each party hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original and both of which taken together shall constitute one and the same agreement.

 

20.                               Choice of Law.  This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the domestic laws of the State of Delaware, without giving effect to any choice of law or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.  Each party consents to the in personam jurisdiction of the Court of Chancery or other courts of the State of Delaware and the United States District Court located in the State of Delaware in connection with any claim or dispute arising under or in connection with this Agreement.

 

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21.                               Severability.  If any provision of this Agreement is or becomes illegal, invalid or unenforceable under any law or regulation of any jurisdiction, it shall, as to such jurisdiction, be deemed modified to the least degree necessary to conform to the requirements of such law or regulation, or if for any reason it is not deemed so modified, it shall be illegal, invalid or unenforceable only to the extent set forth in the law or regulation without affecting the legality, validity or enforceability of such provision in any other jurisdiction or the remaining provisions of this Agreement.

 

22.                               Section 409A.  Notwithstanding anything to the contrary contained in this Agreement, in the event that one or more payments under this Agreement are subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and would cause ZelnickMedia to incur any additional tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder, the Company shall, at no additional cost to the Company, after consulting with ZelnickMedia and receiving ZelnickMedia’s approval,  reform and appropriately adjust such provision; provided that the Company agrees to maintain, to the maximum extent practicable without any such additional cost to the Company, the original intent and economic benefit to ZelnickMedia of the applicable provision without violating the provisions of Section 409A of the Code.

 

23.                               Registration Statement.  Subject to reasonable blackout periods and the receipt of necessary information from ZelnickMedia (or any Subject Person, if applicable) for inclusion in such filing, the Company shall, at any time following the first anniversary of the date hereof and within 45 days following the written request of ZelnickMedia, file a registration statement on Form S-3 (or any applicable successor registration form) (the “Registration Statement”) covering the shares of the common stock granted to ZelnickMedia pursuant to the New Grant Agreement and any grant agreements entered into with respect to additional grants by the Company in accordance with Section 6.  Subject to reasonable blackout periods, the Company shall use its reasonable best efforts to prepare and file with the Securities and Exchange Commission (“SEC”) such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective and free from any material misstatement or omission to state a material fact until such time as all such shares of common stock have been sold pursuant to a registration statement or are otherwise freely tradable.

 

24.                               Dodd-Frank.  ZelnickMedia hereby acknowledges (i) the section in the Company’s Corporate Governance Guidelines entitled “Recovery of Improperly-Awarded Incentive Compensation”, a copy of which is attached hereto as Annex A (the “Clawback Policy”) and (ii) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), which requires that the SEC, by rule, direct the national securities exchanges and national securities associates to prohibit the listing of any security of an issuer that fails to implement a “clawback” policy providing that “in the event that the issuer is required to prepare an accounting restatement due to the material noncompliance of the issuer with any financial reporting requirement under the securities laws, the issuer will recover from any current or former executive of the issuer who received incentive-based compensation (including stock options awarded as compensation) during the three-year period preceding the date on which the issuer is required to prepare an accounting restatement, based on the erroneous 

 

14

 

data, in excess of what would have been paid to the executive officer under the accounting restatement.”  ZelnickMedia shall, and shall cause its shareholders, partners, employees, members and other affiliates who are deemed “Executives” under the Clawback Policy or who receive any portion of the Equity Awards, to comply with the Clawback Policy, including as may be amended or superseded by the Board after the date hereof to the extent required to comply with any rules adopted by the SEC in response to Section 954 of the Dodd-Frank Act.

 

* * * * *

 

15

 

IN WITNESS WHEREOF, the parties hereto have caused this Management Agreement to be duly executed and delivered on the date and year first above written.

 

	
 
    	
ZELNICKMEDIA   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Strauss Zelnick
    
	
 
    	
 
    	
Name:  
    	
Strauss Zelnick
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TAKE-TWO INTERACTIVE   SOFTWARE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Daniel P. Emerson
    
	
 
    	
 
    	
Name:  
    	
Daniel P. Emerson
    
	
 
    	
 
    	
Title:  
    	
EVP and General   Counsel
    

 

 

EXHIBIT A

 

Final Version

 

RESTRICTED UNIT AGREEMENT
 PURSUANT TO THE
 TAKE-TWO INTERACTIVE SOFTWARE, INC.
 2017 STOCK INCENTIVE PLAN

 

