Exhibit 10.2

 

FORM OF SUBORDINATED NOTE

 

FIRST SAVINGS FINANCIAL GROUP, INC.

 

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY
AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE
CORPORATION. THIS OBLIGATION IS SUBORDINATED TO THE CLAIMS OF GENERAL AND
SECURED CREDITORS OF THE COMPANY, IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION
OF CREDIT BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AND IS UNSECURED.

 

THIS SUBORDINATED NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY
ATTEMPTED TRANSFER OF SUCH NOTES IN A DENOMINATION OF LESS THAN $100,000 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 THIS SUBORDINATED NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF PAYMENTS ON THIS SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SUBORDINATED NOTE.

 

THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SUBORDINATED NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SUBORDINATED NOTE BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SUBORDINATED
NOTE ONLY (A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
(“RULE 144A”), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A 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 A “NON U.S.
PERSON” IN AN “OFFSHORE TRANSACTION” PURSUANT TO REGULATION S UNDER THE
SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF
SUBPARAGRAPH (1), (2), (3) OR (7) OF RULE 501(a) UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS SUBORDINATED NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO IT TO CONFIRM THE AVAILABILITY OF SUCH EXEMPTION.
THE HOLDER OF THIS SUBORDINATED NOTE BY ITS ACCEPTANCE HEREOF AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

 

 

 

 

THE HOLDER OF THIS SUBORDINATED NOTE BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS
AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS
SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT OR
AN APPLICABLE EXEMPTION THEREFROM.

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SUBORDINATED NOTE WILL
DELIVER TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE COMPANY TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.

 

CERTAIN ERISA CONSIDERATIONS:

 

EACH PURCHASER AND HOLDER OF THIS SUBORDINATED NOTE, OR ANY INTEREST HEREIN, BY
ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT
EITHER (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), A TRUSTEE OR
OTHER PERSON ACTING ON BEHALF OF ANY SUCH PLAN, OR AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY,
OR (II) THAT SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS
PURCHASE AND HOLDING OF THIS SUBORDINATED NOTE, OR ANY INTEREST HEREIN, ARE NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE. ANY FIDUCIARY OF
ANY PLAN WHO IS CONSIDERING THE ACQUISITION OF THIS SUBORDINATED NOTE OR ANY
INTEREST HEREIN SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING
THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN.

 

 

 

 

FIRST SAVINGS FINANCIAL GROUP, INC.

 

5.95% FIXED-TO-FLOATING Subordinated Note DUE 2028

 

Certificate No.: 2028-1 Accredited Investor CUSIP: 33621E AB5   Accredited
Investor ISIN: US33621EAB56   QIB CUSIP: 33621E AA7   QIB ISIN: US33621EAA73    
U.S. $20,000,000.00 Dated: September 20, 2018

 

FOR VALUE RECEIVED, the undersigned, FIRST SAVINGS FINANCIAL GROUP, INC., an
Indiana corporation (the “Company”), promises to pay to the order of EJF
PORTFOLIO VEHICLE I LLC or its registered assigns (collectively, the “Holder”),
the principal amount of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00), in
the lawful currency of the United States of America, or such lesser or greater
amount as shall then remain outstanding under this Subordinated Note, at the
times and in the manner provided herein, but no later than September 30, 2028
(the “Maturity Date”), or such other date upon which this Subordinated Note
shall become due and payable, whether by reason of extension, acceleration or
otherwise.

 

Interest on this Subordinated Note will be payable in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on December 31, 2018,
to the Holder of record on March 15, June 15, September 15 and December 15 and
at maturity.

 

Reference is hereby made to the further provisions of this Subordinated Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

  FIRST SAVINGS FINANCIAL GROUP, INC.

 

  By:       Anthony A. Schoen     Chief Financial Officer

 

ATTEST:

 

    John P. Lawson, Jr. Chief Operating Officer and Corporate Secretary

 

 

 

 

[REVERSE SIDE OF NOTE]

 

FIRST SAVINGS FINANCIAL GROUP, INC.

