2c - Credit-Unions-Letter-Agreement

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
(ECIP Credit Unions
Subordinated Debt)

UNITED STATES DEPARTMENT OF THE TREASURY
1500 PENNSYLVANIA AVENUE, NW
WASHINGTON, D.C. 20220
Dear Ladies and Gentlemen:
The credit union set forth on the signature page hereto (the “Credit Union”) intends to
issue in a private placement the subordinated debentures set forth on Schedule A hereto (the
“Subordinated Debt”) and the United States Department of the Treasury (the “Investor”) intends
to purchase from the Credit Union the Subordinated Debt, pursuant to the Emergency Capital
Investment Program.
The purpose of this letter agreement is to confirm the terms and conditions of the
purchase by the Investor of the Subordinated Debt. Except to the extent supplemented or
superseded by the terms set forth herein or in the Schedules hereto, the provisions contained in
the Securities Purchase Agreement – Standard Terms attached hereto as Exhibit A (the
“Securities Purchase Agreement”) are incorporated by reference herein. Terms that are defined
in the Securities Purchase Agreement are used in this letter agreement as so defined. In the event
of any inconsistency between this letter agreement and the Securities Purchase Agreement, the
terms of this letter agreement shall govern.
Each of the Credit Union and the Investor hereby confirms its agreement with the other
party with respect to the issuance by the Credit Union of the Subordinated Debt and the purchase
by the Investor of the Subordinated Debt pursuant to this letter agreement and the Securities
Purchase Agreement on the terms specified on Schedule A hereto.
This letter agreement (including the Schedules hereto), the Securities Purchase
Agreement (including the Annexes thereto) and the Disclosure Schedules (as defined in the
Securities Purchase Agreement) constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties, both written and oral, between the
parties, with respect to the subject matter hereof. This letter agreement constitutes the “Letter
Agreement” referred to in the Securities Purchase Agreement.
This letter agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts will together
constitute the same agreement. In addition, this letter agreement may be executed by electronic
signature in accordance with the E-SIGN Act of 2000. Executed signature pages to this letter
agreement may be delivered by facsimile or electronic mail (including pdf) and such facsimiles
or electronic copies will be deemed as sufficient as if actual signature pages had been delivered.
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FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
In witness whereof, this letter agreement has been duly executed and delivered by the
duly authorized representatives of the parties hereto as of the date written below.
UNITED STATES DEPARTMENT OF THE
TREASURY

By:
Name:
Title:

CREDIT UNION:

By:
Name:
Title:
Date:

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
EXHIBIT A
SECURITIES PURCHASE AGREEMENT

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE A
ADDITIONAL TERMS AND CONDITIONS
Credit Union Information:
Name of the Credit Union:
Corporate or other organizational form of Credit Union:
Jurisdiction of Organization of Credit Union:
Appropriate Supervisory Authority of Credit Union:
Notice Information:
Terms of the Purchase:
Original Aggregate Principal
Amount of Subordinated Debt in
the form of Annex A Purchased:

$______________

Purchase Price:

$______________

Denomination Amount:

$1,000.00

Maximum Aggregate Principal
Amount

Not to exceed [7.5 percent][15 percent][22.5
percent] of the Credit Union’s Total Assets.1

Maturity:

[15][30] years

1

The general investment limit per Credit Union is $250,000,000. In addition, the following limitations apply to the
aggregate principal amount of Subordinated Securities a Credit Union may issue, based on a Credit Union’s Total
Assets (defined as the total consolidated assets as reported on the Credit Union’s most recent Call Report Form 5300
submitted to the National Credit Union Administration (“NCUA”)):
•

Credit Unions with more than $2 billion in Total Assets: the aggregate principal amount of Subordinated
Securities issued may not exceed 7.5% of Total Assets;

•

Credit Unions with at least $500 million and not more than $2 billion in Total Assets: the aggregate
principal amount of Subordinated Securities issued may not exceed 15% of Total Assets; and

•

Credit Unions with less than $500 million in Total Assets: the aggregate principal amount of
Subordinated Securities issued may not exceed 22.5% of Total Assets.

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
Ranking (for low-income
designated credit unions):

As Grandfathered Secondary Capital, subordinate to all
other claims, including those of shareholders, creditors
and the National Credit Union Share Insurance Fund. In
the event of the involuntary liquidation of the Credit
Union, the Subordinated Debt will be subject to the
payout priority for Grandfathered Secondary Capital as
set forth in 12 C.F.R. § 709.5(b)(8) (or any successor
provision).