This Restricted Unit Agreement (this “Agreement”), dated as of April 13, 2018, is made by and between Take-Two Interactive Software, Inc. (the “Company”) and ZelnickMedia Corporation (the “Participant”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has adopted the Take-Two Interactive Software, Inc. 2017 Stock Incentive Plan (as amended and restated from time to time, the “Plan”), a copy of which has been delivered to the Participant, which is administered by a committee appointed by the Company’s Board of Directors (the “Committee”);

 

WHEREAS, pursuant to Section 7 of the Plan, the Committee may grant restricted stock units (“Restricted Units”), each representing the right to receive one (1) share (a “Share”) of the Company’s common stock, par value $0.01 per share (“Common Stock”), or the cash value of one (1) share of Common Stock, as determined by the Committee, on a specified settlement date, to Consultants; and

 

WHEREAS, pursuant to the Management Agreement between the Participant and the Company, dated as of November 17, 2017, and effective as of January 1, 2018 (the “Management Agreement”), the Company has agreed to grant Restricted Units to the Participant.

 

NOW, THEREFORE, for and in consideration of the mutual promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                                      Grant of Restricted Units.  Subject to the restrictions, terms and conditions of this Agreement, the Company hereby awards to the Participant [     ] Restricted Units, subject to adjustment, forfeiture and the other terms and conditions set forth below.  The Restricted Units constitute an unfunded and unsecured promise of the Company to deliver (or cause to be delivered) to the Participant, subject to the terms of this Agreement, cash, Shares or a combination of cash and Shares, in the discretion of the Company, on the applicable vesting date for such Restricted Units as provided herein.  Until such delivery, the Participant shall have only the rights of a general unsecured creditor, and no rights as a shareholder of the Company; provided, that if prior to the settlement of any Restricted Unit, (a) the Company pays a cash dividend (whether regular or extraordinary) or otherwise makes a cash distribution to a shareholder in respect of a Share, then the Company shall credit, in respect of each then-outstanding Restricted Unit held by the Participant, an amount equal to any such cash dividend 

 

 

or distribution to a book entry account on behalf of the Participant, provided that such cash dividend or distribution shall not be deemed to be reinvested in shares of Common Stock and will be held uninvested and without interest and paid in cash at the same time as such Restricted Unit vests and is settled under Section 2 below (and the Participant shall forfeit any such right to such cash if such Restricted Unit is forfeited prior to vesting), and (b) the Company pays a non-cash dividend (whether regular or extraordinary) or otherwise makes a non-cash distribution in Shares or other property to a shareholder in respect of a Share, then the Company shall provide the Participant, in respect of each then-outstanding Restricted Unit held by the Participant, an amount equal to the Fair Market Value of such Shares or an amount equal to the fair market value of such other property as reasonably determined by the Company in good faith, as applicable, at the same time as such Restricted Unit vests and is settled under Section 2 below (and the Participant shall forfeit any such right to such amount if such Restricted Unit is forfeited prior to vesting).

 

2.                                      Vesting.  The Restricted Units shall become vested and settled in accordance with the terms set forth on Annex A attached hereto.

 

3.                                      Taxes.  The Participant shall be solely responsible for all applicable federal, state, local, and foreign taxes the Participant incurs from the grant, vesting or settlement of the Restricted Units.

 

4.                                      No Obligation to Continue Service.  This Agreement is not an agreement of consultancy.  This Agreement does not guarantee that the Company or its affiliates will retain, or continue to retain, the Participant during the entire, or any portion of the, term of this Agreement, including but not limited to any period during which the Restricted Units are outstanding, nor does it modify in any respect the Company or its affiliate’s right to terminate or modify the Participant’s consultancy or compensation.

 

5.                                      Power of Attorney.  The Company, and its successors and assigns, is hereby appointed the attorney-in-fact, with full power of substitution, of the Participant for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which such attorney-in-fact may reasonably deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest.  The Company, as attorney-in-fact for the Participant, may in the name and stead of the Participant, make and execute all conveyances, assignments, and transfers of the Restricted Units, Shares, and property provided for herein, and the Participant hereby ratifies and confirms all that the Company, as said attorney-in-fact, shall do by virtue hereof.  Nevertheless, the Participant shall, if so requested by the Company, execute and deliver to the Company all such instruments as may, in the reasonable judgment of the Company, be advisable for the purpose.

