FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

(ECIP Credit Unions

Subordinated Debt)

ANNEX A

FORM OF SUBORDINATED SECURITY

(FORM OF FACE OF SECURITY)

THIS SUBORDINATED SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED 

ONLY IN DENOMINATIONS OF A MINIMUM 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 OR IN A DENOMINATION OTHER THAN IN 

A MULTIPLE 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 ISSUER AND THE UNITED STATES 

DEPARTMENT OF THE TREASURY AND SECURITIES PURCHASE AGREEMENT –

STANDARD TERMS (THE “AGREEMENT”), EACH OF WHICH ARE INCORPORATED 

INTO THIS SUBORDINATED SECURITY.

THIS SECURITY IS NOT A SAVINGS ACCOUNT, SHARE 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 ISSUER 

HAVING THE SAME PRIORITY AS SHAREHOLDERS, THE NATIONAL CREDIT 

UNION SHARE INSURANCE FUND OR ANY HIGHER PRIORITY, INCLUDING 

GENERAL AND SECURED CREDITORS OF THE ISSUER. THIS OBLIGATION IS NOT 

SECURED BY THE ISSUER’S ASSETS OR THE ASSETS OF ANY OF ITS AFFILIATES. 

THIS OBLIGATION IS NOT ELIGIBLE AS COLLATERAL FOR ANY LOAN BY THE 

ISSUER.

THE TERMS UNDER WHICH THE ISSUER MAY PREPAY THIS SUBORDINATED 

SECURITY ARE SET FORTH IN THE AGREEMENT.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 

1933 (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 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

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ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN 

EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

[IF THE SECURITIES WERE NOT ISSUED PURSUANT TO THE EXEMPTION UNDER 

SECTION 3(a)(5) OF THE SECURITIES ACT INCLUDE: EACH PURCHASER OF THE 

SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE ISSUER 

MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT 

PROVIDED BY RULE 144A THEREUNDER. ANY TRANSFEREE OF THE SECURITIES 

REPRESENTED BY THIS INSTRUMENT 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 THE SECURITIES REPRESENTED 

BY THIS INSTRUMENT ARE 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 ISSUER AND THE 

INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE 

ISSUER. THE SECURITY REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD 

OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. 

ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT 

WILL BE VOID. 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

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[NAME OF ISSUER]

ISSUANCE DATE: ____________

$______________

SUBORDINATED SECURITY DUE 20[•]1

(Adjustable Rate)

[Issuer], a credit union organized under the laws of [____] and an Eligible Financial 

Institution (the “Issuer,” which term includes any permitted successor thereto), for value received, 

hereby promises to pay the United States Department of the Treasury or registered assigns, by wire 

transfer, the principal sum of $_______________________ (_________________ Dollars) on 

__________________, 20[•] (the “Maturity Date”) (or any earlier redemption date or date of 

acceleration of the Maturity Date) and to pay, in accordance herewith, interest on the outstanding 

principal amount of this Subordinated Security Due 20[•] (this “Subordinated Security”).

This Subordinated Security is one of the Subordinated Securities referred to in 

the Agreement (as defined on the reverse hereof), by and between the Issuer and the United 

States Department of the Treasury. Capitalized terms used in this Subordinated Security are 

defined in the Agreement, unless otherwise expressly stated herein. The Subordinated Security 

is entitled to the benefits of the Agreement and is subject to all the agreements, terms and 

conditions contained therein, all of which are incorporated herein by reference. This 

Subordinated Security may be redeemed, in whole or in part, in accordance with the terms and 

conditions set forth herein.

Section 1. Definitions. As used herein with respect to this Subordinated Security:

(a) “Aggregate Baseline” means, the “Aggregate Baseline Qualified Lending” 

set forth in the Applicable Quarterly Supplemental Report relating to the Last Reset Date. 

Notwithstanding the foregoing, if the Applicable Quarterly Supplemental Report relating to the 

Last Reset Date is restated pursuant to Section 4.1(h)(ii) of the Securities Purchase Agreement, 

“Aggregate Baseline” shall mean the “Aggregate Baseline Qualified Lending” set forth on such 

restated Applicable Quarterly Supplemental Report.