5.95% FIXED-TO-FLOATING SUBORDINATED NOTE DUE 2028

 

The Company promises to pay interest on the principal amount of this
Subordinated Note, commencing on the original issue date of this Subordinated
Note, 2018, until September 30, 2028 (the “Maturity Date”), or such earlier date
as this Subordinated Note is paid in full, at the rate provided herein. The
unpaid principal balance of this Subordinated Note plus all accrued but unpaid
interest thereon shall be due and payable on the Maturity Date, or such earlier
date on which such amount shall become due and payable. This Subordinated Note
is one of the “Notes” referred to in that certain Subordinated Note Purchase
Agreement, dated September 20, 2018 (the “Purchase Agreement”), by and among the
Company, the Holder (referred to therein as the “Purchaser”) and the other
Purchasers (as defined therein) of the Notes, and the Subordinated Note is
entitled to the benefits thereof. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement.

 

1.           Computation and Payment of Interest. This Subordinated Note will
bear interest (a) from and including the original issue date of this
Subordinated Note to but excluding September 30, 2023 (the “Fixed-Rate Period
End Date”) (or the earlier Redemption Date contemplated by Section 4(a) herein),
payable quarterly in arrears at simple interest of Five and Ninety Five
hundredths percent (5.95%) per annum (the “Fixed Interest Rate”) on each
Interest Payment Date through and including the Fixed-Rate Period End Date; and
(b) from and including the Fixed-Rate Period End Date to but excluding the
Maturity Date (the “Floating-Rate Period”), at the rate per annum, reset
quarterly, equal to LIBOR plus 310 basis points (the “Floating Interest Rate”),
payable quarterly in arrears on each Interest Payment Date during the
Floating-Rate Period. “Interest Payment Date” means March 31, June 30, September
30 and December 31 of each year through the Maturity Date. The payments of
interest and principal, if any, due on any Interest Payment Date shall be paid
to the holders of record on the fifteenth (15th) of the month of each Interest
Payment Date. Interest, whether based on the Fixed Interest Rate or the Floating
Interest Rate, shall be computed on the basis of thirty (30)-day months and a
year of three hundred sixty (360) days.

 

“LIBOR” means the 3-month USD LIBOR, which will be the offered rate for 3-month
deposits in U.S. dollars, as that rate appears on the Reuters Screen LIBOR01
Page (or any successor page thereto) as of 11:00 a.m., London time, as observed
two London banking days prior to the first day of the applicable floating rate
interest period. If at any time while any Subordinated Notes are outstanding
LIBOR ceases to exist or be reported on the Reuters Screen, the Company shall
select (with notice to each Holder) an alternative rate, including any spread
adjustments thereto (the “Alternative Rate”). Company shall use its commercially
reasonable judgment in determining the Alternative Rate based on that rate
determined by the U.K Financial Conduct Authority (the “FCA”) and generally
being used as the successor to 3-month USD LIBOR; if no such successor rate has
been determined by the FCA, Company shall use its commercially reasonable
judgment in determining the Alternative Rate generally being used as the
successor to 3-month USD LIBOR; provided, however, that, in either case, if the
Company is notified by Holders of a majority of the Notes within five (5)
business days after the receipt by all Holders of notice of such Alternative
Rate selection that such Holders reasonably believe that such Alternative Rate
is not consistent with the successor for LIBOR, including any spread
adjustments, generally used in quarterly pay floating rate obligations, then the
Alternative Rate shall be the rate selected by the Holders of majority of the
Notes, each using their commercially reasonable judgment in identifying an
alternative rate that is consistent with the successor for LIBOR, including any
spread adjustments, generally used in quarterly pay floating rate obligations.
In the event the Holders of a majority of the Notes cannot reach agreement on
such Alternative Rate within fifteen (15) business days of the Company’s
notification of its proposed Alternative Rate under this Section, the
Alternative Rate shall be the rate identified by the Holder of the largest
principal amount of Notes, selected based on such Holder’s commercially
reasonable judgment as to the an alternative rate that is consistent with the
successor for LIBOR, including any spread adjustments, generally used in
quarterly pay floating rate obligations. All references herein to “LIBOR” will
mean such Alternative Rate.