 

6.                                      Uncertificated Shares.  Notwithstanding anything else herein, to the extent permitted under applicable law, the Company may issue Shares in the form of uncertificated shares.  Such uncertificated Shares shall be credited to a book entry account maintained by the Company (or its designee) on behalf of the Participant.  If thereafter certificates are issued with 

 

2

 

respect to the uncertificated Shares, such issuance and delivery of certificates shall be in accordance with the applicable terms of this Agreement.

 

7.                                      Provisions of Plan Control.  This Agreement is subject to all the terms, conditions, and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations, and interpretations relating to the Plan as may be adopted by the Committee and as may be in effect from time to time.  The Plan is incorporated herein by reference.  By signing and returning this Agreement, the Participant acknowledges having received and read a copy of the Plan and agrees to comply with it, this Agreement and all applicable laws and regulations.  Capitalized terms in this Agreement that are not otherwise defined shall have the same meaning as set forth in the Plan.  If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly.

 

8.                                      Adjustments.  The Company shall make any adjustments to the Restricted Units upon any changes in capital structure of the Company, as determined by the Committee in good faith and in a manner consistent with the Plan.

 

9.                                      Notices.  Any notice or communication given hereunder (each a “Notice”) shall be in writing and shall be sent by personal delivery, by courier or by United States mail (registered or certified mail, postage prepaid and return receipt requested), to the appropriate party at the address set forth below:

 

If to the Company, to:

 

Take-Two Interactive Software, Inc.
 110 West 44th Street
 New York, New York 10036
 Telephone: (646) 536-2842
 Attention: General Counsel

 

If to the Participant, to:

 

ZelnickMedia Corporation
 110 East 59th Street, 24th Floor
 New York, NY 10022
 Telephone:  (212) 223-1383
 Attention:  Strauss Zelnick

 

or such other address or to the attention of such other person as a party shall have specified by prior Notice to the other party.  Each Notice will be deemed given and effective upon actual receipt (or refusal of receipt).

 

10.                               Governing Law.  All questions concerning the construction, validity, and interpretation of this Agreement will be governed by, and construed in accordance with, the domestic laws of the State of Delaware, without giving effect to any choice of law or conflict of 

 

3

 

law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

11.                               Consent to Jurisdiction.  Notwithstanding anything in the Plan to the contrary, in the event of any dispute, controversy, or claim between the Company or any affiliate and the Participant in any way concerning, arising out of or relating to the Plan or this Agreement (a “Dispute”), including without limitation any Dispute concerning, arising out of, or relating to the interpretation, application, or enforcement of the Plan or this Agreement, the parties hereby (a) agree and consent to the personal jurisdiction of the courts of the State of New York located in New York County and/or the Federal Courts of the United States of America located in the Southern District of New York (collectively, the “Agreed Venue”) for resolution of any such Dispute, (b) agree that those courts in the Agreed Venue, and only those courts, shall have exclusive jurisdiction to determine any Dispute, including any appeal, and (c) agree that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York.  The parties also hereby irrevocably (i) submit to the jurisdiction of any competent court in the Agreed Venue (and of the appropriate appellate courts therefrom), (ii) to the fullest extent permitted by law, waive any and all defenses the parties may have on the grounds of lack of jurisdiction of any such court and any other objection that such parties may now or hereafter have to the laying of the venue of any such suit, action, or proceeding in any such court (including without limitation any defense that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum), and (iii) consent to service of process in any such suit, action, or proceeding anywhere in the world, whether within or without the jurisdiction of any such court, in any manner provided by applicable law.  Without limiting the foregoing, each party agrees that service of process on such party pursuant to a Notice as provided in Section 9 hereof shall be deemed effective service of process on such party.  Any action for enforcement or recognition of any judgment obtained in connection with a Dispute may be enforced in any competent court in the Agreed Venue or in any other court of competent jurisdiction.

 

12.                               Counterparts.  This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.

 

13.                               Amendment.  The Committee may, subject to the terms of the Plan, at any time and from time to time amend, in whole or in part, any or all of the provisions of this Agreement, and may also suspend or terminate this Agreement, subject to the terms of the Plan.  Except as otherwise provided in the Plan, no modification or waiver of any of the provisions of this Agreement shall be effective unless in writing by the party against whom it is sought to be enforced.

 

14.                               Miscellaneous.

 

(a)                                 This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors, and assigns.

