WARRANT TO PURCHASE COMMON
STOCK
THE SECURITIES
REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THIS
INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND
OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE
ISSUER OF THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A
COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES
REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR
OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE
VOID.
WARRANT
to purchase
550,595
Shares of Common
Stock
of First Defiance Financial
Corp.
Issue Date: December
5, 2008
1.
Definitions. Unless the context otherwise requires, when
used herein the following terms shall have the meanings
indicated.
“
Affiliate ” has the meaning ascribed to it in the
Purchase Agreement.
“ Appraisal Procedure ” means
a procedure whereby two independent appraisers, one chosen by the
Company and one by the Original Warrantholder, shall mutually agree
upon the determinations then the subject of appraisal. Each party
shall deliver a notice to the other appointing its appraiser within
15 days after the Appraisal Procedure is invoked. If within 30 days
after appointment of the two appraisers they are unable to agree
upon the amount in question, a third independent appraiser shall be
chosen within 10 days thereafter by the mutual consent of such
first two appraisers. The decision of the third appraiser so
appointed and chosen shall be given within 30 days after the
selection of such third appraiser. If three appraisers shall be
appointed and the determination of one appraiser is disparate from
the middle determination by more than twice the amount by which the
other determination is disparate from the middle determination,
then the determination of such appraiser shall be excluded, the
remaining two determinations shall be averaged and such average
shall be binding and conclusive upon the
Company and the
Original Warrantholder; otherwise, the average of all three
determinations shall be binding upon the Company and the Original
Warrantholder. The costs of conducting any Appraisal Procedure
shall be borne by the Company.
“ Board of Directors ” means
the board of directors of the Company, including any duly
authorized committee thereof.
“ Business Combination ”
means a merger, consolidation, statutory share exchange or similar
transaction that requires the approval of the Company’s
stockholders.
“ business day ” means any
day except Saturday, Sunday and any day on which banking
institutions in the State of New York generally are authorized or
required by law or other governmental actions to close.
“ Capital Stock ” means (A)
with respect to any Person that is a corporation or company, any
and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and
(B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests of such
Person.
“ Charter ” means, with
respect to any Person, its certificate or articles of
incorporation, articles of association, or similar organizational
document.
“
Common Stock ” has the meaning ascribed to it in the
Purchase Agreement.
“ Company ” means the Person
whose name, corporate or other organizational form and jurisdiction
of organization is set forth in Item 1 of Schedule A
hereto.
“
conversion ” has the meaning set forth in Section
13(B). “ convertible securities ” has the
meaning set forth in Section 13(B). “ CPP ” has
the meaning ascribed to it in the Purchase Agreement.
“ Exchange Act ” means the
Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated
thereunder.
“ Exercise Price ” means the
amount set forth in Item 2 of Schedule A hereto. “
Expiration Time ” has the meaning set forth in Section
3.
“ Fair Market Value ” means,
with respect to any security or other property, the fair market
value of such security or other property as determined by the Board
of Directors, acting in good faith or, with respect to Section 14,
as determined by the Original Warrantholder acting in good faith.
For so long as the Original Warrantholder holds this Warrant or any
portion thereof, it may object in writing to the Board of
Director’s calculation of fair market value within 10 days of
receipt of written notice thereof. If the Original Warrantholder
and the Company are unable to agree on fair market value during the
10-day period following the delivery of the Original
Warrantholder’s objection, the Appraisal Procedure may be
invoked by either party to
determine Fair
Market Value by delivering written notification thereof not later
than the 30 th day after delivery of the Original
Warrantholder’s objection.
“
Governmental Entities ” has the meaning ascribed to it
in the Purchase Agreement. “ Initial Number ”
has the meaning set forth in Section 13(B).
“Issue
Date” means the
date set forth in Item 3 of Schedule A hereto.
“ Market Price ” means, with
respect to a particular security, on any given day, the last
reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the last closing bid and
ask prices regular way, in either case on the principal national
securities exchange on which the applicable securities are listed
or admitted to trading, or if not listed or admitted to trading on
any national securities exchange, the average of the closing bid
and ask prices as furnished by two members of the Financial
Industry Regulatory Authority, Inc. selected from time to time by
the Company for that purpose. “Market Price” shall be
determined without reference to after hours or extended hours
trading. If such security is not listed and traded in a manner that
the quotations referred to above are available for the period
required hereunder, the Market Price per share of Common Stock
shall be deemed to be (i) in the event that any portion of the
Warrant is held by the Original Warrantholder, the fair market
value per share of such security as determined in good faith by the
Original Warrantholder or (ii) in all other circumstances, the fair
market value per share of such security as determined in good faith
by the Board of Directors in reliance on an opinion of a nationally
recognized independent investment banking corporation retained by
the Company for this purpose and certified in a resolution to the
Warrantholder. For the purposes of determining the Market Price of
the Common Stock on the "trading day" preceding, on or following
the occurrence of an event, (i) that trading day shall be deemed to
commence immediately after the regular scheduled closing time of
trading on the New York Stock Exchange or, if trading is closed at
an earlier time, such earlier time and (ii) that trading day shall
end at the next regular scheduled closing time, or if trading is
closed at an earlier time, such earlier time (for the avoidance of
doubt, and as an example, if the Market Price is to be determined
as of the last trading day preceding a specified event and the
closing time of trading on a particular day is 4:00 p.m. and the
specified event occurs at 5:00 p.m. on that day, the Market Price
would be determined by reference to such 4:00 p.m. closing
price).
