UST Sequence No. [___]

EXHIBIT A 

(CDFI Credit Unions 

Senior Securities) 

SECURITIES PURCHASE AGREEMENT 

STANDARD TERMS 
UST Sequence No. [___] -iTABLE OF CONTENTS 

Page 

ARTICLE I 

Section 1.1 Definitions................................................................................................................1 

Section 1.2 Interpretation............................................................................................................5 

ARTICLE II 

PURCHASE; CLOSING 

Section 2.1 Purchase ...................................................................................................................5 

Section 2.2 Closing .....................................................................................................................5 

Section 2.3 Closing Conditions ..................................................................................................6 

ARTICLE III 

REPRESENTATIONS AND WARRANTIES 

Section 3.1 Representations and Warranties of the Credit Union ..............................................9 

ARTICLE IV 

COVENANTS 

Section 4.1 Affirmative Covenants...........................................................................................17 

Section 4.2 Negative Covenants ...............................................................................................23

ARTICLE V 

REMEDIES OF THE HOLDERS UPON EVENT OF DEFAULT 

Section 5.1 Event of Default.....................................................................................................24 

Section 5.2 Acceleration and Other Remedies .........................................................................25 

Section 5.3 Suits for Enforcement ............................................................................................25

Section 5.4 Holders May File Proofs of Claim.........................................................................25 

Section 5.5 Waiver of Past Defaults .........................................................................................26 

ARTICLE VI 

ADDITIONAL AGREEMENTS 

Section 6.1 Purchase for Investment.........................................................................................26 

Section 6.2 Form of Senior Subordinated Security ..................................................................26 

Section 6.3 Execution of Senior Subordinated Securities ........................................................26 

Section 6.4 Computation of Interest .........................................................................................27 

Section 6.5 Legends..................................................................................................................28 

Section 6.6 Transfer of Senior Subordinated Securities ...........................................................30 
UST Sequence No. [___] -iiSection 6.7 Replacement of Senior Subordinated Securities....................................................31 

Section 6.8 Cancellation ...........................................................................................................31 

Section 6.9 Depository Senior Subordinated Securities ...........................................................31 

Section 6.10 Redemption............................................................................................................31 

Section 6.11 Voting Rights.........................................................................................................33 

Section 6.12 Secondary Capital Account Status.........................................................................34 

Section 6.13 Rule 144; Rule 144A; 4(11⁄2) Transactions ............................................................35 

Section 6.14 Expenses and Further Assurances..........................................................................36 

Section 6.15 Communications to Holders ..................................................................................36 

ARTICLE VII 

SUBORDINATION OF THE SENIOR SUBORDINATED SECURITIES 

Section 7.1 Agreement to Subordinate .....................................................................................37 

Section 7.2 Default on Senior Indebtedness .............................................................................37 

Section 7.3 Liquidation; Dissolution ........................................................................................38 

Section 7.4 Subrogation............................................................................................................39 

Section 7.5 Notice by the Credit Union....................................................................................40 

Section 7.6 Subordination May Not Be Impaired.....................................................................40 

ARTICLE VIII 

MISCELLANEOUS 

Section 8.1 Termination............................................................................................................41 

Section 8.2 Survival..................................................................................................................41 

Section 8.3 Amendment............................................................................................................42 

Section 8.4 Waiver of Conditions.............................................................................................42

Section 8.5 GOVERNING LAW; SUBMISSION TO JURISDICTION, ETC .......................42 

Section 8.6 Notices ...................................................................................................................43 

Section 8.7 Assignment ............................................................................................................43 

Section 8.8 Severability ............................................................................................................44 

Section 8.9 No Third-Party Beneficiaries.................................................................................44 

Section 8.10 Tax Treatment of Senior Subordinated Securities.................................................44 

Section 8.11 Specific Performance.............................................................................................44 

 
UST Sequence No. [___] -iiiLIST OF ANNEXES 

ANNEX A: FORM OF SENIOR SUBORDINATED SECURITIES 

ANNEX B: FORM OF OFFICER’S CERTIFICATE 

ANNEX C: FORM OF WAIVER 

ANNEX D: FORM OF OPINION 

ANNEX E: FORM OF DISCLOSURE AND ACKNOWLEDGEMENT 

ANNEX F: FORM OF OFFICER’S CERTIFICATE (CDFI REQUIREMENTS) 
UST Sequence No. [___] -ivINDEX OF DEFINED TERMS 

Term 

Location of 

Definition 

Additional Dividend 4.2(b)(ii) 

Affiliate 1.1 

Agreement Recitals 

Appropriate Supervisory Authority 1.1 

Bankruptcy Exceptions 3.1(c) 

Benefit Plans 2.3(f) 

Board of Directors 3.1(f) 

Business Combination 8.7 

business day 1.2 

Capitalization Date 3.1(b) 

Capital Interests 3.1(b) 

CDCI Recitals 

CDFI 3.1(d) 

CDFI Application 2.3(l) 

CDFI Application Update 2.3(l) 

CDFI Events 1.1 

Certified Entities 4.1(d)(iv) 

Charter 2.3(d) 

Closing 2.2 

Closing Date 2.2 

Code 3.1(n) 

Compensation Regulations 2.3(f) 

control; controlled by; under common control with 1.1 

Controlled Group 3.1(n) 

Credit Union Recitals 

Credit Union Financial Statements 2.3(m) 

Credit Union Material Adverse Effect 1.1 

Credit Union Reports 3.1(i) 

Credit Union Subsidiary; Credit Union Subsidiaries 3.1(a) 

Defaulted Interest 6.4(c) 

Disclosure Schedule 1.1 

Disclosure Update 2.3(k) 

EESA 2.3(f) 

ERISA 3.1(n) 

Event of Default 5.1 

Exchange Act 6.6(f) 

Federal Credit Union Act 3.1(d) 

Fund 3.1(d) 

GAAP 1.1 

Governmental Entities 2.3(a) 

Holder 1.1 

Indebtedness 1.1 
UST Sequence No. [___] -vTerm 

Location of 

Definition 

Indemnitee 6.13(b) 

Indenture 6.1 

Indenture Act 6.1 

Information 4.1(c)(iii) 

Interest Holders 3.1(e) 

Interest Payment Date Face of Senior 

Subordinated 

Security 

Interest Period 6.4(b) 

Interest Rate Face of Senior 

Subordinated 

Security 

Investor Recitals 

knowledge of the Credit Union; Credit Union’s knowledge 1.1 

Letter Agreement Recitals 

Majority Holders 5.3 

Maturity Date Face of Senior 

Subordinated 

Security 

Members 1.1 

Member Shares 3.1(b) 

MHA 4.1(g) 

NCUA Regulations 2.3(n) 

Obligor 5.4 

Other Capital Instruments 3.1(b) 

Plan 3.1(n) 

Previously Disclosed 1.1 

[Private Capital 2.3(p)]

Proprietary Rights 3.1(u) 

Purchase Recitals 

Purchase Price 2.1 

RAP 1.1 

Redemption Date 6.10(a) 

Regular Record Date Face of Senior 

Subordinated 

Security 

Regulatory Agreement 3.1(s) 

Relevant Period 2.3(f) 

Schedules Recitals 

SCP Notice 2.3(n) 

SEC 3.1(k) 

Secondary Capital Account 6.12(a) 

Secondary Capital Plan 2.3(n) 
UST Sequence No. [___] -viTerm 

Location of 

Definition 

Section 4.1(e) Employee 4.1(e) 

Securities Act 3.1(a) 

Senior Executive Officers 1.1 

Senior Indebtedness 1.1 

Senior Subordinated Securities Register 6.6(a) 

Senior Subordinated Securities Recitals 

Significant Subsidiary 3.1(a) 

Signing Date 1.1 

State Restrictions 1.1 

State Supervisory Authority 1.1 

subsidiary 1.1 

Tax; Taxes 1.1 

Transaction Documents 1.1 

Transfer 6.6(f) 
UST Sequence No. [___] 

SECURITIES PURCHASE AGREEMENT – STANDARD TERMS 

Recitals: 

WHEREAS, the United States Department of the Treasury (the “Investor”) may from 

time to time agree to purchase senior subordinated debentures from eligible financial institutions 

which elect to participate in the Community Development Capital Initiative (“CDCI”); 

WHEREAS, an eligible credit union electing to participate in the CDCI and issue 

securities to the Investor shall enter into a letter agreement (the “Letter Agreement”) with the 

Investor which incorporates this Securities Purchase Agreement – Standard Terms (the eligible 

credit union identified in the Letter Agreement, the “Credit Union”); 

WHEREAS, the Credit Union agrees to support the availability of credit and financial 

services to underserved populations and communities in the United States to promote the 

expansion of small businesses and the creation of jobs in such populations and communities; 

WHEREAS, the Credit Union agrees to work diligently, under existing and any future 

programs, to modify the terms of residential mortgages as appropriate to strengthen the health of 

the U.S. housing market; 

WHEREAS, the Credit Union intends to issue in a private placement senior subordinated 

debentures (“Senior Subordinated Securities”), in an amount as set forth on Schedule A to the 

Letter Agreement and the Investor intends to purchase (the “Purchase”) from the Credit Union 

the Senior Subordinated Securities; and 

WHEREAS, the Purchase will be governed by this Securities Purchase Agreement – 

Standard Terms and the Letter Agreement, including the schedules thereto (the “Schedules”), 

specifying additional terms of the Purchase. This Securities Purchase Agreement – Standard 

Terms (including the Annexes hereto) and the Letter Agreement (including the Schedules 

thereto) are together referred to as this “Agreement”. All references in this Securities Purchase 

Agreement – Standard Terms to “Schedules” are to the Schedules attached to the Letter 

Agreement. 

NOW, THEREFORE, in consideration of the premises, and of the representations, 

warranties, covenants and agreements set forth herein, the parties agree as follows: 

ARTICLE I 

Section 1.1 Definitions. Except as otherwise specified herein or as the context may 

otherwise require, the following terms have the respective meanings set forth below for all 

purposes of this Agreement. 

“Affiliate” means, with respect to any person, any person directly or indirectly 

controlling, controlled by or under common control with, such other person. For purposes of this 

definition, “control” (including, with correlative meanings, the terms “controlled by” and “under 

common control with”), when used with respect to any person, means the possession, directly or 
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indirectly, of the power to cause the direction of management and/or policies of such person, 

whether through the ownership of voting securities by contract or otherwise. 

“Appropriate Supervisory Authority” means the National Credit Union Administration in 

the case of credit unions chartered under the Federal Credit Union Act and the appropriate State 

Supervisory Authority along with the National Credit Union Administration, where applicable, 

in the case of state-chartered credit unions whose share accounts are insured by the National 

Credit Union Share Insurance Fund. 

“CDFI Events” means the failure by the Credit Union at any time while the Senior 

Subordinated Securities are outstanding to (i) be certified by the Community Development 

Financial Institution Fund of the United States Department of the Treasury as a regulated 

community development financial institution; (ii) together with all of its Affiliates collectively 

meet the eligibility requirements of 12 C.F.R. 1805.200(b); (iii) have a primary mission of 

promoting community development, as may be determined by the United States Department of 

the Treasury from time to time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (iv) 

provide Financial Products, Development Services, and/or other similar financing as a 

predominant business activity in arm’s-length transactions; (v) serve a Target Market by serving 

one or more Investment Areas and/or Targeted Populations as may be determined by the United 

States Department of the Treasury from time to time, substantially in the manner set forth in 12 

C.F.R. 1805.201(b)(3); (vi) provide Development Services in conjunction with its Financial 

Products, directly, through an Affiliate or through a contract with a third-party provider; (vii) 

maintain accountability to residents of the applicable Investment Area(s) or Targeted 

Population(s) through representation on its governing board of directors or otherwise; and (viii) 

remain a non-governmental entity which is not an agency or instrumentality of the United States 

of America, or any State or political subdivision thereof, as described in 12 C.F.R. 

1805.201(b)(6) and within the meaning of any supplemental regulations or interpretations of 12 

C.F.R. 1805.201(b)(6) or such supplemental regulations published by the Fund. Notwithstanding 

any other provision hereof, as used in this definition, the terms “Affiliates”; “Financial 

Products”; “Development Services”; “Target Market”; “Investment Areas”; and “Targeted 

Populations” have the meanings ascribed to such terms in 12 C.F.R. 1805.104. A CDFI Event 

may be waived in writing by the holders of a majority of the Senior Subordinated Securities then 

outstanding. 

 “Credit Union Material Adverse Effect” means a material adverse effect on (i) the 

business, results of operation or financial condition of the Credit Union and its consolidated 

subsidiaries taken as a whole; provided, however, that Credit Union Material Adverse Effect 

shall not be deemed to include the effects of (A) changes after the date of the Letter Agreement 

(the “Signing Date”) in general business, economic or market conditions (including changes 

generally in prevailing interest rates, credit availability and liquidity, currency exchange rates 

and price levels or trading volumes in the United States or foreign securities or credit markets), 

or any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism, in 

each case generally affecting the industries in which the Credit Union and its subsidiaries 

operate, (B) changes or proposed changes after the Signing Date in generally accepted 

accounting principles in the United States (“GAAP”) or regulatory accounting practices (“RAP”), 

or authoritative interpretations thereof, or (C) changes or proposed changes after the Signing 

Date in securities, banking and other laws of general applicability or related policies or 
UST Sequence No. [___] -3- 

interpretations of Governmental Entities (in the case of each of these clauses (A), (B) and (C), 

other than changes or occurrences to the extent that such changes or occurrences have or would 

reasonably be expected to have a materially disproportionate adverse effect on the Credit Union 

and its consolidated subsidiaries taken as a whole relative to comparable U.S. banking or 

financial services organizations); or (ii) the ability of the Credit Union to consummate the 

Purchase and other transactions contemplated by this Agreement and perform its obligations 

hereunder or thereunder on a timely basis. 

“Disclosure Schedule” means that certain schedule to this Agreement delivered to the 

Investor on or prior to the Signing Date, setting forth, among other things, items the disclosure of 

which is necessary or appropriate either in response to an express disclosure requirement 

contained in a provision hereof or as an exception to one or more representations or warranties 

contained in Section 3.1. 

“Holder” means a holder of the Senior Subordinated Securities. 

“Indebtedness” means, whether or not recourse is to all or a portion of the assets of the 

Credit Union and whether or not contingent, (i) the claims of the Credit Union’s secured and 

general creditors; (ii) every obligation of the Credit Union for money borrowed; (iii) every 

obligation of the Credit Union evidenced by bonds, debentures, notes or other similar 

instruments, including obligations incurred in connection with the acquisition of property, assets 

or businesses; (iv) every reimbursement obligation of the Credit Union, contingent or otherwise, 

with respect to letters of credit, bankers’ acceptances, security purchase facilities or similar 

facilities issued for the account of the Credit Union; (v) every obligation of the Credit Union 

issued or assumed as the deferred purchase price of property or services (but excluding trade 

accounts payable or accrued liabilities arising in the ordinary course of business); (vi) every 

capital lease obligation of the Credit Union; (vii) all indebtedness of the Credit Union for claims 

in respect of derivative products, including interest rate, foreign exchange rate and commodity 

forward contracts, options and swaps and similar arrangements; (viii) every obligation of the 

type referred to in clauses (i) through (vii) of another person and all dividends of another person 

the payment of which, in either case, the Credit Union has guaranteed or is responsible or liable 

for directly or indirectly, as obligor or otherwise; and (ix) every obligation of the type referred to 

in clauses (i) through (vii) of another person and all dividends of another person the payment of 

which, in either case, is secured by a lien on any property or assets of the Credit Union. 

“knowledge of the Credit Union” or “Credit Union’s knowledge” means the actual 

knowledge after reasonable and due inquiry of the “officers” (as such term is defined in Rule 3b2 under the Exchange Act) of the Credit Union. 

“Members” means persons having ownership rights in the Credit Union by virtue of their 

ownership of a deposit at the Credit Union. The amount of the (i) “Additional Dividends” and 

(ii) total dividends declared and paid in each case for the year ended December 31, 2009 are set 

forth on Schedule B. 

“Previously Disclosed” means information set forth on the Disclosure Schedule or the 

Disclosure Update, as applicable; provided, however, that disclosure in any section of such 

Disclosure Schedule or Disclosure Update, as applicable, shall apply only to the indicated 
UST Sequence No. [___] -4- 

section of this Agreement except to the extent that it is reasonably apparent from the face of such 

disclosure that such disclosure is relevant to another section of this Agreement; provided,

further, that the existence of Previously Disclosed information, pursuant to a Disclosure Update, 

shall neither obligate the Investor to consummate the Purchase nor limit or affect any rights of or 

remedies available to the Investor. 

“Senior Executive Officers” means the Credit Union’s “senior executive officers” as 

defined in Section 111 of EESA and the Compensation Regulations. 

“Senior Indebtedness” means, with respect to the Senior Subordinated Securities, (i) all 

deposit liabilities of the Credit Union, (ii) the principal of (and premium, if any) and interest, if 

any (including interest accruing on or after the appointment of a receiver or conservator relating 

to the Credit Union, whether or not such claim for post appointment interest is allowed), on all 

Indebtedness, whether outstanding on the date of execution of this Agreement, or hereafter 

created, assumed or incurred, and any deferrals, renewals or extensions of such Indebtedness, 

(iii) any obligation to holders of Capital Interests or shares of equity in the Credit Union (if and 

upon conversion of the Credit Union to a stock-based entity) arising as a result of their status as 

holders of such Capital Interests or shares of equity and (iv) any claims of the National Credit 

Union Share Insurance Fund, provided, however, that Senior Indebtedness shall not include any 

other subordinated debt of the Credit Union that by its terms ranks pari passu or junior to the 

Senior Subordinated Securities issued hereunder. 

“State Restrictions” means, if the Credit Union is organized under the laws of any state, 

any restrictions imposed by the laws of such state on voting rights of holders of the Senior 

Subordinated Securities that cannot be modified, waived or otherwise removed by the 

appropriate Governmental Entity of such state. 

“State Supervisory Authority” means the appropriate governmental agency of the state in 

which the Credit Union is chartered, which regulates state-chartered credit unions. 

“subsidiary” means any corporation, partnership, joint venture, limited liability company, 

credit union or other entity (x) of which such person or a subsidiary of such person is a general 

partner or (y) of which a majority of the voting securities or other voting interests, or a majority 

of the securities or other interests of which having by their terms ordinary voting power to elect a 

majority of the board of directors or persons performing similar functions with respect to such 

entity, is directly or indirectly owned by such person and/or one or more subsidiaries thereof. 