 

 

 

 

2.           Non-Business Days. Whenever any payment to be made by the Company
hereunder shall be stated to be due on a day that is not a business day, such
payment shall be made on the next succeeding business day without change in any
computation of interest with respect to such payment (or any succeeding
payment). “Business day” means any day other than a Saturday, Sunday or any
other day on which banking institutions in New York are permitted or required by
any applicable law or executive order to close.

 

3.           Transfer. The Company or its agent (the “Registrar”) shall maintain
a register of each holder of the Subordinated Note. The Company shall be
entitled to treat each Person in its register as the beneficial owner of this
Subordinated Note. The Subordinated Note will initially be issued in
certificated form. This Subordinated Note may be transferred in whole or in part
at the principal offices of the Company or Registrar, accompanied by due
endorsement or written instrument of transfer. Upon such surrender and
presentment, the Company or the Registrar shall issue one or more Subordinated
Notes with an aggregate principal amount equal to the aggregate principal amount
of this Subordinated Note and registered in such name or names requested by the
holder of record, and shall update its register accordingly. Such transferee
shall be solely responsible for delivering to the Company or the Registrar a
mailing address or other information necessary for the Company or the Registrar
to deliver notices and payments to such transferee.

 

4.           Affirmative Covenants of the Company. During the time that any
portion of the principal balance of this Subordinated Note is unpaid and
outstanding, the Company shall take or cause to be taken the actions set forth
below.

 

(a)          Notice of Certain Events. If the Company is not subject to the
reporting requirements of Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, then the Company shall provide written notice to the
Holder of the occurrence following the date of this Subordinated Note of the
following events as soon as practicable but in no event later than ten (10)
business days following the Company’s becoming aware of the occurrence of such
event:

 

(i)          the total risk-based capital ratio, Tier 1 risk-based capital
ratio, Common Equity Tier 1 capital ratio or leverage ratio of the Company (but
only to the extent the Company is required to measure and report such ratios on
a consolidated basis under applicable law) or any of the Company’s banking
subsidiaries (each, a “Bank”) becomes less than ten percent (10.0%), eight
percent (8.0%), six-and-one-half percent (6.5%) or five percent (5.0%),
respectively;

 

(ii)         the Company, the Bank, or any executive officer of the Company or
the Bank becomes subject to any formal, written regulatory enforcement action;

 

(iii)        the ratio of non-performing assets to total assets of the Bank, as
calculated by the Company in the ordinary course of business and consistent with
past practices, becomes greater than four percent (4.0%);

 

(iv)        the appointment, resignation, removal or termination of the chief
executive officer, president, chief operating officer, chief financial officer,
chief credit officer, chief lending officer or any director of the Company or
the Bank; or

 

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(v)         there occurs a change in ownership of twenty-five percent (25.0%) or
more of the voting securities of the Company, except as a result of the issuance
of Company common stock.

 

(b)          Compliance with Laws. The Company and each Subsidiary of the
Company shall comply with the requirements of all laws, regulations, orders, and
decrees applicable to it or its properties, except for such noncompliance that
would not reasonably be expected to have a Material Adverse Effect.

 

(c)          Taxes and Assessments. The Company and each of its Subsidiaries
shall punctually pay and discharge all taxes, assessments, and other
governmental charges or levies imposed upon it or upon its income or upon any of
its properties; provided, that no such taxes, assessments or other governmental
charges need be paid if they are being contested in good faith by the Company.

 

(d)          Compliance Certificate. If the Company is not subject to the
reporting requirements of Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, then, not later than forty-five (45) days following the
end of each fiscal quarter, the Company shall provide the Holder with a
certificate (the “Compliance Certificate”), executed by the principal executive
officer and principal financial officer of the Company in their capacities as
such, stating whether as of the end of such immediately preceding fiscal
quarter, (i) the Company has complied with all notice provisions and covenants
contained in this Subordinated Note; (ii) an Event of Default has occurred;
(iii) an event of default has occurred under any other indebtedness of the
Company; or (iv) an event or events have occurred that in the reasonable
judgment of the management of the Company would have a material adverse effect
on the ability of the Company to perform its obligations under this Subordinated
Note.

