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(CDFI Subchapter S Corporation
Senior Securities)
ANNEX A
FORM OF SENIOR SUBORDINATED SECURITIES
(FORM OF FACE OF SECURITY)
“THIS SENIOR SUBORDINATED SECURITY WILL BE ISSUED AND MAY
BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $1,000
AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF SUCH SECURITIES IN A DENOMINATION OF LESS THAN
$1,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING,
BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON SUCH
SECURITIES, AND SUCH PURPORTED TRANSFEREE SHALL BE
DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THIS SECURITY IS SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH IN THE LETTER AGREEMENT BY AND BETWEEN THE
COMPANY AND THE UNITED STATES DEPARTMENT OF THE
TREASURY AND SECURITIES PURCHASE AGREEMENT – STANDARD
TERMS (THE “AGREEMENT”), EACH OF WHICH ARE INCORPORATED
INTO THIS SENIOR SUBORDINATED SECURITY.
THIS OBLIGATION IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IS
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM OR ANY OTHER GOVERNMENTAL
AGENCY.
THIS OBLIGATION IS SUBORDINATED TO [Insert for Issuers that are
Bank or Savings Associations: THE CLAIMS OF GENERAL AND SECURED
CREDITORS OF THE COMPANY AND IS NOT SECURED] [Insert for
Issuers that are BHCs or SLHCs: SENIOR INDEBTEDNESS OF THE
COMPANY IN ACCORDANCE WITH APPLICABLE HOLDING COMPANY
REGULATIONS OF THE APPROPRIATE FEDERAL BANKING AGENCY].
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), 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. EACH PURCHASER OF THIS SECURITY IS NOTIFIED THAT THE
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(CDFI Subchapter S Corporation
Senior Securities)
SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. ANY
TRANSFEREE OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
(1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER”
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES
THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE
SECURITIES REPRESENTED BY THIS INSTRUMENT EXCEPT
(A) PURSUANT TO A REGISTRATION STATEMENT WHICH IS THEN
EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE
SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO THE
COMPANY OR (D) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON
TRANSFER AND OTHER PROVISIONS OF THE AGREEMENT BETWEEN
THE COMPANY AND THE INVESTOR REFERRED TO THEREIN, A COPY
OF WHICH IS ON FILE WITH THE COMPANY. THIS SECURITY 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.”
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(CDFI Subchapter S Corporation
Senior Securities)
[NAME OF COMPANY]
CUSIP No._________
$___________
3.1% SENIOR SUBORDINATED SECURITY DUE [Insert for bank or savings associations:
2023] [Insert for BHCs or SLHCs: 2040]
[Company], a [State corporation] (the “Company,” which term includes any
permitted successor thereto), for value received, hereby promises to pay to the order of the
United States Department of the Treasury or registered assigns, by wire transfer, the principal
sum of $_________________ (___________ Dollars) on _________________, [Insert for bank
or savings associations: 2023] [Insert for BHCs or SLHCs: 2040] (the “Maturity Date”) (or any
earlier redemption date or date of acceleration of the Maturity Date) and to pay interest on the
outstanding principal amount of this Senior Subordinated Security Due [Insert for bank or
savings associations: 2023] [Insert for BHCs or SLHCs: 2040] (this “Senior Subordinated
Security”) (i) from _________________, or from the most recent interest payment date to which
interest has been paid or duly provided for, quarterly in arrears [Insert for BHCs or SLHCs:
(subject to deferral as set forth in Section 6.4(c) of the Agreement)] on February 15, May 15,
August 15 and November 15 of each year (each such date, an “Interest Payment Date”),
commencing on
_____ _________________, at the rate of 3.1% per annum, until the
eighth anniversary of the date hereof, provided, however, that [(A)] if a CDFI Event shall have
occurred and it or any other CDFI Event is continuing at all times, from and after the 180th day
after the date on which the first CDFI Event occurred until the date on which no CDFI Events are
continuing, the Interest Rate shall be 7.7% per annum, [To be inserted if Issuer was not a CDFI
on February 3, 2010: and (B) if a CDFI Event shall have occurred and it or any other CDFI
Event is continuing, at all times, from and after the 270th day after the date on which the first
CDFI Event occurred until the date on which no CDFI Events are continuing, 13.8% per annum]
and (ii) from and after the eighth anniversary of the date hereof, at a rate of 13.8% per annum
(each such interest rate, the applicable “Interest Rate”) until the principal hereof shall have been
paid or duly provided for, compounded quarterly, and on any overdue principal and on any
overdue installment of interest (without duplication and to the extent that payment of such
interest is enforceable under applicable law) at the same rate per annum. The amount of interest
payable hereon shall be computed on the basis of a 360-day year comprised of twelve 30-day
months.