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, 

property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or 

add on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, 

governmental fee or other like assessment or charge of any kind whatsoever, together with any 

interest, penalty or addition imposed by any Governmental Entity. 

“Transaction Documents” means this Agreement, the Senior Subordinated Securities, and 

all other instruments, documents and agreements executed by or on behalf of the Credit Union 

and delivered concurrently herewith or at any time hereafter to or for the benefit of any holder of 
UST Sequence No. [___] -5- 

any Senior Subordinated Security in connection with the transactions contemplated by this 

Agreement, all as amended, supplemented or modified from time to time. 

Section 1.2 Interpretation. When a reference is made in this Agreement to “Recitals,” 

“Articles” , “Sections” , or “Annexes” such reference shall be to a Recital, Article or Section of, 

or Annex to, this Securities Purchase Agreement – Standard Terms, and a reference to 

“Schedules” shall be to a Schedule to the Letter Agreement, in each case, unless otherwise 

indicated. The terms defined in the singular have a comparable meaning when used in the plural, 

and vice versa. References to “herein”, “hereof”, “hereunder” and the like refer to this 

Agreement as a whole and not to any particular section or provision, unless the context requires 

otherwise. The table of contents and headings contained in this Agreement are for reference 

purposes only and are not part of this Agreement. Whenever the words “include”, “includes” or 

“including” are used in this Agreement, they shall be deemed followed by the words “without 

limitation”. No rule of construction against the draftsperson shall be applied in connection with 

the interpretation or enforcement of this Agreement, as this Agreement is entered into between 

sophisticated parties advised by counsel. All references to “$” or “dollars” mean the lawful 

currency of the United States of America. Except as expressly stated in this Agreement, all 

references to any statute, rule or regulation are to the statute, rule or regulation as amended, 

modified, supplemented or replaced from time to time (and, in the case of statutes, include any 

rules and regulations promulgated under the statute) and to any section of any statute, rule or 

regulation include any successor to the section. References to a “business day” shall mean any 

day except Saturday, Sunday and any day on which banking institutions in the State of New 

York or the District of Columbia generally are authorized or required by law or other 

governmental actions to close. 

ARTICLE II 

Purchase; Closing 

Section 2.1 Purchase. On the terms and subject to the conditions set forth in this 

Agreement, the Credit Union agrees to sell to the Investor, and the Investor agrees to purchase 

from the Credit Union, at the Closing (as hereinafter defined), the Senior Subordinated Securities 

in the form attached hereto as Annex A, appropriately completed in conformity herewith and 

duly and validly issued, authorized and executed by the Credit Union, in the aggregate principal 

amount set forth on Schedule A for the purchase price set forth on Schedule A (the “Purchase 

Price”). The Senior Subordinated Securities, including the principal and interest, shall be 

unsecured and subordinate and junior in right of payment to Senior Indebtedness to the extent set 

forth in Article VII hereof. 

Section 2.2 Closing. (a) On the terms and subject to the conditions set forth in this 

Agreement, the closing of the Purchase (the “Closing”) will take place at the location specified in 

Schedule A, at the time and on the date set forth in Schedule A or as soon as practicable 

thereafter, or at such other place, time and date as shall be agreed between the Credit Union and 

the Investor. The time and date on which the Closing occurs is referred to in this Agreement as 

the “Closing Date”. 

(b) Subject to the fulfillment or waiver of the conditions to the Closing in Section 2.3, 

at the Closing the Credit Union will deliver the Senior Subordinated Securities, as evidenced by 
UST Sequence No. [___] -6- 

one or more debentures dated the Closing Date and bearing appropriate legends as hereinafter 

provided for, in exchange for payment in full of the Purchase Price by wire transfer of 

immediately available United States funds to a bank account or credit union account designated 

by the Credit Union on Schedule A. 

Section 2.3 Closing Conditions. The obligation of the Investor to consummate the 

Purchase is subject to the fulfillment (or waiver by the Investor) at or prior to the Closing of each 

of the following conditions: 

(a) (i) any approvals or authorizations of all United States and other governmental, 

regulatory or judicial authorities (collectively, “Governmental Entities”) required for the 

consummation of the Purchase shall have been obtained or made in form and substance 

reasonably satisfactory to each party and shall be in full force and effect and all waiting periods 

required by United States and other applicable law, if any, shall have expired and (ii) no 

provision of any applicable United States or other law and no judgment, injunction, order or 

decree of any Governmental Entity shall prohibit the purchase and sale of the Senior 

Subordinated Securities as contemplated by this Agreement; 

(b) (i) the representations and warranties of the Credit Union set forth in Section 3.1 

shall be true and correct in all respects as though made on and as of the Closing Date (other than 

representations and warranties that by their terms speak as of another date, which representations 

and warranties shall be true and correct in all respects as of such other date) and (ii) the Credit 

Union shall have performed in all respects all obligations required to be performed by it under 

this Agreement at or prior to the Closing; 

(c) the Credit Union shall have delivered to the Investor a certificate signed on behalf 

of the Credit Union by a Senior Executive Officer certifying to the effect that the conditions set 

forth in Section 2.3(b) have been satisfied, in substantially the form attached hereto as Annex B; 

(d) if applicable, the Credit Union shall have duly adopted and filed with the 

Secretary of State of its jurisdiction of organization or other applicable Governmental Entity, an 

amendment to its certificate or articles of incorporation, articles of association, organization 

certificate or similar organizational document (“Charter”) and its bylaws as in effect on the 

Closing Date; 

(e) the Credit Union shall have delivered to the Investor true, complete and correct 

certified copies of the Charter and bylaws of the Credit Union; 

(f) (i) the Credit Union shall have effected such changes to its compensation, bonus, 

incentive and other benefit plans, arrangements and agreements (including golden parachute, 

severance and employment agreements) (collectively, “Benefit Plans”) with respect to its Senior 

Executive Officers and any other employee of the Credit Union or its Affiliates subject to 

Section 111 of the Emergency Economic Stabilization Act of 2008, as amended by the American 

Recovery and Reinvestment Act of 2009, or otherwise from time to time (“EESA”), as 

implemented by any guidance, rule or regulation thereunder, as the same shall be in effect from 

time to time (collectively, the “Compensation Regulations”) (and to the extent necessary for such 

changes to be legally enforceable, each of its Senior Executive Officers and other employees 
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shall have duly consented in writing to such changes), as may be necessary, during the period in 

which any obligation of the Credit Union arising from financial assistance under the Troubled 

Asset Relief Program remains outstanding (such period, as it may be further described in the 

Compensation Regulations, the “Relevant Period”), in order to comply with Section 111 of 

EESA or the Compensation Regulations, and (ii) the Investor shall have received a certificate 

signed on behalf of the Credit Union by a Senior Executive Officer certifying to the effect that 

the condition set forth in Section 2.3(f)(i) has been satisfied, in substantially the form attached 

hereto as Annex B; 

(g) each of the Credit Union’s Senior Executive Officers and any other employee of 

the Credit Union or its Affiliates subject to Section 111 of EESA shall have delivered to the 

Investor a written waiver in the form attached hereto as Annex C releasing the Investor and the 

Credit Union from any claims that such Senior Executive Officer or other employee may 

otherwise have as a result of the modification of, or the agreement of the Credit Union hereunder 

to modify, the terms of any Benefit Plans with respect to its Senior Executive Officers or other 

employees to eliminate any provisions of such Benefit Plans that would not be in compliance 

with the requirements of Section 111 of EESA, as implemented by the Compensation 

Regulations; 

(h) the Credit Union shall have delivered to the Investor a written opinion from 

counsel to the Credit Union (which may be internal counsel), addressed to the Investor and dated 

as of the Closing Date, in substantially the form attached hereto as Annex D; 

(i) the Credit Union shall have delivered physical certificated debentures in proper 

form evidencing the Senior Subordinated Securities to the Investor or its designee(s) in the form 

attached hereto as Annex A; 

(j) the Credit Union shall have taken all necessary action to ensure that the Credit 

Union and its executive officers, respectively, are in compliance with (i) all guidelines put forth 

by the Investor with respect to transparency, reporting and monitoring and (ii) the provisions of 

EESA and any federal law respecting EESA, including the Employ American Workers Act 

(Section 1611 of Division A, Title XVI of the American Recovery and Reinvestment Act of 

2009), Public Law No. 111-5, effective as of February 17, 2009, and all rules, regulations and 

guidance issued thereunder; 

(k) the Credit Union shall have delivered to the Investor a copy of the Disclosure 

Schedule on or prior to the Signing Date and to the extent, that any information set forth on the 

Disclosure Schedule needs to be updated or supplemented to make it true, complete and correct 

as of the Closing Date, (i) the Credit Union shall have delivered to the Investor an update to the 

Disclosure Schedule (the “Disclosure Update”), setting forth any information necessary to make 

the Disclosure Schedule true, correct and complete as of the Closing Date and (ii) the Investor, in 

its sole discretion, shall have approved the Disclosure Update, provided, however, that the 

delivery and acceptance of the Disclosure Update shall not limit or affect any rights of or 

remedies available to the Investor; 

(l) the Credit Union shall have delivered to the Investor prior to the Signing Date 

either (i) a true, complete and correct certified copy of the CDFI Certification Application that 
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the Credit Union submitted to the Fund in connection with its certification as a CDFI along with 

any updates to the CDFI Certification Application necessary to make it true, complete and 

correct as of the Signing Date or (ii) to the extent a copy of the CDFI Certification Application 

that the Credit Union submitted to the Fund in connection with its certification as a CDFI is not 

available, a newly completed CDFI Certification Application true, complete and correct as of the 

Signing Date (the CDFI Certification Application, delivered to the Investor pursuant to this 

Section 2.3(l), the “CDFI Application”), and, to the extent any information set forth in the CDFI 

Application is not true, complete and correct as of the Closing Date, the Credit Union shall have 

delivered to the Investor an update to the CDFI Application (the “CDFI Application Update”), 

setting forth any information necessary to make the information set forth in the CDFI 

Application true, correct and complete as of the Closing Date; 

(m) the Credit Union shall have delivered to the Investor each of the consolidated 

financial statements of the Credit Union and its consolidated subsidiaries for each of the last 

three (3) completed fiscal years of the Credit Union (which shall be audited to the extent audited 

financial statements are available prior to the Signing Date) and each completed quarterly period 

since the last completed fiscal year (collectively, the “Credit Union Financial Statements”); 

(n) (i) either (A) the Credit Union shall have received notice from the Appropriate 

Supervisory Authority that a “Secondary Capital Plan” (within the meaning of Section 701.34(b) 

of the regulations promulgated by the National Credit Union Administration and codified in 12 

C.F.R. Parts 700-796 (the “NCUA Regulations”)), covering the Senior Subordinated Securities 

has been approved (the “SCP Notice”) or (B) 45 days shall have passed since the Credit Union 

submitted such a Secondary Capital Plan to the Appropriate Supervisory Authority and such 

Secondary Capital Plan has not been approved or disapproved and (ii) the Credit Union shall 

have delivered to Investor (A) a certified copy of the SCP Notice or (B) a certification that such 

Secondary Capital Plan has neither been approved nor disapproved [;][and]

(o) the Credit Union shall have delivered to the Investor a copy of a “Disclosure and 

Acknowledgement” (within the meaning of Section 701.34(b)(11) of the NCUA Regulations) 

executed by the Credit Union and the Investor as of the Signing Date in the form attached hereto 

as Annex E [.][and]

(p) [Insert for pro-forma viable credit union: the Credit Union shall (i) have 

received capital (“Private Capital”) from one or more non-governmental investors (A) in an 

amount equal to or greater than the Purchase Price, (B) that is subordinate in right of payment of 

principal and interest to the Senior Subordinated Securities and (C) that is acceptable in form and 

substance to the Investor, in its sole discretion and (ii) have satisfied the following requirements 

reasonably in advance of the Closing Date: (A) delivery of copies of the definitive 

documentation for the Private Capital to Investor, (B) delivery of the organizational charts of 

such non-governmental investors to Investor, each certified by the applicable non-governmental 

investor and demonstrating that such non-governmental investor is not an Affiliate of the Credit 

Union, (C) delivery of any other documents or information as Investor may reasonably request, 

in its sole discretion and (D) any other terms and conditions imposed by the Appropriate 

Supervisory Authority, in its sole discretion, as a condition to its recommendation.] 
UST Sequence No. [___] -9- 

ARTICLE III 

Representations and Warranties 

Section 3.1 Representations and Warranties of the Credit Union. Except as Previously 

Disclosed, the Credit Union represents and warrants to the Investor that as of the Signing Date 

and as of the Closing Date (or such other date specified herein): 

(a) Organization, Authority and Significant Subsidiaries. The Credit Union has been 

duly formed and is validly existing and in good standing as a credit union chartered under the 

laws of its jurisdiction of organization, with the necessary power and authority to own, operate 

and lease its properties and conduct its business in all material respects as it is being currently 

conducted, and except as has not, individually or in the aggregate, had and would not reasonably 

be expected to have a Credit Union Material Adverse Effect, has been duly qualified as a foreign 

entity for the transaction of business and is in good standing under the laws of each other 

jurisdiction in which it owns or leases properties or conducts any business so as to require such 

qualification; each subsidiary of the Credit Union (each, a “Credit Union Subsidiary” and, 

collectively, the “Credit Union Subsidiaries”) that would be considered a “significant 

subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the Securities Act of 

1933 (the “Securities Act”) (each such Credit Union Subsidiary, a “Significant Subsidiary”), has 

been duly formed and is validly existing in good standing under the laws of its jurisdiction of 

organization. The Charter and bylaws of the Credit Union, copies of which have been provided 

to the Investor prior to the Signing Date, are true, complete and correct copies of such documents 

as in full force and effect as of the Signing Date and as of the Closing Date. 

(b) Capitalization. The authorized and outstanding credit union membership share 

interests, regardless of form (“Member Shares”) and capital instruments authorized by law, 

including but not limited to, subordinated debt (“Other Capital Instruments” and, together with 

the Member Shares, collectively, the “Capital Interests”) and any authorized or outstanding 

instruments convertible into, or exercisable or exchangeable for, Capital Interests, as of the most 

recent fiscal month-end preceding the Signing Date (the “Capitalization Date”) are set forth on 

Schedule B. The outstanding Capital Interests in the Credit Union have been duly authorized 

and are validly issued and outstanding, fully paid and nonassessable. Each holder of 5% or more 

of the Member Shares, and each holder of the Other Capital Interests, and such holder’s primary 

address are set forth on Schedule B. The Other Capital Instruments are not subject to preemptive 

rights (and were not issued in violation of any preemptive rights). As of the Signing Date, the 

Credit Union does not have outstanding any securities or other obligations providing the holder 

the right to acquire its Other Capital Instruments that are not reserved for issuance as specified 

on Schedule B, and the Credit Union has not made any other commitment to authorize, issue or 

sell any Other Capital Instruments that is not specified on Schedule B. Since the Capitalization 

Date, the Credit Union has not issued any Other Capital Instruments, except [(i)] as disclosed on 

Schedule B [Insert for pro-forma viable companies: and (ii) secondary capital accounts 

representing the Private Capital disclosed on Schedule B]. 

(c) Senior Subordinated Securities. The Senior Subordinated Securities, when 

executed and delivered, will be, the legal, valid and binding obligations of the Credit Union, each 

enforceable in accordance with its respective terms, except to the extent that the enforceability 

thereof may be limited by applicable bankruptcy, receivership, conservatorship, insolvency, 
UST Sequence No. [___] -10- 

reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights 

generally and general equitable principles, regardless of whether such enforceability is 

considered in a proceeding at law or in equity (“Bankruptcy Exceptions”). 

(d) Low-Income Credit Union Status; Community Development Financial Institution 

Status. 

(i) The Credit Union (A) is chartered under either (x) the Federal Credit 

Union Act of June 26, 1934, as amended (the “Federal Credit Union Act”) or (y) the laws 

of any State, the District of Columbia or any territory or possession of the United States; 

(B) has its deposits insured by the National Credit Union Share Insurance Fund, if it is 

not chartered under the Federal Credit Union Act; (C) has a low-income designation 

under 12 C.F.R. 701.34; (D) is a “natural person credit union” as defined in 12 C.F.R. 

725.2(m) and (E) is not a “corporate credit union” as defined in 12 C.F.R. 704.2. 

(ii) The Credit Union (A), collectively with all of its “Affiliates” (within the 

meaning of 12 C.F.R. 1805.104) pursuant to 12 C.F.R. 1805.200(b), is a regulated 

community development financial institution (a “CDFI”) currently certified by the 

Community Development Financial Institution Fund (the “Fund”) of the United States 

Department of the Treasury pursuant to 12 C.F.R. 1805.201(a) as having satisfied the 

eligibility requirements of the Fund’s Community Development Financial Institutions 

Program and (B) satisfies the eligibility requirements for a CDFI set forth in 12 C.F.R. 

1805.201(b)(1)(6). 

(e) Authorization, Enforceability. 

(i) The Credit Union has the power and authority to execute and deliver this 

Agreement and to carry out its obligations hereunder and thereunder (which includes the 

issuance of the Senior Subordinated Securities). The execution, delivery and 

performance by the Credit Union of this Agreement and the consummation of the 

transactions contemplated hereby have been duly authorized by all necessary action on 

the part of the Credit Union and its Members and other non-Member holders of Capital 

Interests (collectively, “Interest Holders”), and no further approval or authorization is 

required on the part of the Credit Union. This Agreement is a valid and binding 

obligation of the Credit Union enforceable against the Credit Union in accordance with 

its terms, subject to the Bankruptcy Exceptions. 

(ii) The execution, delivery and performance by the Credit Union of this 

Agreement and the consummation of the transactions contemplated hereby and 

compliance by the Credit Union with the provisions hereof, will not (A) violate, conflict 

with, or result in a breach of any provision of, or constitute a default (or an event which, 

with notice or lapse of time or both, would constitute a default) under, or result in the 

termination of, or accelerate the performance required by, or result in a right of 

termination or acceleration of, or result in the creation of any lien, security interest, 

charge or encumbrance upon any of the properties or assets of the Credit Union or any 

Credit Union Subsidiary under any of the terms, conditions or provisions of (x) its 

organizational documents or (y) any note, debenture, bond, mortgage, indenture, deed of 
UST Sequence No. [___] -11- 

trust, license, lease, agreement or other instrument or obligation to which the Credit 

Union or any Credit Union Subsidiary is a party or by which it or any Credit Union 

Subsidiary may be bound, or to which the Credit Union or any Credit Union Subsidiary 

or any of the properties or assets of the Credit Union or any Credit Union Subsidiary may 

be subject, or (B) subject to compliance with the statutes and regulations referred to in the 

next paragraph, violate any statute, rule or regulation or any judgment, ruling, order, writ, 

injunction or decree applicable to the Credit Union or any Credit Union Subsidiary or any 

of their respective properties or assets except, in the case of clauses (A)(y) and (B), for 

those occurrences that, individually or in the aggregate, have not had and would not 

reasonably be expected to have a Credit Union Material Adverse Effect. 