 

(e)          Financial Statements; Access to Records.

 

(i)          If the Company is not subject to the reporting requirements of
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended,
and has not submitted a Consolidated Financial Statements for Holding Companies
Reporting Form FR Y-9C to the Board of Governors of the Federal Reserve System
(the “Federal Reserve”) within forty-five (45) days following the end of any
fiscal quarter, the Company shall provide the Holder with copies of the
Company’s unaudited consolidated balance sheet and statement of income (loss)
for and as of the end of such immediately preceding fiscal quarter, prepared in
accordance with past practice and in a form substantially similar to the form
provided to the Holders prior to the date hereof. Quarterly financial
statements, if required herein, shall be unaudited and, except for the balance
sheet and statement of income (loss) for the Bank, need not comply with GAAP.

 

(ii)         If the Company is not subject to the reporting requirements of
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended,
then, not later than ninety (90) days from the end of each fiscal year, the
Company shall provide the Holder with copies of the Company’s audited financial
statements consisting of the consolidated balance sheet of the Company as of
date of the fiscal year end and the related statements of income (loss) and
retained earnings, stockholders’ equity and cash flows for the fiscal year then
ended. Such financial statements shall be prepared in accordance with GAAP
applied on a consistent basis throughout the period involved.

 

(iii)        In addition to the foregoing Sections 4(e)(i) and (ii), the Company
shall furnish Holder with such financial, business and legal information of the
Company and the Bank, and afford Holder with access to inspect Company records,
in each case as Holder may reasonably request as may be reasonably necessary or
advisable to allow Holder to confirm compliance by the Company with this
Subordinated Note.

 

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(f)          Business Continuation. The Company and each of its subsidiaries
shall use reasonable best efforts to maintain and preserve intact the current
organization, business and franchise of the Company and the Bank, including but
not limited to (i) maintaining the corporate existence of the Company and the
Bank, and (ii) conducting the business of the Company and the Bank in the
ordinary course of business consistent with past practice.

 

5.           Negative Covenants.

 

(a)          The Company shall not declare or pay any dividend or make any
distribution on capital stock or other equity securities of any kind of the
Company, except for dividends payable solely in shares of common stock, if
either of the Company or the Bank are not “well capitalized” for regulatory
capital purposes, both immediately prior to the declaration of such dividend or
distribution and after giving effect to the payment of such dividend or
distribution.

 

(b)          The Company shall not take any action, omit to take any action or
enter into any other transaction that would have the effect of (i) the Company
ceasing to be a bank holding company or financial holding company under the Bank
Holding Company Act of 1956, as amended, (ii) the liquidation or dissolution of
the Company or the Bank, (iii) the Bank ceasing to be an “insured depository
institution” under Section 3(c)(2) of the Federal Deposit Insurance Act, as
amended, or (iv) the Company owning less than one hundred percent (100%) of the
capital stock of the Bank.

 

6.           Subordination.

 

(a)          The obligations of the Company evidenced by this Subordinated Note,
including the principal and interest, shall be subordinate and junior in right
of payment to its obligations to its general and secured creditors, whether now
outstanding or hereafter incurred, except such other creditors holding
obligations of the Company ranking by their terms on a parity with or junior to
this Subordinated Note. No provision of this Subordinated Note shall be
construed to prohibit or restrict the Company’s ability to issue, renew or
extend any senior indebtedness or obligations that rank on a parity with or
junior to this Subordinated Note. In the event of any insolvency, receivership,
conservatorship, reorganization, readjustment of debt, marshaling of assets and
liabilities or similar proceedings or any liquidation or winding up of or
relating to the Company, whether voluntary or involuntary, all such obligations
shall be entitled to be paid in full before any payment shall be made on account
of the principal of or interest on this Subordinated Note. In the event of any
such proceedings, after payment in full of all sums owing on such prior
obligations, the Holder, together with holders of any obligations of the Company
ranking on a parity with this Subordinated Note (including but not limited to
the holders of the other Subordinated Notes), shall be entitled to be paid from
the remaining assets of the Company the unpaid principal thereof and any
interest thereon before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or any
obligations of the Company ranking junior to this Subordinated Note. Nothing
herein shall impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this Subordinated Note
according to its terms.