(b) “Aggregate Increase in Qualified Lending” means the Aggregate Qualified 

Lending minus the Aggregate Baseline.

(c) “Aggregate Qualified Lending” means the “Aggregate Annual Qualified 

Lending” set forth in the Applicable Quarterly Supplemental Report relating to the Last Reset 

Date. Notwithstanding the foregoing, if the Applicable Quarterly Supplemental Report relating to 

the Last Reset Date is restated pursuant to Section 4.1(h)(ii) of the Securities Purchase Agreement, 

1 Note to Form: At the Issuer’s option, to be 15 or 30 years from the Original Issue Date. All 

Subordinated Securities issued by the Issuer to the United States Department of the Treasury as 

part of this transaction shall have the same maturity date.
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

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“Aggregate Qualified Lending” shall mean the “Aggregate Annual Qualified Lending” set forth 

on such restated Applicable Quarterly Supplemental Report.

(d) “Annual Reset Period” means the period from and including the First Reset 

Date, to, but excluding, the next following Reset Date, and thereafter each period from and 

including each Reset Date to, but excluding, the next following Reset Date; provided that the last 

Annual Reset Period will be the period from and including the Reset Date immediately preceding 

the Tenth Anniversary to, but excluding, the Last Reset Date. Each Reset Date “relates” to the 

Annual Reset Period commencing on such Reset Date, and vice versa (with the words “related” 

and “relating” having correlative meanings).

(e) “Applicable Interest Rate” has the meaning set forth in Section 2(a).

(f) “Applicable Investment Amount” means the Purchase Price, subject to 

adjustment pursuant to Section 2(a)(v).

(g) “Applicable Quarterly Supplemental Report” means, for the First Reset 

Date, the Quarterly Supplemental Report for the most recently completed calendar quarter for 

which the due date has occurred and, for each Reset Date thereafter, the Quarterly Supplemental 

Report for the most recently completed calendar quarter.

(h) “Average Annual Increase in Qualified Lending” means the “Average 

Annual Increase in Qualified Lending” set forth in the Applicable Quarterly Supplemental Report 

relating to the Last Reset Date, which is based on the Aggregate Increase in Qualified Lending 

over a nine-year period preceding the Last Reset Date. Notwithstanding the foregoing, if the 

Applicable Quarterly Supplemental Report relating to the Last Reset Date is restated pursuant to 

Section 4.1(h)(ii) of the Securities Purchase Agreement, “Average Annual Increase in Qualified 

Lending” shall mean the “Average Annual Increase in Qualified Lending” set forth on such 

restated Applicable Quarterly Supplemental Report.

(i) “Average Applicable Investment Amount” means the “Average Applicable 

Investment Amount” set forth in the Applicable Quarterly Supplemental Report relating to the Last 

Reset Date.

(j) “Baseline” means the “Baseline Qualified Lending” set forth on the Initial 

Supplemental Report, subject to adjustment pursuant to Section 2(a)(iv). Notwithstanding the 

foregoing, if the Initial Supplemental Report is restated pursuant to Section 4.1(h)(ii) of the 

Securities Purchase Agreement, “Baseline” shall mean the “Baseline Qualified Lending” set forth 

on such restated Initial Supplemental Report, subject to adjustment pursuant to Section 2(a)(iv).

(k) “Business Combination” means a merger, consolidation, statutory share 

exchange or similar transaction that requires the approval of the Issuer’s Members.

(l) “Business Day” means 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 action to close.

(m) “First Reset Date” means the Second Anniversary.
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

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(n) “Initial Supplemental Report” means the supplemental report delivered by 

the Issuer to the Treasury prior to the Original Issue Date pursuant to the Agreement.

(o) “Interest Payment Date” means March 15, June 15, September 15 and 

December 15 of each year.

(p) “Interest Period” means the period from and including any Interest Payment 

Date to, but excluding, the next Interest Payment Date; provided, however, the initial Interest 

Period shall be the period from and including the Second Anniversary to, but excluding, the next 

succeeding Interest Payment Date. Interest Payment Dates and Interest Periods will not be 

adjusted for Business Days.