(iii) Other than the filings with the applicable Governmental Entity, such 

filings and approvals as are required to be made or obtained under any state “blue sky” 

laws, if applicable, and such as have been made or obtained, no notice to, filing with, 

exemption or review by, or authorization, consent or approval of, any Governmental 

Entity is required to be made or obtained by the Credit Union in connection with the 

consummation by the Credit Union of the Purchase except for any such notices, filings, 

exemptions, reviews, authorizations, consents and approvals the failure of which to make 

or obtain would not, individually or in the aggregate, reasonably be expected to have a 

Credit Union Material Adverse Effect. 

(f) Charter; Bylaws; Agreements among Interest Holders; Anti-takeover Provisions 

and Rights Plan. The Board of Directors of the Credit Union (“Board of Directors”) has taken 

all necessary action to ensure that the transactions contemplated by this Agreement and the 

consummation of the transactions contemplated hereby (i) are not prohibited by the Credit 

Union’s Charter and bylaws or other organizational documents, or any operating agreement or 

agreement among the Interest Holders of the Credit Union, and has obtained all consents 

required by its Charter, bylaws or other organizational documents or by such operating 

agreement or agreements among Interest Holders of the Credit Union, or has amended the 

Charter and bylaws, as is necessary, in order to consummate the transactions contemplated by 

this Agreement and (ii) will be exempt from any anti-takeover or similar provisions of the Credit 

Union’s Charter and bylaws, and any other provisions of any applicable anti-takeover laws and 

regulations of any jurisdiction. 

(g) No Credit Union Material Adverse Effect. Since the last day of the last 

completed fiscal period for which financial statements are included in the Credit Union Financial 

Statements, no fact, circumstance, event, change, occurrence, condition or development has 

occurred that, individually or in the aggregate, has had or would reasonably be expected to have 

a Credit Union Material Adverse Effect, except as disclosed on Schedule C. 

(h) Credit Union Financial Statements. The Credit Union Financial Statements 

present fairly in all material respects the consolidated financial position of the Credit Union and 

its consolidated subsidiaries as of the dates indicated therein and the consolidated results of their 

operations for the periods specified therein; and except as stated therein, such financial 

statements (i) were prepared in conformity with either (x) if the Credit Union has assets greater 

than $10,000,000, GAAP applied on a consistent basis (except as may be noted therein) or (y) if 

the Credit Union has assets under $10,000,000, RAP applied on a consistent basis (except as may 
UST Sequence No. [___] -12- 

be noted therein) and (ii) have been prepared from, and are in accordance with, the books and 

records of the Credit Union and the Credit Union Subsidiaries. 

(i) Reports. 

(i) Since December 31, 2008, the Credit Union and each Credit Union 

Subsidiary has filed all reports, registrations, documents, filings, statements and 

submissions, together with any amendments thereto, that it was required to file with any 

Governmental Entity (the foregoing, collectively, the “Credit Union Reports”) and has 

paid all fees and assessments due and payable in connection therewith, except, in each 

case, as would not, individually or in the aggregate, reasonably be expected to have a 

Credit Union Material Adverse Effect. As of their respective dates of filing, the Credit 

Union Reports complied in all material respects with all statutes and applicable rules and 

regulations of the applicable Governmental Entities. 

(ii) The records, systems, controls, data and information of the Credit Union 

and the Credit Union Subsidiaries are recorded, stored, maintained and operated under 

means (including any electronic, mechanical or photographic process, whether 

computerized or not) that are under the exclusive ownership and direct control of the 

Credit Union or the Credit Union Subsidiaries or their accountants (including all means 

of access thereto and therefrom), except for any non-exclusive ownership and non-direct 

control that would not reasonably be expected to have a material adverse effect on the 

system of internal accounting controls described below in this Section 3.1(i)(ii). The 

Credit Union (A) has implemented and maintains adequate disclosure controls and 

procedures to ensure that material information relating to the Credit Union, including the 

consolidated Credit Union Subsidiaries, is made known to the chief executive officer and 

the chief financial officer of the Credit Union by others within those entities, and (B) has 

disclosed, based on its most recent evaluation prior to the Signing Date, to the Credit 

Union’s outside auditors and the audit committee of the Board of Directors of the Credit 

Union (x) any significant deficiencies and material weaknesses in the design or operation 

of internal controls that are reasonably likely to adversely affect the Credit Union’s 

ability to record, process, summarize and report financial information and (y) any fraud, 

whether or not material, that involves management or other employees who have a 

significant role in the Credit Union’s internal controls over financial reporting. 

(j) No Undisclosed Liabilities. Neither the Credit Union nor any of the Credit Union 

Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or 

otherwise) which are not properly reflected or reserved against in the Credit Union Financial 

Statements to the extent required to be so reflected or reserved against in accordance with 

GAAP, except for (i) liabilities that have arisen since the last fiscal year end in the ordinary and 

usual course of business and consistent with past practice and (ii) liabilities that, individually or 

in the aggregate, have not had and would not reasonably be expected to have a Credit Union 

Material Adverse Effect. 

(k) Offering of Securities. Neither the Credit Union nor any person acting on its 

behalf has taken any action (including any offering of any securities of the Credit Union under 

circumstances which would require the integration of such offering with the offering of any of 
UST Sequence No. [___] -13- 

the Senior Subordinated Securities under the Securities Act, and the rules and regulations of the 

Securities and Exchange Commission (the “SEC”) promulgated thereunder), which might subject 

the offering, issuance or sale of any of the Senior Subordinated Securities to Investor pursuant to 

this Agreement to the registration requirements of the Securities Act. 

(l) Litigation and Other Proceedings. Except (i) as set forth on Schedule D or (ii) as 

would not, individually or in the aggregate, reasonably be expected to have a Credit Union 

Material Adverse Effect, there is no (A) pending or, to the knowledge of the Credit Union, 

threatened, claim, action, suit, investigation or proceeding against the Credit Union or any Credit 

Union Subsidiary or to which any of their assets are subject, nor is the Credit Union or any 

Credit Union Subsidiary subject to any order, judgment or decree, or (B) unresolved violation, 

criticism or exception by any Governmental Entity with respect to any report or relating to any 

examinations or inspections of the Credit Union or any Credit Union Subsidiaries. 

(m) Compliance with Laws. Except as would not, individually or in the aggregate, 

reasonably be expected to have a Credit Union Material Adverse Effect, the Credit Union and the 

Credit Union Subsidiaries have all permits, licenses, franchises, authorizations, orders and 

approvals of, and have made all filings, applications and registrations with, Governmental 

Entities that are required in order to permit them to own or lease their properties and assets and 

to carry on their business as presently conducted and that are material to the business of the 

Credit Union or such Credit Union Subsidiary. Except as set forth on Schedule E, the Credit 

Union and the Credit Union Subsidiaries have complied in all respects and are not in default or 

violation of, and none of them is, to the knowledge of the Credit Union, under investigation with 

respect to or, to the knowledge of the Credit Union, have been threatened to be charged with or 

given notice of any violation of, any applicable domestic (federal, state or local) or foreign law, 

statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, 

decree or judgment of any Governmental Entity, other than such noncompliance, defaults or 

violations that would not, individually or in the aggregate, reasonably be expected to have a 

Credit Union Material Adverse Effect. Except for statutory or regulatory restrictions of general 

application or as set forth on Schedule E, no Governmental Entity has placed any restriction on 

the business or properties of the Credit Union or any Credit Union Subsidiary that would, 

individually or in the aggregate, reasonably be expected to have a Credit Union Material Adverse 

Effect. 

(n) Employee Benefit Matters. Except as would not reasonably be expected to have, 

either individually or in the aggregate, a Credit Union Material Adverse Effect: (i) each 

“employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement 

Income Security Act of 1974, as amended (“ERISA”)) providing benefits to any current or 

former employee, officer or director of the Credit Union or any member of its “Controlled 

Group” (defined as any organization which is a member of a controlled group of corporations 

within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the 

“Code”)) that is sponsored, maintained or contributed to by the Credit Union or any member of 

its Controlled Group and for which the Credit Union or any member of its Controlled Group 

would have any liability, whether actual or contingent (each, a “Plan”) has been maintained in 

compliance with its terms and with the requirements of all applicable statutes, rules and 

regulations, including ERISA and the Code; (ii) with respect to each Plan subject to Title IV of 

ERISA (including, for purposes of this clause (ii), any plan subject to Title IV of ERISA that the 
UST Sequence No. [___] -14- 

Credit Union or any member of its Controlled Group previously maintained or contributed to in 

the six years prior to the Signing Date), (A) no “reportable event” (within the meaning of 

Section 4043(c) of ERISA), other than a reportable event for which the notice period referred to 

in Section 4043(c) of ERISA has been waived, has occurred in the three years prior to the 

Signing Date or is reasonably expected to occur, (B) no “accumulated funding deficiency” 

(within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not 

waived, has occurred in the three years prior to the Signing Date or is reasonably expected to 

occur, (C) the fair market value of the assets under each Plan exceeds the present value of all 

benefits accrued under such Plan (determined based on the assumptions used to fund such Plan) 

and (D) neither the Credit Union nor any member of its Controlled Group has incurred in the six 

years prior to the Signing Date, or reasonably expects to incur, any liability under Title IV of 

ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guaranty 

Corporation in the ordinary course and without default) in respect of a Plan (including any Plan 

that is a “multiemployer plan”, within the meaning of Section 4001(c)(3) of ERISA); and 

(iii) each Plan that is intended to be qualified under Section 401(a) of the Code has received a 

favorable determination letter from the Internal Revenue Service with respect to its qualified 

status that has not been revoked, or such a determination letter has been timely applied for but 

not received by the Signing Date, and nothing has occurred, whether by action or by failure to 

act, which could reasonably be expected to cause the loss, revocation or denial of such qualified 

status or favorable determination letter. 

(o) Taxes. Except as would not, individually or in the aggregate, reasonably be 

expected to have a Credit Union Material Adverse Effect, (i) the Credit Union and the Credit 

Union Subsidiaries have filed all federal, state, local and foreign income and franchise Tax 

returns (together with any schedules and attached thereto) required to be filed through the 

Signing Date, subject to permitted extensions, and have paid all Taxes due thereon, (ii) all such 

Tax returns (together with any schedules and attached thereto) are true, complete and correct in 

all material respects and were prepared in compliance with all applicable laws and (iii) no Tax 

deficiency has been determined adversely to the Credit Union or any of the Credit Union 

Subsidiaries, nor does the Credit Union have any knowledge of any Tax deficiencies. 

(p) Properties and Leases. Except as would not, individually or in the aggregate, 

reasonably be expected to have a Credit Union Material Adverse Effect, the Credit Union and the 

Credit Union Subsidiaries have good and marketable title to all real properties and all other 

properties and assets owned by them, in each case free from liens (including, without limitation, 

liens for Taxes), encumbrances, claims and defects that would affect the value thereof or 

interfere with the use made or to be made thereof by them. Except as would not, individually or 

in the aggregate, reasonably be expected to have a Credit Union Material Adverse Effect, the 

Credit Union and the Credit Union Subsidiaries hold all leased real or personal property under 

valid and enforceable leases with no exceptions that would interfere with the use made or to be 

made thereof by them. 

(q) Environmental Liability. Except as would not, individually or in the aggregate, 

reasonably be expected to have a Credit Union Material Adverse Effect: 

(i) there is no legal, administrative, or other proceeding, claim or action of 

any nature seeking to impose, or that would reasonably be expected to result in the 
UST Sequence No. [___] -15- 

imposition of, on the Credit Union or any Credit Union Subsidiary, any liability relating 

to the release of hazardous substances as defined under any local, state or federal 

environmental statute, regulation or ordinance, including the Comprehensive 

Environmental Response, Compensation and Liability Act of 1980, pending or, to the 

Credit Union’s knowledge, threatened against the Credit Union or any Credit Union 

Subsidiary; 

(ii) to the Credit Union’s knowledge, there is no reasonable basis for any such 

proceeding, claim or action; and 

(iii) neither the Credit Union nor any Credit Union Subsidiary is subject to any 

agreement, order, judgment or decree by or with any court, Governmental Entity or third 

party imposing any such environmental liability. 

(r) Risk Management Instruments. Except as would not, individually or in the 

aggregate, reasonably be expected to have a Credit Union Material Adverse Effect, all derivative 

instruments, including, swaps, caps, floors and option agreements, whether entered into for the 

Credit Union’s own account, or for the account of one or more of the Credit Union Subsidiaries 

or its or their customers, were entered into (i) only in the ordinary course of business, (ii) in 

accordance with prudent practices and in all material respects with all applicable laws, rules, 

regulations and regulatory policies and (iii) with counterparties believed to be financially 

responsible at the time; and each of such instruments constitutes the valid and legally binding 

obligation of the Credit Union or one of the Credit Union Subsidiaries, enforceable in 

accordance with its terms, except as may be limited by the Bankruptcy Exceptions. Neither the 

Credit Union nor the Credit Union Subsidiaries, nor, to the knowledge of the Credit Union, any 

other party thereto, is in breach of any of its obligations under any such agreement or 

arrangement other than such breaches that would not, individually or in the aggregate, 

reasonably be expected to have a Credit Union Material Adverse Effect. 

(s) Agreements with Regulatory Agencies. Except as set forth on Schedule F, neither 

the Credit Union nor any Credit Union Subsidiary is subject to any material cease-and-desist or 

other similar order or enforcement action issued by, or is a party to any material written 

agreement, consent agreement or memorandum of understanding with, or is a party to any 

commitment letter or similar undertaking to, or is subject to any capital directive by, or since 

December 31, 2006, has adopted any board resolutions at the request of, any Governmental 

Entity that currently restricts in any material respect the conduct of its business or that in any 

material manner relates to its capital adequacy, its liquidity and funding policies and practices, its 

ability to pay dividends, its credit, risk management or compliance policies or procedures, its 

internal controls, its management or its operations or business (each item in this sentence, a 

“Regulatory Agreement”), nor has the Credit Union or any Credit Union Subsidiary been advised 

since December 31, 2006, by any such Governmental Entity that it is considering issuing, 

initiating, ordering, or requesting any such Regulatory Agreement. The Credit Union and each 

Credit Union Subsidiary is in compliance in all material respects with each Regulatory 

Agreement to which it is party or subject, and neither the Credit Union nor any Credit Union 

Subsidiary has received any notice from any Governmental Entity indicating that either the 

Credit Union or any Credit Union Subsidiary is not in compliance in all material respects with 

any such Regulatory Agreement. 
UST Sequence No. [___] -16- 

(t) Insurance. The Credit Union and the Credit Union Subsidiaries are insured with 

reputable insurers against such risks and in such amounts as the management of the Credit Union 

reasonably has determined to be prudent and consistent with industry practice. The Credit Union 

and the Credit Union Subsidiaries are in material compliance with their insurance policies and 

are not in default under any of the material terms thereof, each such policy is outstanding and in 

full force and effect, all premiums and other payments due under any material policy have been 

paid, and all claims thereunder have been filed in due and timely fashion, except, in each case, as 

would not, individually or in the aggregate, reasonably be expected to have a Credit Union 

Material Adverse Effect. 

(u) Intellectual Property. Except as would not, individually or in the aggregate, 

reasonably be expected to have a Credit Union Material Adverse Effect, (i) the Credit Union and 

each Credit Union Subsidiary owns or otherwise has the right to use, all intellectual property 

rights, including all trademarks, trade dress, trade names, service marks, domain names, patents, 

inventions, trade secrets, know-how, works of authorship and copyrights therein, that are used in 

the conduct of their existing businesses and all rights relating to the plans, design and 

specifications of any of its branch facilities (“Proprietary Rights”), free and clear of all liens and 

any claims of ownership by current or former employees, contractors, designers or others and 

(ii) neither the Credit Union nor any of the Credit Union Subsidiaries is materially infringing, 

diluting, misappropriating or violating, nor has the Credit Union or any of the Credit Union 

Subsidiaries received any written (or, to the knowledge of the Credit Union, oral) 

communications alleging that any of them has materially infringed, diluted, misappropriated or 

violated, any of the Proprietary Rights owned by any other person. Except as would not, 

individually or in the aggregate, reasonably be expected to have a Credit Union Material Adverse 

Effect, to the Credit Union’s knowledge, no other person is infringing, diluting, misappropriating 

or violating, nor has the Credit Union or any or the Credit Union Subsidiaries sent any written 

communications since January 1, 2007, alleging that any person has infringed, diluted, 

misappropriated or violated, any of the Proprietary Rights owned by the Credit Union and the 

Credit Union Subsidiaries. 

(v) Brokers and Finders. The Investor has no liability for any amounts that any 

broker, finder or investment banker is entitled to for any financial advisory, brokerage, finder’s 

or other fee or commission in connection with this Agreement or the transactions contemplated 

hereby based upon arrangements made by or on behalf of the Credit Union or any Credit Union 

Subsidiary. 

(w) Disclosure Schedule. The Credit Union has delivered the Disclosure Schedule 

and, if applicable, the Disclosure Update to the Investor and the information contained in the 

Disclosure Schedule, as modified by the information contained in the Disclosure Update, if 

applicable, is true, complete and correct. 
UST Sequence No. [___] -17- 

ARTICLE IV 

Covenants 

Section 4.1 Affirmative Covenants. The Credit Union hereby covenants and agrees 

with Investor that: 

(a) Commercially Reasonable Efforts. Subject to the terms and conditions of this 

Agreement, each of the parties will use its commercially reasonable efforts in good faith to take, 

or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or 

desirable, or advisable under applicable laws, so as to permit consummation of the Purchase as 

promptly as practicable and otherwise to enable consummation of the transactions contemplated 

hereby and shall use commercially reasonable efforts to cooperate with the other party to that 

end. 