 

(b)          Notwithstanding the provisions of Section 6(a) above, the
obligations of the Company evidenced by this Subordinated Note, including the
principal and interest, shall be senior in right and interest of payment to the
indebtedness of the Company in connection with any future indebtedness of the
Company that is expressly made junior to this Subordinated Note by the terms of
such indebtedness. Nothing herein shall act to prohibit, limit or impede the
Company from issuing additional debt of the Company having the same rank as the
Subordinated Notes or which may be junior or senior in rank to the Subordinated
Notes.

 

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(c)          The Holder, if a depository institution, waives any applicable
right of offset by it as a lender.

 

7.           Events of Default and Remedies.

 

(a)          Notwithstanding any cure periods described below, the Company shall
immediately notify Holder in writing when the Company obtains knowledge of the
occurrence of any default specified below. Regardless of whether the Company has
given the required notice, the occurrence of one or more of the following will
constitute an “Event of Default” under this Subordinated Note:

 

(i)          the Company fails to pay any principal of or installment of
interest on this Subordinated Note when due (or, in the case of interest, after
a fifteen (15)-day grace period);

 

(ii)         the Company fails to keep or perform any of its agreements,
undertakings, obligations, covenants or conditions under the Purchase Agreement
or this Subordinated Note not expressly referred to in another clause of this
Section 7 and such failure continues for a period of thirty (30) days;

 

(iii)        any certification made pursuant to the Purchase Agreement or this
Subordinated Note by the Company or otherwise made in writing in connection with
or as contemplated by the Purchase Agreement or this Subordinated Note by the
Company shall be materially incorrect or false as of the delivery date of such
certification, or any representation to Holder by the Company as to the
financial condition or credit standing of the Company is or proves to be false
or misleading in any material respect;

 

(iv)        the Company or the Bank (A) becomes insolvent or unable to pay its
debts as they mature, (B) makes an assignment for the benefit of creditors, or
(C) admits in writing its inability to pay its debts as they mature; or

 

(v)         the Company or the Bank becomes subject to a receivership,
insolvency, liquidation, or similar proceeding.

 

(b)          Remedies of Holders. Upon the occurrence of any Event of Default,
Holder shall have the right, if such Event of Default shall then be continuing,
in addition to all the remedies conferred upon Holder by the terms of the
Purchase Agreement or this Subordinated Note, to do any or all of the following,
concurrently or successively, without notice to the Company:

 

(i)          solely pursuant to a default under Section 7(a)(v), declare this
Subordinated Note to be, and it shall thereupon become, immediately due and
payable, without presentation, demand, protest or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in this
Subordinated Note to the contrary; or

 

(ii)         exercise all of its rights and remedies at law or in equity,
excluding the right, if any, to declare this Subordinated Note to be immediately
due and payable (such right to acceleration being governed solely by Section
7(b)(i).

 

(c)          Distribution Limitations Upon Event of Default. Upon the occurrence
of any Event of Default and until such Event of Default is cured by the Company,
the Company shall not (i) declare, pay, or make any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company’s capital stock, (ii) make any payment of principal or
interest or premium, if any on or repay, repurchase or redeem any debt
securities of the Company that rank equal with or junior to the Subordinated
Notes, or (iii) make any payments under any guarantee that ranks equal with or
junior to the Subordinated Notes. The limitations imposed by the provisions of
this Section 8(c) shall apply whether or not the Holder has notified the Company
of an Event of Default.

 

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(d)          Reimbursement of Expenses. Upon the occurrence of any Event of
Default, in addition to all the remedies conferred upon Holder by the terms of
the Purchase Agreement or this Subordinated Note and subject to any applicable
law, the Company shall pay Holders’ reasonable fees and expenses including
attorneys’ fees and expenses, in connection with the enforcement of this
Agreement or other related documents.

 

(e)          Other Remedies. Nothing in this Section 7 is intended to restrict
Holder’s rights under this Subordinated Note, other related documents, or at law
or in equity, and Holder may exercise such rights and remedies as and when they
are available to the extent permitted by Section 7(b).

