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Exhibit 4.1
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
245,443
Shares of Common Stock
of HAWTHORN BANCSHARES, INC.
Issue Date: December 19, 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 30th day
after delivery of the Original Warrantholder’s objection.
" Governmental Entities " has the meaning
ascribed to it in the Purchase Agreement.
" Initial Number " has the meaning set forth
in Section 13(B).
"Issue Date" means the date set forth in
Item 3 of Schedule A hereto.
" Market Price " means, with respect to a
particular security, on any given day, the last reported sale price
regular way or, in case no such reported sale takes place on such
day, the average of the last closing bid and ask prices regular
way, in either case on the principal national securities exchange
on which the applicable securities are listed or admitted to
trading, or if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and ask prices
as furnished by two members of the Financial Industry Regulatory
Authority, Inc. selected from time to time by the Company for that
purpose. "Market Price" shall be determined without reference to
after hours or extended hours trading. If such security is not
listed and traded in a manner that the quotations referred to above
are available for the period required hereunder, the Market Price
per share of Common Stock shall be deemed to be (i) in the
event that any portion of the Warrant is held by the Original
Warrantholder, the fair market value per share of such security as
determined in good faith by the Original Warrantholder or
(ii) in all other circumstances, the fair market value per
share of such security as determined in good faith by the Board of
Directors in reliance on an opinion of a nationally recognized
independent investment banking corporation retained by the Company
for this purpose and certified in a resolution to the
Warrantholder. For the purposes of determining the Market Price of
the Common Stock on the "trading day" preceding, on or following
the occurrence of an event, (i) that trading day shall be
deemed to commence immediately after the regular scheduled closing
time of trading on the New York Stock Exchange or, if trading is
closed at an earlier time, such earlier time and (ii) that trading
day shall end at the next regular scheduled closing time, or if
trading is closed at an earlier time, such earlier time (for the
avoidance of doubt, and as an example, if the Market Price is to be
determined as of the last trading day preceding a specified event
and the closing time of trading on a particular day is 4:00 p.m.
and the specified event occurs at 5:00 p.m. on that day, the Market
Price would be determined by reference to such 4:00 p.m. closing
price).
" Ordinary Cash Dividends " means a regular
quarterly cash dividend on shares of Common Stock out of surplus or
net profits legally available therefor (determined in accordance
with generally accepted accounting principles in effect from time
to time), provided that Ordinary Cash Dividends shall not
include any cash dividends paid subsequent to the Issue Date to the
extent the aggregate per share dividends paid on the outstanding
Common Stock in any quarter exceed the amount set forth in
Item 4 of Schedule A hereto, as adjusted for any stock
split, stock dividend, reverse stock split, reclassification or
similar transaction.
" Original Warrantholder " means the United
States Department of the Treasury. Any actions specified to be
taken by the Original Warrantholder hereunder may only be taken by
such Person and not by any other Warrantholder.
" 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.
8. Transfer/Assignment .
(A) Subject to compliance with clause
(B) of this Section 8, this Warrant and all rights
hereunder are transferable, in whole or in part, upon the books of
the Company by the registered holder hereof in person or by duly
authorized attorney, and a new warrant shall be made and delivered
by the Company, of the same tenor and date as this Warrant
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