Document:

exv4w1

Exhibit 4.1

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”) (55 WATER STREET, NEW YORK, NEW YORK), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY, AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR CERTIFICATES IN DEFINITIVE
REGISTERED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE (A) BY THE DEPOSITARY TO
A NOMINEE THEREOF OR (B) BY A NOMINEE THEREOF TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR (C) BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR NOMINEE OF
SUCH SUCCESSOR DEPOSITARY.

SEE REVERSE FOR CERTAIN DEFINITIONS

			
	 	 	 
	NUMBER 1
	 	$300,000,000
	 	 	 
	REGISTERED
	 	CUSIP 651229AJ5
	 	 	 
	 
	 	ISIN US651229AJ53

NEWELL RUBBERMAID INC.

10.60% Notes due 2019

          Newell Rubbermaid Inc., a corporation duly organized and existing under the laws of the State
of Delaware (herein referred to as the “Company”), for value received, hereby promises to pay to
Cede & Co. or registered assigns, the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000)
on April 15, 2019 and to pay interest, semi-annually in arrears on April 15 and October 15 of each
year (each, an “Interest Payment Date”), commencing October 15, 2009 on said principal sum at the
rate of 10.60% per annum, from the most recent Interest Payment Date to which interest has been
paid or, if no interest has been paid, from March 31, 2009, until payment of said principal sum has
been made. The interest so payable on any Interest Payment Date will, subject to certain
exceptions provided in the Indenture referred to on the reverse hereof, be paid to the Person in
whose name this Security is registered at the close of business on the April 1 or October 1, as the
case may be (each, a “Record Date”), next preceding such Interest Payment Date. The amount of
interest payable will

 

 

be computed on the basis of a 360-day year of twelve 30-day months. The principal of and
interest on this Security are payable in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts at the office or
agency of the Company in the Place of Payment, and at such other locations as the Company may from
time to time designate. Any interest not punctually paid or duly provided for shall be payable as
provided in said Indenture.

          Reference is made to the further provisions of this Security set forth on the reverse hereof.
Such further provisions shall for all purposes have the same effect as though fully set forth at
this place.

          Unless the certificate of authentication hereon has been executed by the Trustee by the manual
signature of one of its authorized officers, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.

[THIS SPACE INTENTIONALLY

LEFT BLANK]

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          IN WITNESS WHEREOF, THE COMPANY HAS CAUSED THIS INSTRUMENT TO BE DULY EXECUTED UNDER ITS
CORPORATE SEAL.

Dated: March 31, 2009

	 	 	 	 	 	 	 
	 	 	NEWELL RUBBERMAID INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Dale L. Metz
	 	 
	 

	 	Title:
	 	Vice President, Treasurer	 	 

[Corporate Seal]

	 	 	 	 	 
	Attest:
	 	 	 	 
	Name:

	 	 

Dale L. Matschullat
	 	 
	Title:

	 	Corporate Secretary	 	 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

	 	 	 	 	 
	The Bank of New York Mellon Trust Company, N.A., as Trustee, 

certifies that this is one of the Securities of 

the series referred to in the 

within-mentioned Indenture.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

      Authorized Officer
	 	 

Dated: March 31, 2009

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NEWELL RUBBERMAID INC.

10.60% Notes due 2019

          This Security is one of a duly authorized issue of Securities of the Company designated as its
10.60% Notes due 2019 (Securities of such series being hereinafter called the “Securities”),
limited in initial aggregate principal amount to $300,000,000, issued under the senior indenture
dated as of November 1, 1995, (hereinafter called the “Indenture”), between the Company (as
successor to Newell Co.) and The Bank of New York Mellon Trust Company, N.A. , formerly known as
The Bank of New York Trust Company, N.A. ( as successor to JPMorgan Chase Bank, formerly The Chase
Manhattan Bank (National Association)), as trustee (the “Trustee”, which term includes any
successor trustee under the Indenture with respect to the Securities of this series), to which
Indenture reference is hereby made for a statement of the respective rights thereunder of the
Company, the Trustee and any Holder of the Securities, and the terms upon which the Securities are,
and are to be, authenticated and delivered.

          Except as otherwise provided in the Indenture, this Security will be issued in global form
only registered in the name of the Depositary or its nominee. This Security will not be issued in
definitive form, except as otherwise provided in the Indenture, and ownership of this Security
shall be maintained in book-entry form by the Depositary for the accounts of participating
organizations of the Depositary.

          No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and interest on this Security at the times, place and rate, and in the coin and
currency, herein prescribed.

          The interest rate payable on the Securities will be subject to adjustment from time to time if
either Moody’s (as defined below) or S&P (as defined below) or, in either case, any Substitute
Rating Agency (as defined below) downgrades (or downgrades and subsequently upgrades) the debt
rating assigned to the Securities, in the manner described below.

          “Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its
successors.

          “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
and its successors.

          “Substitute Rating Agency” means a “nationally recognized statistical rating organization”
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), selected by the Company (as certified by a resolution of the
Company’s Board of Directors) as a replacement agency for Moody’s, S&P, or both of them, as the
case may be.

          If the rating from Moody’s (or any Substitute Rating Agency) of the Securities is decreased to
a rating set forth in the immediately following table, the interest rate on the

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Securities will increase such that it will equal 10.60% plus the percentage set forth opposite
the ratings from the table below:

	 	 	 
	 	 	Percentage
	Moody’s Rating*	 	Points
	Ba1

	 	0.25
	Ba2

	 	0.50
	Ba3

	 	0.75
	B1 or below

	 	1.00

 

		
	*	 Including the equivalent rating of any Substitute Rating Agency

          If the rating from S&P (or any Substitute Rating Agency) of the Securities is decreased to a
rating set forth in the immediately following table, the interest rate on the Securities will
increase such that it will equal 10.60% plus the percentage set forth opposite the ratings from the
table below:

	 	 	 
	 	 	Percentage
	S&P Rating*	 	Points
	BB+

	 	0.25
	BB

	 	0.50
	BB-

	 	0.75
	B+ or below

	 	1.00

 

		
	*	 Including the equivalent rating of any Substitute Rating Agency

          If at any time the interest rate on the Securities has been adjusted upward as a result of a
decrease in a rating by either Moody’s or S&P (or, in either case, a Substitute Rating Agency), as
the case may be, and subsequently such rating agency increases its rating of the Securities to any
of the threshold ratings set forth above, the interest rate on the Securities will be decreased
such that the interest rate for the Securities will equal 10.60% plus the percentages set forth
opposite the ratings from the tables above in effect immediately following the increase in rating.
If Moody’s (or any Substitute Rating Agency) decreases and subsequently increases its rating of the
Securities to Baa3 (or its equivalent, in the case of a Substitute Rating Agency) or higher, and
S&P (or any Substitute Rating Agency thereof) decreases and subsequently increases its rating to
BBB- (or its equivalent, in the case of a Substitute Rating Agency) or higher, the interest rate on
the Securities will be decreased to 10.60%. In addition, the interest rates on the Securities will
permanently cease to be subject to any adjustment described above (notwithstanding any subsequent
decrease in the ratings by either or both rating agencies) if the Securities become A3 and A- (or
the equivalent of either such rating, in the case of a Substitute Rating Agency) or higher by
Moody’s and S&P (or, in either case, a Substitute Rating Agency thereof), respectively (or one of
these ratings if the Securities are only rated by one rating agency).