(q) “Last Reset Date” means the Interest Payment Date immediately following 

the Tenth Anniversary, provided that if the Tenth Anniversary is an Interest Payment Date, then 

the Last Reset Date shall be the date of the Tenth Anniversary.

(r) “Ninth Anniversary” means the date that is nine (9) years from the Original 

Issue Date.

(s) “Original Issue Date” means the date on which the Subordinated Securities 

are first issued.

(t) “Percentage Change in Qualified Lending” has the meaning set forth in 

Section 2(a)(ii).

(u) “Person” means a legal person, including any individual, corporation, 

estate, partnership, joint venture, association, joint-stock company, limited liability company or 

trust.

(v) “Purchase Price” means the purchase price for the Subordinated Securities 

set forth on Schedule A to the Letter Agreement.

(w) “Qualified Lending” means, with respect to any particular Reset Date other 

than the Last Reset Date, the “Annual Qualified Lending” set forth in the Applicable Quarterly 

Supplemental Report with respect to such Reset Date. Notwithstanding the foregoing, if the 

Applicable Quarterly Supplemental Report is restated pursuant to Section 4.1(h)(ii) of the

Securities Purchase Agreement, “Qualified Lending” shall mean the “Annual Qualified Lending” 

set forth on such restated Applicable Quarterly Supplemental Report.

(x) “Quarterly Supplemental Report” means a quarterly supplemental report to 

be delivered by the Issuer to Treasury on or after the Original Issue Date pursuant to the 

Agreement.

(y) “Rate Reduction Disqualifying Event” means any breach, violation or 

default by the Issuer of or under (i) (A) Section 104A of the Community Development Banking 

and Financial Institutions Act of 1994 (12 U.S.C. § 4701 et seq.), (B) any regulations promulgated 

thereunder, including, without limitation, the interim final rule promulgated by Treasury setting 

forth restrictions on executive compensation, share buybacks and dividends applicable to 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-6

participants in the Emergency Capital Investment Program, originally codified at 31 C.F.R. Part 

35, or (C) any additional rules or regulations established in connection with the Emergency Capital 

Investment Program or (ii) any covenant, agreement or obligation of the Issuer set forth in the 

Agreement or this Subordinated Security, in each case, as determined by Treasury in its sole 

discretion. Notwithstanding the foregoing, a default in the payment of interest shall not give rise 

to a Rate Reduction Disqualifying Event. 

(z) “Rate Reduction Disqualifying Period” means the period from and 

including the Interest Payment Date immediately following the occurrence of a Rate Reduction 

Disqualifying Event (provided that if a Rate Reduction Disqualifying Event occurs on an Interest 

Payment Date, the Rate Reduction Disqualifying Period shall commence on such Interest Payment 

Date), to, but excluding, the Interest Payment Date immediately following the occurrence of a Rate 

Reduction Termination Event. Any failure by Treasury to provide notice of a Rate Reduction 

Disqualifying Event or defect in such notice or the transmission thereof shall not affect the 

occurrence of a Rate Reduction Disqualifying Event or commencement or length of a Rate 

Reduction Disqualifying Period.

(aa) “Rate Reduction Termination Event” means the determination by Treasury, 

in its sole discretion, that the Rate Reduction Disqualifying Event has terminated. For the 

avoidance of doubt, notwithstanding any actual or purported remediation or cure of the breach, 

violation or default giving rise to a Rate Reduction Disqualifying Event by the Issuer, a Rate 

Reduction Disqualifying Event shall be ongoing from and including the occurrence thereof unless 

and until Treasury, in its sole discretion, provides notice to the Issuer of the termination thereof.

(bb) “Regular Record Date” has the meaning set forth in Section 2(b)(i).

(cc) “Reset Date” means, as applicable, the (i) First Reset Date, (ii) (x) if the 

First Reset Date is not an Interest Payment Date, each Interest Payment Date immediately 

following each annual anniversary of the First Reset Date through the Interest Payment Date 

immediately following the Ninth Anniversary or (y) if the First Reset Date is an Interest Payment 

Date, each Interest Payment Date occurring on each annual anniversary of the First Reset Date 

through the Interest Payment Date occurring on the Ninth Anniversary, and (iii) the Last Reset 

Date. Reset Dates will not be adjusted for Business Days.