 

8.           Successors to the Company.

 

(a)          Conditions Applicable to Successors. The Company shall not merge
with or into, nor sell all or substantially all of its assets to, nor effect a
Change in Bank Ownership to, any Person unless:

 

(i)          except in a case in which the Company is the surviving entity in a
merger, such Person (the “Successor”) executes, and delivers to the Holder, a
copy of an instrument pursuant to which such Person assumes the due and punctual
payment of the principal of and interest on this Subordinated Note and the
performance and observance of all the obligations of the Company under this
Subordinated Note, and

 

(ii)         immediately after giving effect to the transaction, no Event of
Default and no event which after notice or lapse of time or both would become an
Event of Default shall have occurred.

 

“Change in Bank Ownership” means the sale, transfer, lease or conveyance by the
Company, or an issuance of stock by the Bank, in either case resulting in
ownership by the Company of less than 80% of the Bank.

 

(b)          Successor as Company. Upon compliance with this Section 8, the
Successor shall succeed to and be substituted for the Company under this
Subordinated Note with the same effect as if the Successor had been named as the
Company herein, and the Company shall be released from the obligation to pay the
principal of and interest accrued on the Subordinated Notes.

 

9.           Amendments and Waivers.

 

(a)          Amendment of Subordinated Notes. Except as otherwise provided in
this Section 9, and subject to any necessary regulatory approval, the
Subordinated Notes may, with the consent of the Company and the Holders of more
than fifty percent (50.0%) of the aggregate outstanding principal amount of the
Subordinated Notes then outstanding, be amended or any provision, past or
existing default, or non-compliance thereof waived (or modify any previously
granted waiver); provided, however, that, without the consent of each Holder of
an affected Subordinated Note, no such amendment or waiver may:

 

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(i)          reduce the principal amount of the Subordinated Note;

 

(ii)         reduce the rate of or change the time for payment of interest on
any Subordinated Note;

 

(iii)        extend the maturity of any Subordinated Note;

 

(iv)        make any change in Sections 6 through 9 hereof; 

 

(v)         make any change in Section 11 hereof that adversely affects the
rights of any holder of a Subordinated Note; or

 

(vi)        disproportionately affect any of the Holders of the then outstanding
Subordinated Notes.

 

(b)          Effectiveness of Amendments. An amendment or waiver becomes
effective in accordance with its terms and thereafter binds every holder of the
Subordinated Notes, unless otherwise provided by Section 9(a) above. After an
amendment or waiver becomes effective, the Company shall mail to the Holder a
copy of such amendment or waiver. The Company may require the Holder to
surrender this Subordinated Note so that an appropriate notation concerning the
amendment or waiver may be placed thereon or a new Subordinated Note, reflecting
the amendment or waiver, exchanged therefor. Even if such a notation is not made
or such a new Subordinated Note is not issued, such amendment or waiver and any
consent given thereto by a Holder of this Subordinated Note shall be binding
according to its terms on any subsequent Holder of this Subordinated Note.

 

(c)          Amendments Without Consent of Holders. Notwithstanding Section
10(a) hereof but subject to the provisos contained in subsections (i) through
(vi) therein, the Company may amend or supplement this Subordinated Note without
the consent of the holders of the Subordinated Notes to: (i) cure any ambiguity,
defect or inconsistency therein; (ii) provide for uncertificated Subordinated
Notes in addition to or in place of certificated Subordinated Notes; or (iii)
make any other change, in each case, that does not adversely affect the rights
of any holder of any Subordinated Note.

 

10.         Order of Payments; Pari Passu. Any payments made hereunder shall be
applied first against interest due hereunder; and then against principal due
hereunder. Holder acknowledges and agrees that the payment of all or any portion
of the outstanding principal amount of this Subordinated Note and all interest
hereon shall be pari passu in right of payment and in all other respects to the
other Subordinated Notes and subordinated debt issued by the Company in the
future which by its terms are pari passu with the Subordinated Notes. In the
event Holder receives payments in excess of its pro rata share of the Company’s
payments to the holders of all of the Subordinated Notes, then Holder shall hold
in trust all such excess payments for the benefit of the holders of the other
Subordinated Notes and shall pay such amounts held in trust to such other
holders upon demand by such holders.