          Each adjustment required by any decrease or increase in a rating set forth above, whether
occasioned by the action of Moody’s or S&P (or, in either case, a Substitute Rating Agency), shall
be made independent of (and in addition to) any and all other adjustments. In no event shall (1)
the interest rate for the Securities be reduced to below 10.60% or (2) the total

5

 

increase in the interest rate on the Securities exceed 2.00% above the interest rate payable
on the Securities on the date of their issuance.

          No adjustments in the interest rate of the Securities shall be made solely as a result of a
rating agency ceasing to provide a rating of the Securities. If at any time Moody’s or S&P ceases
to provide a rating of the Securities for a reason beyond the Company’s control, the Company will
use its commercially reasonable efforts to obtain a rating of the Securities from a Substitute
Rating Agency, to the extent one exists, and if a Substitute Rating Agency exists, for purposes of
determining any increase or decrease in the interest rate on the Securities pursuant to the tables
above:

          (1) such Substitute Rating Agency will be substituted for the last rating agency to provide a
rating of the Securities but which has since ceased to provide such rating;

          (2) the relative rating scale used by such Substitute Rating Agency to assign ratings to
senior unsecured debt will be determined in good faith by an independent investment banking
institution of national standing appointed by the Company and, for purposes of determining the
applicable ratings included in the applicable table above with respect to such Substitute Rating
Agency, such ratings will be deemed to be the equivalent ratings used by Moody’s or S&P, as
applicable, in such table; and

          (3) the interest rate on the Securities will increase or decrease, as the case may be, such
that the interest rate equals 10.60% plus the appropriate percentage, if any, set forth opposite
the rating from such Substitute Rating Agency in the applicable table above (taking into account
the provisions of the second bullet point above) (plus any applicable percentage resulting from a
decreased rating by the other rating agency).

For so long as only one of Moody’s or S&P provides a rating of the Securities and no Substitute
Rating Agency is offered to replace the other rating agency, any subsequent increase or decrease in
the interest rate of the Securities necessitated by a reduction or increase in the rating by the
agency providing the rating shall be twice the percentage set forth in the applicable table above.
For so long as none of Moody’s, S&P or a Substitute Rating Agency provides a rating of the
Securities, the interest rate on the Securities will increase to, or remain at, as the case may be,
2.00% above the interest rate payable on the Securities on the date of their issuance. If Moody’s
or S&P either ceases to rate the Securities for reasons within the Company’s control or ceases to
make a rating of the Securities publicly available for reasons within the Company’s control, the
Company will not be entitled to obtain a rating from a Substitute Rating Agency and the increase or
decrease in the interest rate of the Securities shall be determined in the manner described above
as if either only one or no rating agency provides a rating of the Securities, as the case may be.

          Any interest rate increase or decrease described above will take effect on the next business
day after the rating change has occurred.

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          If the interest rate payable on the Securities is increased as described above, the term
“interest,” as used with respect to the Securities, will be deemed to include any such additional
interest unless the context otherwise requires.

          Securities will be redeemable in whole or in part, at the option of the Company at any time
and from time to time prior to maturity (any such date of redemption, the “Redemption Date”), on
not less than 30 or more than 60 days’ notice mailed to Holders thereof, at a redemption price (the
“Redemption Price”) equal to the greater of (a) 100% of the principal amount of the Securities
being redeemed on the Redemption Date and (b) the sum of the present values of the remaining
scheduled payments of principal and interest on the Securities being redeemed on that Redemption
Date (not including any portion of any payments of interest accrued to the Redemption Date),
discounted to the Redemption Date on a semi-annual basis at the Treasury Rate (as defined below),
plus 50 basis points, as determined by a Reference Treasury Dealer (as defined below), plus, in the
case of both (a) and (b) above, accrued and unpaid interest on the Securities being redeemed to the
Redemption Date. Notwithstanding the foregoing, installments of interest on Securities that are
due and payable on Interest Payment Dates falling on or prior to a Redemption Date will be payable
on the Interest Payment Date to the registered Holders as of the close of business on the relevant
Record Date. The Redemption Price will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. Once notice of redemption is mailed, the Securities called for redemption
will become due and payable on the Redemption Date and at the Redemption Price, plus accrued and
unpaid interest to the Redemption Date. The Securities will be redeemed in increments of $1,000.

          “Treasury Rate” means, with respect to any Redemption Date, the rate per year equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date.

          “Comparable Treasury Issue” means the United States Treasury security selected by the
Reference Treasury Dealer as having a maturity comparable to the remaining term of the Securities
that would be utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Securities.

          “Comparable Treasury Price” means, with respect to any Redemption Date, (a) the average of the
Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (b) if the Company obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations, or (c) if only one Reference Treasury Dealer Quotation is received, such Quotation.

          “Reference Treasury Dealer” means (a) J.P. Morgan Securities Inc. and Banc of America
Securities LLC (or their respective affiliates which are Primary Treasury Dealers) and their
respective successors, provided, however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall
substitute therefor another Primary Treasury Dealer, and (b) any other Primary Treasury Dealer(s)
selected by the Trustee after consultation with the Company.

7

 

          “Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m. (New York City
time) on the third business day preceding such Redemption Date.

          On and after the Redemption Date, interest will cease to accrue on the Securities, or any
portion of the Securities, called for redemption (unless the Company defaults in the payment of the
Redemption Price and accrued interest). On or before the Redemption Date, the Company will deposit
with a Paying Agent (or the Trustee) money sufficient to pay the Redemption Price of and accrued
interest on the Securities to be redeemed on such date. If less than all the Securities are to be
redeemed, the Securities to be redeemed shall be selected by lot by DTC or, if the Securities are
not represented by a global security, by such method as the Trustee shall deem fair and
appropriate.

          If a Change of Control Triggering Event occurs with respect to the Securities, unless the
Company has exercised its option to redeem the Securities as described above, the Company will be
required to make an offer (a “Change of Control Offer”) to each Holder of Securities to repurchase
all or any part (equal to $1,000 or an integral multiple of $1,000 in excess thereof) of that
Holder’s Securities. In a Change of Control Offer, the Company will be required to offer payment in
cash equal to 101% of the aggregate principal amount of Securities repurchased, plus accrued and
unpaid interest, if any, on the Securities repurchased to the date of repurchase (a “Change of
Control Payment”).

          Within 30 days following any Change of Control Triggering Event or, at the Company’s option,
prior to any Change of Control, but after public announcement of the transaction that constitutes
or may constitute the Change of Control, a notice will be mailed to Holders of the Securities
describing the transaction that constitutes or may constitute the Change of Control Triggering
Event and offering to repurchase such Securities on the date specified in the notice, which date
will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (a
“Change of Control Payment Date”). The notice will, if mailed prior to the date of consummation of
the Change of Control, state that the Change of Control Offer is conditioned on the Change of
Control Triggering Event occurring on or prior to the Change of Control Payment Date.