(dd) “Second Anniversary” means the date that is two (2) years from the Original 

Issue Date.

(ee) “Tenth Anniversary” means the date that is ten (10) years from the Original 

Issue Date.

(ff) “Treasury” means the United States Department of the Treasury. 

Section 2. Interest.

(a) Rate. 

(i) The “Applicable Interest Rate” shall be determined as follows: 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-7

(A) From the Original Issue Date to, but excluding, the First Reset Date, 

the interest rate on this Subordinated Security shall be zero percent (0%) per annum;

(B) From and including the First Reset Date, to, but excluding, the Last 

Reset Date, during each applicable Annual Reset Period, the interest rate on this 

Subordinated Security shall be the applicable rate, expressed as a percentage per 

annum, set forth in column “A” of the table in Section 2(a)(iii), in each case 

determined by reference to the Applicable Quarterly Supplemental Report 

submitted to Treasury for the Reset Date relating to such Annual Reset Period; 

provided that if the Issuer shall fail to timely submit a complete and accurate 

Applicable Quarterly Supplemental Report during any Annual Reset Period, the 

interest rate on this Subordinated Security for the next Annual Reset Period shall 

be 2.0%; 

(C) From and including the Last Reset Date, to, but excluding, the 

Maturity Date, the interest rate on this Subordinated Security shall be the applicable 

rate, expressed as a percentage per annum, set forth in column “B” of the table in 

Section 2(a)(iii), determined by reference to the Applicable Quarterly Supplemental 

Report submitted to Treasury and relating to the Last Reset Date; provided that if 

the Issuer shall fail to timely submit a complete and accurate Applicable Quarterly 

Supplemental Report during the Annual Reset Period preceding the Last Reset 

Date, the interest rate on this Subordinated Security shall be 2.0% from and 

including the Last Reset Date; and

(D) Notwithstanding the foregoing, during any Rate Reduction 

Disqualifying Period, the Applicable Interest Rate shall be 2.0%.

(ii) The “Percentage Change in Qualified Lending” used to determine the 

Applicable Interest Rate for any Reset Date shall be the result of the following formulas, 

as applicable, expressed as a percentage:

(A) With respect to each Reset Date other than the Last Reset Date: 

(i)(x) the Qualified Lending set forth in the Applicable Quarterly Supplemental 

Report minus (y) the Baseline, divided by (ii) the Applicable Investment Amount, 

and multiplied by (iii) 100.

(B) With respect to the Last Reset Date: (i) the Average Annual 

Increase in Qualified Lending, divided by (ii) the Average Applicable Investment 

Amount, and multiplied by (iii) 100.

(iii) The following table shall be used for determining the Applicable Interest 

Rate: 

If the Percentage Change in 

Qualified Lending is:

Column “A” – rate in 

effect during Annual 

Reset Periods

Column “B” – rate in 

effect from and 

including the Last Reset 

Date

Less than 200% of the Applicable 2.0% 2.0% 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-8

Investment Amount (in the case of 

Section 2(a)(ii)(A)) or the Average 

Applicable Investment Amount (in the 

case of Section 2(a)(ii)(B))

More than or equal to 200%, but less 

than or equal to 400% of the 

Applicable Investment Amount (in the 

case of Section 2(a)(ii)(A)) or the 

Average Applicable Investment 

Amount (in the case of Section 

2(a)(ii)(B))

1.25% 1.25% 

More than 400% of the Applicable 

Investment Amount (in the case of 

Section 2(a)(ii)(A)) or the Average 

Applicable Investment Amount (in the 

case of Section 2(a)(ii)(B))

0.5% 0.5% 

(iv) If the Issuer has consummated or consummates a Business Combination, 

any other merger or consolidation with or acquisition of another entity, since and including, 

the quarter ended on September 30, 2020, then, with respect to each such transaction, the 

Baseline shall be increased and, thereafter for each Annual Reset Period, the Baseline shall 

be the “Adjusted Baseline Qualified Lending” as calculated and set forth on the Applicable 

Quarterly Supplemental Report submitted to Treasury for the Reset Date relating to such 

Annual Reset Period. Such Adjusted Baseline Qualified Lending shall also factor into the 

determination of the Aggregate Baseline, as provided in the instructions for the Quarterly 

Supplemental Reports. 