 

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11.         Optional Redemption.

 

(a)          Redemption Prior to Fifth Anniversary. This Subordinated Note shall
not be redeemable by the Company prior to the fifth anniversary of the effective
date of this Subordinated Note, except that in the event (i) the Company is
subject to the consolidated capital requirements under applicable regulations of
the Board of Governors of the Federal Reserve System (“Federal Reserve”) and
after such time this Subordinated Note no longer qualifies as “Tier 2” capital
(as defined by the Federal Reserve) as a result of any amendment or change in
interpretation or application of law or regulation by any judicial, legislative
or regulatory authority that becomes effective after the date of issuance of
this Subordinated Note, (ii) of a Tax Event (as defined below), or (iii) of an
Investment Company Act Event (as defined below), the Company may redeem this
Subordinated Note, in whole and not in part, at any time upon giving not less
than ten (10) days’ notice to the Holder of this Subordinated Note at an amount
equal to one hundred percent (100.0%) of the principal amount outstanding plus
accrued but unpaid interest to but excluding the date fixed for redemption (the
“Redemption Date”). “Tax Event” means the receipt by the Company of an opinion
of counsel to the Company that as a result of any amendment to, or change
(including any final and adopted (or enacted) prospective change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, there exists a material risk that interest
payable by the Company on the Subordinated Notes is not, or within one hundred
twenty (120) days after the receipt of such opinion will not be, deductible by
the Company, in whole or in part, for United States federal income tax purposes.
“Investment Company Act Event” means the receipt by the Company of an opinion of
counsel to the Company to the effect that there is a material risk that the
Company is, or within one hundred twenty (120) days of the date of such opinion
will be, considered an “investment company” that is required to register under
the Investment Company Act of 1940, as amended.

 

(b)          Redemption on or After Fifth Anniversary. On or after the fifth
anniversary of the effective date of this Subordinated Note, this Subordinated
Note shall be redeemable by the Company, in whole or in part, upon giving the
notice required in Section 11(c), for a redemption price equal to one hundred
percent (100.0%) of the principal amount of this Subordinated Note, or portion
thereof, to be redeemed, plus accrued but unpaid interest, if any, thereon to,
but excluding, the Redemption Date.

 

(c)          Notice of Redemption. Notice of redemption of this Subordinated
Note shall be given by first class mail, postage prepaid, addressed to the
Holder at its last address appearing on the books of the Company. Such mailing
shall be at least thirty (30) days and not more than sixty (60) days before the
Redemption Date. Any notice mailed as provided in this Subordinated Note shall
be conclusively presumed to have been duly given, whether or not the Holder
receives such notice, but failure duly to give such notice by mail, or any
defect in such notice or in the mailing thereof, to the Holder shall not affect
the validity of the proceedings for the redemption of any other holders of the
Subordinated Notes. Each notice of redemption given to the Holder shall state:
(i) the Redemption Date; (ii) the principal amount of this Subordinated Note to
be redeemed; (iii) the redemption price; and (iv) the place or places where this
Subordinated Note is to be surrendered for payment of the redemption price.

 

(d)          Partial Redemption. If less than the then outstanding principal
amount of this Subordinated Note is redeemed, (i) a new Subordinated Note shall
be issued representing the unredeemed portion without charge to the Holder
thereof and (ii) such redemption shall be effected on a pro rata basis as to the
Holders of the Subordinated Notes. For purposes of clarity, upon a partial
redemption, a like percentage of the principal amount of every Subordinated Note
held by every Holder shall be redeemed.

