(CDFI Credit Unions 

Senior Securities) 

 A-1 

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 CREDIT UNION 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 SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT

INSURED BY THE UNITED STATES, ANY AGENCY OR FUND OF THE 

UNITED STATES OR THE NATIONAL CREDIT UNION SHARE INSURANCE 

FUND. 

THIS OBLIGATION IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT, 

AS TO PRINCIPAL, INTEREST AND PREMIUM, TO ALL CLAIMS AGAINST THE 

CREDIT UNION HAVING THE SAME PRIORITY AS SAVINGS ACCOUNT 

HOLDERS, SHAREHOLDERS OR OTHER DEPOSITORS, THE NATIONAL 

CREDIT UNION SHARE INSURANCE FUND OR ANY HIGHER PRIORITY, 

INCLUDING GENERAL AND SECURED CREDITORS OF THE CREDIT UNION. 

THIS OBLIGATION IS NOT SECURED BY THE CREDIT UNION’S ASSETS OR 

THE ASSETS OF ANY OF ITS AFFILIATES. THIS OBLIGATION IS NOT 

ELIGIBLE AS COLLATERAL FOR ANY LOAN BY THE CREDIT UNION. 

THE TERMS UNDER WHICH THE CREDIT UNION MAY PREPAY THIS SENIOR 

SUBORDINATED SECURITY ARE SET FORTH IN THE AGREEMENT. 

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 
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Senior Securities) 

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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 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 CREDIT 

UNION 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 

CREDIT UNION AND THE INVESTOR REFERRED TO THEREIN, A COPY OF 

WHICH IS ON FILE WITH THE CREDIT UNION. 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.”
 (CDFI Credit Unions 

Senior Securities) 

 A-3 

[NAME OF CREDIT UNION] 

[Federal/State] Credit Union Charter No. ____________ 

$_______________ 

2% SENIOR SUBORDINATED SECURITY DUE [Insert for securities with 8 year maturity:

2018] [Insert for securities with 13 year maturity: 2023]

[Credit Union], a credit union organized under the laws of [___________] (the “Credit 

Union,” 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 securities with 8 

year maturity: 2018] [Insert for securities with 13 year maturity: 2023] (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 

securities with 8 year maturity: 2018] [Insert for securities with 13 year maturity: 2023] (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 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 2% 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 5% 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, 9% per 

annum] [Insert for securities with 13 year maturity: and (ii) from and after the eighth 

anniversary of the date hereof, at a rate of 9% 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 Credit Union 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 conditions contained therein, all of which are incorporated herein by this reference. This 
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Senior Securities) 

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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 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 

Credit Union 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 Credit Union 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, subordinate and junior in right of payment to all deposit liabilities of 

the Credit Union and to the Credit Union’s debt obligations to its general and secured creditors, 

unless such debt obligations are explicitly made pari passu or subordinated to the Senior 

Subordinated Securities, in accordance with regulations of the Appropriate Supervisory 

Authority, 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 
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Senior Securities) 

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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 Credit Union has caused this instrument to be duly 

executed this 

_______________ day of ________________, __________. 

[NAME OF CREDIT UNION] 

By: ____________________________________ 

Name: 

Title: 

Attest: 

By: ____________________________________ 

Name: 

Title: 
 (CDFI Credit Unions 

Senior Securities) 

 A-6 

(FORM OF REVERSE OF SECURITY) 

This Senior Subordinated Security is one of the Senior Subordinated Securities of the 

Credit Union (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 Credit Union 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 Credit Union and the Holders of the Senior Subordinated Securities. This Senior 

Subordinated Security is a single series note 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 under 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 Credit Union 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 Credit Union therefrom, shall be effective unless made in writing and signed by 

an officer or a duly authorized representative of the Credit Union, 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(d) 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 Credit Union 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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Senior Securities) 

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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 Credit Union, 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 Credit Union’s ability to declare and pay dividends and purchase or acquire Capital 

Interests or other equity securities of any kind of any Credit Union Subsidiary or any Senior 

Subordinated Security is limited by the terms of the Agreement. The Credit Union’s ability to 

redeem this Senior Subordinated Security is limited by the terms of 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 Credit Union or its 

agent, upon surrender of this Senior Subordinated Security for registration of transfer at the 

office or agency of the Credit Union or its agent, accompanied by a written instrument or 

instruments of transfer in form satisfactory to the Credit Union 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 Credit Union 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 Credit Union 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 Credit Union or any agent thereof shall be 

affected by any notice to the contrary. 

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, 

Mutual Interest Holder, employee, officer or director, as such, past, present or future, as such, of 

the Credit Union 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, 
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Senior Securities) 

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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 LAW 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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Senior Securities) 

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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 Credit Union. 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.]