This Senior Subordinated Security is one of the Senior Subordinated Securities
referred to in the Letter Agreement and Securities Purchase Agreement – Standard Terms, dated
as of ________ (as amended, modified or restated from time to time, the “Agreement”), by and
among the Company and the United States Department of the Treasury, as the initial Investor
(the “Investor”). Capitalized terms used in this Senior Subordinated Security are defined in the
Agreement, unless otherwise expressly stated herein. The Senior Subordinated Security is
entitled to the benefits of the Agreement and is subject to all of the agreements, terms and
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(CDFI Subchapter S Corporation
Senior Securities)
conditions contained therein, all of which are incorporated herein by this reference. This Senior
Subordinated Security may be redeemed, in whole or in part, in accordance with the terms and
conditions set forth in the Agreement.
Interest
The interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the person in whose name this Senior Subordinated
Security is registered at the close of business on the regular record date for such installment of
interest, which date shall be at the close of business on the 1st calendar day (whether or not a
business day) of the month in which each Interest Payment Date occurs (each such date, the
“Regular Record Date”). Any such installment of interest (other than Deferred Interest) not
punctually paid or duly provided for shall forthwith cease to be payable to the Holders on such
Regular Record Date and shall be paid to the person in whose name this Senior Subordinated
Security is registered at the close of business on the date preceding the next Interest Payment
Date, on the next Interest Payment Date, along with all other amounts then due and payable. In
no event, however, shall interest exceed the maximum rate permitted by applicable law.
If an Interest Payment Date or the Maturity Date falls on a day that is not a
“business day” (as defined in the Agreement), the related payment of principal or interest will be
paid on the next business day, with the same force and effect as if made on such date, and no
interest on such payments will accrue from and after such Interest Payment Date or Maturity
Date, as the case may be. Interest payable on the Maturity Date of the Senior Subordinated
Securities will be paid to the registered Holder to whom the principal is payable upon
presentation and surrender for cancellation.
Method of Payment
The principal of this Senior Subordinated Security shall be payable upon
surrender hereof and interest on this Senior Subordinated Security shall be payable at the office
or agency of the Company or an agent appointed for that purpose in any coin or currency of the
United States of America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest shall be made by the Company to the
Holders of this Senior Subordinated Security entitled thereto as shown on the Senior
Subordinated Securities Register by wire transfer of immediately available funds to any account
with a banking institution located in the United States designated by such Holder no later than
the related Regular Record Date.
Subordination
The indebtedness evidenced by this Senior Subordinated Security is, to the extent
provided in the Agreement, senior to the Common Stock, but subordinate and junior in right of
payment to the prior payment in full of [Insert for bank and savings associations: all claims of
depositors and to the Company’s other debt obligations to its general and secured creditors]
[Insert for BHC and SLHC: senior indebtedness of the Company, in accordance with
applicable holding company regulations of the Appropriate Federal Banking Agency], unless
such debt obligations are explicitly made pari passu or subordinated to the Senior Subordinated
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(CDFI Subchapter S Corporation
Senior Securities)
Securities, if applicable. Each Holder of this Senior Subordinated Security, by accepting the
same agrees to and shall be bound by such provisions of the Agreement. Each Holder hereof, by
his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination
provisions contained herein and in the Agreement by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
The provisions of this Senior Subordinated Security are continued on the reverse
side hereof and such provisions shall for all purposes have the same effect as though fully set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed this ____________ day of ____________, __________.
[NAME OF COMPANY]
By: ____________________________________
Name:
Title:
Attest:
By: ____________________________________
Name:
Title:
UST Sequence No. 1295
A-5
(CDFI Subchapter S Corporation
Senior Securities)
(FORM OF REVERSE OF SECURITY)
This Senior Subordinated Security is one of the Senior Subordinated Securities of
the Company (herein sometimes referred to as the “Senior Subordinated Securities”), issued or to
be issued under and pursuant to a Letter Agreement and Securities Purchase Agreement –
Standard Terms, dated as of ________, 2010 (as amended, modified or restated from time to
time, the “Agreement”), by and between the Company and the United States Department of the
Treasury, as the initial Investor (the “Investor”), to which Agreement reference is hereby made
for a description of the rights, limitations of rights, obligations, duties and immunities thereunder
of Company and the Holders of the Senior Subordinated Securities. This Senior Subordinated
Security is a single series security with a face value in aggregate principal amount as set forth on
the front of this Senior Subordinated Security.
Defaults and Remedies
If an Event of Default as provided for in Section 5.1 of the Agreement occurs,
then the principal of, interest accrued on, and other obligations payable under this Senior
Subordinated Security and the Transaction Documents, will immediately become due and
payable. Notwithstanding anything to the contrary herein or in the Agreement, other than
Section 5.2 of the Agreement, there is no right of acceleration for any default, including a default
in the payment of principal or interest or the performance of any other covenant or obligation by
the Company under this Senior Subordinated Security or the Agreement.