(b) Certain Notifications until Closing. From the Signing Date until the Closing, the 

Credit Union shall promptly notify the Investor of (i) any fact, event or circumstance of which it 

is aware and which would reasonably be expected to cause any representation or warranty of the 

Credit Union contained in this Agreement to be untrue or inaccurate in any material respect or to 

cause any covenant or agreement of the Credit Union contained in this Agreement not to be 

complied with or satisfied in any material respect and (ii) except as Previously Disclosed, any 

fact, circumstance, event, change, occurrence, condition or development of which the Credit 

Union is aware and which, individually or in the aggregate, has had or would reasonably be 

expected to have a Credit Union Material Adverse Effect; provided, however, that delivery of 

any notice pursuant to this Section 4.1(b) shall not limit or affect any rights of or remedies 

available to the Investor. 

(c) Access, Information and Confidentiality. 

(i) From the Signing Date until the date when the Investor owns an amount of 

Senior Subordinated Securities having an aggregate face value of less than 10% of the 

Purchase Price, the Credit Union will permit the Investor and its agents, consultants, 

contractors and advisors (x) acting through the Appropriate Supervisory Authority, or 

otherwise to the extent necessary to evaluate, manage, or transfer its investment in the 

Credit Union, to examine the Credit Union’s books, Tax returns (including all schedules 

and attached thereto) and other information reasonably requested by Investor relating to 

Taxes and make copies thereof and to discuss the affairs, finances and accounts of the 

Credit Union and the Credit Union Subsidiaries with the principal officers of the Credit 

Union, all upon reasonable notice and at such reasonable times and as often as the 

Investor may reasonably request and (y) to review any information material to the 

Investor’s investment in the Credit Union provided by the Credit Union to its Appropriate 

Supervisory Authority. Any investigation pursuant to this Section 4.1(c) shall be 

conducted during normal business hours and in such manner as not to interfere 

unreasonably with the conduct of the business of the Credit Union, and nothing herein 

shall require the Credit Union or any Credit Union Subsidiary to disclose any information 

to the Investor to the extent (A) prohibited by applicable law or regulation, or (B) that 

such disclosure would reasonably be expected to cause a violation of any agreement to 

which the Credit Union or any Credit Union Subsidiary is a party or would cause a risk of 
UST Sequence No. [___] -18- 

a loss of privilege to the Credit Union or any Credit Union Subsidiary (provided that the 

Credit Union shall use commercially reasonable efforts to make appropriate substitute 

disclosure arrangements under circumstances where the restrictions in this clause (i) 

apply). 

(ii) From the Signing Date until the date on which all of the Senior 

Subordinated Securities have been redeemed in whole, the Credit Union will deliver, or 

will cause to be delivered, to the Investor: 

(A) as soon as available after the end of each fiscal year of the Credit 

Union, and in any event within 90 days thereafter, a consolidated balance sheet of 

the Credit Union as of the end of such fiscal year, and consolidated statements of 

income, retained earnings and cash flows of the Credit Union for such year, in 

each case prepared in accordance with GAAP or RAP, as applicable, and setting 

forth in each case in comparative form the figures for the previous fiscal year of 

the Credit Union and which shall be audited to the extent audited financial 

statements are available; 

(B) as soon as available after the end of the first, second and third 

quarterly periods in each fiscal year of the Credit Union, a copy of any quarterly 

reports provided to Interest Holders of the Credit Union or Credit Union 

management by the Credit Union; 

(C) as soon as available after the Credit Union receives any assessment 

of the Credit Union’s internal controls, a copy of such assessment; 

(D) annually on a date specified by the Investor, a completed survey, in 

a form specified by the Investor, providing, among other things, a description of 

how the Credit Union has utilized the funds the Credit Union received hereunder 

in connection with the sale of the Senior Subordinated Securities and the effects 

of such funds on the operations and status of the Credit Union; 

(E) as soon as such items become effective, any amendments to the 

Charter, bylaws or other organizational documents of the Credit Union; and 

(F) at the same time as such items are sent to all Members of the 

Credit Union, copies of any information or documents, excluding any general 

solicitations or advertisements for services and products, sent by the Credit Union 

to its Members. 

(iii) The Investor will use reasonable best efforts to hold, and will use 

reasonable best efforts to cause its agents, consultants, contractors and advisors and 

United States executive branch officials and employees, to hold, in confidence all 

non-public records, books, contracts, instruments, computer data and other data and 

information (collectively, “Information”) concerning the Credit Union furnished or made 

available to it by the Credit Union or its representatives pursuant to this Agreement 

(except to the extent that such information can be shown to have been (A) previously 

known by such party on a non-confidential basis, (B) in the public domain through no 
UST Sequence No. [___] -19- 

fault of such party or (C) later lawfully acquired from other sources by the party to which 

it was furnished (and without violation of any other confidentiality obligation)); provided

that nothing herein shall prevent the Investor from disclosing any Information to the 

extent required by applicable laws or regulations or by any subpoena or similar legal 

process. The Investor understands that the Information may contain commercially 

sensitive confidential information entitled to an exception from a Freedom of Information 

Act request. 

(iv) The Investor’s information rights pursuant to Section 4.1(c)(ii)(A), (B), 

(C), (E) and (F) and the Investor’s right to receive certifications from the Credit Union 

pursuant to Section 4.1(d)(ii) may be assigned by the Investor to a transferee or assignee 

of the Senior Subordinated Securities with a face value of no less than an amount equal to 

2% of the Purchase Price. 

(v) From the Signing Date until the date when the Investor no longer owns 

any Senior Subordinated Securities, the Credit Union shall permit, and shall cause each 

of the Credit Union’s Subsidiaries to permit (A) the Investor and its agents, consultants, 

contractors and advisors, (B) the Special Inspector General of the Troubled Asset Relief 

Program, and (C) the Comptroller General of the United States access to personnel and 

any books, papers, records or other data, in each case, to the extent relevant to 

ascertaining compliance with the financing terms and conditions; provided that, prior to 

disclosing any information pursuant to clause (B) or (C), the Special Inspector General of 

the Troubled Asset Relief Program and the Comptroller General of the United States 

shall have agreed, with respect to documents obtained under this Agreement in 

furtherance of its function, to follow applicable law and regulation (and the applicable 

customary policies and procedures) regarding the dissemination of confidential materials, 

including redacting confidential information from the public version of its reports and 

soliciting the input from the Credit Union as to information that should be afforded 

confidentiality, as appropriate. 

(vi) Nothing in this Section shall be construed to limit the authority that the 

Special Inspector General of the Troubled Asset Relief Program, the Comptroller General 

of the United States or any other applicable regulatory authority has under law. 

(d) CDFI Requirements. 

(i) From the Signing Date until the date on which all of the Senior 

Subordinated Securities have been redeemed in whole, the Credit Union shall (A) be 

certified by the Fund as a CDFI; (B) together with all of its Affiliates collectively meet 

the eligibility requirements of 12 C.F.R. 1805.200(b); (C) have a primary mission of 

promoting community development, as may be determined by Investor from time to time, 

based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (D) provide Financial Products, 

Development Services, and/or other similar financing as a predominant business activity 

in arm’s-length transactions; (E) serve a Target Market by serving one or more 

Investment Areas and/or Targeted Populations as may be determined by Investor from 

time to time, substantially in the manner set forth in 12 C.F.R. 1805.201(b)(3); 

(F) provide Development Services in conjunction with its Financial Products, directly, 
UST Sequence No. [___] -20- 

through an Affiliate or through a contract with a third-party provider; (G) maintain 

accountability to residents of the applicable Investment Area(s) or Targeted Population(s) 

through representation on its governing Board of Directors or otherwise; and (H) remain 

a non-governmental entity which is not an agency or instrumentality of the United States 

of America, or any State or political subdivision thereof, as described in 12 C.F.R. 

1805.201(b)(6) and within the meaning of any supplemental regulations or interpretations 

of 12 C.F.R. 1805.201(b)(6) or such supplemental regulations published by the Fund. 

Notwithstanding any other provision hereof, as used in this Section 4.1(d), the terms 

“Affiliates”; “Financial Products”; “Development Services”; “Target Market”; 

“Investment Areas”; and “Targeted Populations” have the meanings ascribed to such 

terms in 12 C.F.R. 1805.104. 

(ii) From the Signing Date until the date on which all of the Senior 

Subordinated Securities have been redeemed in whole, the Credit Union shall deliver to 

Investor (1) (x) on the date that is 180 days after the Closing Date and (y) annually on the 

same date on which the Credit Union delivers the documentation required under 

Section 4.1(c)(ii), (A) to the Investor, a certificate signed on behalf of the Credit Union 

by a Senior Executive Officer, in substantially the form attached hereto as Annex F, 

certifying (A) that the Credit Union remains in compliance with the covenants set forth in 

Section 4.1(d)(i); (B) that the information in the CDFI Application, as modified by any 

updates to the CDFI Application provided by the Credit Union to the Investor on or prior 

to the date of such certificate, with respect to the covenants set forth in 

Section 4.1(d)(i)(B) and Section 4.1(d)(i)(D) remains true, correct and complete as of 

such date or, to the extent any information set forth in the CDFI Application, as modified 

by any updates to the CDFI Application provided by the Credit Union to the Investor on 

or prior to the date of such certificate, with respect to such covenants needs to be updated 

or supplanted to make it true, complete and correct as of such date, that an updated 

narrative to the CDFI Application setting forth any information necessary to make the 

information set forth in the CDFI Application is true, complete and correct as of such 

date; (C) either (a) that the contracts and material agreements entered into by the Credit 

Union with respect to Development Services previously disclosed to the Investor remain 

in effect or (b) that attached are any new contracts and material agreements entered into 

by the Credit Union with respect to Development Services; (iv) a list of the names and 

addresses of the individuals which comprise the Board of Directors as of such date and, 

to the extent any of such individuals was not a member of the Board of Directors as of the 

last certification to the Investor, a narrative describing such individual's relationship to 

the applicable Investment Area(s) and Targeted Population(s) or, if the Credit Union 

maintains accountability to residents of the applicable Investment Area(s) or Target 

Population(s) through means other than representation on its governing Board of 

Directors and such means have changed since the date of the last certification to the 

Investor, a narrative describing such change and (v) that the Credit Union is not an 

agency of the United States of America, or any State or political subdivision thereof, as 

described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any supplemental 

regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental 

regulations published by the Fund and (2) within five (5) business days of receipt, copies 

of any notices, correspondence or other written communication between the Credit Union 

and the Fund, including any form the Credit Union is required to provide to the Fund due 
UST Sequence No. [___] -21- 

to the occurrence of a “Material Event” within the meaning of the Fund’s CDFI 

Certification Procedures. 

(iii) The Credit Union shall immediately notify the Investor upon the 

occurrence of any breach of any of the covenants set forth in Section 4.1(d). 

(iv) If at any time the Credit Union is no longer certified as a CDFI, but one or 

more Affiliates thereof are certified as CDFIs (such affiliates, the “Certified Entities”), 

the Credit Union shall (A) immediately notify the Investor of such status, (B) cause the 

Certified Entities to comply with the covenants set forth in Section 4.1(d)(i), (C) on an 

annual basis pursuant to Section 4.1(d)(ii), deliver to Investor, the certificates and 

documentation required by clauses (A), (B) and (C) in Section 4.1(d)(ii)(1)(y), with 

respect to the Certified Entities and (D) execute and deliver to Investor such amendments 

or documents or perform such other acts as the Investor may deem necessary, in its sole 

discretion, for the Credit Union and the Certified Entities to comply with the terms and 

conditions of this Agreement. 

(e) Executive Compensation. 

(i) Benefit Plans. During the Relevant Period, the Credit Union shall take all 

necessary action to ensure that the Benefit Plans of the Credit Union and its Affiliates 

comply in all respects with, and shall take all other actions necessary to comply with, 

Section 111 of EESA as implemented by the Compensation Regulations, and neither the 

Credit Union nor any of its Affiliates shall adopt any new Benefit Plan (x) that does not 

comply therewith or (y) that does not expressly state and require that such Benefit Plan 

and any compensation thereunder shall be subject to any relevant Compensation 

Regulations adopted, issued or released on or after the date any such Benefit Plan is 

adopted. To the extent that EESA and/or the Compensation Regulations are amended or 

otherwise change during the Relevant Period in a manner that requires changes to thenexisting Benefit Plans, or that requires other actions, the Credit Union and its Affiliates 

shall effect such changes to its or their Benefit Plans, and take such other actions, as 

promptly as practicable after it has actual knowledge of such amendments or changes in 

order to be in compliance with this Section 4.1(e) (and shall be deemed to be in 

compliance for a reasonable period to effect such changes). In addition, the Credit Union 

and its Affiliates shall take all necessary action, other than to the extent prohibited by 

applicable law or regulation applicable outside of the United States, to ensure that the 

consummation of the transactions contemplated by this Agreement will not accelerate the 

vesting, payment or distribution of any deferred cash awards or any nonqualified deferred 

compensation payable by the Credit Union or any of its Affiliates. 

(ii) Additional Waivers. After the Closing Date, in connection with the hiring 

or promotion of a Section 4.1(e) Employee and/or the promulgation of applicable 

Compensation Regulations or otherwise, to the extent any Section 4.1(e) Employee shall 

not have executed a waiver in a form satisfactory to the Investor with respect to the 

application to such Section 4.1(e) Employee of the Compensation Regulations, the Credit 

Union shall use its best efforts to (x) obtain from such Section 4.1(e) Employee a waiver 

in substantially the form attached hereto as Annex C and (y) deliver such waiver to the 
UST Sequence No. [___] -22- 

Investor as promptly as possible, in each case within sixty days of such Section 4.1(e) 

Employee’s becoming subject to the requirements of this section. “Section 4.1(e) 

Employee” means (A) each Senior Executive Officer and (B) any other employee of the 

Credit Union or any of its Affiliates determined at any time to be subject to Section 111 

of EESA as implemented by the Compensation Regulations. 

(iii) Clawback. In the event that any Section 4.1(e) Employee receives a 

payment in contravention of the provisions of this Section 4.1(e), the Credit Union shall 

promptly provide such individual with written notice that the amount of such payment 

must be repaid to the Credit Union in full within fifteen business days following receipt 

of such notice or such earlier time as may be required by the Compensation Regulations 

and shall promptly inform the Investor (x) upon discovering that a payment in 

contravention of this Section 4.1(e) has been made and (y) following the repayment to the 

Credit Union of such amount, and shall take such other actions as may be necessary to 

comply with the Compensation Regulations. 

(iv) Limitation on Deductions. During the Relevant Period, the Credit Union 

agrees that it shall not claim a deduction for remuneration for federal income tax 

purposes in excess of $500,000 for each Senior Executive Officer that would not be 

deductible if Section 162(m)(5) of the Code applied to the Credit Union. 

(f) Payment of Principal and Interest. The Credit Union covenants and agrees for the 

benefit of the Holders of the Senior Subordinated Securities that it will duly and punctually pay 

or cause to be paid the principal of and interest on the Senior Subordinated Securities at the 

respective times and in the manner provided herein. Payment of the principal of and interest on 

the Senior Subordinated Securities due on the Maturity Date will be made by the Credit Union in 

immediately available funds against presentation and surrender of the Senior Subordinated 

Securities. Each installment of interest on the Senior Subordinated Securities due on an Interest 

Payment Date other than the Maturity Date shall be paid 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. 

(g) HAMP Modifications. The Credit Union shall take all necessary action to ensure 

that (i) from and after the date the Credit Union or any Credit Union Subsidiary that services 

residential mortgage loans has 100 or more residential mortgage loans not owned or guaranteed 

by Fannie Mae or Freddie Mac which have been past due for 60 or more days, the Credit Union 

or such Credit Union Subsidiary shall, to the extent such programs are open for participation, 

(A) participate in the United States Department of the Treasury’s Making Home Affordable 

(“MHA”) program, including MHA’s Second Lien Modification Program and (B) immediately 

execute a Commitment to Purchase Financial Instrument and Servicer Participation Agreement 

(in such form as may be set forth on the MHA website at www.hmpadmin.com from time to 

time) with Fannie Mae (acting as the United States Department of the Treasury’s fiscal agent) 

and (ii) if the Credit Union or any Credit Union Subsidiary owns mortgage loans that are 

serviced by a non-affiliated mortgage servicer, the Credit Union or such Credit Union Subsidiary 

shall consent to any MHA modification request made by such mortgage servicer. 
UST Sequence No. [___] -23- 

(h) Predominantly Financial. For as long as the Investor owns any Senior 

Subordinated Securities, the Credit Union, agrees to remain predominantly engaged in financial 

activities. A entity is predominantly engaged in financial activities if the annual gross revenues 

derived by the entity and all subsidiaries of the entity (excluding revenues derived from 

subsidiary depository institutions), on a consolidated basis, from engaging in activities that are 

financial in nature or are incidental to a financial activity under subsection (k) of Section 4 of the 

Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) represent at least 85 percent of the 

consolidated annual gross revenues of the entity. 

(i) Capital Covenant. From the Signing Date until the date on which all of the Senior 

Subordinated Securities have been redeemed in whole, the Credit Union and the Credit Union 

Subsidiaries shall maintain such capital as may be necessary to meet the minimum capital 

requirements of the Appropriate Supervisory Authority, as in effect from time to time. 

(j) Compliance with Employ American Workers Act. The Credit Union shall agree 

to comply, and take all necessary action to ensure that any Credit Union Subsidiary complies, in 

all respects with the provisions of EESA and any federal law respecting EESA, including the 

Employ American Workers Act (Section 1611 of Division A, Title XVI of the American 

Recovery and Reinvestment Act of 2009), Public Law No. 111-5, effective as of February 17, 

2009, as implemented by any rules, regulation or guidance thereunder, as such may be amended 

or supplemented from time to time, and any applicable guidance of the United States Department 

of the Treasury with respect thereto. 

Section 4.2 Negative Covenants. The Credit Union hereby covenants and agrees with 

the Investor that: 

(a) Certain Transactions. The Credit Union shall not merge or consolidate with, or 

sell, transfer or lease all or substantially all of its property or assets to, any other party unless the 

successor, transferee or lessee party (or its ultimate parent entity), as the case may be (if not the 

Credit Union), expressly assumes the due and punctual performance and observance of each and 

every covenant, agreement and condition of this Agreement to be performed and observed by the 

Credit Union. 

(b) Restriction on Dividends and Repurchases. 

