**Exhibit 4.1**

 

**ATLANTIC SOUTHERNFINANCIAL GROUP, INC.**

 

**Form of Atlantic Southern Bank Fixed RateSubordinated Debenture**

 

**THIS NOTEIS NOT A DEPOSIT AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSITINSURANCE CORPORATION OR ANY GOVERNMENT AGENCY, AND IS NOT SECURED**

 

**THIS NOTEHAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 OR ANY STATE OROTHER JURISDICTION’S SECURITIES OR BLUE SKY LAWS.  NO SUCH SECURITIES NOR ANY INTEREST THEREINSHALL BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED ORDISPOSED OF ABSENT SUCH REGISTRATION, OR RECEIPT OF AN OPINION OF COUNSELREASONABLY SATISFACTORY TO THE BORROWER, SUCH REGISTRATION IS NOT REQUIRED.**

 
| Registered | Principal |   |
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|       |      |   |
| No.        | Amount:   | $      |
|       |      |   |
|       | CUSIP:    |   |

 

ATLANTIC SOUTHERNBANK

Fixed RateSubordinated Note due September 30, 2018

 

1.        Payment.

 

(a)       ATLANTIC SOUTHERN BANK, a Georgiastate-chartered bank (the “Issuer”), for value received, hereby promisesto pay to                                      ,or its registered assigns, the principal sum of                                          Dollars (U.S.)($                          )on September 30, 2018 (the “Maturity Date”) and to pay interestthereon from September 30, 2008, or from the most recent Interest PaymentDate (as defined below) to which interest has been paid or duly provided for,semi-annually in arrears on June 30 and December 31 of each year(each, an “Interest Payment Date”), commencing on the Interest PaymentDate in December 2008, at an annual rate equal to 12% (the “InterestRate”) will be applied to the principal amount hereof, until the principalhereof is paid or duly provided for or made available for payment, and on anyoverdue principal and (without duplication and to the extent that payment ofsuch interest is enforceable under applicable law) on any overdue installmentof interest at the Interest Rate in effect for each applicable period,compounded semi-annually, from the dates such amounts are due until they arepaid or made available for payment.  Theamount of interest payable for any period will be computed on the basis of theactual number of days in the Distribution Period concerned divided by 360.

 

On or before December 31, 2008, the Issuer may,in its sole discretion and without consent of the Noteholders (as definedbelow), increase retroactive to September 30, 2008 the Interest Rate to bepaid on the Notes (as defined below) to an annual rate not to exceed 12.5% bysending notice to the holder in whose name this Note is registered on theSecurity Register as of the date of such increase.  In no event may the Issuer decrease theInterest Rate without the consent of Noteholders as required by Section 16hereof.

 

(b)      Any payment ofprincipal of or interest on this Note that would otherwise become due and payableon a day which is not a Business Day shall become due and payable on the nextsucceeding Business Day, with the same force and effect as if made on the datefor payment of such principal or interest, and no interest shall accrue inrespect of such payment for the period after such day.  The term “Business Day” means any daythat is not a Saturday or Sunday and that is not a day on which banks in theCities of New York, New York and Wilmington, Delaware or the State of Georgiaare generally authorized or required by law or executive order to be closed.

 

2.        Notes, Noteholders, Fiscal and PayingAgency Agreement.  This Note is oneof a duly authorized issue of notes of the Issuer designated as Fixed RateNotes due September 30, 2018 (herein called the “Notes”), initiallylimited in aggregate principal amount to $10,000,000.  The Issuer intends to act as its own payingagent;

 

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**ATLANTIC SOUTHERN FINANCIAL GROUP, INC.**

 