“ Ordinary Cash Dividends ”
means a regular quarterly cash dividend on shares of Common Stock
out of surplus or net profits legally available therefor
(determined in accordance with generally accepted accounting
principles in effect from time to time), provided that
Ordinary Cash Dividends shall not include any cash dividends paid
subsequent to the Issue Date to the extent the aggregate per share
dividends paid on the outstanding Common Stock in any quarter
exceed the amount set forth in Item 4 of Schedule A hereto, as
adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.
“ Original Warrantholder ”
means the United States Department of the Treasury. Any actions
specified to be taken by the Original Warrantholder hereunder may
only be taken by such Person and not by any other
Warrantholder.
“
Permitted Transactions ” has the meaning set forth in
Section 13(B).
“ Person ” has the meaning
given to it in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act.
“ Per
Share Fair Market Value ” has the meaning set forth in
Section 13(C).
“Preferred Shares ” means the perpetual preferred stock
issued to the Original Warrantholder on the Issue Date pursuant to
the Purchase Agreement.
“ Pro Rata Repurchases ”
means any purchase of shares of Common Stock by the Company or any
Affiliate thereof pursuant to (A) any tender offer or exchange
offer subject to Section 13(e) or 14(e) of the Exchange Act or
Regulation 14E promulgated thereunder or (B) any other offer
available to substantially all holders of Common Stock, in the case
of both (A) or (B), whether for cash, shares of Capital Stock of
the Company, other securities of the Company, evidences of
indebtedness of the Company or any other Person or any other
property (including, without limitation, shares of Capital Stock,
other securities or evidences of indebtedness of a subsidiary), or
any combination thereof, effected while this Warrant is
outstanding. The “ Effective Date ” of a Pro
Rata Repurchase shall mean the date of acceptance of shares for
purchase or exchange by the Company under any tender or exchange
offer which is a Pro Rata Repurchase or the date of purchase with
respect to any Pro Rata Repurchase that is not a tender or exchange
offer.
“ Purchase Agreement ” means
the Securities Purchase Agreement – Standard Terms
incorporated into the Letter Agreement, dated as of the date set
forth in Item 5 of Schedule A hereto, as amended from time to time,
between the Company and the United States Department of the
Treasury (the “ Letter Agreement ”), including
all annexes and schedules thereto.
“
Qualified Equity Offering ” has the meaning ascribed
to it in the Purchase Agreement.
“ Regulatory Approvals ” with
respect to the Warrantholder, means, to the extent applicable and
required to permit the Warrantholder to exercise this Warrant for
shares of Common Stock and to own such Common Stock without the
Warrantholder being in violation of applicable law, rule or
regulation, the receipt of any necessary approvals and
authorizations of, filings and registrations with, notifications
to, or expiration or termination of any applicable waiting period
under, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
“
SEC ” means the U.S. Securities and Exchange
Commission.
“ Securities Act ” means the
Securities Act of 1933, as amended, or any successor statute, and
the rules and regulations promulgated thereunder.
“
Shares ” has the meaning set forth in Section
2.
“trading day”
means (A) if the shares of Common
Stock are not traded on any national or regional securities
exchange or association or over-the-counter market, a business day
or (B) if the shares of Common Stock are traded on any national or
regional securities exchange or
association or
over-the-counter market, a business day on which such relevant
exchange or quotation system is scheduled to be open for business
and on which the shares of Common Stock (i) are not suspended from
trading on any national or regional securities exchange or
association or over-the-counter market for any period or periods
aggregating one half hour or longer; and (ii) have traded at least
once on the national or regional securities exchange or association
or over-the-counter market that is the primary market for the
trading of the shares of Common Stock.
“ U.S.
GAAP ” means United States generally accepted accounting
principles. “ Warrantholder ” has the meaning
set forth in Section 2.
“
Warrant ” means this Warrant, issued pursuant to the
Purchase Agreement.
2.
Number of Shares; Exercise Price. This certifies that, for
value received, the United States Department of the Treasury or its
permitted assigns (the “ Warrantholder ”) is
entitled, upon the terms and subject to the conditions hereinafter
set forth, to acquire from the Company, in whole or in part, after
the receipt of all applicable Regulatory Approvals, if any, up to
an aggregate of the number of fully paid and nonassessable shares
of Common Stock set forth in Item 6 of Schedule A hereto, at a
purchase price per share of Common Stock equal to the Exercise
Price. The number of shares of Common Stock (the “
Shares ”) and the Exercise Price are subject to
adjustment as provided herein, and all references to “Common
Stock,” “Shares” and “Exercise Price”
herein shall be deemed to include any such adjustment or series of
adjustments.