 

(e)          Effectiveness of Redemption. If notice of redemption has been duly
given and if on or before the Redemption Date all funds necessary for the
redemption have been deposited by the Company, in trust for the pro rata benefit
of the Holders of the Subordinated Notes called for redemption, so as to be and
continue to be available solely therefor, then, notwithstanding that any
Subordinated Notes so called for redemption have not been surrendered for
cancellation, on and after the Redemption Date interest shall cease to accrue on
all Subordinated Notes so called for redemption, all Subordinated Notes so
called for redemption shall no longer be deemed outstanding and all rights with
respect to such Subordinated Notes shall forthwith on such Redemption Date cease
and terminate, except only the right of the Holders thereof to receive the
amount payable on such redemption held in trust, without interest. Any funds
unclaimed at the end of three (3) years from the Redemption Date shall, to the
extent permitted by law, be released to the Company, after which time the
Holders of the Subordinated Notes so called for redemption shall look only to
the Company for payment of the redemption price of such Subordinated Notes.

 

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(f)          Federal Reserve Approval. If necessary, any redemption or
prepayment of this Subordinated Note shall be subject to receipt of prior
written approval by the Federal Reserve (or any successor bank regulatory agency
having supervisory authority over the Company) and any and all other required
federal and state regulatory approvals.

 

(g)          No Sinking Fund. The Subordinated Notes are not entitled to any
sinking fund.

 

12.         Notices. All notices and other communications hereunder shall be in
writing and, for purposes of this Subordinated Note, shall be delivered in
accordance with, and effective as provided in, the Purchase Agreement.

 

13.         Conflicts; Governing Law; Interpretation. In the case of any
conflict between the provisions of this Subordinated Note and the Purchase
Agreement, the provisions of this Subordinated Note shall control. This
Subordinated Note shall be construed in accordance with, and be governed by, the
laws of the state in which the Company is incorporated or organized without
giving effect to any conflicts of law provisions of such laws. This Subordinated
Note is intended to meet the criteria for qualification of the outstanding
principal as Tier 2 capital under the regulatory guidelines of the Federal
Reserve. If at any time the Company is subject to consolidated capital
requirements under applicable regulations of the Federal Reserve and after such
time all or any portion of this Subordinated Note ceases to be deemed to be
Tier 2 capital, other than due to the limitation imposed on the capital
treatment of subordinated debt during the five years immediately preceding the
maturity date of this Subordinated Note, the Company will promptly notify the
Holder, and thereafter, subject to the Company’s right to redeem this
Subordinated Note under such circumstances pursuant to the terms of this
Subordinated Note, if requested by the Company, the Company and the Holder will
work together in good faith to execute and deliver all agreements as reasonably
necessary in order to restructure the applicable portions of the obligations
evidenced by this Subordinated Note to qualify as Tier 2 capital.

 

14.         Successors and Assigns. This Subordinated Note shall be binding upon
the Company and inure to the benefit of the Holder and its respective successors
and permitted assigns. The Holder may assign all, or any part of, or any
interest in, the Holder’s rights and benefits hereunder at any time without
notice to or consent of the Company, and the failure of Holder to comply with
the requirements of Section 3 shall have no effect of the effectiveness of such
assignment. To the extent of any such assignment, such assignee shall have the
same rights and benefits against the Company and shall agree to be bound by and
to comply with the terms and conditions of the Purchase Agreement as it would
have had if it were the Holder hereunder. The Company may not assign this
Subordinated Note or its obligations hereunder except as provided in Section 8
hereto or with the prior written consent of the Holder.

 

15.         Notes Solely Corporate Obligations. The Holder shall not have any
recourse for the payment of principal or interest, on any Subordinated Note, for
any claim based thereon or otherwise with respect thereto, under any obligation,
covenant or agreement of the Company in this Subordinated Note, or because of
the creation of any indebtedness represented hereby, against any incorporator,
stockholder, employee, agent, officer, director or subsidiary, as such, past,
present or future, of the Company or of any successor Person, either directly or
through the Company or any successor Person, whether by virtue of any
constitution, statute or rule of law, or by enforcement of any assessment or
penalty or otherwise. The Holder agrees that all such liability is hereby
expressly waived and released as a condition of, and consideration for, the
execution and issuance of this Subordinated Note.

 

16.         Waivers. Neither any failure nor any delay on the part of the Holder
in exercising any right, power or privilege under this Subordinated Note shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any other right, power or privilege.

 

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