**Form of Atlantic SouthernBank Fixed Rate Subordinated Debenture**

 

however, the Bank may, for thebenefit of the holders of the Notes (collectively, the “Noteholders”),enter into a Fiscal and Paying Agency Agreement (the “Fiscal and PayingAgency Agreement”) between the Issuer and a Fiscal and Paying Agent.  In the event the Issuer enters into a Fiscaland Paying Agency Agreement, Issuer shall provide notice to the registeredholder of the Notes within 60 day of entering into such agreement, and copiesof such Fiscal and Paying Agency Agreement shall be kept on file and availablefor inspection during normal business hours at the offices of the Fiscal andPaying Agent, or at such other place or places as the Fiscal and Paying Agentshall designate by notice to the holder in whose name this Note is registeredon the Security Register (as defined in Section 10 of this Note).  Such Fiscal and Paying Agency Agreement mayprovide for further rights of the Noteholders and the further rights,limitations of rights, duties and indemnities thereunder of the Issuer and theFiscal and Paying Agent and of the terms upon which the Notes are, and are tobe, authenticated and delivered.

 

3.        Optional Redemption.  Beginning on September 30, 2013, theIssuer may, at its option and subject to obtaining prior approval of theFederal Deposit Insurance Corporation (the “FDIC”), redeem some or allof the Notes on any Interest Payment Date at a redemption price of 100% of theprincipal amount of the redeemed Notes, plus any accrued but unpaid interest.

 

TheIssuer will notify the registered holders of the Notes to be redeemed at least30 but not more than 60 days before the Issuer redeems the Notes.  If the Issuer redeems only some of the Notes,it will select the Notes to be redeemed on principal amounts of $100,000 or anyamount in excess thereof which is an integral multiple of $1,000 by lot, *pro rata* or by another method the Issuer considers fair andappropriate.  All Notes that remainoutstanding after any partial redemption must have a principal amount of$100,000 or any amount in excess thereof which is an integral multiple of$1,000.

 

The Notes, which havebeen called for redemption, shall cease to be outstanding from and after theredemption date.

 

4.        Subordination.  The indebtedness of the Issuer evidenced bythe Notes, including the principal and interest on this Note, shall besubordinate and junior in right of payment to the Issuer’s obligations to itsdepositors, its obligations under bankers’ acceptances and letters of credit,and its other obligations to its general and secured creditors, including, butnot limited to, its obligations to the Federal Reserve Bank of Atlanta, theFDIC and any rights acquired by the FDIC as a result of loans made by the FDICto the Issuer or the purchase or guarantee of any of its assets by the FDIC,pursuant to the provisions of 12 U.S.C. 1823 (c), (d) or (e) whethernow outstanding or hereafter incurred (except any other obligations which rankon a parity with or subordinate to the Notes). In the event of any insolvency, receivership, conservatorship,reorganization, readjustment of debt, marshalling of assets and liabilities orsimilar proceedings or any liquidation or winding up of or relating to theIssuer, whether voluntary or involuntary, all obligations of the Issuer (exceptany other obligations which rank on a parity with or subordinate to the Notes)shall be entitled to be paid in full before any payment shall be made onaccount of the principal of or interest on the Notes, including this Note.  In the event of any such proceeding, afterpayment in full of all sums owing with respect to such prior obligations, theNoteholders, together with the holders of any obligations of the Issuer rankingon a parity with the Notes, shall be entitled to be paid from the remainingassets of the Issuer the unpaid principal thereof, and the unpaid interestthereon, before any payment or other distribution, whether in cash, property orotherwise, shall be made on account of any capital stock or any obligations ofthe Issuer ranking junior to the Notes.

 

Nothingherein shall impair the obligation of the Issuer, which is absolute andunconditional, to pay the principal of and interest on this Note in accordancewith its terms.