(v) If the Issuer has consummated or consummates a Business Combination, 

any other merger or consolidation with or acquisition of another entity that has also issued 

preferred stock or subordinated debt to Treasury through Treasury’s Emergency Capital 

Investment Program, the Applicable Investment Amount shall be adjusted to reflect the 

amount of the preferred stock or subordinated debt, as the case may be, issued by such 

entity to Treasury and, from and after any such Business Combination, or other merger, 

consolidation or acquisition, the Applicable Investment Amount shall be the “Adjusted 

Investment Amount” set forth on the Applicable Quarterly Supplemental Report submitted

to Treasury for the Reset Date. Such adjustments shall also factor into the determination of 

the Average Applicable Investment Amount, as provided in the instructions for the 

Quarterly Supplemental Reports.

(b) Payment of Principal and Interest. 

(i) The interest installment so payable, and punctually paid or duly provided 

for, on any Interest Payment Date occurring after the Second Anniversary will be paid in 

arrears to the Person in whose name this Subordinated Security is registered at the close of 

business on the regular record date for such installment of interest, which date shall be at 

the close of business on the first (1st) calendar day (whether or not a Business Day) of the 

month in which each Interest Payment Date occurs (each such date, the “Regular Record 

Date”). Any such installment of interest (other than Deferred Interest) not punctually paid 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-9

or duly provided for shall forthwith cease to be payable to the Holders on such Regular 

Record Date and shall be paid to the Person in whose name this Subordinated Security is 

registered at the close of business on the date preceding the next Interest Payment Date, on 

the next Interest Payment Date, along with all other amounts then due and payable. In no 

event, however, shall interest exceed the maximum rate permitted by applicable law. The 

amount of interest payable hereon shall be computed on the basis of a 360-day year 

comprised of twelve 30-day months. 

(ii) If an Interest Payment Date or the Maturity Date falls on a day that is not a 

Business Day, the related payment of principal or interest will be paid on the next Business 

Day, with the same force and effect as if made on such date, and no interest on such 

payments will accrue from and after such Interest Payment Date or Maturity Date, as the 

case may be. Interest payable on the Maturity Date of the Subordinated Securities will be 

paid to the registered Holder to whom the principal is payable upon presentation and 

surrender for cancellation.

(iii) As provided in the Agreement, in certain circumstances an installment of 

interest may be deferred, and any such Deferred Interest shall be paid in accordance with 

the Agreement. 

Section 3. Method of Payment.

The principal of this Subordinated Security shall be payable upon surrender hereof 

and interest on this Subordinated Security shall be payable at the office or agency of the Issuer or 

an agent appointed for that purpose in any coin or currency of the United States of America that at 

the time of payment is legal tender for payment of public and private debts; provided, however, 

that payment of interest shall be made by the Issuer to the Holders of this Subordinated Security

entitled thereto as shown on the Subordinated Securities Register by wire transfer of immediately 

available funds to any account with a banking institution located in the United States designated 

by such Holder no later than the related Regular Record Date.

Section 4. Subordination. The indebtedness evidenced by this Subordinated Security is, to 

the extent provided in the Agreement, subordinate to all other claims on the assets of the Issuer, 

including claims of Members, general and secured creditors and the National Credit Union Share 

Insurance Fund. Each Holder of this Subordinated Security, by accepting the same agrees to and 

shall be bound by such provisions of the Agreement. Each Holder hereof, by its, his or her 

acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions 

contained herein and in the Agreement by each holder of Senior Indebtedness, whether now 

outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. 

Without limiting the foregoing, if the Issuer is not a low-income designated Credit Union, the 

Holder of this Subordinated Security also agrees to be subject to the same payout priority as 

Grandfathered Secondary Capital for purposes of the NCUA Regulations, and specifically as set 

forth in 12 C.F.R. § 709.5(b)(8) (or any successor provision), as though this Subordinated Security 

was Grandfathered Secondary Capital, and waives any right to a higher payout priority, including, 

without limitation, the priority set forth in 12 C.F.R. § 709.5(b)(5) (or any successor provision).
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

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The provisions of this Subordinated Security contained on the reverse side hereof shall for all 

purposes have the same effect as though fully set forth on the face hereof.
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly 

executed this _______________ day of____________, ______________.