3.
Exercise of Warrant; Term. Subject to Section 2, to the
extent permitted by applicable laws and regulations, the right to
purchase the Shares represented by this Warrant is exercisable, in
whole or in part by the Warrantholder, at any time or from time to
time after the execution and delivery of this Warrant by the
Company on the date hereof, but in no event later than 5:00 p.m.,
New York City time on the tenth anniversary of the Issue Date (the
“ Expiration Time ”), by (A) the surrender of
this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the principal
executive office of the Company located at the address set forth in
Item 7 of Schedule A hereto (or such other office or agency of the
Company in the United States as it may designate by notice in
writing to the Warrantholder at the address of the Warrantholder
appearing on the books of the Company), and (B) payment of the
Exercise Price for the Shares thereby purchased:
(i) by
having the Company withhold, from the shares of Common Stock that
would otherwise be delivered to the Warrantholder upon such
exercise, shares of Common stock issuable upon exercise of the
Warrant equal in value to the aggregate Exercise Price as to which
this Warrant is so exercised based on the Market Price of the
Common Stock on the trading day on which this Warrant is exercised
and the Notice of Exercise is delivered to the Company pursuant to
this Section 3, or
(ii) with
the consent of both the Company and the Warrantholder, by tendering
in cash, by certified or cashier’s check payable to the order
of the Company, or by wire transfer of immediately available funds
to an account designated by the Company.
If the Warrantholder does not exercise this
Warrant in its entirety, the Warrantholder will be entitled to
receive from the Company within a reasonable time, and in any event
not exceeding three business days, a new warrant in substantially
identical form for the purchase of that number of Shares equal to
the difference between the number of Shares subject to this Warrant
and the number of Shares as to which this Warrant is so exercised.
Notwithstanding anything in this Warrant to the contrary, the
Warrantholder hereby acknowledges and agrees that its exercise of
this Warrant for Shares is subject to the condition that the
Warrantholder will have first received any applicable Regulatory
Approvals.
4.
Issuance of Shares; Authorization; Listing. Certificates for
Shares issued upon exercise of this Warrant will be issued in such
name or names as the Warrantholder may designate and will be
delivered to such named Person or Persons within a reasonable time,
not to exceed three business days after the date on which this
Warrant has been duly exercised in accordance with the terms of
this Warrant. The Company hereby represents and warrants that any
Shares issued upon the exercise of this Warrant in accordance with
the provisions of Section 3 will be duly and validly authorized and
issued, fully paid and nonassessable and free from all taxes, liens
and charges (other than liens or charges created by the
Warrantholder, income and franchise taxes incurred in connection
with the exercise of the Warrant or taxes in respect of any
transfer occurring contemporaneously therewith). The Company agrees
that the Shares so issued will be deemed to have been issued to the
Warrantholder as of the close of business on the date on which this
Warrant and payment of the Exercise Price are delivered to the
Company in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Company may
then be closed or certificates representing such Shares may not be
actually delivered on such date. The Company will at all times
reserve and keep available, out of its authorized but unissued
Common Stock, solely for the purpose of providing for the exercise
of this Warrant, the aggregate number of shares of Common Stock
then issuable upon exercise of this Warrant at any time. The
Company will (A) procure, at its sole expense, the listing of the
Shares issuable upon exercise of this Warrant at any time, subject
to issuance or notice of issuance, on all principal stock exchanges
on which the Common Stock is then listed or traded and (B) maintain
such listings of such Shares at all times after issuance. The
Company will use reasonable best efforts to ensure that the Shares
may be issued without violation of any applicable law or regulation
or of any requirement of any securities exchange on which the
Shares are listed or traded.
5.
No Fractional Shares or Scrip. No fractional Shares or scrip
representing fractional Shares shall be issued upon any exercise of
this Warrant. In lieu of any fractional Share to which the
Warrantholder would otherwise be entitled, the Warrantholder shall
be entitled to receive a cash payment equal to the Market Price of
the Common Stock on the last trading day preceding the date of
exercise less the pro-rated Exercise Price for such fractional
share.
6.
No Rights as Stockholders; Transfer Books. This Warrant does
not entitle the Warrantholder to any voting rights or other rights
as a stockholder of the Company prior to the date of exercise
hereof. The Company will at no time close its transfer books
against transfer of this Warrant in any manner which interferes
with the timely exercise of this Warrant.
7.
Charges, Taxes and Expenses. Issuance of certificates for
Shares to the Warrantholder upon the exercise of this Warrant shall
be made without charge to the Warrantholder for any issue or
transfer tax or other incidental expense in respect of the issuance
of such certificates, all of which taxes and expenses shall be paid
by the Company.
(A) &n