(i) Prior to the date on which all of the Senior Subordinated Securities have 

been redeemed in whole, neither the Credit Union nor any Credit Union Subsidiary shall, 

redeem, purchase, repay or acquire any equity or debt capital instruments of any kind of 

the Credit Union or any Credit Union Subsidiary, other than (A) maturing secondary 

capital accounts (for the avoidance of doubt, only with respect to amounts mandatorily 

then due and payable pursuant to the terms of the instrument thereof with respect to such 

secondary capital accounts and not any changes in regulatory treatment) or 

(B) redemptions, purchases, repayments or other acquisitions of Capital Interests or other 

securities of any kind of the Credit Union or any Credit Union Subsidiary required 

pursuant to binding contractual agreements entered into prior to October 21, 2009 or (C) 

good faith transactions in the ordinary course of business involving Member Shares, 

unless all accrued and unpaid interest for all past interest periods on the Senior 
UST Sequence No. [___] -24- 

Subordinated Securities is paid in full. For purposes of this Section 4.2(b)(i), the term 

“secondary capital account” shall have the meaning ascribed to such term in 

Section 701.34(b)(6) of the NCUA Regulations or shall mean any comparable instrument 

authorized by applicable state regulations, as applicable. 

(ii) Notwithstanding anything contained in this Section 4.2(b), prior to the 

date on which all of the Senior Subordinated Securities have been redeemed in whole, no 

Additional Dividends may be declared or paid on any Capital Interests or other capital 

instruments of any kind of the Credit Union or any Credit Union Subsidiary. The term 

“Additional Dividends” shall mean special dividends paid on Capital Interests or other 

capital instruments of any kind of the Credit Union or any Credit Union Subsidiary in 

excess of dividends paid at the stated market dividend rates on share accounts and other 

deposit liabilities of the Members and the stated interest or dividend rates payable on any 

other capital instruments of the Credit Union or any Credit Union Subsidiary. 

(c) Related Party Transactions. Until such time as the Investor ceases to own any 

debt or equity securities of the Credit Union, including the Senior Subordinated Securities, the 

Credit Union and the Credit Union Subsidiaries shall not enter into transactions with Affiliates or 

related persons (within the meaning of Item 404 under the SEC’s Regulation S-K) unless 

(A) such transactions are on terms no less favorable to the Credit Union and the Credit Union 

Subsidiaries than could be obtained from an unaffiliated third party, and (B) have been approved 

by the audit committee of the Board of Directors or comparable body of independent directors of 

the Credit Union, or if there are no independent directors, the Board of Directors, provided that 

the Board of Directors shall maintain written documentation which supports its determination 

that the transaction meets the requirements of clause (A) of this Section 4.2(c). 

(d) Restriction on Repurchase of Senior Subordinated Securities Not Held by 

Investor. Prior to the date on which the Investor no longer owns any Senior Subordinated 

Securities, the Credit Union shall not repurchase, redeem, call or otherwise reacquire any Senior 

Subordinated Securities from any Holder thereof, whether by means of open market purchase, 

negotiated transaction, or otherwise, unless it offers to repurchase, redeem, call or otherwise 

reacquire a ratable portion of the Senior Subordinated Securities then held by the Investor on the 

same terms and conditions. 

ARTICLE V 

Remedies of the Holders upon Event of Default 

Section 5.1 Event of Default. “Event of Default” shall mean the occurrence or 

existence of any one or more of the following: 

(a) Receivership or Conservatorship. 

(i) There shall be appointed a receiver, conservator, liquidator, assignee, 

custodian, trustee, sequestrator or other similar official of the Credit Union or for any 

substantial part of its property, and such appointment shall remain unstayed and in effect 

for a period of sixty (60) days; 
UST Sequence No. [___] -25- 

(ii) The Credit Union shall consent to the appointment of a receiver, 

conservator, liquidator, assignee, custodian, trustee, sequestrator or other similar official 

for it or all or substantially all of its property in any liquidation, insolvency or similar 

proceeding with respect to it or all or substantially all of its property. 

(b) Dissolution. Any order, judgment or decree is entered against the Credit Union or 

a Credit Union Subsidiary decreeing the dissolution or split-up of the Credit Union or a Credit 

Union Subsidiary and such order remains undischarged or unstayed for a period in excess of 

thirty (30) days. 

Section 5.2 Acceleration and Other Remedies. When any Event of Default has 

occurred and is continuing, then the Senior Subordinated Securities, including both principal and 

interest, and all fees, charges and other obligations payable hereunder and under the Transaction 

Documents, shall immediately become due and payable without presentment, demand, protest or 

notice of any kind. In addition, the Holders may exercise any and all remedies available to it 

under the Transaction Documents or applicable law. 

Section 5.3 Suits for Enforcement. In case any one or more Events of Default shall 

have occurred and be continuing, unless such Events of Default shall have been waived in the 

manner provided in Section 5.5 hereof, the Holders holding more than fifty percent (50%) of the 

aggregate outstanding principal amount of the Senior Subordinated Securities (the “Majority 

Holders”), subject to the terms of Article VI hereof, may proceed to protect and enforce their 

rights under this Article V by suit in equity or action at law. It is agreed that in the event of such 

action, or any action between the Holders of the Senior Subordinated Securities and the Credit 

Union (including its officers and agents) in connection with a breach or enforcement of this 

Agreement, the Holders of the Senior Subordinated Securities shall be entitled to receive all 

reasonable fees, costs and expenses incurred, including without limitation such reasonable fees 

and expenses of attorneys (whether or not litigation is commenced) and reasonable fees, costs 

and expenses of appeals. 

Section 5.4 Holders May File Proofs of Claim. In case there shall be pending 

proceedings for the bankruptcy or for the reorganization of any obligor on the Senior 

Subordinated Securities (other than the Credit Union) under Title 11, United States Code, or any 

other applicable law, or in case a receiver, conservator or trustee shall have been appointed for 

the Credit Union or such other obligor (each, an “Obligor”) or a Significant Subsidiary, or in the 

case of any other similar judicial proceedings relative to an Obligor or a Significant Subsidiary, 

or to the creditors or property of an Obligor or a Significant Subsidiary, any Holder, irrespective 

of whether the principal of the Senior Subordinated Securities shall then be due and payable as 

therein expressed or by declaration or otherwise and irrespective of whether any such Holder 

shall have made any demand pursuant to the provisions of this Section 5.4, shall be entitled and 

empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims 

for the whole amount of principal and interest owing and unpaid in respect of the Senior 

Subordinated Securities held by any such Holder and, in case of any judicial proceedings, to file 

such proofs of claim and other papers or documents as may be necessary or advisable in order to 

have the claims of any such Holder allowed in such judicial proceedings relative to an Obligor or 

a Significant Subsidiary, or to the creditors or property of an Obligor, unless prohibited by 

applicable law and regulations, to vote in any election of a trustee or a standby trustee in 
UST Sequence No. [___] -26- 

arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person 

performing similar functions in comparable proceedings, and to collect and receive any moneys 

or other property payable or deliverable to any such Holder on any such claims. 

Section 5.5 Waiver of Past Defaults. The Holders of not less than a majority in 

aggregate principal amount of the outstanding Senior Subordinated Securities may on behalf of 

the Holders of all the Senior Subordinated Securities waive any past default hereunder with 

respect such Senior Subordinated Securities and its consequences. Upon any such waiver, such 

default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have 

been cured, for every purpose of this Agreement; but no such waiver shall extend to any 

subsequent or other default or impair any right consequent thereon. 

ARTICLE VI 

Additional Agreements 

Section 6.1 Purchase for Investment. The Investor acknowledges that the Senior 

Subordinated Securities have not been registered under the Securities Act, or under any state 

securities laws. The Investor acknowledges that the Senior Subordinated Securities are not being 

sold pursuant to an indenture (an “Indenture”) qualified under the Trust Indenture Act of 1939, 

as amended (the “Indenture Act”). The Investor (a) is acquiring the Senior Subordinated 

Securities pursuant to an exemption from registration under the Securities Act and an exemption 

from qualification of an indenture under the Indenture Act, and is acquiring the Senior 

Subordinated Securities solely for investment with no present intention to distribute them to any 

person in violation of the Securities Act or any applicable U.S. state securities laws, (b) will not 

sell or otherwise dispose of any of the Senior Subordinated Securities, except in compliance with 

the registration requirements or exemption provisions of the Securities Act and any applicable 

U.S. state securities laws, and (c) has such knowledge and experience in financial and business 

matters and in investments of this type that it is capable of evaluating the merits and risks of the 

Purchase and of making an informed investment decision. 

Section 6.2 Form of Senior Subordinated Security. The Senior Subordinated Security 

shall be substantially in the form of Annex A hereto, the terms of which are incorporated in and 

made a part of this Agreement. The Senior Subordinated Securities shall be issued, and may be 

transferred, only in denominations having an aggregate principal amount of not less than $1,000 

and integral multiples of $1,000 in excess thereof. The Senior Subordinated Securities shall be 

in registered form without coupons and shall be numbered, lettered or otherwise distinguished in 

such manner or in accordance with such plans as the officers executing the same may determine 

as evidenced by the execution thereof. 

Section 6.3 Execution of Senior Subordinated Securities. The Senior Subordinated 

Securities shall be executed in the name and on behalf of the Credit Union by the manual or 

facsimile signature of its President, Chief Executive Officer, Chief Financial Officer or one of its 

Executive Vice Presidents under its seal (if legally required) which may be affixed thereto or 

printed, engraved or otherwise reproduced thereon, by facsimile or otherwise, and which need 

not be attested, unless otherwise required by the Credit Union’s Charter or bylaws or applicable 

law. Every Senior Subordinated Security shall be dated the date of its execution and delivery. 
UST Sequence No. [___] -27- 

Section 6.4 Computation of Interest. (a) The amount of interest payable for any 

Interest Period (as defined below) will be computed as provided in the Senior Subordinated 

Securities. 

(b) Each Senior Subordinated Security will bear interest at the Interest Rate (i) in the 

case of the initial Interest Period, for the period from, and including, the date of original issuance 

of such Senior Subordinated Security to, but excluding, the initial Interest Payment Date and 

(ii) thereafter, for the period from, and including, the first day following the end of the preceding 

Interest Period to, but excluding, the applicable Interest Payment Date or, in the case of the last 

Interest Period, the Maturity Date (each such period, an “Interest Period”), on the principal 

thereof, on any overdue principal and (to the extent that payment of such interest is enforceable 

under applicable law) on any overdue installment of interest (including Defaulted Interest), 

payable on each Interest Payment Date or the Maturity Date, as the case may be. Interest on any 

Senior Subordinated Security that is payable, and is punctually paid or duly provided for by the 

Credit Union, on any Interest Payment Date shall be paid to the person in whose name such 

Senior Subordinated Security is registered at the close of business on the Regular Record Date 

for such interest installment. 

(c) (i) Any interest on the Senior Subordinated Securities that is payable, but is not 

punctually paid or duly provided for by the Credit Union, on any Interest Payment Date (herein 

called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant 

Regular Record Date, and such Defaulted Interest shall be paid by the Credit Union on either the 

next succeeding Interest Payment Date or another date specified by the Credit Union to the 

persons in whose names such Senior Subordinated Securities are registered at the close of 

business on either (x), if such Defaulted Interest is to be paid on the next succeeding Interest 

Payment Date, the related Regular Record Date, or (y), if such Defaulted Interest is to be paid on 

any other date, a special record date for the payment of such Defaulted Interest. To the extent 

any Defaulted Interest is paid by the Credit Union, the Credit Union shall notify the Holder in 

writing of the amount of Defaulted Interest proposed to be paid on each such Senior 

Subordinated Security and the date of the proposed payment. 

(ii) To the extent that Defaulted Interest is to be paid on a date other than on 

an Interest Payment Date, the Board of Directors shall fix a special record date for the 

payment of such Defaulted Interest, which shall not be more than 15 nor less than 10 

days prior to the date of the proposed payment. The Credit Union shall cause notice of 

the proposed payment of such Defaulted Interest and the special record date therefor to be 

mailed, first class postage prepaid, to each Holder of a Senior Subordinated Security at 

his, her or its address as it appears in the Senior Subordinated Securities Register, not less 

than 10 days prior to such special record date. Notice of the proposed payment of such 

Defaulted Interest and the special record date therefor having been mailed as aforesaid, 

such Defaulted Interest shall be paid to the person in whose name such Senior 

Subordinated Security is registered at the close of business on such special record date 

and thereafter the Credit Union shall have no further payment obligation in respect of the 

Defaulted Interest. 

(d) The Credit Union may make payment of any Defaulted Interest on the Senior 

Subordinated Securities in any other lawful manner not inconsistent with the requirements of any 
UST Sequence No. [___] -28- 

securities exchange on which such Senior Subordinated Securities may be listed, and upon such 

notice as may be required by such exchange. 

(e) Subject to the foregoing provisions of this Section 6.4, each Senior Subordinated 

Security delivered under this Agreement upon registration of transfer of or in exchange for or in 

lieu of any other Senior Subordinated Security shall carry the rights to interest accrued and 

unpaid, and to accrue, that were carried by such other Senior Subordinated Security. 

Section 6.5 Legends. (a) The Investor agrees that all certificates or other instruments 

representing the Senior Subordinated Securities will bear a legend substantially to the following 

effect: 

“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. 
UST Sequence No. [___] -29- 

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 

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.” 

(b) In the event that any Senior Subordinated Securities (i)(A) become registered 

under the Securities Act or (B) are eligible to be transferred without restriction in accordance 

with Rule 144 or another exemption from registration under the Securities Act (other than Rule 

144A), and (ii)(A) become subject to an Indenture qualified under the Indenture Act or (B) are 

exempt from qualification under the Indenture Act, the Credit Union shall issue new certificates 

or other instruments representing such Senior Subordinated Securities, which shall not contain 

the applicable legends in Section 6.5(a) above; provided that the Investor surrenders to the Credit 

Union the previously issued certificates or other instruments. 
UST Sequence No. [___] -30- 

Section 6.6 Transfer of Senior Subordinated Securities. (a) The Credit Union or its 

duly appointed agent shall maintain a register (the “Senior Subordinated Securities Register”) for 

the Senior Subordinated Securities in which it shall register the issuance and transfer of the 

Senior Subordinated Securities. All transfers of the Senior Subordinated Securities shall be 

recorded on the Senior Subordinated Securities Register maintained by the Credit Union or its 

agent, and the Credit Union shall be entitled to regard the registered Holder of such Senior 

Subordinated Security as the actual owner of the Senior Subordinated Security so registered until 

the Credit Union or its agent is required to record a transfer of such Senior Subordinated Security 

on its Senior Subordinated Securities Register. The Credit Union or its agent shall, subject to 

applicable securities laws, be required to record any such transfer when it receives the Senior 

Subordinated Security to be transferred duly and properly endorsed by the registered Holder or 

by its attorney duly authorized in writing. 

(b) The Credit Union shall at any time, upon written request of the Holder of a Senior 

Subordinated Security and surrender of the Senior Subordinated Security for such purpose, at the 

expense of the Credit Union, issue new Senior Subordinated Securities in exchange therefor in 

such denominations of at least $1,000, as shall be specified by the Holder of such Senior 

Subordinated Security, in an aggregate principal amount equal to the then unpaid principal 

amount of the Senior Subordinated Securities surrendered and substantially in the form of 

Annex A, with appropriate insertions and variations, and bearing interest from the date to which 

interest has been paid on the Senior Subordinated Security surrendered. All Senior Subordinated 

Securities issued upon any registration of transfer of exchange pursuant to this Section 6.6(b) 

shall be valid obligations of the Credit Union, evidencing the same debt, and entitled to the same 

benefits under this Agreement, as the Senior Subordinated Securities surrendered upon such 

registration of transfer or exchange. 

(c) All Senior Subordinated Securities presented for registration of transfer or for 

exchange or payment shall be duly endorsed by, or be accompanied by, a written instrument or 

instruments of transfer in a form satisfactory to the Credit Union duly executed by the Holder or 

such Holder’s attorney duly authorized in writing. 

(d) No service charge shall be incurred for any exchange or registration of transfer of 

Senior Subordinated Securities, but the Credit Union may require payment of a sum sufficient to 

cover any tax, fee or other governmental charge that may be imposed in connection therewith. 

(e) Prior to due presentment for the registration of a transfer of any Senior 

Subordinated Security, the Credit Union and any agent of the Credit Union may deem and treat 

the person in whose name such Senior Subordinated Security is registered as the absolute owner 

and Holder of such Senior Subordinated Security for the purpose of receiving payment of 

principal of and interest on such Senior Subordinated Security and none of the Credit Union or 

any agents of the Credit Union shall be affected by notice to the contrary. 

(f) Subject to compliance with applicable securities laws, the Holder shall be 

permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of the 

Senior Subordinated Securities at any time, and the Credit Union shall take all steps as may be 

reasonably requested by the Investor to facilitate the Transfer of the Senior Subordinated 

Securities, including, without limitation, as set forth in Section 6.13; provided that the Investor 
UST Sequence No. [___] -31- 

shall not Transfer any Senior Subordinated Securities if such transfer would require the Credit 

Union to be subject to the periodic reporting requirements of Section 13 or 15(d) of the 

Securities Exchange Act of 1934 (the “Exchange Act”) and the Credit Union was not already 

subject to such requirements. In furtherance of the foregoing, the Credit Union shall provide 

reasonable cooperation to facilitate any Transfers of the Senior Subordinated Securities, 

including, as is reasonable under the circumstances, by furnishing such information concerning 

the Credit Union and its business as a proposed transferee may reasonably request (including 

such information as is required by Section 4.1(c)(iv)) and making management of the Credit 

Union reasonably available to respond to questions of a proposed transferee in accordance with 

customary practice, subject in all cases to the proposed transferee agreeing to a customary 

confidentiality agreement. 

Section 6.7 Replacement of Senior Subordinated Securities. Upon receipt of evidence 

reasonably satisfactory to the Credit Union of the loss, theft, destruction or mutilation of any 

Senior Subordinated Security, and, in the case of any such loss, theft or destruction, upon 

delivery of a bond of indemnity reasonably satisfactory to the Credit Union (provided that the 

Investor or any institutional Holder of a Senior Subordinated Security may instead deliver to the 

Credit Union an indemnity agreement in form and substance reasonably satisfactory to the Credit 

Union), or, in the case of any such mutilation, upon surrender and cancellation of the Senior 

Subordinated Security, as the case may be, the Credit Union will issue a new Senior 

Subordinated Security of like tenor, in lieu of such lost, stolen, destroyed or mutilated Senior 

Subordinated Security. 