 

4

 

(b)                                 This Agreement, the Plan, and the Management Agreement contain the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior agreements between the Company and the Participant with respect to the subject matter hereof.

 

(c)                                  The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.

 

(d)                                 Although the Company makes no guarantee with respect to the tax treatment of the Restricted Units, the Company intends that the Restricted Units shall not constitute “nonqualified deferred compensation” subject to Section 409A of the Internal Revenue Code of 1986, as amended, and any successor provision or any Treasury Regulation promulgated thereunder (“Section 409A”) and this Agreement shall be interpreted, administered and construed consistent with such intent.  If, and only to the extent that, (i) the Restricted Units constitute “deferred compensation” within the meaning of Section 409A and (ii) the Participant is deemed to be a “specified employee” (as such term is defined in Section 409A and as determined by the Company), the payment of Restricted Units on termination of the Management Agreement shall not be made until the first business day of the seventh month following such termination or, if earlier, the date of the Participant’s death.

 

[End of text.  Signature page follows.]

 

5

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
TAKE-TWO INTERACTIVE SOFTWARE, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:   Daniel P. Emerson
    
	
 
    	
 
    	
Title:   EVP and General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
PARTICIPANT: 
    
	
 
    	
 
    
	
 
    	
ZELNICKMEDIA CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:   Karl Slatoff 
    
	
 
    	
 
    	
Title:   Partner
    

 

6

 

Annex A

 

Vesting

 

A.                                    Time Based Vesting.

 

Subject to Section C, [     ] of the Restricted Units (the “Time-Based Units”) shall become vested on April 13, 2020 (the “Vesting Date”).

 

 

B.                                    Performance Based Vesting.

 

Subject to Section C, certain of the Restricted Units shall be subject to performance-based vesting in accordance with Section (B)(i) (the “TSR Performance-Based Units”), Section (B)(ii) (the “Recurrent Consumer Spending Performance-Based Units”), and Section (B)(iii) (the “IP Performance-Based Units,” and together with the TSR Performance-Based Units and the Recurrent Consumer Spending Performance-Based Units, the “Performance-Based Units”).

 

(i)                                     TSR Performance-Based Units.  The target number of TSR Performance-Based Units that shall be eligible to vest pursuant to this Section B(i) shall be [     ], and the maximum number of TSR Performance-Based Units that shall be eligible to vest pursuant to this Section B(i) shall be [     ].  Subject to Section C, on the Vesting Date, a number of TSR Performance-Based Units shall become vested equal to the product of (x) the target number of TSR Performance-Based Units eligible to vest pursuant to this Section B(i) multiplied by (y) the TSR Vesting Percentage as of March 31, 2020, rounded down to the nearest whole TSR Performance-Based Unit.

 

A-1

 

(ii)                                  Recurrent Consumer Spending Performance-Based Units.  The target number of Recurrent Consumer Spending Performance-Based Units that shall be eligible to vest pursuant to this Section B(ii) shall be [     ], and the maximum number of Recurrent Consumer Spending Performance-Based Units that shall be eligible to vest pursuant to this Section B(ii) shall be [     ].  Subject to Section C, on the Vesting Date, a number of Recurrent Consumer Spending Performance-Based Units shall become vested equal to the product of (x) the target number of Recurrent Consumer Spending Performance-Based Units in such vesting tranche multiplied by (y) the Recurrent Consumer Spending Vesting Percentage as of March 31, 2020, rounded down to the nearest whole Recurrent Consumer Spending Performance-Based Unit.

 

(iii)                               IP Performance-Based Units.  The target number of IP Performance-Based Units that shall be eligible to vest pursuant to this Section B(iii) shall be [     ], and the maximum number of IP Performance-Based Units that shall be eligible to vest pursuant to this Section B(iii) shall be [     ].  Subject to Section C, on the Vesting Date, a number of IP Performance-Based Units shall become vested equal to the product of (x) the target number of IP Performance-Based Units in such vesting tranche multiplied by (y) the IP Vesting Percentage on March 31, 2020, rounded down to the nearest whole IP Performance-Based Unit.