          In order to accept the Change of Control Offer, the Holder must deliver to the Paying Agent,
at least three Business Days prior to the Change of Control Payment Date, this Security together
with the form entitled “Election Form” (which form is annexed hereto) duly completed, or a
telegram, telex, facsimile transmission or a letter from a member of a national securities
exchange, or the National Association of Securities Dealers, Inc. or a commercial bank or trust
company in the United States setting forth:

	 	(i)	 	the name of the Holder of this Security;
	 
	 	(ii)	 	the principal amount of this Security;
	 
	 	(iii)	 	the principal amount of this Security to be repurchased;

8

 

	 	(iv)	 	the certificate number or a description of the tenor and terms
of this Security;
	 
	 	(v)	 	a statement that the Holder is accepting the Change of Control
Offer; and
	 
	 	(vi)	 	a guarantee that this Security, together with the form entitled
“Election Form” duly completed, will be received by the Paying Agent at least
three Business Days prior to the Change of Control Payment Date.

Any exercise by a Holder of its election to accept the Change of Control Offer shall be
irrevocable. The Change of Control Offer may be accepted for less than the entire principal amount
of this Security, but in that event the principal amount of this Security remaining outstanding
after repurchase must be equal to $1,000 or an integral multiple of $1,000 in excess thereof.

          Upon the Change of Control Payment Date, the Company will, to the extent lawful: (a) accept
for payment all Securities or portions of Securities properly tendered and not withdrawn pursuant
to the Change of Control Offer; (b) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Securities or portions of the Securities properly tendered; and
(c) deliver or cause to be delivered to the Trustee the Securities properly accepted together with
an Officers’ Certificate stating the aggregate principal amount of Securities or portions of
Securities being repurchased.

          The Company will not be required to make a Change of Control Offer upon the occurrence of a
Change of Control Triggering Event if a third party makes such an offer in the manner, at the times
and otherwise in compliance with the requirements for an offer made by the Company and the third
party repurchases all Securities properly tendered and not withdrawn under its offer. In addition,
the Company will not repurchase any Securities if there has occurred and is continuing on the
Change of Control Payment Date an Event of Default under the Indenture, other than a Default in the
payment of the Change of Control Payment upon a Change of Control Triggering Event.

          The Company will comply with the requirements of Rule 14e-1 under the Exchange Act, and any
other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the Securities as a result of a Change of Control
Triggering Event. To the extent that the provisions of any securities laws or regulations conflict
with the Change of Control Offer provisions contained herein, the Company will comply with those
securities laws and regulations and will not be deemed to have breached its obligations under the
Change of Control Offer provisions contained herein by virtue of any such conflict.

          For purposes of the Change of Control Offer provisions, the following terms will be
applicable:

          “Change of Control” means the occurrence of any of the following: (1) the direct or indirect
sale, lease, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or more series of related transactions, of all or substantially all of the
Company’s assets and the assets of its subsidiaries, taken as a whole, to any person, other than

9

 

the Company or one of its subsidiaries; (2) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any person becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the Company’s outstanding Voting Stock or other Voting Stock into
which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed measured by
voting power rather than number of shares; (3) the Company consolidates with, or merges with or
into, any person, or any person consolidates with, or merges with or into, the Company, in any such
event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or the
Voting Stock of such other person is converted into or exchanged for cash, securities or other
property, other than any such transaction where the shares of the Company’s Voting Stock
outstanding immediately prior to such transaction constitute, or are converted into or exchanged
for, a majority of the Voting Stock of the surviving person or any direct or indirect parent
company of the surviving person, immediately after giving effect to such transaction; (4) the first
day on which a majority of the members of the Company’s Board of Directors are not Continuing
Directors; or (5) the adoption of a plan relating to the Company’s liquidation or dissolution.

          Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control
under clause (2) above if (i) the Company becomes a direct or indirect wholly-owned subsidiary of a
holding company and (ii)(A) the direct or indirect holders of the Voting Stock of such holding
company immediately following that transaction are substantially the same as the holders of the
Company’s Voting Stock immediately prior to that transaction or (B) immediately following that
transaction no person (other than a holding company satisfying the requirements of this sentence)
is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such
holding company. The term “person,” as used in this definition, has the meaning given thereto in
Section 13(d)(3) of the Exchange Act.

          “Change of Control Triggering Event” means the occurrence of both a Change of Control and a
Rating Event.

          “Continuing Directors” means, as of any date of determination, any member of the Company’s
Board of Directors who (1) was a member of such Board of Directors on the date the Securities were
issued or (2) was nominated for election, elected or appointed to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such Board of Directors at
the time of such nomination, election or appointment (either by a specific vote or by approval of
the Company’s proxy statement in which such member was named as a nominee for election as a
director, without objection to such nomination).

          “Fitch” means Fitch Inc., and its successors.

          “Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by
Fitch, a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and a rating equal to
or higher than BBB- (or the equivalent) by S&P, and a rating equal to or higher than the equivalent
investment grade credit rating from any replacement Rating Agency or Rating Agencies selected by
the Company.

10

 

          “Rating Agencies” means (1) each of Fitch, Moody’s and S&P and (2) if any of Fitch, Moody’s or
S&P ceases to rate the Securities or fails to make a rating of the Securities publicly available
for reasons outside of the Company’s control, a “nationally recognized statistical rating
organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the
Company (as certified by a resolution of the Company’s Board of Directors) as a replacement agency
for Fitch, Moody’s or S&P, or all of them, as the case may be.

          “Rating Event” means, that on any day during the period (the “Trigger Period”) commencing 60
days prior to the first public announcement by the Company of any Change of Control (or pending
Change of Control) and ending 60 days following consummation of such Change of Control (which
Trigger Period will be extended following consummation of a Change of Control for so long as any of
the Rating Agencies has publicly announced that it is considering a possible ratings change), the
Securities cease to have an Investment Grade Rating from at least two of the three Rating Agencies.
Unless at least two of the three Rating Agencies are providing a rating for the Securities at the
commencement of any Trigger Period, the Securities will be deemed to have ceased to have an
Investment Grade Rating from at least two of the three Rating Agencies during that Trigger Period.

          “Voting Stock” means, with respect to any specified “person” (as that term is used in Section
13(d)(3) of the Exchange Act) as of any date, the capital stock of such person that is at the time
entitled to vote generally in the election of the board of directors of such person.

          As provided in the Indenture and subject to certain limitations therein set forth, this
Security may be registered for transfer on the Security Register of the Company, upon surrender of
this Security for registration of transfer at the office or agency of the Company in the Place of
Payment, and at such other locations as the Company may from time to time designate, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or the Holder’s attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.

          The Securities are issuable only as Registered Securities without coupons in the denominations
of $1,000 and any integral multiple thereof. As provided in the Indenture, and subject to certain
limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of
Securities of different authorized denominations, as requested by the Holder surrendering the same.

          No service charge will be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

          Prior to due presentment for registration of transfer of this Security, the Company, the
Trustee, the Security Registrar, the Paying Agent and any agent of any one thereof may treat the
Person in whose name this Security is registered as the owner hereof for all purposes,

11

 

whether or not this Security be overdue, and neither the Company, the Trustee, the Security
Registrar, the Paying Agent nor any such agent shall be affected by notice to the contrary.

          The Company may from time to time, without notice to or the consent of the registered Holders
of the Securities, create and issue further Securities ranking equally and ratably with the
Securities in all respects (or in all respects except for the payment of interest accruing prior to
the issue date of such further Securities or except for the first payment of interest following the
issue date of such further Securities), so that such further Securities shall be consolidated and
form a single series with the Securities and shall have the same terms as to status, redemption or
otherwise as the Securities.