 

5.        Consolidation, Merger and Sale ofAssets.  The Issuer shall notconsolidate with or merge into another entity or convey, transfer or lease itsproperties and assets substantially as an entirety to any person, unless:

 

(a)       the continuingentity formed by such consolidation or into which the Issuer is merged or theperson which acquires by conveyance or transfer or which leases the propertiesand assets of the Issuer substantially as an entirety shall be a corporation,association or general partnership or other legal entity organized and existingunder

 

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**ATLANTIC SOUTHERN FINANCIAL GROUP, INC.**

 

**Form of Atlantic SouthernBank Fixed Rate Subordinated Debenture**

 

the laws of the United States of America, any State thereofor the District of Columbia, shall expressly assume, by a supplementalagreement executed and delivered to the Issuer in a satisfactory form, the dueand punctual payment of the principal of and any premium and interest on theNotes, according to their terms, and the due and punctual performance of allcovenants and conditions hereof on the part of the Issuer to be performed orobserved; and

 

(b)      immediatelyafter giving effect to such transaction, no Event of Default (as definedbelow), and no event which, after notice or lapse of time or both, would becomean Event of Default, shall have happened and be continuing.

 

6.        Events of Default; Acceleration; ComplianceCertificate.  If any of the followingevents shall occur and be continuing it shall constitute an event of default(each an “Event of Default”):

 

(a)       the Issuer shall consent to theappointment of a receiver, liquidator, trustee or other similar official in anyliquidation, insolvency or similar proceeding with respect to the Issuer or allor substantially all of its property; or

 

(b)      a court orother governmental agency or body having jurisdiction on the premises shallenter a decree or order for the appointment of a receiver, liquidator, trusteeor other similar official in any liquidation, insolvency or similar proceedingwith respect to the Issuer or all or substantially all of the property of theIssuer, or for the winding up of the affairs or business of the Issuer and suchdecree or order shall have remained in force for 60 days; then, and in eachsuch case, unless the principal of this Note already shall have become due andpayable, the holder of this Note, by notice in writing to the Issuer, maydeclare the principal amount of this Note to be due and payable immediatelyand, upon any such declaration the same shall become and shall be immediatelydue and payable.  The Issuer may waive demand, presentment for payment, notice ofnonpayment, notice of protest, and all other notices.

 

TheIssuer, promptly after the receipt of written notice from the source of theoccurrence of an Event of Default with respect to this Note, shall mail to allNoteholders, at their addresses shown on the Security Register, such writtennotice of the Event of Default, unless such Event of Default shall have beencured or waived before the giving of such notice.  Prior to any acceleration of this Note, theNoteholders holding 66 2/3% in aggregate principal amount of the outstandingNotes may waive any past Event of Default. In addition, the Noteholders holding 66 2/3% in aggregate principalamount of the outstanding Notes may rescind a declaration of acceleration ofthis Note before any judgment has been obtained if (i) the Issuer pays allmatured installments of principal of and interest on this Note (other thaninstallments due by reason of acceleration) and interest on the overdueinstallments and (ii) all other Events of Default with respect to thisNote have been cured or waived.

 

THISNOTE MAY NOT BE REPAID PRIOR TO THE MATURITY DATE, WHETHER PURSUANT TO ANACCELERATION UPON AN EVENT OF DEFAULT OR OTHERWISE, WITHOUT THE PRIOR WRITTENAPPROVAL OF THE FDIC.

 

7.        Failure to Make Payment.  In the event of failure by the Issuer to makeany payment of principal of or interest on this Note (and, in the case ofpayment of interest, such failure to pay shall have continued for 30 days), theIssuer will, upon demand of the holder, pay to the holder the whole amount thendue and payable on this Note for principal and interest (without acceleration),with interest on the overdue principal and interest at the rate borne by thisNote, to the extent permitted by applicable law.  If the Issuer fails to pay such amount uponsuch demand, the holder may, among other things, institute a judicialproceeding for the collection of the sums so due and unpaid, may prosecute suchproceeding to judgment or final decree and may enforce the same against theIssuer and collect the amounts adjudged or decreed to be payable in the mannerprovided by law out of the property of the Issuer.