 

 

C.                                    Qualifying Termination; Change in Control.

 

(i)                                     Termination.  In the event of a Qualifying Termination prior to the earlier of (x) the Vesting Date or (y) a Change in Control (as defined in the Management Agreement): (a) the effective date of such Qualifying Termination shall serve as the vesting date for all Time-Based Units hereunder, and all such Time-Based Units shall vest as of such date; (b) the effective date of such Qualifying Termination shall serve as the vesting date for all TSR Performance-Based Units hereunder and the given date for purposes of the Measurement Price, and the number of such TSR Performance-Based Units that shall vest as of such date shall be calculated in accordance with Section B(i) above based upon the Percentile Rank through the effective date of such Qualifying Termination; and (c) the effective date of such Qualifying Termination shall serve as the vesting date for all Recurrent Consumer Spending Performance-Based Units and IP Performance-Based Units hereunder, and the target number of such Recurrent Consumer Spending Performance-Based Units and IP Performance-Based Units (as set forth in Sections B(ii) and B(iii), as applicable) shall vest as of such date without regard to the application of the Applicable Vesting Percentage.

 

(ii)                                  Change in Control.  If a Change in Control occurs while the Management Agreement remains in effect, in any case prior to the earlier of (x) the Vesting Date or (y) a Qualifying Termination, all Time-Based Units and the target number of Performance-Based 

 

A-2

 

Units (as set forth in Sections B(i), B(ii) and B(iii), as applicable) shall remain eligible to vest and shall vest (without regard to the application of the Applicable Vesting Percentage, in the case of Performance-Based Units), in each case, as of the earlier of (a) a Qualifying Termination or (b) the Vesting Date.  Each Restricted Unit that remains eligible to vest following a Change in Control pursuant to the foregoing sentence shall be referred to as a “Vesting-Eligible Unit.”  Upon the occurrence of a Change in Control, each Vesting-Eligible Unit shall be converted into an amount in cash equal to the Market Value of the consideration payable in the Change in Control in respect of each such Vesting-Eligible Unit, and such consideration shall be paid to the Participant promptly following the satisfaction of the vesting conditions set forth in this Section C(ii) (i.e., in full on the Vesting Date, or if earlier, upon a Qualifying Termination), and shall automatically be forfeited and shall revert back to the Company if such vesting conditions are not satisfied.

 

D.                                    Forfeiture.

 

(i)                                     Any Restricted Units that have not vested as of the termination of the Management Agreement for any reason other than a Qualifying Termination shall automatically be forfeited and shall revert back to the Company without compensation to the Participant.

 

(ii)                                  Any Performance-Based Units that (x) have not vested as of the earlier of (a) the Vesting Date or (b) the effective date of a Qualifying Termination, or (y) do not become Vesting-Eligible Units upon the occurrence of a Change in Control (i.e., any Performance-Based Units above the target numbers set forth in Sections B(i), B(ii) and B(iii), as applicable), shall automatically be forfeited and shall revert back to the Company without compensation to the Participant.

 

E.                                     Settlement.  Subject to the last sentence of Section C(ii), upon vesting pursuant to Sections A, B, and C, the Company shall deliver to the Participant an amount in cash having a value equal to the aggregate value of a number of Shares equal to the number of Restricted Units vesting on such date, based on the closing price of the Shares on such settlement date on the principal national securities exchange on which the Shares are traded on such date (or if the Shares are not traded on such date, the immediately preceding trading day), provided that the Participant has satisfied any tax withholding obligations as described in this Agreement.  Notwithstanding anything herein to the contrary, but subject to the last sentence of Section C(ii), each Restricted Unit (including any amount provided for pursuant to Section 1(a) of the Agreement) may, at the election of the Company, be settled in Shares issued pursuant to the Plan (subject to any required delay in issuance as required under the Plan).  To the extent any Shares become deliverable to the Participant hereunder the Participant shall be deemed the beneficial owner of any Share issued upon settlement of a Restricted Unit at the close of business on any settlement date and shall be entitled to any dividend or distribution that has not already been made with respect to such Share if the record date for such dividend or distribution is after the close of business on such settlement date, and the Company shall promptly issue and deliver, unless the Company is using a book entry or similar method pursuant to Section 6 of the Agreement (in which case the Company shall upon request promptly issue and deliver upon the Participant’s request), to the Participant a new stock certificate registered in the name of the Participant for any Shares issued upon settlement of Restricted Units and deliver to the 

 

A-3

 

Participant such Shares, in each case free of all liens, claims and other encumbrances (other than those created by the Participant).