          If an Event of Default, as defined in the Indenture, with respect to the Securities shall
occur, the principal of all the Securities may be declared due and payable in the manner and with
the effect provided in the Indenture.

          The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company with respect to the Securities and
the rights of the Holders of the Securities under the Indenture at any time by the Company with the
consent of the Holders of not less than a majority in aggregate principal amount of the Securities
at the time Outstanding. The Indenture also contains provisions permitting the Holders of not less
than a majority in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration of transfer hereof
or in exchange herefor or in lieu hereof whether or not a notation of such consent or waiver is
made upon this Security.

          No recourse shall be had for the payment of the principal of or the interest on this Security,
or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or any successor corporation, 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 issue hereof, expressly waived and released.

          The Company at its option, subject to the terms and conditions contained in the Indenture, (a)
will be discharged from any and all obligations in respect of the Securities (except for certain
obligations to register the transfer and exchange of such Securities, to replace mutilated,
destroyed, lost or stolen Securities, to compensate, reimburse and indemnify the Trustee, to
maintain an office or agency with respect to the Securities and to hold moneys for payment in
trust) or (b) may omit to comply with certain restrictive covenants contained in the Indenture, in
each case upon irrevocable deposit with the Trustee in trust of money or U.S. government securities
(as described in the Indenture) or a combination thereof, which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money in an amount
sufficient to discharge the principal of and interest on such Securities on the Stated Maturity of
such principal or interest.

12

 

          This Security shall be governed and construed in accordance with the internal laws of the
State of New York, without regard to its conflicts of law principles.

          Except as otherwise defined herein, all terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

          Customary abbreviations may be used in the name of a Holder of Securities or an assignee, such
as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with
right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift
to Minors Act). Additional abbreviations may also be used though not in the above list.

13

 

          FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto

	 	 	 	 	 
	 

	 
	 	 	 	 
	 
	 

	 
	 	 	 	 
	PLEASE INSERT SOCIAL SECURITY 

OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
	 
	 	 	 	 
	 	 	 
	 
	 
	 	 	 	 
	 

	 
	 
	 	 	 	 
	 

	 
	 
	 	 	 	 
	 

(Please print or typewrite name and address

including postal zip code of assignee)

the within Security and all rights thereunder, and hereby irrevocably constitutes and appoints

 

Attorney to transfer said Security on the books of the Company, with full power of substitution in
the premises.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

NOTICE: The signature to this

assignment must correspond with

the name as written upon the

face of the within instrument

in every particular, without

alteration or enlargement or

any change whatever.
	 	 

 

 

 

ELECTION FORM

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER

 

          The undersigned hereby irrevocably requests and instructs the Company to repurchase the within
Security (or the portion thereof specified below), pursuant to its terms, on the Change of Control
Payment Date specified in the Change of Control Offer, for the Change of Control Payment specified
in the within Security, to the undersigned,                                 , at
                                                
               
      (please print or typewrite name
and address of the undersigned).

          For this election to accept the Change of Control Offer to be effective, the Company must
receive, at the address of the Paying Agent set forth below or at such other place or places of
which the Company shall from time to time notify the Holder of the within Security, either (i) the
within Security with this “Election Form” form duly completed, or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United
States setting forth (a) the name of the Holder of the Security, (b) the principal amount of the
Security, (c) the principal amount of the Security to be repurchased, (d) the certificate number or
description of the tenor and terms of the Security, (e) a statement that the option to elect
repurchase is being exercised, and (f) a guarantee stating that the Security to be repurchased,
together with this “Election Form” duly completed will be received by the Paying Agent three
Business Days prior to the Change of Control Payment Date. The address of the Paying Agent is The
Bank of New York Mellon Trust Company, N.A., c/o The Bank of New York, 101 Barclay Street, New
York, New York 10286.

          If less than the entire principal amount of the within Security is to be repurchased, specify
the portion thereof (which principal amount must be $1,000 or an integral multiple of $1,000 in
excess thereof) which the Holder elects to have repurchased: $                    .

2exv4w1

Exhibit 4.1

Capital Plan

Amended and Revised

March 24, 2009

(Approved by the Federal Housing Finance Agency on March 6, 2009)

 

 

Table of Contents

	 	 	 	 	 
	1 Definitions
	 	 	1	 
	2 Capital Structure
	 	 	3	 
	2.1 Authorized Capital Stock
	 	 	3	 
	2.2 Stock Issuance and Retirement Procedures
	 	 	3	 
	2.3 Minimum Investment Requirements
	 	 	4	 
	2.4 Membership Stock Requirements
	 	 	4	 
	2.5 Activity Based Stock Requirements
	 	 	5	 
	3 Rights and Preferences
	 	 	6	 
	3.1 Par Value
	 	 	6	 
	3.2 Ownership of Retained Earnings
	 	 	6	 
	3.3 Voting Rights
	 	 	6	 
	3.4 Dividends
	 	 	6	 
	3.5 Liquidation
	 	 	7	 
	3.6 Merger or Consolidation
	 	 	7	 
	4 Redemption, Repurchase and Transfer
	 	 	8	 
	4.1 Capital Stock Redemption
	 	 	8	 
	4.2 Capital Stock Repurchases
	 	 	11	 
	4.3 Limitations on Capital Stock Redemption or Repurchase
	 	 	12	 
	4.4 Transfer of Excess Stock
	 	 	13	 
	5 Termination of Membership
	 	 	14	 
	5.1 Voluntary Withdrawal from Membership
	 	 	14	 
	5.2 Involuntary Termination of Membership
	 	 	14	 
	5.3 Liquidation of Claims
	 	 	14	 
	6 Conversion
	 	 	16	 
	6.1 Member Opt-Out
	 	 	16	 
	6.2 Member Transition Period
	 	 	17	 
	6.3 Preliminary Estimate of Minimum Investment
	 	 	17	 
	6.4 Conversion Date
	 	 	17	 
	Appendix I
	 	 	19	 

 

 

Capital Plan

1 Definitions

For purposes of this Capital Plan, all capitalized terms used but not defined elsewhere have the
following meanings:

Acquired Member Assets means assets sold to the Bank pursuant to 12 C.F.R. Part 955 and
held on the Bank’s balance sheet.

Activity Based Stock means a subclass of Capital Stock that a Member is required to
purchase and hold in order to obtain an advance and to engage in other transactions with the Bank.

Activity Based Stock Requirement means the level of Activity Based Stock that a Member must
purchase and hold in order to obtain advances and engage in other transactions with the Bank.

Bank means the Federal Home Loan Bank of Des Moines.

Board of Directors means the Board of Directors of the Bank.

Calculation Date means the business day immediately preceding the Conversion Date, on which
each Member’s Minimum Investment will be determined.

Cancellation Fee means the fee the Bank will impose upon a Member that cancels or revokes a
Notice of Redemption or Notice of Withdrawal.

Capital Plan means the Bank’s plan for a new capital structure as required by 12 U.S.C.
1426(b), as approved by the Finance Board.

Capital Stock means the Class B stock authorized under this Capital Plan.

Commitment means any legally binding agreement that requires the Bank to make an advance,
acquire Member assets, or otherwise transact business with a Member.