[NAME OF ISSUER]

By: _______________________________

Name:

Title:

Attest:

By: _______________________________

Name:

Title:
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-12

(FORM OF REVERSE OF SECURITY)

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

(herein sometimes referred to as the “Subordinated Securities”), issued or to be issued under and 

pursuant to a Letter Agreement and Securities Purchase Agreement – Standard Terms, dated as of 

_________, 202[•] (as amended, modified or restated from time to time, the “Agreement”), by and 

between the Issuer and the United States Department of the Treasury, as the initial Investor (the 

“Investor”), to which Agreement reference is hereby made for a description of the rights, 

limitations of rights, obligations, duties and immunities thereunder of the Issuer and the Holders 

of the Subordinated Securities. This Subordinated Security is a single series note with a face value 

in aggregate principal amount as set forth on the face of this Subordinated Security.

Defaults and Remedies

If an Event of Default as provided for in Section 5.1 of the Agreement occurs, then 

the principal of, interest accrued on, and other obligations payable under this Subordinated 

Security and the Transaction Documents, will immediately become due and payable. As provided 

in the Agreement, there is no right of acceleration for any default in the payment of principal or 

interest or the performance of any other covenant or obligation by the Issuer under this 

Subordinated Security or the Agreement. Whenever interest on this Subordinated Security has not 

been timely paid (whether due to deferral or otherwise) for one or more Interest Periods, the Issuer 

shall be subject to certain obligations and restrictions (including, without limitation, with respect 

to distributions on its securities) and the Holder of this Subordinated Security shall have certain 

rights (including, without limitation, the right to appoint board observers under certain 

circumstances), all as set forth in the Agreement. 

As provided in the Agreement, in the event the Issuer is subject to liquidation under 

12 U.S.C. § 1787 and the NCUA Regulations in 12 C.F.R. Part 709 (or any successor provisions)

(i) accrual of interest on this Subordinated Security after commencement of the liquidation 

proceedings, and (ii) the payment of principal and interest on this Subordinated Security, will be 

determined in accordance with 12 U.S.C. § 1787 and the NCUA Regulations in 12 C.F.R. Part 709 

(or any successor provisions).

Under certain net worth classifications of the Issuer (see 12 C.F.R. §§ 

702.109(b)(11) and 702.204(b)) the Issuer may be prohibited by the National Credit Union 

Administration from making payments on this Subordinated Security, in which case unpaid 

interest will continue to accrue under the terms hereof to the extent permitted by law.

Amendment and Waiver

No amendment, modification, termination or waiver of any provision of the 

Agreement or the Subordinated Securities or any of the other Transaction Documents will be 

effective unless made in writing and signed by an officer or a duly authorized representative of 

each party to the Agreement, and, in the case of any amendment, modification, termination or 

waiver affecting the Subordinated Securities, the Majority Holders; provided that for so long as 

the Subordinated Securities are outstanding, the Investor may at any time and from time to time 

unilaterally amend the Agreement to the extent the Investor deems necessary, in its sole discretion, 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-13

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 

Investor governing ECIP; provided further that no amendment, modification, termination or 

waiver with respect to the 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 

Subordinated Security; (B) extend any date fixed for any payment of principal or interest; (C) 

change the definition of the terms “Holders” or “Majority Holders” or the percentage of Holders 

which shall be required for Holders to take any action hereunder; or (D) consent to the assignment, 

delegation or other transfer by the Issuer of any of its rights and obligations under any Transaction 

Documents.

Any such consent or waiver by the Holder of this Subordinated Security shall be 

conclusive and binding upon such Holder and upon all future Holders of this Subordinated Security 

and of any Subordinated Security issued in exchange herefor or in place hereof (whether by 

registration of transfer or otherwise), irrespective of whether or not any notation of such consent 

or waiver is made upon this Subordinated Security.

