Exhibit 1.1
THE COMMUNITY FINANCIAL CORPORATION
$23,000,000
6.25% Fixed to Floating Rate Subordinated
Notes due February 15, 2025
UNDERWRITING AGREEMENT
February 3, 2015
KEEFE, BRUYETTE & WOODS, INC.
as Representative of
the several Underwriters
c/o Keefe, Bruyette & Woods,
Inc.
787 Seventh Avenue
4
th
Floor
New York, New York 10019
Ladies and Gentlemen:
The Community Financial
Corporation, a Maryland corporation (the “
Company
”), proposes to issue and sell to the underwriters named in
Schedule I
hereto (the “
Underwriters
”) $23,000,000 aggregate principal amount of the Company’s
6.25% Fixed to Floating Rate Subordinated Notes due February 15, 2025 (the “
Securities
”). The Securities are
to be issued pursuant to an indenture dated as of February 6, 2015, (the
“Base Indenture”
) between the Company
and Wilmington Trust, National Association, as trustee (the “
Trustee
”) as supplemented by a supplemental indenture
dated as of February 6, 2015 between the Company and the Trustee (the “First Supplemental Indenture”) and collectively
with the Base Indenture, (the “
Indenture
”). Keefe, Bruyette & Woods, Inc. (“
KBW
”) has
agreed to act as Representative of the Underwriters (in such capacity, the “
Representative
”) in connection with
the offering and sale of the Securities. To the extent there are no additional Underwriters listed on Schedule I, the term “Representative”
as used herein shall mean you, as Underwriters, and the term “Underwriters” shall mean either the singular or the plural,
as the context requires.
The Company understands
that the Underwriters propose to make a public offering of the Securities as soon as the Representative deems advisable after this
Agreement has been executed and delivered. Securities issued in book-entry form shall be issued to Cede & Co. as nominee of
The Depository Trust Company (“
DTC
”) pursuant to a blanket issuer letter of representations, dated January 28,
2015 (the “
DTC Agreement
”), between the Company and DTC.
The Company has filed
with the Securities and Exchange Commission (the “
Commission
”) a registration statement on Form S-3 (No. 333-199455),
including the related preliminary prospectus or prospectus covering the registration of various securities, including the Securities,
under the Securities Act of 1933, as amended (the “
Securities Act
”). Such registration statement has been declared
effective by the Commission, the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the “
1939
Act
”), and the Company has filed such post-effective amendments thereto as may be required prior to the execution of
this Agreement and each such post-effective amendment is effective under the Securities Act. Promptly after execution and delivery
of this Agreement, the Company will prepare and file a prospectus supplement in accordance with the provisions of Rule 430B (“
Rule
430B
”) of the rules and regulations of the Commission under the Securities Act (the “
Securities Act Regulations
”)
and paragraph (b) of Rule 424 (“
Rule 424(b)
”) of the Securities Act Regulations. Any information included in
such prospectus supplement that was omitted from such registration statement at the time it became effective but that is deemed
to be part of such registration statement at the time it became effective pursuant to Rule 430B is referred to as “
Rule
430B Information
.” Each base prospectus and prospectus supplement used in connection with the offering of the Securities
that omitted Rule 430B Information is referred to herein collectively as a “preliminary prospectus.” Such registration
statement, at any given time, including any amendments thereto, including post-effective amendments, to such time, the exhibits
and any schedules thereto at such time, the documents incorporated by reference therein at such time and the documents otherwise
deemed to be a part thereof or included therein by the Securities Act, is referred to herein as the “
Registration Statement
;”
provided, however, that the term “Registration Statement” without reference to a time means such registration statement
as of the time of the first contract of sale for the Securities, which time shall be considered the “new effective date”
of such Registration Statement with respect to the Underwriters and the Securities (within the meaning of Rule 430B(f)(2)); provided,
further, that any registration statement filed pursuant to Rule 462(b) under the Securities Act is referred to herein as the “
Rule
462(b) Registration Statement
”, and after such filing the term “
Registration Statement
” shall include
the Rule 462(b) Registration Statement. The final base prospectus and the prospectus supplement, dated the date hereof, including
the documents incorporated by reference therein, are referred to herein collectively as the “
Prospectus
.”
For purposes of this
Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any term sheet or any amendment
or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (“
EDGAR
”).