Conversion Date means the date upon which stock issued by the Bank prior to the
implementation of this Capital Plan is converted into Capital Stock.

Excess Shares or Excess Stock means the amount or shares of each subclass of the
Bank’s Capital Stock held by a Member which exceeds that Member’s Minimum Investment.

Finance Board means the Federal Housing Finance Board, the regulator of the Federal Home
Loan Bank System, or any successor thereto.

1

 

Capital Plan

Member means any institution that has been approved for membership in the Bank and has
purchased the required amount of Membership Stock.

Membership Stock means a subclass of Capital Stock that a Member is required to purchase
and hold as a condition of membership in the Bank.

Membership Stock Requirement means the level of Membership Stock that a Member must
purchase and maintain as a condition of membership.

Minimum Investment means the amount of Membership Stock necessary for a Member to satisfy
its Membership Stock Requirement and the amount of Activity Based Stock necessary for a Member to
satisfy its Activity Based Stock Requirement.

Notice of Redemption means any written request by a Member to the Bank to redeem Capital
Stock.

Notice of Withdrawal means the written notice by a Member to the Bank of that Member’s
intention to withdraw from membership in the Bank.

Opt-out Date means the date 30 calendar days prior to the Conversion Date.

Total Assets means a Member’s total assets as reported to the Member’s primary regulator or
on its audited financial statement.

2

 

Capital Plan

2 Capital Structure

2.1 Authorized Capital Stock

The Bank issues Capital Stock only in accordance with 12 C.F.R. Section 931.2 and in
accordance with this Capital Plan.

Capital Stock is composed of the following subclasses:

	 	 	w Membership Stock; and
	 
	 	 	w Activity Based Stock

2.2 Stock Issuance and Retirement Procedures

The Bank acts as its own transfer agent and issues all stock in book-entry form.

The Bank does not issue fractional shares of Capital Stock. A Member’s Minimum Investment
shall be rounded up to the next $100. Any dividend declared in the form of Capital Stock
shall be rounded down to the next $100 and any fractional shares shall be distributed in the
form of a cash dividend.

Capital Stock may be purchased and held only by Members, former Members that are required to
hold Capital Stock after their membership has terminated in order to support outstanding
advances and other transactions with the Bank, and entities that acquire Members, such as
through mergers or consolidations, but which themselves are not Members.

The Bank issues Capital Stock in a Member’s name, credits the Member’s Membership Stock or
Activity Based Stock balance, as appropriate, and debits the Member’s demand deposit account
for any payment due.

Upon redemption or repurchase of Capital Stock, the Bank retires the stock, debits the
Member’s Membership Stock or Activity Based Stock balance, as appropriate, and credits the
Member’s demand deposit account with any proceeds.

The Bank shall not permit a Member to convert any Excess Shares of Capital Stock between
sub-classes of Capital Stock.

3

 

	 	 	 
	

	 	Capital Plan

2.3 Minimum Investment Requirements

The Board of Directors has a continuing obligation to review and adjust the Minimum
Investment as necessary to ensure that the Bank remains in compliance with its capital
requirements. The Bank shall provide notice to each stockholder of any adjustment to the
Minimum Investment and the effective date of any such adjustment at least 15 days prior to
the effective date of any such adjustment. Upon the effective date of any such adjustment,
the Bank shall, as applicable, issue any Capital Stock in accordance with section 2.2 or
repurchase any Capital Stock in accordance with section 4.

A Member must comply promptly with any adjustments the Board of Directors makes to the
Minimum Investment.

2.4 Membership Stock Requirements

The Board of Directors has established a Membership Stock Requirement identified in Appendix
I. The Board of Directors may adjust the Membership Stock Requirement within the ranges
specified in Appendix I. Each Member is required to purchase and maintain Membership Stock
in an amount equal to its Membership Stock Requirement, as calculated by the Bank.

At least annually, the Bank calculates each Member’s Membership Stock Requirement as a
percentage of Total Assets as of the preceding December 31st. The Bank will notify each
Member of its Membership Stock Requirement at least 15 days prior to the effective date of
any adjustments that the Bank shall make to the Member’s Membership Stock balance as a
result of such annual calculation. If a Member’s Membership Stock Requirement has increased
since the last time the Bank calculated the Member’s Membership Stock Requirement, the Bank
shall issue Membership Stock in accordance with section 2.2.

The Bank, in its discretion, may recalculate any member’s Membership Stock Requirements more
often than annually if the Bank deems it appropriate. The Bank may recalculate a Member’s
Membership Stock Requirement if requested by the Member, or in the Bank’s discretion. In
each of these cases, the Bank will calculate the Membership Stock Requirement based on the
Member’s Total Assets as of the end of the most recent calendar quarter for which financial
information is available.

Notwithstanding any other provision of this Capital Plan, in the event that (a) a member
becomes insolvent or otherwise subject to the appointment of a conservator, receiver or
other legal custodian under federal or state law, and (b) the Bank has terminated the
Member’s membership, then that Member’s Membership Stock Requirement shall be zero.

4

 

	 	 	 
	

	 	Capital Plan

Activity Based Stock Requirements

The Board of Directors has established an Activity Based Stock Requirement identified in
Appendix I. The Board of Directors may adjust the Activity Based Stock Requirement within
the ranges specified in Appendix I. The Board of Directors may apply changes in the
Activity Based Stock Requirement only to new advances and other transactions, or to new and
existing advances and other transactions.

Each Member is required to purchase and maintain Activity Based Stock in an amount equal to
its Activity Based Stock Requirement, as calculated by the Bank, as long as the advance or
other transaction remains recorded on the Bank’s books and records. Acquired Member Assets
held by the Bank on the Conversion Date shall be subject only to capital requirements
specified in contracts in effect at the time the assets were acquired by the Bank prior to
the Conversion Date.

The Bank calculates each Member’s Activity Based Stock Requirement daily. The Bank shall
notify each Member of any increase in its Activity Based Stock Requirement and issue
Activity Based Stock to the Member in accordance with section 2.2.

5

 

	 	 	 
	

	 	Capital Plan

3 Rights and Preferences

3.1 Par Value

Capital Stock shall be issued, transferred, redeemed, and repurchased at a par value of
$100.

3.2 Ownership of Retained Earnings

The retained earnings, paid-in surplus, undivided profits and equity reserves, if any, of
the Bank are owned by the stockholders of Capital Stock in an amount proportional to the
stockholder’s share of the total shares of issued and outstanding Capital Stock.
Stockholders have no right to receive any portion of these items except through the
declaration of a dividend or capital distribution approved by the Board of Directors or upon
liquidation of the Bank.

3.3 Voting Rights

The voting rights associated with Capital Stock are defined in and governed by the Finance
Board’s regulations. No share of Capital Stock shall have any voting preference.

3.4 Dividends

Except as otherwise provided herein or by regulation or statute, the Board of Directors has
sole discretion to determine the amount, form, frequency and timing of dividend payments for
each subclass of Capital Stock. The Board of Directors may declare different dividends for
each subclass of Capital Stock. Dividend payments may be made in the form of cash,
additional shares of Capital Stock, or a combination thereof as determined by the Board of
Directors. Unless the Board of Directors declares otherwise, dividends are non-cumulative.