No reference herein to the Agreement and no provision of this Subordinated 

Security or of the Agreement shall alter or impair the obligation of the Issuer, which is absolute 

and unconditional, to pay the principal of and interest on this Subordinated Security at the time 

and place and at the rate and in the money herein prescribed in accordance with the terms hereof. 

Limitation on Dividends and Repurchases of Equity Securities

The Issuer’s ability to declare and pay dividends and purchase or acquire Capital 

Interests or any other equity securities of any kind is limited by the terms of the Agreement. The 

Issuer’s ability to redeem this Subordinated Security is limited by the terms of the Agreement.

Denominations; Transfer; Exchange.

The Subordinated Securities are issuable only in registered form without coupons 

in authorized denominations of a minimum of $1,000.00 and integral multiples of $1,000.00 in 

excess thereof. As provided in the Agreement, this Subordinated Security is transferable by the 

Holder hereof on the Subordinated Securities Register maintained by the Issuer or its agent, upon 

surrender of this Subordinated Security for registration of transfer at the office or agency of the 

Issuer or its agent, accompanied by a written instrument or instruments of transfer in form 

satisfactory to the Issuer duly executed by the Holder hereof or its, his or her attorney duly 

authorized in writing, and thereupon one or more new Subordinated Securities of authorized 

denominations and for the same aggregate principal amount will be issued to the designated 

transferee or transferees. No service charge will be made for any such registration of transfer, but 

the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge 

payable in relation thereto.

Prior to due presentment for registration of transfer of this Subordinated Security, 

the Issuer and any agent thereof may deem and treat the Holder hereof as the absolute owner hereof 

(whether or not this Subordinated Security shall be overdue and notwithstanding any notice of 

ownership or writing hereon made) for the purpose of receiving payment of or on account of the 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-14

principal hereof and (subject to the Agreement) interest due hereon and for all other purposes, and 

none of the Issuer or any agent thereof shall be affected by any notice to the contrary.

No Recourse Against Others

No recourse shall be had for the payment of the principal of or interest on this 

Subordinated Security, or for any claim based hereon, or otherwise in respect hereof, or based on 

or in respect of the Agreement or any other Transaction Document, against any incorporator, 

holder of any Capital Interests or other equity of the Issuer, employee, officer or director, as such, 

past, present or future, as such, of the Issuer or of any successor thereto, whether by virtue of any 

constitution, statute or rule of law, or by the enforcement of any assessment or penalty or 

otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the 

issuance hereof, expressly waived and released.

Governing Law

THE AGREEMENT AND THIS SUBORDINATED SECURITY SHALL 

EACH BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE 

FEDERAL LAW OF THE UNITED STATES, IF AND TO THE EXTENT SUCH LAW IS 

APPLICABLE AND OTHERWISE IN ACCORDANCE WITH THE LAWS OF THE 

STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE 

PERFORMED ENTIRELY WITHIN SUCH STATE.

Abbreviations

The following abbreviations, when used in the inscription on the face of this 

Subordinated Security, shall be construed as though they were written out in full according to 

applicable laws or regulations:

TEN CON – as tenants in common TEN ENT – as tenants in the entireties 

JT TEN – as joint tenants with right of survival 

UNIF GIFT MIN ACT – under Uniform Gift to Minors Act and not as 

tenants

Additional abbreviations may also be used though not in the above list. 
FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022

D-15

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby assigns and transfers this 

Subordinated Security to:

________________________________________

(Assignee’s social security or tax 

identification number)

________________________________________

(Address and zip code of assignee)

and irrevocably appoints _______________ agent to transfer this Subordinated Security on the 

books of the Issuer. The agent may substitute another to act for him or her.

Date: ______________________

Signature: ________________________________

(Sign exactly as your name appears on the other side of this Subordinated Security)

Signature Guarantee: ________________________

[Signature must be guaranteed by an “eligible 

guarantor institution” that is a bank, stockbroker, 

savings and loan association or credit union meeting 

the requirements of the Registrar, which 

requirements include membership or participation 

in the Securities Transfer Agents Medallion 

Program (“STAMP”) or such other “signature 

guarantee program” as may be determined by the 

Registrar in addition to, or in substitution for, 

STAMP, all in accordance with the Securities 

Exchange Act of 1934, as amended.]