 

F.                                      Definitions.

 

“Add-On Content” in respect of any IP means all interactive software entertainment products that are sold as a supplement (including as part of a bundle or special/premium edition) to a full game release of such IP, including but not limited to expansion packs and micro-content (or, in the case of free-to-play game software programs, that are sold in connection with such IP), which are not playable separately from such IP, but excluding any Sequel of such IP.

 

“Applicable Vesting Percentage” means (i) with respect to TSR Performance-Based Units, the TSR Vesting Percentage, (ii) with respect to Recurrent Consumer Spending Performance-Based Units, the Recurrent Consumer Spending Vesting Percentage, and (iii) with respect to IP Performance-Based Units, the IP Vesting Percentage.

 

“Individual Release” means any IP released at any time prior to or following the date of this Agreement across any and all gaming platforms and all SKUs released of any IP, including, for the avoidance of doubt, any bundles, anniversary editions or “game of the year” editions of such IP but excluding (i) any Add-On Content in respect of such IP and (ii) any expansion packs that are playable separately from such IP, with each such expansion pack being deemed to be a separate Individual Release.

 

“IP” means any commercially-released interactive entertainment product, including any commercially-released products that are derived from or use the branding, environments or characters of such products (e.g., Sequels and subsequent Individual Releases).

 

“IP Vesting Percentage” as of a given date is a function of the Company’s Sell-In Performance for any Individual Release of IP calculated as of such date, determined by reference to the following table.  For the avoidance of doubt, the IP Vesting Percentage shall be determined based on the Company’s Sell-In Performance with respect to one Individual Release of IP.  If multiple Individual Releases of IP occur during the relevant measurement period, the IP Vesting Percentage shall be determined based on the Individual Release of IP that results in the highest IP Vesting Percentage.  Without limiting the generality of the foregoing, in no event shall (i) the Company’s Sell-In Performance with respect to multiple Individual Releases of IP or (ii) the IP Vesting Percentages attributable to multiple Individual Releases of IP, be aggregated for purposes of  determining the IP Vesting Percentage.  By way of example, if, during the relevant measurement period, the Company has an Individual Release of IP that results in a Sell-In Performance of 6,000,000 units, as well as an Individual Release of IP that results in Sell-In Performance of 8,000,000 units, the IP Vesting Percentage will be 100% (i.e., the highest IP Vesting Percentage attributable to an Individual Release of IP).  For purposes of calculating the IP Vesting Percentage under Section B(iii) of this Annex A, except where such calculation is not required as provided in Section C of this Annex A, the relevant measurement date will be March 31, 2020.

 

(x)                                 For any Individual Release of IP:

 

A-4

 

	
IP Sell-In Performance
    	
 
    	
IP Vesting Percentage
    
	
Less than 6,000,000   units
    	
 
    	
0%
    
	
6,000,000 units
    	
 
    	
50%
    
	
8,000,000 units
    	
 
    	
100%
    
	
10,000,000 units or   greater
    	
 
    	
200%
    

 

In the event that the IP Sell-In Performance is less than 6,000,000 units, the IP Vesting Percentage shall be zero percent (0%).  In the event that the IP Sell-In Performance falls between any of the values listed in the table above, the IP Vesting Percentage shall be based on a straight line interpolation between such two values.

 

“Measurement Price” as of a given date means the average of the closing prices of the Common Stock or the common stock of a Peer Group company, as applicable, for each of the 30 trading days ending on (and including) such date.  For purposes of calculating the TSR Vesting Percentage under Section B(i) of this Annex A, except where such calculation is not required as provided in Section C of this Annex A, the given date for the definition of Measurement Price will be March 31, 2020.

 

The “Peer Group” shall consist of the companies that comprise The NASDAQ Composite Index on March 31, 2018; provided, that (i) subject to clause (ii) below, if a member of the Peer Group ceases to be publicly traded for any reason following March 31, 2018 and prior to the applicable date on which the Measurement Price is calculated, that member of the Peer Group shall be deleted as a member of the Peer Group and shall not be counted for purposes of the TSR Vesting Percentage and related calculations and (ii) if a member of the Peer Group becomes bankrupt following March 31, 2018 and prior to the applicable date on which the Measurement Price is calculated, that member of the Peer Group shall remain a member of the Peer Group and shall be attributed a Total Shareholder Return of -100% for purposes of the TSR Vesting Percentage and related calculations (even if such member of the Peer Group ceases to be publicly traded upon or following its bankruptcy).