Dividends may only be paid from current earnings or previously retained earnings. The Board
of Directors may not declare or pay any dividends if the Bank is not in compliance with its
capital requirements or, if after paying the dividend, the Bank would not be in compliance
with its capital requirements.

Each Member will be entitled to receive dividends on Capital Stock held during the
applicable dividend period for the period of time the Member owned the Capital Stock. The
Bank pays dividends on Capital Stock as long as it is issued and outstanding, regardless of
whether a Member has provided a Notice of Redemption or Notice of Withdrawal or a
stockholder has terminated membership for any reason.

6

 

	 	 	 
	

	 	Capital Plan

3.5 Liquidation

If the Bank is liquidated, after payment in full to the Bank’s creditors, the Bank’s
stockholders shall be entitled to receive the par value of their Capital Stock, as well as
any retained earnings, in an amount proportional to the stockholder’s share of the total
shares of Capital Stock.

3.6 Merger or Consolidation

The Board of Directors shall determine the rights and preferences of the Bank’s stockholders
in connection with any merger or consolidation, subject to any terms and conditions imposed
by the Finance Board.

7

 

	 	 	 
	

	 	Capital Plan

4 Redemption, Repurchase and Transfer

4.1 Capital Stock Redemption

Capital Stock is redeemable on five years written notice to the Bank. The Bank shall not be
obligated to redeem a Member’s Capital Stock other than in accordance with the Capital Plan,
and is not permitted to redeem Capital Stock if such redemption would cause the Member to
fail to meet its Minimum Investment.

4.1.1 Notice of Redemption

A Member may redeem Capital Stock by providing a Notice of Redemption to the Bank
specifying the sub-class and the number of shares of Capital Stock to be redeemed.
A Member shall not have more than one Notice of Redemption outstanding at any one
time for the same shares of Capital Stock.

The redemption period commences upon the Bank’s receipt of the Notice of Redemption.
The Bank honors Notices of Redemption in the order in which the Bank receives them.

The Bank shall redeem the Capital Stock identified in a Notice of Redemption
following the expiration of the redemption period and pay the stated par value of
that Capital Stock to the Member in cash in accordance with section 2.2 and subject
to the limitations set forth in section 4.3, unless the Bank exercises its
discretionary authority to repurchase Excess Stock in accordance with section 4.2
prior to that time.

4.1.2 Cancellation of Notice of Redemption

A Member may cancel a Notice of Redemption prior to the end of the redemption period
by providing written notice to the Bank of its intent to cancel its Notice of
Redemption. The Bank will charge the Member a Cancellation Fee equal to the
following:

	 	w	 	one percent of the par value of the shares of Capital Stock subject to the
Notice of Redemption if the Bank receives the cancellation of Notice of
Redemption within one year of the day the Bank received the Notice of
Redemption;
	 
	 	w 	 	 two percent of the par value of the shares of Capital Stock subject to the
Notice of Redemption if the Bank receives the cancellation of Notice of

8

 

	 	 	 
	

	 	Capital Plan

	 	 	 	 Redemption within two years of the day the Bank received the Notice of
Redemption;

	 
	 	w 	 	 three percent of the par value of the shares of Capital Stock subject to the
Notice of Redemption if the Bank receives the cancellation of Notice of
Redemption within three years of the day the Bank received the Notice of
Redemption;
	 
	 	w 	 	four percent of the par value of the shares of Capital Stock subject to the
Notice of Redemption if the Bank receives the cancellation of Notice of
Redemption within four years of the day the Bank received the Notice of
Redemption;
	 
	 	w 	 	 five percent of the par value of the shares of Capital Stock subject to the
Notice of Redemption if the Bank receives the cancellation of Notice of
Redemption within five years of the day the Bank received the Notice of
Redemption.

The Board of Directors may change the Cancellation Fee to any percentage of the par
value of the shares of Capital Stock subject to the cancelled Notice of Redemption
that is not less than 0.0 percent and not more than the percentages specified in the
preceding paragraph. If the Board of Directors changes the Cancellation Fee, the
Board of Directors will also determine whether the changed Cancellation Fee will
apply to the cancellation of any previously submitted Notice of Redemption as well
as those submitted in the future. Otherwise, the Cancellation Fee in effect at the
time the Bank received the Notice of Redemption will apply to the cancellation of
that Notice of Redemption. The Bank will notify Members in writing at least 15 days
in advance of any changes in the Cancellation Fee.

A Notice of Redemption by a Member (whose membership has not been terminated) shall
be automatically cancelled if, within five business days after the end of the
applicable redemption notice period, the Bank is prevented from redeeming the
Member’s Capital Stock because the Member would fail to maintain its Minimum
Investment after such redemption. The automatic cancellation shall have the same
effect as a voluntary cancellation and the Bank shall impose the Cancellation Fee
described in the preceding paragraph.

9

 

			
	
	 	Capital Plan

4.1.3 Notice of Withdrawal

The Bank’s receipt of a Notice of Withdrawal commences the five-year redemption
period for all Capital Stock held by that Member that is not already subject to a
pending Notice of Redemption. The redemption period for Membership Stock purchased
subsequent to the Bank’s receipt of a Member’s Notice of Withdrawal shall be deemed
to have commenced when the Bank issued such Membership Stock. Following the
expiration of the redemption period, the Bank shall pay the stated par value of the
Capital Stock to the Member in cash, in accordance with section 2.2 and subject to
the limitations set forth in sections 4.3 and 5.3.

4.1.4 Cancellation of Notice of Withdrawal

A Member may cancel a Notice of Withdrawal prior to the end of the redemption period
by providing written notice to the Bank of its intent to cancel its Notice of
Withdrawal. The Bank will charge the Member a Cancellation Fee on the par value of
the Member’s Capital Stock balance as described in section 4.1.2.

4.1.5 Termination of Membership

If an institution’s membership has been terminated as a result of a merger or
consolidation into a nonmember or into a member of another Federal Home Loan Bank,
the redemption period for any Capital Stock that is not subject to a pending Notice
of Redemption shall be deemed to commence on the date on which the charter of the
former member is terminated.

If an institution’s membership is involuntarily terminated, the redemption period
for all Capital Stock owned by the former member and not already subject to a
pending Notice of Redemption shall commence on the date that the Board of Directors
terminates the institution’s membership.

10

 

			
	
	 	Capital Plan

4.2 Capital Stock Repurchases

The Bank, in its discretion, may repurchase any Excess Shares without regard to any
redemption period.

4.2.1 Membership Stock

Upon 15 days written notice to Members, the Bank may, in its sole discretion,
repurchase Membership Stock which the Bank determines is Excess Stock without regard
to the five-year redemption notice period. The Bank shall repurchase any such
Excess Stock in accordance with section 2.2 and subject to the limitations set forth
in section 4.3.

Any repurchase of Membership Stock automatically reduces the amount of Membership
Stock that is the subject of any outstanding Notice of Redemption by the amount of
Membership Stock repurchased. If a Member has Membership Stock that is subject to
more than one Notice of Redemption, the Bank will automatically reduce the amount of
Membership Stock that is subject to such outstanding Notices of Redemption in the
same order in which the Bank received such Notices of Redemption.

A Member’s submission of a Notice of Withdrawal in accordance with section 5.1, or
its termination of membership in any other manner, will not, in and of itself, cause
any Membership Stock to be deemed Excess Stock for purposes of this section.