 

8.        Payment Procedures.  Payment of the principal and interest payableon the Maturity Date will be made by check or wire transfer in immediatelyavailable funds to a bank account in the United States designated by the holderof this Note, upon presentation and surrender of this Note at the main officeof the Issuer in Macon, Georgia, or at such other place or places as the Issuershall designate by notice to the Noteholders, provided that this

 

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**ATLANTIC SOUTHERN FINANCIAL GROUP, INC.**

 

**Form of Atlantic SouthernBank Fixed Rate Subordinated Debenture**

 

Note is presented to the Issuerin time for it to make such payments in such funds in accordance with itsnormal procedures.  Payments of interest(other than interest payable on the Maturity Date) shall be made by wiretransfer or by check mailed to the person entitled thereto, as such person’saddress appears on the Security Register. Interest payable on any Interest Payment Date shall be payable to theholder in whose name this Note is registered at the close of business on the 15thof the month next in which the relevant Interest Payment Date is scheduled tofall, whether or not a Business Day (such date being referred to herein as the “RegularRecord Date”), except that interest not so punctually paid will be paid tothe holder in whose name this Note is registered at the close of business on aspecial record date fixed by the Issuer (a “Special Record Date”),notice of which shall be given to the holder not less than ten calendar daysprior to such Special Record Date (the Regular Record Date and Special RecordDate are referred to herein collectively as the “Record Dates”).  To the extent permitted by applicable law, interestshall accrue at the Interest Rate on any amount of principal of or interest onthis Note not paid when due.  Allpayments on this Note shall be applied first to accrued interest and then thebalance, if any, to principal.

 

9.        Form of Payment, Maintenance ofPayment Office.  Payments ofprincipal of and interest on this Note shall be made in such coin or currencyof the United States of America as at the time of payment shall be legal tenderfor the payment of public and private debts. Until the date on which all of the Notes shall have been surrendered ordelivered to the Issuer for cancellation or destruction, or become due andpayable and a sum sufficient to pay the principal of and interest on all of theNotes have been paid or returned to the Issuer as provided herein.  The Issuer shall at all times maintain anoffice or agency in the City of Macon, Georgia where Notes may be presented orsurrendered for payment.

 

10.      Registration of Transfer, SecurityRegister.  Except as otherwiseprovided on the first page hereof, this Note is transferable in whole orin part, and may be exchanged for a like aggregate principal amount of Notes ofother authorized denominations, by the holder in person, or by his attorneyduly authorized in writing, at the office of the Issuer in the City of Macon,Georgia.  The Issuer shall maintain aregister providing for the registration of the Notes and any exchange ortransfer thereof (the “Security Register”).  Upon surrender or presentation of this Notefor exchange or registration of transfer, the Issuer shall execute and shallauthenticate and deliver in exchange therefor a Note or Notes of like aggregateprincipal amount, each in a denomination of $100,000 or any amount in excessthereof which is an integral multiple of $1,000 (and, in the absence of anopinion of counsel satisfactory to the Issuer to the contrary, bearing therestrictive legend(s) called for by the Offering Memorandum), and that isor are registered in such name or names requested by the holder.  Any Note presented or surrendered forregistration of transfer or for exchange shall (if so required by the Issuer)be duly endorsed, or accompanied by a written instrument of transfer insatisfactory form with such evidence of due authorization and guarantee ofsignature as may reasonably be required by the Issuer, duly executed by theholder or his attorney duly authorized in writing, with such tax identificationnumber or other information for each person in whose name a Note is to beissued, and accompanied by evidence of compliance with any restrictive legend(s) appearingon such Note or Notes as the Issuer may reasonably request to comply withapplicable law.  No exchange orregistration of transfer of this Note shall be made on or after the fifteenthday immediately preceding the Maturity Date.

 

11.      Charges and Transfer Taxes.  No service charge, excluding any cost ofdelivery, shall be imposed for any exchange or registration of transfer of thisNote, but the Issuer may require the payment of a sum sufficient to cover anystamp or other tax or governmental charge that may be imposed in connectiontherewith (or presentation of evidence that such tax or charge has been paid).

 

12.      Ownership.  Prior to due presentment of this Note forregistration of transfer, the Issuer may treat the holder in whose name thisNote is registered in the Security Register as the absolute owner of this Notefor the purpose of receiving payments of principal of and interest on this Noteand for all other purposes whatsoever, whether or not this Note be overdue, andthe Issuer shall not be affected by any notice to the contrary.