Section 6.8 Cancellation. All Senior Subordinated Securities surrendered for the 

purpose of payment, exchange or registration of transfer, shall be surrendered to the Credit 

Union and promptly canceled by it, and no Senior Subordinated Securities shall be issued in lieu 

thereof except as expressly permitted by any of the provisions of this Agreement. The Credit 

Union shall destroy all canceled Senior Subordinated Securities. 

Section 6.9 Depository Senior Subordinated Securities. Upon request by the Investor 

at any time following the Closing Date, the Credit Union shall promptly enter into a depositary 

arrangement, pursuant to customary agreements reasonably satisfactory to the Investor and with 

a depositary reasonably acceptable to the Investor, pursuant to which the Senior Subordinated 

Securities may be deposited. 

Section 6.10 Redemption. (a) The Senior Subordinated Securities at the time 

outstanding may be redeemed by the Credit Union at its option, subject to the approval of the 

Appropriate Supervisory Authority, in whole or in part and subject to Section 6.10(e), at any 

time and from time to time, out of funds legally available therefor, upon notice given as provided 

in Section 6.10(d) below, on any Interest Payment Date (the “Redemption Date”) at a redemption 

price equal to the sum of (i) 100% of the principal amount thereof being called for redemption 

(provided that, if less than all of the outstanding Senior Subordinated Securities are then being 

redeemed, such amount shall not be less than 25% of the Purchase Price) and (ii) any accrued 

and unpaid interest. 

(b) The redemption price for any Senior Subordinated Securities shall be payable on 

the Redemption Date to the Holder of such Senior Subordinated Securities against surrender 
UST Sequence No. [___] -32- 

thereof to the Credit Union or its agent. Interest shall be paid at the then applicable Interest Rate 

from the date of the last Interest Payment Date up to but not including the Redemption Date. 

(c) No Sinking Fund. The Senior Subordinated Securities will not be subject to any 

mandatory redemption, sinking fund or other similar provisions. Holders of Senior Subordinated 

Securities will have no right to require redemption or repurchase of any of the Senior 

Subordinated Securities. 

(d) Notice of Redemption. Notice of redemption of the Senior Subordinated 

Securities shall be given by first-class mail, postage prepaid, addressed to the Holders of record 

of the Senior Subordinated Securities to be redeemed at their respective last addresses appearing 

on the Senior Subordinated Securities Register. Such mailing shall be at least 30 days and not 

more than 60 days before the Redemption Date. Any notice mailed as provided in this 

subsection 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 any Holder of Senior Subordinated Securities designated for 

redemption shall not affect the validity of the proceedings for the redemption of any other Senior 

Subordinated Securities. Notwithstanding the foregoing, if Senior Subordinated Securities are 

issued in book-entry form through The Depository Trust Company or any other similar facility, 

notice of redemption may be given to the Holders of Senior Subordinated Securities at such time 

and in any manner permitted by such facility. Each notice of redemption given to a Holder shall 

state: (1) the Redemption Date; (2) the amount of Senior Subordinated Securities to be redeemed 

by such Holder; (3) the redemption price; and (4) the place or places where such Senior 

Subordinated Securities are to be surrendered for payment of the redemption price. 

(e) Partial Redemption. The Credit Union may redeem less than all of the 

outstanding Senior Subordinated Securities, provided that the amount called for redemption at 

any time is not less than 20% of the amount of the outstanding principal amount of the Senior 

Subordinated Securities. Subject to the provisions hereof, the Board of Directors or a duly 

authorized committee thereof shall have full power and authority to prescribe the terms and 

conditions upon which Senior Subordinated Securities shall be redeemed from time to time. If 

less than the full aggregate principal amount of any Senior Subordinated Security is redeemed, 

the Credit Union shall issue a new Senior Subordinated Security in the unredeemed aggregate 

principal amount thereof without charge to the Holder thereof. Senior Subordinated Securities 

may be redeemed in part only on a pro rata basis and only in minimum denominations of $1,000 

and integral multiples thereof. 

(f) Effectiveness of Redemption. If notice of redemption has been duly given and if 

on or before the Redemption Date specified in the notice all funds necessary for the redemption 

have been deposited by the Credit Union, in trust for the pro rata benefit of the Holders of the 

Senior Subordinated Securities called for redemption, with a bank or trust company doing 

business in the Borough of Manhattan, The City of New York, and having a capital and surplus 

of at least $500 million and selected by the Board of Directors, so as to be and continue to be 

available solely therefor, then, notwithstanding that any Senior Subordinated Security so called 

for redemption has not been surrendered for cancellation, on and after the Redemption Date 

interest shall cease to accrue on the aggregate principal amount of such Senior Subordinated 

Securities so called for redemption, the aggregate principal amount of such Senior Subordinated 
UST Sequence No. [___] -33- 

Securities so called for redemption shall no longer be deemed outstanding and shall cease to bear 

interest from and after the Redemption Date. All rights with respect to such Senior Subordinated 

Securities (or the portion thereof so called for redemption) shall forthwith on such Redemption 

Date cease and terminate, except only the right of the Holders thereof to receive the redemption 

price payable on such redemption from such bank or trust company, without interest. Any funds 

unclaimed at the end of three years from the Redemption Date shall, to the extent permitted by 

applicable law, be released to the Credit Union, after which time the Holders of such Senior 

Subordinated Securities (or portion thereof so called for redemption) shall look only to the Credit 

Union for payment of the redemption price of such Senior Subordinated Securities. 

(g) Status of Redeemed Securities. Senior Subordinated Securities that are redeemed, 

repurchased or otherwise acquired by the Credit Union shall be cancelled and shall not thereafter 

be re-issued by the Credit Union. 

Section 6.11 Voting Rights. 

(a) General. The Holders of Senior Subordinated Securities shall not have any voting 

rights except as set forth below or as otherwise from time to time required by law. 

(b) Class Voting Rights as to Particular Matters. So long as any Senior Subordinated 

Securities are outstanding, in addition to any other vote or consent of Interest Holders required 

by law or by the Charter, but subject to any applicable State Restrictions, the vote or consent of 

the Holders of at least 66 2/3% of the Senior Subordinated Securities at the time outstanding, 

given in person or by proxy, either in writing without a meeting or by vote at any meeting of the 

Holders of Senior Subordinated Securities called for the purpose in accordance with 

Section 6.11(d), shall be necessary for effecting or validating: 

(i) Amendment of Senior Subordinated Securities. Any amendment, 

alteration or repeal of any provision of this Agreement or of the form of the Senior 

Subordinated Securities or the Charter (including, unless no vote on such merger or 

consolidation is required by Section 6.11(b)(ii) below, any amendment, alteration or 

repeal by means of a merger, consolidation or otherwise) so as to adversely affect the 

rights, preferences, privileges or voting powers of the Senior Subordinated Securities; or 

(ii) Exchanges, Reclassifications, Mergers and Consolidations. Any 

consummation of a binding exchange or reclassification involving the Senior 

Subordinated Securities, or of a merger or consolidation of the Credit Union with another 

entity, unless in each case (x) the Senior Subordinated Securities remain outstanding or, 

in the case of any such merger or consolidation with respect to which the Credit Union is 

not the surviving or resulting entity, are converted into or exchanged for securities of the 

surviving or resulting entity or its ultimate parent, and (y) such remaining Senior 

Subordinated Securities outstanding or such securities, as the case may be, have such 

rights, preferences, privileges and voting powers, and limitations and restrictions thereof, 

taken as a whole, as are not materially less favorable to the Holders thereof than the 

rights, preferences, privileges and voting powers, and limitations and restrictions thereof, 

of Senior Subordinated Securities immediately prior to such consummation, taken as a 

whole; 
UST Sequence No. [___] -34- 

provided, however, that, for all purposes of this Section 6.11(b), any increase in the amount of 

the Senior Subordinated Securities, or the creation and issuance of any other Indebtedness of the 

Credit Union, or any securities convertible into or exchangeable or exercisable for any Senior 

Subordinated Securities, ranking senior to, equally with and/or subordinate to the Senior 

Subordinated Securities with respect to the payment of interest (whether or not such interest 

compounds) and the distribution of assets upon liquidation, dissolution or winding up of the 

Credit Union. will not be deemed to adversely affect the rights, preferences, privileges or voting 

powers, and shall not require the affirmative vote or consent of, the Holders of outstanding 

Senior Subordinated Securities. 

(c) Changes after Provision for Redemption. No vote or consent of the Holders of 

Senior Subordinated Securities shall be required pursuant to Section 6.11(b) above if, at or prior 

to the time when any such vote or consent would otherwise be required pursuant to such Section, 

all outstanding Senior Subordinated Securities shall have been redeemed or shall have been 

called for redemption upon proper notice and sufficient funds shall have been deposited in trust 

for such redemption, in each case pursuant to Section 6.10 above. 

(d) Procedures for Voting and Consents. The rules and procedures for calling and 

conducting any meeting of the Holders of Senior Subordinated Securities (including, without 

limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies 

at such a meeting, the obtaining of written consents and any other aspect or matter with regard to 

such a meeting or such consents shall be governed by any rules of the Board of Directors or any 

duly authorized committee of the Board of Directors, in its discretion, may adopt from time to 

time, which rules and/or procedures shall conform to the requirements of the Charter, the bylaws, 

and applicable law and the rules of any national securities exchange or other trading facility on 

which the Senior Subordinated Securities are listed or traded at the time. 

Section 6.12 Secondary Capital Account Status. 

(a) Characterization of Senior Subordinated Securities. The Investor and the Credit 

Union hereby agree that the funds received by the Credit Union in connection with the Purchase 

shall be deposited into an account (the “Secondary Capital Account”) and that the Secondary 

Capital Account, together with the Senior Subordinated Securities, shall constitute a “secondary 

capital account” for purposes of the NCUA Regulations. 

(b) Characterization of Letter Agreement. The Investor and the Credit Union hereby 

agree that the Letter Agreement shall constitute a “secondary capital account contract 

agreement” as contemplated by Section 701.34(b)(10) of the NCUA Regulations. 

(c) Availability to Cover Losses. The Investor and the Credit Union hereby agree 

that funds deposited in the Secondary Capital Account shall be available to cover operating 

losses realized by the Credit Union that exceed its net available reserves (exclusive of secondary 

capital accounts and allowance accounts for loan and lease losses). Such funds held in the 

Secondary Capital Account shall be available to cover operating losses only to the extent that 

accrued but unpaid interest on the Senior Subordinated Securities is unavailable to cover such 

losses. To the extent funds held in the Secondary Capital Account are used to cover losses, the 

Credit Union shall not restore or replenish the Secondary Capital Account. 
UST Sequence No. [___] -35- 

(d) Security. The Investor hereby agrees that it shall not pledge or provide the 

Secondary Capital Account as security on a loan or other obligation with the Credit Union or any 

other party. 

Section 6.13 Rule 144; Rule 144A; 4(11⁄2) Transactions. (a) At all times after the 

Signing Date, the Credit Union covenants that (i) it will, upon the request of the Investor or any 

Holder, use its reasonable best efforts to (x), to the extent any Holder is relying on Rule 144 

under the Securities Act to sell any of the Senior Subordinated Securities, make “current public 

information” available, as provided in Section (c)(1) of Rule 144 (if the Credit Union is a 

“Reporting Issuer” within the meaning of Rule 144) or in Section (c)(2) of Rule 144 (if the 

Credit Union is a “Non-Reporting Issuer” within the meaning of Rule 144), in either case for 

such time period as necessary to permit sales pursuant to Rule 144, (y), to the extent any Holder 

is relying on the so-called “Section 4(11⁄2)” exemption to sell any of its Senior Subordinated 

Securities, prepare and provide to such Holder such information, including the preparation of 

private offering memoranda or circulars or financial information, as the Holder may reasonably 

request to enable the sale of the Senior Subordinated Securities pursuant to such exemption, or 

(z) to the extent any Holder is relying on Rule 144A under the Securities Act to sell any of its 

Senior Subordinated Securities, prepare and provide to such Holder the information required 

pursuant to Rule 144A(d)(4), and (ii) it will take such further action as any Holder may 

reasonably request from time to time to enable such Holder to sell Senior Subordinated 

Securities without registration under the Securities Act within the limitations of the exemptions 

provided by (A) the provisions of the Securities Act or any interpretations thereof or related 

thereto by the SEC, including transactions based on the so-called “Section 4(11⁄2)” and other 

similar transactions, (B) Rule 144 or 144A under the Securities Act, as such Rules may be 

amended from time to time, or (C) any similar rule or regulation hereafter adopted by the SEC; 

provided that the Credit Union shall not be required to take any action described in this Section 

6.13(a) that would cause the Credit Union to become subject to the reporting requirements of 

Section 13 or 15(d) of the Exchange Act if the Credit Union was not subject to such 

requirements prior to taking such action. Upon the request of any Holder, the Credit Union will 

deliver to such Holder a written statement as to whether it has complied with such requirements 

and, if not, the specifics thereof. 

(b) The Credit Union agrees to indemnify Investor, Investor’s officers, directors, 

employees, agents, representatives and Affiliates, and each person, if any, that controls Investor 

within the meaning of the Securities Act (each, an “Indemnitee”), against any and all losses, 

claims, damages, actions, liabilities, costs and expenses (including reasonable fees, expenses and 

disbursements of attorneys and other professionals incurred in connection with investigating, 

defending, settling, compromising or paying any such losses, claims, damages, actions, 

liabilities, costs and expenses), joint or several, arising out of or based upon any untrue statement 

or alleged untrue statement of material fact contained in any document or report provided by the 

Credit Union pursuant to this Section 6.13 or any omission to state therein a material fact 

required to be stated therein or necessary to make the statements therein, in light of the 

circumstances under which they were made, not misleading. 

(c) If the indemnification provided for in Section 6.13(b) is unavailable to an 

Indemnitee with respect to any losses, claims, damages, actions, liabilities, costs or expenses 

referred to therein or is insufficient to hold the Indemnitee harmless as contemplated therein, 
UST Sequence No. [___] -36- 

then the Credit Union, in lieu of indemnifying such Indemnitee, shall contribute to the amount 

paid or payable by such Indemnitee as a result of such losses, claims, damages, actions, 

liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the 

Indemnitee, on the one hand, and the Credit Union, on the other hand, in connection with the 

statements or omissions which resulted in such losses, claims, damages, actions, liabilities, costs 

or expenses as well as any other relevant equitable considerations. The relative fault of the 

Credit Union, on the one hand, and of the Indemnitee, on the other hand, shall be determined by 

reference to, among other factors, whether the untrue statement of a material fact or omission to 

state a material fact relates to information supplied by the Credit Union or by the Indemnitee and 

the parties’ relative intent, knowledge, access to information and opportunity to correct or 

prevent such statement or omission; the Credit Union and Investor agree that it would not be just 

and equitable if contribution pursuant to this Section 6.13(c) were determined by pro rata

allocation or by any other method of allocation that does not take account of the equitable 

considerations referred to in Section 6.13(b). No Indemnitee guilty of fraudulent 

misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to 

contribution from the Credit Union if the Credit Union was not guilty of such fraudulent 

misrepresentation. 

Section 6.14 Expenses and Further Assurances. (a) Unless otherwise provided in this 

Agreement, each of the parties hereto will bear and pay all costs and expenses incurred by it or 

on its behalf in connection with the transactions contemplated under this Agreement, including 

fees and expenses of its own financial or other consultants, investment bankers, accountants and 

counsel. 

(b) The Credit Union shall, at the Credit Union’s sole cost and expense, (i) furnish to 

the Investor all instruments, documents and other agreements required to be furnished by the 

Credit Union pursuant to the terms of this Agreement, including, without limitation, any 

documents required to be delivered pursuant to Section 6.13 above, or which are reasonably 

requested by the Investor in connection therewith; (ii) execute and deliver to the Investor such 

documents, instruments, certificates, assignments and other writings, and do such other acts 

necessary or desirable, to evidence, preserve and/or protect the Senior Subordinated Securities 

purchased by the Investor, as Investor may reasonably require; and (iii) do and execute all and 

such further lawful and reasonable acts, conveyances and assurances for the better and more 

effective carrying out of the intents and purposes of this Agreement, as the Investor shall 

reasonably require from time to time. 

Section 6.15 Communications to Holders. Any Holder shall have the right, upon 

five (5) business days prior written notice to the Credit Union or its duly appointed agent to 

obtain a complete list of Holders. In addition, any Holder shall have the right to request that 

the Credit Union or its duly appointed agent send a notice on behalf of such Holder to all 

other Holders at the addresses set forth on the Senior Subordinated Securities Register or, to the 

extent the Credit Union has entered into a depositary arrangement, by means of any procedures 

applicable to such depositary arrangement. 
UST Sequence No. [___] -37- 

ARTICLE VII 

Subordination of the Senior Subordinated Securities 

Section 7.1 Agreement to Subordinate. (a) The Credit Union covenants and agrees, 

and each Holder of Senior Subordinated Securities issued hereunder likewise covenants and 

agrees, that the Senior Subordinated Securities shall be issued subject to the provisions of this 

Article VII; and each Holder of a Senior Subordinated Security, whether upon original issue or 

upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. 

(b) The payment by the Credit Union of the principal of and interest on all Senior 

Subordinated Securities issued hereunder shall, to the extent and in the manner hereinafter set 

forth, be subordinated and subject in right of payment to the prior payment in full of all amounts 

then due and payable in respect of Senior Indebtedness, whether outstanding at the date of this 

Agreement or thereafter incurred. 

(c) No provision of this Article VII shall prevent the occurrence of any Event of 

Default (or any event which, after notice or the lapse of time or both would become, an Event of 

Default) with respect to the Senior Subordinated Securities hereunder. 

Section 7.2 Default on Senior Indebtedness. (a) In the event and during the 

continuation of any default by the Credit Union in the payment of principal, premium, interest or 

any other payment due on any Senior Indebtedness, no payment shall be made by the Credit 

Union with respect to the principal or interest on the Senior Subordinated Securities or any other 

amounts which may be due on the Senior Subordinated Securities pursuant to the terms hereof or 

thereof. 

(b) In the event of the acceleration of the maturity of the Senior Indebtedness, then no 

payment shall be made by the Credit Union with respect to the principal or interest on the Senior 

Subordinated Securities or any other amounts which may be due on the Senior Subordinated 

Securities pursuant to the terms hereof or thereof until the holders of all Senior Indebtedness 

outstanding at the time of such acceleration shall receive payment, in full, of all amounts due on 

or in respect of such Senior Indebtedness (including any amounts due upon acceleration). 