4.2.2 Activity Based Stock

Each Member may hold Excess Shares of Activity Based Stock up to the operational
threshold established in Appendix I. The Board of Directors may, from time to time,
increase or decrease the operational threshold within ranges specified in Appendix
I. The Bank will notify each Member of a change in the operational threshold at
least 15 days prior to implementing the change.

The Bank will repurchase any Excess Shares of Activity Based Stock that exceed the
operational threshold established in Appendix I, on at least a scheduled, monthly
basis in accordance with section 2.2 and subject to the limitations set forth in
section 4.3. The Bank will notify Members at least 15 days in advance of the
scheduled date(s) for repurchasing Activity Based Stock and prior to implementing
any changes in the scheduled date(s) for repurchasing Activity Based Stock.

11

 

			
	
	 	Capital Plan

4.3 Limitations on Capital Stock Redemption or Repurchase

The Bank will not redeem or repurchase Capital Stock:

	 	w 	 	without the prior written approval of the Finance Board, if the Finance Board or the
Board of Directors has determined that the Bank has incurred, or is likely to incur,
losses that result in or are likely to result in charges against the capital of the
Bank. This prohibition shall apply even if the Bank is in compliance with its capital
requirements, and shall remain in effect for however long the Bank continues to incur
such charges or until the Finance Board determines that such charges are not expected
to continue; or
	 
	 	w 	 	if the redemption or repurchase would cause the Bank to be out of compliance with
its capital requirements; or
	 
	 	w 	 	if the redemption or repurchase would cause a Member to be out of compliance with
its Minimum Investment; or
	 
	 	w 	 	 if the sum of all requested Capital Stock redemptions that the Bank is scheduled to
make on any date equals or exceeds the amount that would cause the Bank to fall below
its capital requirements, in which case the Bank will process redemptions in the order
in which notification was received, but in
no case will the Bank redeem Capital Stock to the point that it would fail to meet its
capital requirements.

The Bank, upon the approval of its Board of Directors, or of a subcommittee thereof, may
suspend redemption of Capital Stock if the Bank reasonably believes that continued
redemption of Capital Stock would cause the Bank to fail to meet its capital requirements,
would prevent the Bank from maintaining adequate capital against a potential risk that may
not be adequately reflected in its capital requirements, or would otherwise prevent the Bank
from operating in a safe and sound manner. The Bank will notify the Finance Board in
writing within two business days of the date of the decision to suspend the redemption of
Capital Stock, informing the Finance Board of the reasons for the suspension and of the
Bank’s strategies and time frames for addressing the conditions that led to the suspension.
The Finance Board may require the Bank to re-institute the redemption of Capital Stock. The
Bank will not repurchase any Capital Stock without the written permission of the Finance
Board during any period in which the Bank has suspended redemption of Capital Stock under
this paragraph.

12

 

			
	
	 	Capital Plan

4.4 Transfer of Excess Stock

With the prior approval of the Bank, a Member may transfer Excess Stock to another Member
that controls, is controlled by, or is under common control with the Member.

If a Member that has filed a Notice of Redemption transfers Excess Stock that is subject to
that notice to another Member, the transfer shall be deemed to be a cancellation of the
Notice of Redemption on the Excess Stock transferred upon the effective date of the
transfer. The transferring Member shall be responsible for paying any applicable
Cancellation Fees in accordance with section 4.1.2.

If a Member that has filed a Notice of Withdrawal transfers Excess Stock to another Member,
the transfer shall be deemed to be a cancellation of the five-year redemption period on the
Excess Stock transferred. The transferring Member shall be responsible for paying any
applicable Cancellation Fees in accordance with section 4.1.2.

The Bank shall transfer Capital Stock only in accordance with 12 C.F.R. Section 931.6. The
Bank will not approve a Capital Stock transfer if the transfer would result in the
transferring Member being out of compliance with its Minimum Investment. Capital Stock may
be traded only between the Bank and its members. All Capital Stock transfers are to be at
par value and are effective upon being recorded on the appropriate books and records of the
Bank.

13

 

			
	
	 	Capital Plan

5 Termination of Membership

A Member’s submission of a Notice of Withdrawal, or its termination of membership in any other
manner, shall not, in and of itself, cause any Capital Stock to be deemed Excess Stock.

If a former member’s membership has been withdrawn, terminated involuntarily, or terminated as a
result of a merger or consolidation, the Bank shall redeem such former member’s Capital Stock in
accordance with section 4.1 and subject to the limitations in sections 4.3 and 5.3.

5.1 Voluntary Withdrawal from Membership

Any institution may withdraw from membership by providing a Notice of Withdrawal.

A Member that has submitted its Notice of Withdrawal continues to have access to the
benefits of membership until the effective date of its withdrawal, but the Bank does not
have to provide any further services, including advances, that would mature or otherwise
terminate subsequent to the effective date of the withdrawal.

The membership of an institution that has submitted a Notice of Withdrawal shall terminate
five years from the date of the Bank’s receipt of the Member’s Notice of Withdrawal, unless
the institution has cancelled its Notice of Withdrawal prior to that date.

5.2 Involuntary Termination of Membership

The Board of Directors may terminate a Member’s membership pursuant to the Finance Board’s
regulations. A Member whose membership is terminated involuntarily shall cease being a
Member as of the date on which the Board of Directors acts to terminate the membership, and
the institution shall have no right to obtain any of the benefits of membership after that
date, but shall be entitled to receive any dividends declared on its Capital Stock until the
Capital Stock is redeemed or repurchased by the Bank.

5.3 Liquidation of Claims

If an institution withdraws from membership or has its membership terminated, the Bank will
determine an orderly manner for:

	 	w 	 	 liquidating all outstanding indebtedness (including prepayment fees) owed by that
Member to the Bank, and
	 
	 	w 	 	 settling all other claims against the Member.

14

 

			
	
	 	Capital Plan

If an institution that withdraws from membership or has its membership terminated remains
indebted to the Bank or has outstanding any transactions with the Bank after the effective
date of its termination of membership, the Bank shall not redeem or repurchase any Activity
Based Stock if such redemption or repurchase is subject to any of the limitations in section
4.3. The Bank shall redeem or repurchase any Activity Based Stock in accordance with
section 2.2.

15

 

			
	
	 	Capital Plan

6 Conversion

The Bank will convert to the capital structure established by this Capital Plan within 18 months
following Finance Board approval of the Capital Plan.

The Bank will notify each Member of the Conversion Date within 180 days after the Finance Board’s
approval of the Capital Plan.

The Bank will provide each Member with a disclosure document that complies with 12 C.F.R Section
933.5 at least 45 days, but not more than 60 days prior to, the Opt-out Date.

The Bank intends to be in full compliance with its capital requirements at the close of business on
the Conversion Date.