 

13.      Priority.  The Notes rank *pari passu*among themselves and *pari passu*, inthe event of any insolvency proceeding, receivership, conservatorship, reorganization,readjustment of debt, marshalling of assets and liabilities or similarproceeding or any liquidation or winding up of the Issuer, with all otherpresent or future

 

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**ATLANTIC SOUTHERN FINANCIAL GROUP, INC.**

 

**Form of Atlantic SouthernBank Fixed Rate Subordinated Debenture**

 

unsecured subordinated debtobligations of the Issuer, except any unsecured subordinated debt which may beexpressly stated to be senior to or subordinate to the Notes.

 

14.      Notices.  All notices to the Issuer under this Noteshall be in writing and addressed to the Issuer at 1701 Bass Road, Macon,Georgia 31210, Attention:  ChiefFinancial Officer, or to such other address as the Issuer may notify to theholder.  All notices to the Noteholdersshall be in writing and sent by first-class mail to each Noteholder at his orits address as set forth in the Security Register.

 

15.      Denominations.  The Notes are issuable only as fullyregistered Notes without interest coupons in denominations of $100,000 or anyamount in excess thereof which is a whole multiple of $1,000.

 

16.      Modification.  Except as set forth in Section 1 hereof,the Issuer may not amend or modify the rights and obligations of the Issuer andthe rights of the holders without the consent of the Noteholders holding66 2/3% in aggregate principal amount of the Notes at the timeoutstanding.  If there is an Event ofDefault, Noteholders holding 66 2/3% in aggregate principal amount of the Notesat the time outstanding, on behalf of all Noteholders, may waive Issuercompliance.  The Issuer shall not enterinto any agreement for the purpose of changing the Maturity Date or the termsof subordination of any Note unless the FDIC has consented to such agreement.

 

17.      Absolute and Unconditional Obligationof the Issuer.  No provisions of thisNote shall alter or impair the obligation of the Issuer, which is absolute andunconditional, to pay the principal of and interest on this Note at the times,places and rate, and in the coin or currency, herein prescribed.

 

18.      Waiver and Consent.  (a) Any consent or waiver given by theholder of this Note shall be conclusive and binding upon such holder and uponall future holders of this Note and of any Note issued upon the registration oftransfer hereof or in exchange therefor or in lieu hereof, whether or notnotation of such consent or waiver is made upon this Note.

 

(b)      No delay or omission of the holder toexercise any right or remedy accruing upon any Event of Default shall impairsuch right or remedy or constitute a waiver of any such Event of Default or anacquiescence therein.

 

(c)       Any insured depository institution whichshall be a holder of this Note or which otherwise shall have any beneficialownership interest in this Note shall, by its acceptance of such Note (orbeneficial interest therein), be deemed to have waived any right of offset withrespect to the indebtedness evidenced thereby.

 

20.      Loans by Issuer.  This Note is ineligible as collateral for aloan by the Issuer.

 

21.      Further Issues.  The Issuer may, without the consent of theholders of the Notes, create and issue additional notes having the same termsand conditions of the Notes (except for the issue date and issue price) .  Such further notes shall be consolidated andform a single series with the Notes.  Anysuch issuance shall be made pursuant to another offering document and willeither be registered or issued pursuant to an exemption from registration underthe Securities Act of 1933, as amended, or similar laws or regulations issuedby the applicable banking agency.

 

22.      Governing Law.  This Note shall be governed by and construedin accordance with applicable federal law and the laws of the State of Georgia.

 

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**ATLANTIC SOUTHERN FINANCIAL GROUP, INC.**

 

**Form of Atlantic SouthernBank Fixed Rate Subordinated Debenture**

 

INWITNESS WHEREOF, the undersigned has caused this Note to be duly executed andits corporate seal to be hereunto affixed and attested.

 
|             |   | ATLANTIC SOUTHERN BANK |
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| ATTEST:          |   |                   |
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| (Corporate Seal) |   |                   |

 

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