 

The “Percentile Rank” of the Company’s Total Shareholder Return is defined as the percentage of the Peer Group companies’ returns falling at or below the Company’s Total Shareholder Return.  The formula for calculating the Percentile Rank is as follows:

 

Percentile Rank = (N - R + 1) ÷ N × 100

 

Where:

 

N =           total number of companies in the Peer Group

 

R =           the numeric rank of the Company’s Total Shareholder Return relative to the Peer Group, where the highest Total Shareholder Return in the Peer Group is ranked number 1

 

The Percentile Rank shall be rounded to the nearest whole percentage, with (0.5) rounded up.

 

A-5

 

To illustrate, if the Company’s Total Shareholder Return is the 25th highest in a Peer Group comprised of 100 companies, its Percentile Rank would be 76.  The calculation is (100 - 25 + 1) ÷ 100 × 100 = 76.

 

The “Port” of an IP means a substantially similar version of such IP developed to operate on a platform other than the platform for which such IP had theretofore been developed to operate.

 

“Qualifying Termination” means (i) a termination of the Management Agreement by the Company without Cause (as defined in the Management Agreement), including any termination by the Company (other than for Cause) in connection with a Change in Control, or by ZelnickMedia or its assignee for Good Reason (as defined in the Management Agreement) or (ii) the failure of the Company and ZelnickMedia to enter into a new management agreement, on terms substantially similar in the aggregate to the terms of the Management Agreement, upon the expiration of the Initial Term (as defined therein) or to otherwise agree to extend the Initial Term.

 

“Recurrent Consumer Spending” as of a given date shall mean the consolidated net bookings generated by the Company that are supplemental to the sale of any full game release from the sale of virtual currency, add-on content, microtransactions and similar items, calculated on a basis consistent with how the Company calculates recurrent consumer spending for its management reporting.  For the avoidance of doubt, Recurrent Consumer Spending shall not include full-game digital downloads.

 

“Recurrent Consumer Spending Vesting Percentage” is a function of the Company’s Recurrent Consumer Spending and is determined by reference to the following tables.  The first table measures the percentage change between Recurrent Consumer Spending for the fiscal year ended March 31, 2018 and the two-year average Recurrent Consumer Spending for the fiscal years ending March 31, 2019 and March 31, 2020, while the second table measures two-year average Recurrent Consumer Spending for the fiscal years ending March 31, 2019 and March 31, 2020 as a percentage of two-year average total net bookings for the fiscal years ending March 31, 2019 and March 31, 2020, and reflects a Relative Recurrent Consumer Spending Vesting Percentage.  For the avoidance of doubt, the Recurrent Consumer Spending Vesting Percentage shall be equal to either the Absolute Recurrent Consumer Spending Vesting Percentage or the Relative Recurrent Consumer Spending Vesting Percentage, whichever is greater.

 

	
Absolute Recurrent Consumer Spending Growth
   (during the relevant measurement period)
    	
 
    	
Absolute Recurrent Consumer
   Spending Vesting Percentage
    
	
Less than 3%
    	
 
    	
0%
    
	
3%
    	
 
    	
50%
    
	
6%
    	
 
    	
100%
    
	
9% or greater
    	
 
    	
200%
    

 

In the event that the Absolute Recurrent Consumer Spending Growth is less than 3%, the Absolute Recurrent Consumer Spending Vesting Percentage shall be zero percent (0%).  In the event that the Absolute Recurrent Consumer Spending Growth falls between any of the values 

 

A-6

 

listed in the table above, the Absolute Recurrent Consumer Spending Vesting Percentage shall be based on a straight line interpolation between such two values.

 

	
Relative Recurrent Consumer Spending (as a
   percentage of two-year average total net bookings)
    	
 
    	
Relative Recurrent Consumer
   Spending Vesting Percentage
    
	
Less than 27.5%
    	
 
    	
0%
    
	
27.5%
    	
 
    	
50%
    
	
37.5%
    	
 
    	
100%
    
	
47.5% or greater
    	
 
    	
200%
    

 

In the event that the Relative Recurrent Consumer Spending Growth is less than 27.5%, the Relative Recurrent Consumer Spending Vesting Percentage shall be zero percent (0%).  In the event that the Relative Recurrent Consumer Spending Growth falls between any of the values listed in the table above, the Relative Recurrent Consumer Spending Vesting Percentage shall be based on a straight line interpolation between such two values.