(c) In the event that, notwithstanding the foregoing, any payment is received by any 

Holder of a Senior Subordinated Security, when such payment is prohibited by the preceding 

paragraphs of this Section 7.2, such payment shall be held in trust for the benefit of, and shall be 

paid over or delivered by the Holder of the Senior Subordinated Securities to the holders of 

Senior Indebtedness or their respective representatives, or to the trustee or trustees under any 

indenture pursuant to which any of such Senior Indebtedness may have been issued, as their 

respective interests may appear, but only to the extent of the amounts in respect of such Senior 

Indebtedness and to the extent that the holders of the Senior Indebtedness (or their representative 

or representatives or a trustee) notify the Credit Union in writing within 90 days of such payment 

of the amounts then due and owing on such Senior Indebtedness, and only the amounts specified 

in such notice to the Credit Union shall be paid to the holders of such Senior Indebtedness. The 

Credit Union shall, within ten (10) business days of receipt of such notice, provide Investor with 

(i) a copy of such notice delivered to the Credit Union and (ii) a certificate signed on behalf of 

the Credit Union by a Senior Executive Officer certifying that the information set forth in such 
UST Sequence No. [___] -38- 

notice is true and correct and confirming that the Holder of the Senior Subordinated Securities 

should pay or deliver the amounts specified in such notice in the manner specified therein. 

Section 7.3 Liquidation; Dissolution. (a) Upon any payment by the Credit Union or 

distribution of assets of the Credit Union of any kind or character, whether in cash, property or 

securities, to creditors upon any dissolution, winding-up, liquidation or reorganization of the 

Credit Union, whether voluntary or involuntary or in insolvency, receivership or other 

proceedings, the holders of all Senior Indebtedness of the Credit Union will first be entitled to 

receive payment in full of amounts due on or in respect of such Senior Indebtedness, before any 

payment is made by the Credit Union on account of the principal of or interest on the Senior 

Subordinated Securities or any other amounts which may be due on the Senior Subordinated 

Securities pursuant to the terms hereof or thereof); and upon any such dissolution, winding-up, 

liquidation or reorganization, any payment by the Credit Union, or distribution of assets of the 

Credit Union of any kind or character, whether in cash, property or securities, which the Holder 

of the Senior Subordinated Securities would be entitled to receive from the Credit Union, except 

for the provisions of this Article VII, shall be paid by the Credit Union or by any receiver, 

liquidating trustee, agent or other person making such payment or distribution, or by the Holder 

of the Senior Subordinated Securities under this Agreement if received by them or it, directly to 

the holders of Senior Indebtedness of the Credit Union (pro rata to such holders on the basis of 

the respective amounts of Senior Indebtedness held by such holders, as calculated by the Credit 

Union) or their representative or representatives, or to the trustee or trustees under any indenture 

pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, 

as their respective interests may appear, to the extent necessary to pay all such amounts of Senior 

Indebtedness in full, in money or money’s worth, after giving effect to any concurrent payment 

or distribution to or for the holders of such Senior Indebtedness, before any payment or 

distribution is made to the Holder of the Senior Subordinated Securities. 

(b) In the event that, notwithstanding the foregoing, any payment or distribution of 

assets of the Credit Union of any kind or character prohibited by Section 7.3(a), whether in cash, 

property or securities, shall be received by any Holder of the Senior Subordinated Securities, 

before the amounts of all Senior Indebtedness is paid in full, or provision is made for such 

payment in money in accordance with its terms, such payment or distribution shall be held in 

trust for the benefit of and shall be paid over or delivered by any Holder of a Senior 

Subordinated Security, to the holders of such Senior Indebtedness or their representative or 

representatives, or to the trustee or trustees under any indenture pursuant to which any 

instruments evidencing such Senior Indebtedness may have been issued, as their respective 

interests may appear, as calculated by the Credit Union, for application to the payment of all 

amounts of Senior Indebtedness remaining unpaid to the extent necessary to pay all amounts due 

on or in respect of such Senior Indebtedness in full in money in accordance with its terms, after 

giving effect to any concurrent payment or distribution to or for the benefit of the holders of such 

Senior Indebtedness. In such event, the Credit Union shall provide Investor with a certificate 

signed on behalf of the Credit Union by a Senior Executive Officer confirming that the Holder of 

the Senior Subordinated Securities should pay or deliver such amounts to the holders of such 

Senior Indebtedness. 

(c) For purposes of this Article VII, the words “cash, property or securities” shall not 

be deemed to include Capital Interests in the Credit Union as reorganized or readjusted, or 
UST Sequence No. [___] -39- 

securities of the Credit Union or any other entity provided for by a plan of reorganization or 

readjustment, the payment of which is subordinated at least to the extent provided in this 

Article VII with respect to the Senior Subordinated Securities to the payment of Senior 

Indebtedness that may at the time be outstanding, provided that (i) such Senior Indebtedness is 

assumed by the new entity, if any, resulting from any such reorganization or readjustment, and 

(ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such 

holders, altered by such reorganization or readjustment. The consolidation of the Credit Union 

with, or the merger of the Credit Union into, another person or the liquidation or dissolution of 

the Credit Union following the sale, conveyance, transfer or lease of its property as an entirety, 

or substantially as an entirety, to another person upon the terms and conditions provided for in 

Section 4.2(a) of this Agreement shall not be deemed a dissolution, winding-up, liquidation or 

reorganization for the purposes of this Section 7.3 if such other person shall, as a part of such 

consolidation, merger, sale, conveyance, transfer or lease, comply with the conditions stated in 

Section 4.2(a) of this Agreement. 

Section 7.4 Subrogation. (a) Subject to the payment in full of all of Senior 

Indebtedness, the rights of the Holders of the Senior Subordinated Securities shall be subrogated 

to the rights of the holders of such Senior Indebtedness to receive payments or distributions of 

cash, property or securities of the Credit Union, as the case may be, applicable to such Senior 

Indebtedness until the principal of and interest on the Senior Subordinated Securities shall be 

paid in full; and, for the purposes of such subrogation, no payments or distributions to the 

holders of such Senior Indebtedness of any cash, property or securities to which the Holders of 

the Senior Subordinated Securities would be entitled except for the provisions of this Article VII, 

and no payment pursuant to the provisions of this Article VII to or for the benefit of the holders 

of such Senior Indebtedness by the Holders of the Senior Subordinated Securities shall, as 

between the Credit Union, its creditors other than holders of Senior Indebtedness of the Credit 

Union, and the Holders of the Senior Subordinated Securities, be deemed to be a payment by the 

Credit Union to or on account of such Senior Indebtedness. It is understood that the provisions 

of this Article VII are intended solely for the purposes of defining the relative rights of the 

Holders of the Senior Subordinated Securities, on the one hand, and the holders of such Senior 

Indebtedness on the other hand. 

(b) Nothing contained in this Article VII or elsewhere in this Agreement or in the 

Senior Subordinated Securities is intended to or shall impair, as between the Credit Union, its 

creditors other than the holders of Senior Indebtedness of the Credit Union, and the Holders of 

the Senior Subordinated Securities, the obligation of the Credit Union, which is absolute and 

unconditional, to pay to the Holders of the Senior Subordinated Securities the principal of and 

interest on the Senior Subordinated Securities as and when the same shall become due and 

payable in accordance with their terms, or is intended to or shall affect the relative rights of the 

Holders of the Senior Subordinated Securities and creditors of the Credit Union, as the case may 

be, other than the holders of Senior Indebtedness of the Credit Union, as the case may be, nor 

shall anything herein or therein prevent the Holder of any Senior Subordinated Securities from 

exercising all remedies otherwise permitted by applicable law upon default under this 

Agreement, subject to the rights, if any, under this Article VII of the holders of such Senior 

Indebtedness in respect of cash, property or securities of the Credit Union, as the case may be, 

received upon the exercise of any such remedy. 
UST Sequence No. [___] -40- 

Section 7.5 Notice by the Credit Union. (a) The Credit Union shall give prompt 

written notice to the Holders of the Senior Subordinated Securities of any fact known to the 

Credit Union that would prohibit the making of any payment of monies in respect of the Senior 

Subordinated Securities pursuant to the provisions of this Article VII. 

(b) Upon any payment or distribution of assets of the Credit Union referred to in this 

Article VII, the Holders of the Senior Subordinated Securities shall be entitled to conclusively 

rely upon any order or decree entered by any court of competent jurisdiction in which such 

insolvency, receivership, liquidation, reorganization, dissolution, winding-up or similar case or 

proceeding is pending, or a certificate of the liquidating trustee, custodian, receiver, assignee for 

the benefit of creditors, agent or other person making such payment or distribution, delivered to 

the Holders of the Senior Subordinated Securities, for the purpose of ascertaining the persons 

entitled to participate in such payment or distribution, the holders of Senior Indebtedness and 

other indebtedness of the Credit Union, the amount thereof or payable thereon, the amount or 

amounts paid or distributed thereon and all other facts pertinent thereto or to this Article VII. 

Section 7.6 Subordination May Not Be Impaired. (a) No right of any present or future 

holder of any Senior Indebtedness of the Credit Union to enforce subordination as herein 

provided shall at any time in any way be prejudiced or impaired by any act or failure to act on 

the part of the Credit Union, as the case may be, or by any act or failure to act, in good faith, by 

any such holder, or by any noncompliance by the Credit Union, as the case may be, with the 

terms, provisions and covenants of this Agreement, regardless of any knowledge thereof that any 

such holder may have or otherwise be charged with. 

(b) Without in any way limiting the generality of the foregoing paragraph, the holders 

of Senior Indebtedness of the Credit Union may, at any time and from time to time, without the 

consent of or notice to the Holders of the Senior Subordinated Securities, without incurring 

responsibility to the Holders of the Senior Subordinated Securities and without impairing or 

releasing the subordination provided in this Article VII or the obligations hereunder of the 

Holders of the Senior Subordinated Securities to the holders of such Senior Indebtedness, do any 

one or more of the following: (i) change the manner, place or terms of payment or extend the 

time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or 

supplement in any manner such Senior Indebtedness or any instrument evidencing the same or 

any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release 

or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior 

Indebtedness; (iii) release any person liable in any manner for the collection of such Senior 

Indebtedness; and (iv) exercise or refrain from exercising any rights against the Credit Union, as 

the case may be, and any other person. 
UST Sequence No. [___] -41- 

ARTICLE VIII 

Miscellaneous 

Section 8.1 Termination. This Agreement shall terminate upon the earliest to occur 

of: 

(a) termination at any time prior to the Closing: 

(i) by either the Investor or the Credit Union if the Closing shall not have 

occurred by the 30th calendar day following the Signing Date; provided, however, that in 

the event the Closing has not occurred by such 30th calendar day, the parties will consult 

in good faith to determine whether to extend the term of this Agreement, it being 

understood that the parties shall be required to consult only until the fifth calendar day 

after such 30th calendar day and not be under any obligation to extend the term of this 

Agreement thereafter; provided, further, that the right to terminate this Agreement under 

this Section 8.1(a)(i) shall not be available to any party whose breach of any 

representation or warranty or failure to perform any obligation under this Agreement 

shall have caused or resulted in the failure of the Closing to occur on or prior to such 

date; or 

(ii) by either the Investor or the Credit Union in the event that any 

Governmental Entity shall have issued an order, decree or ruling or taken any other 

action restraining, enjoining or otherwise prohibiting the transactions contemplated by 

this Agreement and such order, decree, ruling or other action shall have become final and 

nonappealable; or 

(iii) by the mutual written consent of the Investor and the Credit Union; or 

(b) the date on which all of the Senior Subordinated Securities have been redeemed in 

whole; or 

(c) the date on which the Investor has transferred all of the Senior Subordinated 

Securities to third parties which are not Affiliates of the Investor; or 

(d) if the Closing shall not have occurred by September 30, 2010, on such date. 

In the event of termination of this Agreement as provided in this Section 8.1, this Agreement 

shall forthwith become void and there shall be no liability on the part of either party hereto 

except that nothing herein shall relieve either party from liability for any breach of this 

Agreement. 

Section 8.2 Survival. (a) This Agreement and all representations, warranties, 

covenants and agreements made herein shall survive the Closing without limitation. 

(b) The covenants set forth in Article IV and the agreements set forth in Articles V 

and VI shall, to the extent such covenants do not explicitly terminate at such time as the Investor 

no longer owns any Senior Subordinated Securities, survive the termination of this Agreement 
UST Sequence No. [___] -42- 

pursuant to Section 8.1(c) hereof without limitation until the date on which all of the Senior 

Subordinated Securities have been redeemed in whole. 

Section 8.3 Amendment. Except as otherwise provided herein, no amendment, 

modification, termination or waiver of any provision of this 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) 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 

of an entity as a CDFI by the Fund; provided, further, that, notwithstanding anything else in this 

Section 8.3, 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; (d) amend or waive this Section 8.3 or the definitions of 

the terms used in this Section 8.3 insofar as the definitions affect the substance of this 

Section 8.3; or (e) consent to the assignment, delegation or other transfer by the Credit Union of 

any of its rights and obligations under any Transaction Documents. Any amendment, 

modification, termination, waiver or consent effected in accordance with this Section 8.3 shall be 

binding upon each Holder of the Senior Subordinated Securities at the time outstanding, each 

future Holder of the Senior Subordinated Securities and the Credit Union. No failure or delay by 

any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof 

nor shall any single or partial exercise thereof preclude any other or further exercise of any other 

right, power or privilege. The rights and remedies herein provided shall be cumulative of any 

rights or remedies provided by law. 

Section 8.4 Waiver of Conditions. The conditions to each party’s obligation to 

consummate the Purchase are for the sole benefit of such party and may be waived by such party 

in whole or in part to the extent permitted by applicable law. No waiver will be effective unless 

it is in a writing signed by a duly authorized officer of the waiving party that makes express 

reference to the provision or provisions subject to such waiver. 

Section 8.5 GOVERNING LAW; SUBMISSION TO JURISDICTION, ETC. 

This Agreement and any claim, controversy or dispute arising under or related to this Agreement, 

the relationship of the parties, and/or the interpretation and enforcement of the rights and duties 

of the parties shall be enforced, governed, and construed in all respects (whether in contract or in 

tort) 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. Each of the parties hereto agrees 

(a) to submit to the exclusive jurisdiction and venue of the United States District Court for the 

District of Columbia and the United States Court of Federal Claims for any and all civil actions, 
UST Sequence No. [___] -43- 

suits or proceedings arising out of or relating to this Agreement or the Purchase contemplated 

hereby and (b) that notice may be served upon (i) the Credit Union at the address and in the 

manner set forth for notices to the Credit Union in Section 8.6 and (ii) the Investor at the address 

and in the manner set forth for notices to the Credit Union in Section 8.6, but otherwise in 

accordance with federal law. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH 

OF THE PARTIES HERETO HEREBY UNCONDITIONALLY WAIVES TRIAL BY JURY 

IN ANY CIVIL LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT 

OR THE PURCHASE CONTEMPLATED HEREBY. 

Section 8.6 Notices. Any notice, request, instruction or other document to be given 

hereunder by any party to the other will be in writing and will be deemed to have been duly 

given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of 

receipt, or (b) on the second business day following the date of dispatch if delivered by a 

recognized next day courier service. All notices to the Credit Union shall be delivered as set 

forth in Schedule A, or pursuant to such other instruction as may be designated in writing by the 

Credit Union to the Investor. All notices to the Holders of Senior Subordinated Securities shall 

be delivered in writing, mailed first-class postage prepaid, to each Holder of a Senior 

Subordinated Security at the address of such Holder as it appears in the Senior Subordinated 

Securities Register. All notices to the Investor shall be delivered as set forth below, or pursuant 

to such other instructions as may be designated in writing by the Investor to the Credit Union. 

If to the Investor: 

United States Department of the Treasury 

1500 Pennsylvania Avenue, NW 

Washington, D.C. 20220 

Attention: Chief Counsel, Office of Financial Stability 

Facsimile: (202) 927-9225 

E-mail: CDCINotice@do.treas.gov

with a copy to: 

E-mail: OFSChiefCounselNotices@do.treas.gov 

Section 8.7 Assignment. Neither this Agreement nor any right, remedy, obligation nor 

liability arising hereunder or by reason hereof shall be assignable by any party hereto without the 

prior written consent of the other party, and any attempt to assign any right, remedy, obligation 

or liability hereunder without such consent shall be void, except (a) an assignment, in the case of 

a merger, consolidation, statutory share exchange or similar transaction that requires the approval 

of the Credit Union’s Interest Holders or other equity securityholders (a “Business 

Combination”) where such party is not the surviving entity, or a sale of substantially all of its 

assets, to the entity which is the survivor of such Business Combination or the purchaser in such 

sale, (b) an assignment of certain rights as provided in Section 4.1(c) or (c) an assignment by the 

Investor of this Agreement to an Affiliate of the Investor; provided that, if the Investor assigns 

this Agreement to an Affiliate, the Investor shall be relieved of its obligations under this 

Agreement but (i) all rights, remedies and obligations of the Investor hereunder shall continue 

and be enforceable by such Affiliate, (ii) the Credit Union’s obligations and liabilities hereunder 
UST Sequence No. [___] -44- 

shall continue to be outstanding and (iii) all references to the Investor herein shall be deemed to 

be references to such Affiliate. 

Section 8.8 Severability. If any provision of this Agreement or the Senior 

Subordinated Securities, or the application thereof to any person or circumstance, is determined 

by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining 

provisions hereof, or the application of such provision to persons or circumstances other than 

those as to which it has been held invalid or unenforceable, will remain in full force and effect 

and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal 

substance of the transactions contemplated hereby is not affected in any manner materially 

adverse to any party. Upon such determination, the parties shall negotiate in good faith in an 

effort to agree upon a suitable and equitable substitute provision to effect the original intent of 

the parties. 

Section 8.9 No Third-Party Beneficiaries. Other than as expressly provided herein, 

nothing contained in this Agreement, expressed or implied, is intended to confer upon any person 

or entity other than the Credit Union, the Investor, any Holder of the Senior Subordinated 

Securities and any Indemnitee any benefit, right or remedies. 

Section 8.10 Tax Treatment of Senior Subordinated Securities. The Investor and the 

Credit Union agree that, for all tax purposes, the Senior Subordinated Securities will be treated 

as debt instruments and not as stock or equity of the Credit Union. 