Ranking (for other credit unions):

Subordinate to all other claims, including those of
shareholders, creditors and the National Credit Union
Insurance Fund. The holder of the Subordinated Debt
will agree to be subject to the same payout priority as set
forth in 12 C.F.R. § 709.5(b)(8) (or any successor
provision) for Grandfathered Secondary Capital, as
though the Subordinated Debt were Grandfathered
Secondary Capital, and will expressly waive any right to
a higher payout priority, including, without limitation,
the priority set forth in 12 C.F.R. § 709.5(b)(5) (or any
successor provision).

Interest Rate:

No interest accrues, nor will any interest be due for the
first 24 months following the Closing Date. Interest will
begin to accrue on the two-year anniversary of the
Closing Date. The first quarterly payment will be due on
the first interest payment date after that date. From the
two-year anniversary of the Closing Date, interest
payments will reflect the Credit Union’s Qualified
Lending compared to the Baseline in accordance with the
terms of the Securities Purchase Agreement.

Interest Payment Dates:

Quarterly, in arrears, on March 15, June 15, September
15 and December 15 of each year.

Restriction on Acceleration:

Principal and interest may only become immediately due
and payable (i.e., accelerated) upon the occurrence of an
Event of Default. In addition, upon the occurrence of an
Event of Default, the (i) accrual of interest after
commencement of the Event of Default, and (ii) the
payment of principal and interest, will be determined
accordance with 12 U.S.C. § 1787 (or any successor
provision) and the NCUA’s regulations in 12 C.F.R. Part
709 (or any successor provision).

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
Securities Law Exemption for Subordinated Debt:
Please select appropriate exemption by checking the box:
Section 3(a)(5) exemption: ☐
Section 4(a)(2) exemption: ☐
Closing (by electronic exchange of documents):
Time of Closing:
Date of Closing:

Wire Information for Closing:

ABA Number:
Bank:
Account Name:
Account Number:
Beneficiary:

Contact for Confirmation of Wire Information: 2
Address for Delivery of Subordinated Debt:
[Address]
[Address]
[Address]
Attention: [•]
Email tracking number for such mailing to: [•]

2

Include the name, title and contact information (telephone number and email address). The contact must be a
person different from the officer executing the Letter Agreement.

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE B
CAPITALIZATION
Capitalization Date:
Capital Interests
Type of Interest (Member Shares, etc.):
Par Value:
Total Authorized:
Outstanding (aggregate dollar amount of Member Shares as of Capitalization Date):
Reserved for Issuance upon Conversion, Exercise or Exchange of Securities:
Remaining Authorized but Unissued:
Subordinated Debt:
Type:
Existing Parity Subordinated Debt:
Amount Outstanding:
Amount Qualifying as Grandfathered Secondary Capital:
Holders of 5% or more of Other Capital Instruments
Potential Sales
Describe any commitments to authorize, issue or sell Capital Interests:
If none, please so indicate by checking the box: ☐.

Primary Address

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE C
MATERIAL ADVERSE EFFECT
List any exceptions to the representation and warranty in Section 3.1(g) of the Securities
Purchase Agreement – Standard Terms.

If none, please so indicate by checking the box: ☐

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE D
LITIGATION
List any exceptions to the representation and warranty in Section 3.1(l) of the Securities
Purchase Agreement – Standard Terms.

If none, please so indicate by checking the box: ☐

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE E
COMPLIANCE WITH LAWS
List any exceptions to the representation and warranty in the second sentence of Section 3.1(m)
of the Securities Purchase Agreement – Standard Terms.

If none, please so indicate by checking the box: ☐

List any exceptions to the representation and warranty in the last sentence of Section 3.1(m) of
the Securities Purchase Agreement – Standard Terms.

If none, please so indicate by checking the box: ☐

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE F
REGULATORY AGREEMENTS
List any exceptions to the representation and warranty in Section 3.1(s) of the Securities
Purchase Agreement – Standard Terms.

If none, please so indicate by checking the box: ☐

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE G
RELATED PARTY TRANSACTIONS
List any exceptions to the representation and warranty in Section 3.1(x) of the Securities
Purchase Agreement – Standard Terms.

If none, please so indicate by checking the box: ☐

FOR REFERENCE ONLY – NOT FOR EXECUTION – UPDATED 3.25.2022
SCHEDULE H
OTHER EXCEPTIONS
List any exceptions to the representations and warranties in the Securities Purchase Agreement –
Standard Terms not covered in Schedules C through G above and, for each listed exception,
identify the applicable representation and warranty in Section 3.1 by the applicable subsection.

If none, please so indicate by checking the box: ☐