 

“Reference Price” means the average of the closing prices of the Common Stock or the common stock of a Peer Group company, as applicable, for each of the 30 trading days ending on (and including) March 31, 2018.

 

“Sell-In Performance” as of a given date means, with respect to any Individual Release of IP, the number of units “sold-in” during the period beginning on April 1, 2018 and ending on March 31, 2020.

 

“Sequel” means with respect to any IP, any game software program, other than any Port or Add-On Content, in any medium that is derived from such IP within the same genre, utilizing the same game play, and based on the same themes and using the same brand name as such IP where the visual display(s), character(s), background(s), virtual environment(s), or other visual or video elements accessible to the end-user of the game software program are derived from comparable elements of such IP.

 

“Total Shareholder Return” as of a given date means the percentage change in the value of the Common Stock or the common stock of a Peer Group company, as applicable, from the Reference Price to the Measurement Price on such date.

 

“TSR Vesting Percentage” as of a given date is a function of the Company’s Percentile Rank among the Peer Group calculated as of such date, determined by reference to the following table:

 

	
Percentile Rank
    	
 
    	
TSR Vesting Percentage
    
	
Less than 40th Percentile
    	
 
    	
0%
    
	
40th Percentile
    	
 
    	
50%
    
	
50th Percentile
    	
 
    	
100%
    
	
75th Percentile or greater
    	
 
    	
200%
    

 

A-7

 

In the event that the Percentile Rank is less than 40th Percentile, the TSR Vesting Percentage shall be zero percent (0%).  In the event that the Percentile Rank falls between any of the values listed in the table above, the TSR Vesting Percentage shall be based on a straight line interpolation between such two values. 

 

A-8

 

ANNEX A

 

Clawback Policy

 

Recovery of Improperly-Awarded Incentive Compensation

 

The Company will use commercially reasonable efforts to implement the following policy through the insertion of contractual provisions in new agreements with applicable employees and through any amendments that may be entered into after the date of the adoption of this policy on November 12, 2010 to existing agreements with Executives (as defined below).

 

The Board may require the reimbursement of any bonus or incentive compensation awarded to an Executive and/or effect the cancellation of unvested restricted stock or outstanding stock option awards previously granted to an Executive, in each case, on or after the adoption of this policy on November 12, 2010, but in no event more than four years after the award of such compensation where: (1) the payment was predicated upon achieving certain financial results that were subsequently determined to have been erroneously reported; (2) the Board determines that the Executive engaged in knowing or intentional fraudulent or illegal conduct that caused or substantially caused such erroneous reporting to have occurred; and (3) a lower payment would have been made to the Executive based upon the corrected financial results. In each instance, the Board may, to the extent practicable under applicable law, seek to recover from such Executive on or after the adoption of this policy any amount that was subsequently reduced due to the correction of erroneous reporting and/or effect the cancellation of outstanding restricted stock or stock option awards previously granted to such Executive on or after the date of the adoption of this policy in the amount by which such Executive’s bonus or incentive payments for the relevant period exceeded the lower payment that would have been made based on the corrected financial results.

 

The Board shall render a determination pursuant to this policy in each instance where both an erroneous report of financial results has affected the size of a bonus or incentive compensation awarded to an Executive, and where the Board is aware of credible evidence that the Executive may have engaged in such fraudulent or illegal conduct. In determining whether to recover a payment, the Board shall take into account such considerations as it deems appropriate, including, without limitation, whether the assertion of a claim against the Executive could violate applicable law or prejudice the Company’s overall interests and whether other penalties or punishments are being imposed on the Executives, including by third parties, such as law enforcement agencies, regulators or other authorities. The Board shall have sole discretion in determining whether an Executive’s conduct has or has not met any particular standard of conduct under law of Company policy. Any recovery under this policy may be in addition to any other remedies that may be available to the Company under applicable law, including disciplinary actions up to and including termination of employment.

 

For purposes of this policy, the term “Executive” means an “executive officer” as defined in Rule 3b-7 of the Securities Exchange Act of 1934. The right of the Board to assert a recovery claim under this policy shall not survive the occurrence of a change in control of the Company as defined in the relevant incentive compensation plan. This policy shall apply in addition to any 

 

 

right of recovery against the Chief Executive Officer and the Chief Financial Officer under Section 304 of the Sarbanes-Oxley Act of 2002. The Board may delegate one or more of the duties or powers described in this policy to one or more committees of the Board consisting of solely independent directors.

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