Section 8.11 Specific Performance. The parties agree that irreparable damage would 

occur in the event that any of the provisions of this Agreement were not performed in accordance 

with their specific terms. It is accordingly agreed that the parties shall be entitled (without the 

necessity of posting a bond) to specific performance of the terms hereof, this being in addition to 

any other remedies to which they are entitled at law or equity. 

* * * 
UST Sequence No. [___] 

ANNEX A 

FORM OF SENIOR SUBORDINATED SECURITIES

[SEE ATTACHED] 
UST Sequence No. [___] 

ANNEX B 

FORM OF OFFICER’S CERTIFICATE

OFFICER’S CERTIFICATE 

OF 

[CREDIT UNION] 

In connection with that certain letter agreement, dated [____________], 2010 

(the “Agreement”) by and between [CREDIT UNION] (the “Credit Union”) and the United 

States Department of the Treasury which incorporates that certain Securities Purchase 

Agreement –Standard Terms referred to therein (the “Standard Terms”), the undersigned does 

hereby certify as follows: 

1. I am a duly elected/appointed [____________] of the Credit Union. 

2. The representations and warranties of the Credit Union set forth in 

Section 3.1 of the Standard Terms are true and correct in all respects as though as of the date 

hereof (other than representations and warranties that by their terms speak as of another date, 

which representations and warranties shall be true and correct in all respects as of such other 

date), and the Credit Union has performed in all material respects all obligations required to be 

performed by it under the Agreement. 

3. The Credit Union has effected such changes to its Benefit Plans with 

respect to its Senior Executive Officers and any other employee of the Credit Union or its 

Affiliates subject to Section 111 of EESA, as implemented by any Compensation Regulations 

(and to the extent necessary for such changes to be legally enforceable, each of its Senior 

Executive Officers and other employees has duly consented in writing to such changes), as may 

be necessary, during the Relevant Period, in order to comply with Section 111 of EESA or the 

Compensation Regulations. 

4. The copies of the Charter and bylaws of the Credit Union attached hereto 

as Exhibit A are true, complete and correct as of the date hereof. 

5. The copy of the CDFI Application attached hereto as Exhibit B and the 

information therein [when taken together with the CDFI Application Update attached hereto as 

Exhibit C] is true, complete and correct as of the date hereof. 

6. [Attached hereto as Exhibit [C][D] is a true, complete and correct copy of 

the SCP Notice][Forty-five days have since the Credit Union submitted a Secondary Capital Plan 

related to the Senior Subordinated Securities to its Appropriate Supervisory Authority and such 

Secondary Capital Plan has neither been approved or disapproved]. 
UST Sequence No. [___] -2- 

The foregoing certifications are made and delivered as of [_________] pursuant to 

Section 2.3 of the Standard Terms. 

Capitalized terms used and not otherwise defined herein shall have the meanings assigned 

to them in the Standard Terms. 

[SIGNATURE PAGE FOLLOWS] 
UST Sequence No. [___] 

IN WITNESS WHEREOF, this Officer’s Certificate has been duly executed and 

delivered as of the [__] day of [__________], 20[__]. 

[CREDIT UNION] 

By: ____________________________________ 

Name: 

Title: 
UST Sequence No. [___] C-1 

ANNEX C 

FORM OF WAIVER

In consideration for the benefits I will receive as a result of the participation of [NAME 

OF CREDIT UNION] (together with its subsidiaries and affiliates, the “Credit Union”) in the 

United States Department of the Treasury’s (“Treasury”) Community Development Capital 

Initiative and/or any other economic stabilization program implemented by Treasury under the 

Emergency Economic Stabilization Act of 2008 (as amended, supplemented or otherwise 

modified, “EESA”) (any such initiative or program, including the Community Development 

Capital Initiative, a “Program”), I hereby voluntarily waive any claim against the United States 

(and each of its departments and agencies) or the Credit Union or any of its directors, officers, 

employees and agents for any changes to my compensation or benefits that are required to 

comply with the executive compensation and corporate governance requirements of Section 111 

of EESA, as implemented by any guidance or regulation thereunder, including the rules set forth 

in 31 C.F.R. Part 30, or any other guidance or regulations under EESA, and the applicable 

requirements of the Securities Purchase Agreement by and between the Credit Union and 

Treasury dated as of [ ], 2010, as amended (such requirements, the “Limitations”). 

I acknowledge that the Limitations may require modification or termination of the 

employment, compensation, bonus, incentive, severance, retention and other benefit plans, 

arrangements, policies and agreements (including so-called “golden parachute” agreements), 

whether or not in writing, that I may have with the Credit Union or in which I may participate as 

they relate to the period the United States holds any equity or debt securities of the Credit Union 

acquired through a Program or for any other period applicable under such Program or 

Limitations, as the case may be, and I hereby consent to all such modifications. 

This waiver includes all claims I may have under the laws of the United States or any 

other jurisdiction (whether or not in existence as of the date hereof) related to the requirements 

imposed by the Limitations, including without limitation a claim for any compensation or other 

payments or benefits I would otherwise receive, any challenge to the process by which the 

Limitations are or were adopted and any tort or constitutional claim about the effect of the 

Limitations on my employment relationship and I hereby agree that I will not at any time initiate, 

or cause or permit to be initiated on my behalf, any such claim against the United States (or any 

of its departments or agencies) or the Credit Union or any of its directors, officers, employees or 

agents in or before any local, state, federal or other agency, court or body. 

I agree that, in the event and to the extent that the Compensation Committee of the Board 

of Directors of the Credit Union or similar governing body (the “Committee”) reasonably 

determines that any compensatory payment or benefit provided to me, including any bonus or 

incentive compensation based on materially inaccurate financial statements or performance 

criteria, would cause the Credit Union to fail to be in compliance with the Limitations (such 

payment or benefit, an “Excess Payment”), upon notification from the Credit Union, I shall repay 

such Excess Payment to the Credit Union within 15 business days. In addition, I agree that the 

Credit Union shall have the right to postpone any such payment or benefit for a reasonable 
UST Sequence No. [___] C-2 

period of time to enable the Committee to determine whether such payment or benefit would 

constitute an Excess Payment. 

I understand that any determination by the Committee as to whether or not, including the 

manner in which, a payment or benefit needs to be modified, terminated or repaid in order for the 

Credit Union to be in compliance with Section 111 of EESA and/or the Limitations shall be a 

final and conclusive determination of the Committee which shall be binding upon me. I further 

understand that the Credit Union is relying on this letter from me in connection with its 

participation in a Program. 

In witness whereof, I execute this waiver on my own behalf, thereby communicating my 

acceptance and acknowledgement to the provisions herein. 

Respectfully, 

By: 

Name: 

Title: 

Date: 
UST Sequence No. [___] D-1 

ANNEX D 

FORM OF OPINION 

(a) The Credit Union has been duly formed and is validly existing as an organization 

of the type described in Schedule A. The Credit Union has all necessary power and authority to 

own, operate and lease its properties and to carry on its business as it is being conducted. 

(b) The Senior Subordinated Securities have been duly and validly authorized, and, 

when executed and delivered pursuant to the Agreement, the Senior Subordinated Securities will 

be the legal, valid and binding obligations of the Credit Union, enforceable in accordance with 

their terms, except as the same may be limited by applicable receivership, insolvency, 

reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights 

generally and general equitable principles, regardless of whether such enforceability is 

considered in a proceeding at law or in equity. 

(c) The Credit Union has the power and authority to execute and deliver the 

Agreement and to carry out its obligations thereunder (which includes the issuance of the Senior 

Subordinated Securities). 

(d) The execution, delivery and performance by the Credit Union of the Agreement 

and the consummation of the transactions contemplated thereby have been duly authorized by all 

necessary entity action on the part of the Credit Union and its Interest Holders, and no further 

approval or authorization is required on the part of the Credit Union. 

(e) The Agreement is a legal, valid and binding obligation of the Credit Union 

enforceable against the Credit Union in accordance with its terms, except as the same may be 

limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws 

affecting the enforcement of creditors’ rights generally and general equitable principles, 

regardless of whether such enforceability is considered in a proceeding at law or in equity. 

(f) The execution and delivery by the Credit Union of the Agreement and the 

performance by the Credit Union of its obligations thereunder (i) do not require any approval by 

any Governmental Entity to be obtained on the part of the Credit Union, except those that have 

been obtained, (ii) do not violate or conflict with any provision of the Charter, (iii) do not violate, 

conflict with, or result in a breach of any provision of, or constitute a default (or an event which, 

with notice or lapse of time or both, would constitute a default) under, or result in the termination 

of, or accelerate the performance required by, or result in a right of termination or acceleration 

of, or result in the creation of, any lien, security interest, charge or encumbrance upon any of the 

properties or assets of the Credit Union or any Credit Union Subsidiary under any of the terms, 

conditions or provisions of its organizational documents or under any agreement, contract, 

indenture, lease, mortgage, power of attorney, evidence of indebtedness, letter of credit, license, 

instrument, obligation, purchase or sales order, or other commitment, whether oral or written, to 

which it is a party or by which it or any of its properties is bound or (iv) do not conflict with, 

breach or result in a violation of, or default under any judgment, decree or order known to us that 

is applicable to the Credit Union and, pursuant to any applicable laws, is issued by any 

Governmental Entity having jurisdiction over the Credit Union. 
UST Sequence No. [___] D-2 

(g) Other than the filings with the applicable Governmental Entity, such filings and 

approvals as are required to be made or obtained under any state “blue sky” laws, if applicable, 

and such as have been made or obtained, no notice to, filing with, exemption or review by, or 

authorization, consent or approval of, any Governmental Entity is required to be made or 

obtained by the Credit Union in connection with the consummation by the Credit Union of the 

Purchase. 

(h) The Credit Union (A) is a regulated community development financial institution 

(a “CDFI”) currently certified by the Community Development Financial Institution Fund (the 

“Fund”) of the United States Department of the Treasury pursuant to 12 C.F.R. 1805.201(a) and 

(B) satisfies all of the eligibility requirements of the Fund’s Community Development Financial 

Institutions Program for a CDFI. 
UST Sequence No. [___] 

ANNEX E 

FORM OF DISCLOSURE AND ACKNOWLEDGMENT

[Name of Credit Union] and the United States Department of the Treasury hereby acknowledge 

and agree that the United States Department of the Treasury has committed [amount of funds] to 

a secondary capital account with [name of Credit Union] under the following terms and 

conditions: 

1. Term. The funds committed to the secondary capital account are committed for a period of 

[8][13] years. 

2. Redemption prior to maturity. Subject to the conditions set forth in 12 CFR 701.34, the funds 

committed to the secondary capital account are redeemable prior to maturity only at the option of 

the [name of Credit Union] and only with the prior approval of the Appropriate Supervisory 

Authority (as defined in that certain Letter Agreement, dated as of the date hereof, between 

[name of Credit Union] and the United States Department of the Treasury). 

3. Uninsured, non-share account. The secondary capital account is not a share account and the 

funds committed to the secondary capital account are not insured by the National Credit Union 

Share Insurance Fund or any other governmental or private entity. 

4. Prepayment risk. Redemption of U.S.C. prior to the account’s original maturity date may 

expose the account investor to the risk of being unable to reinvest the repaid funds at the same 

rate of interest for the balance of the period remaining until the original maturity date. The 

investor acknowledges that it understands and assumes responsibility for prepayment risk 

associated with the [name of Credit Union]’s redemption of the investor’s U.S.C. account prior 

to the original maturity date. 

5. Availability to cover losses. The funds committed to the secondary capital account and any 

interest paid into the account may be used by [name of Credit Union] to cover any and all 

operating losses that exceed the Credit Union’s net worth exclusive of allowance accounts for 

loan losses, and in the event the funds are so used, [name of Credit Union] will under no 

circumstances restore or replenish those funds to the United States Department of the Treasury. 

Dividends are not considered operating losses and are not eligible to be paid out of secondary 

capital. 

6. Accrued interest. By initialing below, [name of Credit Union] and United States Department 

of Treasury agree that accrued interest will be: 

___ Paid into and become part of the secondary capital account; 

_X_ Paid directly to the United States Department of the Treasury; 
UST Sequence No. [___] -2- 

___ Paid into a separate account from which the United States Department of the Treasury may 

make withdrawals; or 

___Any combination of the above provided the details are specified and agreed to in writing. 

7. Subordination of claims. In the event of liquidation of [name of Credit Union], the funds 

committed to the secondary capital account will be subordinate to all other claims on the assets 

of the Credit Union, including claims of member shareholders, creditors and the National Credit 

Union Share Insurance Fund. 

8. Prompt Corrective Action. Under certain net worth classifications (see 12 CFR 

702.204(b)(11), 702.304(b) and 702.305(b), as the case may be), the NCUA Board may prohibit 

[name of Credit Union] from paying principal, dividends or interest on its uninsured secondary 

capital accounts established after August 7, 2000, except that unpaid dividends or interest will 

continue to accrue under the terms of the account to the extent permitted by law. 

[SIGNATURE PAGE FOLLOWS] 
UST Sequence No. [___] 

ACKNOWLEDGED AND AGREED TO this ____day of ______________, 2010 by: 

UNITED STATES DEPARTMENT OF THE TREASURY 

_______________________________________ 

Name: 

Title: 

United States Department of the Treasury 

1500 Pennsylvania Avenue, NW 

Washington, D.C. 20220 

Attention: Chief Counsel, Office of Financial Stability 

[CREDIT UNION] 

_______________________________________ 

Name: 

Title: 
UST Sequence No. [___] F-1 

ANNEX F 

OFFICER’S CERTIFICATE 

OF 

[CREDIT UNION] 

In connection with that certain letter agreement, dated [____________], 2010 

(the “Agreement”) by and between [CREDIT UNION] (the “Credit Union”) and the United 

States Department of the Treasury (“Investor”) which incorporates that certain Securities 

Purchase Agreement – Standard Terms referred to therein (the “Standard Terms”), the 

undersigned does hereby certify as follows: 

1. I am a duly elected/appointed [____________] of the Credit Union. 

2. The Credit Union (as defined in the Standard Terms) (A) is certified by 

the Community Development Financial Institution Fund (the “Fund”) of the United States 

Department of the Treasury as a regulated community development financial institution (a 

“CDFI”); (B) together with its Affiliates collectively meets the eligibility requirements of 12 

C.F.R. 1805.200(b); (C) has a primary mission of promoting community development, as may be 

determined by Investor from time to time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); 

(D) provides Financial Products, Development Services, and/or other similar financing as a 

predominant business activity in arm’s-length transactions; (E) serves a Target Market by 

serving one or more Investment Areas and/or Targeted Populations in the manner set forth in 12 

C.F.R. 1805.201(b)(3); (F) provides Development Services in conjunction with its Financial 

Products, directly, through an Affiliate or through a contract with a third-party provider; (G) 

maintains accountability to residents of the applicable Investment Area(s) or Targeted 

Population(s) through representation on its governing Board of Directors or otherwise; and (H) 

remains a non-governmental entity which is not an agency or instrumentality of the United States 

of America, or any State or political subdivision thereof, as described in 12 C.F.R. 1805. 

201(b)(6) and within the meaning of any supplemental regulations or interpretations of 12 C.F.R. 

1805. 201(b)(6) or such supplemental regulations published by the Fund. As used herein, the 

terms “Affiliates”; “Financial Products”; “Development Services”; “Target Market”; 

“Investment Areas”; and “Targeted Populations” have the meanings ascribed to such terms in 12 

C.F.R. 1805.104. 

3. The information set forth in the CDFI Certification Application delivered 

to the Investor pursuant to Section 2.3(l) of the Standard Terms (the “CDFI Application”), as 

modified by any updates to the CDFI Application provided on [Insert Date(s)] by the Credit 

Union to the Investor on or prior to the date hereof, with respect to the covenants set forth in 

Section 4.1(d)(i)(B) and Section 4.1(d)(i)(D) of the Standard Terms remains true, correct and 

complete as of the date hereof. 
UST Sequence No. [___] F-2 

4. The contracts and material agreements entered into by the Credit Union 

with respect to Development Services previously disclosed to the Investor remain in effect and 

copies of any new contracts and material agreements entered into by the Credit Union with 

respect to Development Services are attached hereto as Exhibit A. 

5. Attached hereto as Exhibit B is (A) a list of the names and addresses of the 

individuals which comprise the board of directors of the Credit Union as of the date hereof, (B) 

to the extent any member of the board of directors listed on Exhibit B was not a member of the 

board of directors as of the last certification provided to the Investor pursuant to Section 

4.1(d)(ii) of the Standard Terms, a narrative describing such individual’s relationship to the 

applicable Investment Area(s) and Targeted Population(s) and (C) to the extent the Credit Union 

maintains accountability to residents of the applicable Investment Area(s) or Target 

Population(s) through means other than representation on its governing board of directors and 

such means have changed since the date of the last certification provided to the Investor pursuant 

to Section 4.1(d)(ii) of the Standard Terms on [Insert Date], a narrative describing such change. 

6. The Credit Union is not an agency of the United States of America, or any 

State or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within the 

meaning of any supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such 

supplemental regulations published by the Fund. 

The foregoing certifications are made and delivered as of [_________] pursuant to 

Section 4.1(d)(ii) of the Standard Terms. 

Capitalized terms used and not otherwise defined herein shall have the meanings assigned 

to them in the Standard Terms. 

[SIGNATURE PAGE FOLLOWS] 
UST Sequence No. [___] F-3 

IN WITNESS WHEREOF, this Officer’s Certificate has been duly executed and 

delivered as of the [__] day of [__________], 20[__]. 

[CREDIT UNION] 

By: ____________________________________ 

Name: 

Title: 
UST Sequence No. [___] Exh. A-1 

EXHIBIT A 

NEW CONTRACTS AND MATERIAL AGREEMENTS 
UST Sequence No. [___] Exh. B-1 

EXHIBIT B 

BOARD OF DIRECTORS 

NAME ADDRESS NARRATIVE1

 

 

1

 To the extent (x) any of the individuals was not a member of the board of directors of the Credit Union 

as of the last certification to the Investor, include a narrative describing such individual’s relationship to 

the applicable Investment Area(s) and Targeted Population(s) or, (y) if the Credit Union maintains 

accountability to residents of the applicable Investment Area(s) or Target Population(s) through means 

other than representation on its governing board of directors and such means have changed since the date 

of the last certification to the Investor, a narrative describing such change.