Amendment and Waiver
No amendment, modification, termination or waiver of any provision of the
Agreement, the Senior Subordinated Securities or any of the other Transaction Documents, or
consent to any departure by the Company therefrom, shall be effective unless made in writing
and signed by an officer or a duly authorized representative of the Company and in the case of
the Senior Subordinated Securities, the Majority Holders; provided that for so long as the Senior
Subordinated Securities are outstanding, the Investor may at any time and from time to time
unilaterally amend Section 4.1(e) of the Agreement to the extent the Investor deems necessary, in
its sole discretion, to comply with, or conform to, any changes after the Signing Date in any
federal statutes, any rules and regulations promulgated thereunder and any other publications or
interpretative releases of the Fund governing CDFIs, including, without limitation, any changes
in the criteria for certification as a CDFI by the Fund; provided further that no amendment,
modification, termination or waiver with respect to the Senior Subordinated Securities shall,
unless in writing and signed by all Holders, do any of the following: (A) change the principal of
or the rate of interest on any Senior Subordinated Security; (B) extend any date fixed for any
payment of principal or interest; (C) change the definition of the terms “Holders” or “Majority
Holders” or the percentage of Holders which shall be required for Holders to take any action
hereunder; or (D) consent to the assignment, delegation or other transfer by the Company of any
of its rights and obligations under any Transaction Documents.
Any such consent or waiver by the Holder of this Senior Subordinated Security
shall be conclusive and binding upon such Holder and upon all future Holders of this Senior
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(CDFI Subchapter S Corporation
Senior Securities)
Subordinated Security and of any Senior Subordinated Security issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Senior Subordinated Security.
No reference herein to the Agreement and no provision of this Senior
Subordinated Security or of the Agreement shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on this Senior
Subordinated Security at the time and place and at the rate and in the money herein prescribed.
Limitation on Dividends and Repurchases of Equity Securities
The Company’s ability to declare and pay dividends and purchase or acquire
shares of Common Stock, other equity securities, trust preferred securities or any Senior
Subordinated Security is limited by the terms of the Agreement. The Company’s ability to
redeem this Senior Subordinated Security is limited by the terms of the Agreement.
Interest Deferral and Voting Rights
The Company may defer interest paid on the Senior Subordinated Securities,
subject to the terms and conditions in the Agreement. The Holders of this Senior Subordinated
Security will be permitted to vote for two directors in the event interest is deferred for eight
quarters (regardless of whether such quarters are consecutive). [Insert for BHCs or SLHCs:
Deferral of interest in excess of 20 quarters constitutes an “Event of Default” as defined in the
Agreement.]
Denominations; Transfer; Exchange
The Senior Subordinated Securities are issuable only in registered form without
coupons in minimum denominations of $1,000.00 and integral multiples of $1,000.00 in excess
thereof. As provided in the Agreement, this Senior Subordinated Security is transferable by the
Holder hereof on the Senior Subordinated Securities Register maintained by the Company or its
agent, upon surrender of this Senior Subordinated Security for registration of transfer at the
office or agency of the Company or its agent, accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company duly executed by the Holder hereof
or his or her attorney duly authorized in writing, and thereupon one or more new Senior
Subordinated Securities of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Senior Subordinated
Security, the Company and any agent thereof may deem and treat the Holder hereof as the
absolute owner hereof (whether or not this Senior Subordinated Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made) for the purpose of receiving
payment of or on account of the principal hereof and (subject to the Agreement) interest due
hereon and for all other purposes, and none of the Company or any agent thereof shall be
affected by any notice to the contrary.
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(CDFI Subchapter S Corporation
Senior Securities)
No Recourse Against Others
No recourse shall be had for the payment of the principal of or interest on this
Senior Subordinated Security, or for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Agreement or any other Transaction Document, against any
incorporator, shareholder, employee, officer or director, as such, past, present or future, as such,
of the Company or of any successor thereto, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
Governing Law
THE AGREEMENT AND THIS SENIOR SUBORDINATED SECURITY
SHALL EACH BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
FEDERAL LAWS OF THE UNITED STATES, IF AND TO THE EXTENT SUCH LAW IS
APPLICABLE AND OTHERWISE IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.
Abbreviations
The following abbreviations, when used in the inscription on the face of this
Senior Subordinated Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN CON – as tenants in common TEN ENT – as tenants in the entireties
JT TEN – as joint tenants with right of survival
UNIF GIFT MIN ACT – under Uniform Gift to Minors Act and not as
tenants
Additional abbreviations may also be used though not in the above list.
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(CDFI Subchapter S Corporation
Senior Securities)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns and transfers this
Senior Subordinated Security to:
____________________________________
(Assignee’s social security or tax
identification number)
____________________________________
(Address and zip code of assignee)
and irrevocably appoints ________________ agent to transfer this Senior Subordinated Security
on the books of the Company. The agent may substitute another to act for him or her.
Date: ______________________
Signature: ______________________________
(Sign exactly as your name appears on the other side of this Senior Subordinated Security)
Signature Guarantee:______________________
[Signature must be guaranteed by an “eligible
guarantor institution” that is a bank,
stockbroker, savings and loan association or
credit union meeting the requirements of the
Registrar, which requirements include
membership or participation in the Securities
Transfer Agents Medallion Program
(“STAMP”) or such other “signature guarantee
program” as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act
of 1934, as amended.]
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@FedFRASER