6.1 Member Opt-Out

A Member that does not wish to continue membership under the Capital Plan must provide the
Finance Board and the Bank with a Notice of Withdrawal no later than the Opt-out Date. The
membership of an institution that files a Notice of Withdrawal with the Finance Board on or
before the Opt-out Date shall terminate on the earlier of the Conversion Date or the date
six months from the date the Notice of Withdrawal was filed with the Finance Board. The
Member shall not be subject to a Membership Stock Requirement on the Conversion Date but
shall be subject to the Activity Based Stock Requirement so long as any advance or other
transaction remains recorded on the Bank’s books and records, provided, however, that the
Activity Based Stock Requirement for a Member that has submitted a Notice of Withdrawal on
or before the Opt-Out Date shall be the lesser of the requirement in effect prior to the
Conversion Date or the requirement under this Capital Plan. The Bank’s receipt of the
Notice of Withdrawal commences the five-year redemption period for all Activity Based Stock
held by that Member.

Any Member filing a Notice of Withdrawal with the Finance Board after the Opt-out Date and
before the Conversion Date shall have its existing stock converted into Capital Stock on the
Conversion Date as required by the Capital Plan. The effective date of withdrawal for such
Member shall be five years from the receipt of the Notice of Withdrawal and the five-year
redemption period shall commence on receipt of the Notice of Withdrawal.

16

 

			
	
	 	Capital Plan

6.2 Member Transition Period

Members must comply with the terms of the Capital Plan on the Conversion Date.

Any institution that becomes a Member after the Conversion Date must comply with the Minimum
Investment upon becoming a Member.

6.3 Preliminary Estimate of Minimum Investment

At least 30 days prior to the Conversion Date, the Bank will calculate each Member’s Minimum
Investment as the sum of:

	 	w 	 	 the Membership Stock Requirement based on the Total Assets as of the immediately
preceding December 31st; and
	 
	 	w 	 	the Activity Based Stock Requirement based on the Member’s outstanding advances and
other transactions at the close of business on that date, provided, however, that any
Acquired Member Assets held by the Bank on the Conversion Date shall be subject to
capital requirements specified in contracts in effect at the time the assets were
purchased in lieu of the Activity Based Stock Requirement.

The Bank will notify each Member of the preliminary estimate of the Member’s Minimum
Investment and Excess Stock, if any.

A Member must notify the Bank at least 15 days prior to the Conversion Date that the Member
wants the Bank to repurchase any shares of stock that exceed that Member’s Minimum
Investment on the Conversion Date. If the Bank receives such notice at least 15 days prior
to the Conversion Date, the Bank shall repurchase all such shares on the Conversion Date in
accordance with section 2.2 and subject to the limitations set forth in section 4.3. If the
Bank does not receive such a notice from a Member at least 15 days prior to the Conversion
Date, the Bank shall convert all shares of stock that exceed that Member’s Minimum
Investment on the Conversion Date into Excess Shares of Membership Stock.

6.4 Conversion Date

At the opening of business on the Conversion Date, the Bank will take the following actions
in the order specified for each Member:

	 	a)	 	Calculate a Member’s Minimum Investment at the opening of business on the
Conversion Date as the sum of:

17

 

			
	
	 	Capital Plan

	 	w 	 	 the Membership Stock Requirement based on the Total Assets as of the immediately
preceding December 31st; and
	 
	 	w 	 	the Activity Based Stock Requirement based on the Member’s outstanding advances
and other transactions at the close of business on the Calculation Date, provided,
however, that any Acquired Member Assets held by the Bank on the Conversion Date
shall be subject to capital requirements specified in contracts in effect at the
time the assets were purchased in lieu of the Activity Based Stock Requirement.

	 	b)	 	Convert the Member’s existing shares of stock into an identical number of
shares of Capital Stock by:

	 	w	 	 Crediting the Member’s Membership Stock balance with the lesser of the total
number of shares converted or the number of shares required to meet the Member’s
Membership Stock Requirement;
	 
	 	w	 	 Crediting the Member’s Activity Based Stock balance with the lesser of the
remaining number of shares converted or the number of shares required to meet the
Member’s Activity Based Stock Requirement; and
	 
	 	w	 	 Crediting any remaining existing stock to the Member’s Membership Stock balance
unless the Member has elected to have the Bank repurchase any remaining existing
shares on the Conversion Date.

	 	c)	 	If the Member does not own sufficient Capital Stock to satisfy its Minimum
Investment following the conversion, issue Capital Stock and credit the Member’s
Capital Stock accounts with the number and sub-class of shares that the Member is
required to own on the Conversion Date to meet its Minimum Investment and make a
corresponding debit to the Member’s demand deposit account at the Bank;
	 
	 	d)	 	If the Member has elected to have the Bank repurchase existing stock in excess
of the amount needed to satisfy the Minimum Investment, the Bank will repurchase such
existing shares and make a corresponding credit to the Members’ demand deposit account
at the Bank; and
	 
	 	e)	 	Advise the Member of its Minimum Investment, its Membership Stock balance, its Activity Based
Stock balance, and the amount of any funds credited or debited to the Member’s demand deposit
account at the Bank.

18

 

			
	
	 	Capital Plan

Appendix I

Membership Stock Requirement

Each Member is required to purchase and maintain Membership Stock equal to the following:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Membership Stock	 	Minimum Investment Range1
	 	 	Requirement2	 	Minimum	 	Maximum
	% of Total Assets
	 	0.12%	 	0.10%	 	0.25%
	Membership Stock Cap
	 	$10 million	 	$10 million	 	$30 million
	Membership Stock Floor
	 	$	10,000	 	 	$	10,000	 	 	$	30,000	 

Activity Based Stock Requirement

Each Member is required to purchase and maintain Activity Based Stock equal to the percentage of
the book value on the Bank’s books and records of the following transactions as shown in the table
below.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Activity Based	 	Minimum Investment Range1
	               
Transaction	 	Stock Requirement2	 	Minimum	 	Maximum
	Outstanding Advances
	 	 	4.45	%	 	 	3.0	%	 	 	5.00	%
	Outstanding Acquired Member Assets3
	 	 	4.45	%	 	 	3.0	%	 	 	5.00	%
	Standby Letters of Credit
	 	 	0.00	%4	 	 	0.0	%	 	 	0.175	%
	Advance Commitments
	 	 	0.00	%	 	 	0.0	%	 	 	0.35	%
	Acquired Member Asset Commitments
	 	 	0.00	%	 	 	0.0	%	 	 	0.60	%

Operational
Threshold

Each Member is permitted to retain Excess Shares of Activity Based Stock in an amount not to exceed
the following operational threshold, designed to minimize the number of repurchase transactions for
the Bank and its Members.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Current Operational	 	Operational Threshold Range1
	 	 	Threshold	 	Minimum	 	Maximum
	Operational Threshold
	 	$	50,000	 	 	$	0	 	 	$	250,000	 

 

			
	1	 	Changes to the Minimum Investment and operational threshold ranges constitute amendments to
the Capital Plan and requires approval by the Finance Board.
	 
	2	 	The Board of Directors reviews and adjusts the Membership Stock Requirement, Activity Based
Stock Requirement and the Current Operational Threshold within the established ranges, subject
to the Member notification requirements in section 2.3. Initial requirements and thresholds
that will be applied on the Conversion Date will be disclosed to Members consistent with 12
C.F.R. Section 933.5.
	 
	3	 	Any Acquired Member Assets held by the Bank on the Conversion Date shall be subject to
capital requirements specified in contracts in effect at the time the assets were purchased in
lieu of the initial Activity Based Stock Requirement.
	 
	4	 	Board of Directors approved change of Activity Based Stock Requirement from 0.15% to 0.00% on
October 8, 2008.

19

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