All references in this
Agreement to financial statements and schedules and other information which is “contained,” “included”
or “stated” in the Registration Statement, any preliminary prospectus, the Prospectus or the General Disclosure Package
(as defined hereinafter) (or other references of like import) shall be deemed to include all such financial statements and schedules
and other information which is incorporated by reference in the Registration Statement, any preliminary prospectus, the Prospectus
or the General Disclosure Package, as the case may be, prior to the execution of this Agreement; and all references in this Agreement
to amendments or supplements to the Registration Statement, any preliminary prospectus, the Prospectus or the General Disclosure
Package shall be deemed to include the filing of any document under the Securities Exchange Act of 1934, as amended (the “
Exchange
Act
”), which is incorporated by reference in the Registration Statement, such preliminary prospectus, the Prospectus
or the General Disclosure Package, as the case may be, after the execution of this Agreement.
As used in this Agreement:
“
Applicable
Time
” means 4:30 p.m. (Eastern time) on the date of this Agreement or such other time as agreed by the Company and the
Representative.
“
Final Term
Sheet
” means the final term sheet in the form set forth on Schedule II hereto, reflecting the final terms of the Securities.
“
Statutory Prospectus
”
as of any time means the prospectus relating to the Securities that is included in the Registration Statement immediately prior
to that time, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof.
For purposes of this definition, information contained in a form of prospectus that is deemed retroactively to be a part of the
Registration Statement pursuant to Rule 430B shall be considered to be included in the Statutory Prospectus as of the actual time
that form of prospectus is filed with the Commission pursuant to Rule 424(b).
“
Issuer Free
Writing Prospectus
” means any “issuer free writing prospectus,” as defined in Rule 433 of the Securities
Act Regulations (“
Rule 433
”), relating to the Securities that (i) is required to be filed with the Commission
by the Company, (ii) is a Road Show (as hereinafter defined), whether or not required to be filed with the Commission, (iii) the
Final Term Sheet, or (iv) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Securities
or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission
or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
“
Issuer General
Free Writing Prospectus
” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective
investors, as evidenced by its being specified in Schedule III hereto.
“Road Show”
means a “road show” (as defined in Rule 433) relating to the offering of the Securities contemplated hereby that is
a “written communication” (as defined in Rule 405 of the Securities Act Regulations (“
Rule 405
”)).
The “
General
Disclosure Package
” means the Final Term Sheet, the Issuer General Free Writing Prospectus issued at or prior to the
Applicable Time and the Statutory Prospectus, all considered together.
The Company confirms
as follows its agreement with the Representative and the other Underwriters.
Section
1.
(a) The Company represents and warrants to, and agrees with, each of the Underwriters that, as of the date hereof,
as of the Applicable Time and as of the Closing Date:
(i) (A)
At the time of filing the Registration Statement, any 462(b) Registration Statement and any post-effective amendments thereto,
(B) at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning
of Rule 164(h)(2) of the Securities Act Regulations) of the Securities, and (C) at the date hereof, the Company was not an “ineligible
issuer” as defined in Rule 405. The Company meets the requirements for use of Form S-3 under the Securities Act. Each of
the Registration Statement and any Rule 462(b) Registration Statement has become effective under the Securities Act;
(ii) (A)
Each of the Registration Statement, any
Rule 462(b) Registration Statement
and any post-effective amendments thereto, at the time it became effective, complied and will comply in all material
respects with the requirements of the Securities Act, the Securities Act Regulations, the 1939 Act and the Rules and Regulations
of the Commission under the 1939 Act (the “
1939 Act Regulations
”) and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company makes no representations or warranties as to that part of the Registration
Statement which shall constitute the Statements of Eligibility and Qualification (Form T-1) under the 1939 Act of the Trustee,
and (B) the Prospectus as of its date, did not, and at the Closing Date, will not, contain an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the representations and warranties in clauses (A) and (B) above shall
not apply to statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement or any post-effective
amendments thereto, the Prospectus, or any amendments or supplements thereto, made in reliance upon and in strict conformity with
information furnished to the Company in writing by any Underwriter through the Representative expressly for use therein, it being
understood and agreed that the only such information provided by any Underwriter is that identified as such in Section 8(b) hereof.
No order preventing or suspending the use of the Registration Statement, any Issuer Free Writing Prospectus or the Prospectus
has been issued by the Commission. The Registration Statement is not the subject of a pending proceeding or examination under
Section 8(d) or 8(e) of the Securities Act, and the Company is not the subject of a pending proceeding under Section 8A of the
Securities Act in connection with the offering of the Securities. Each preliminary prospectus, any Issuer Free Writing Prospectus
and the Prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424(b), complied when so filed in all material respects with the requirements of the Securities Act and each
preliminary prospectus, any Issuer Free Writing Prospectus and the Prospectus delivered to the Underwriters for use in connection
with this offering was substantially identical to the electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T;
(iii) The
General Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading; and each Issuer Free Writing Prospectus listed on Schedule III did not, does not and will not conflict with the
information contained in the Registration Statement, any preliminary prospectus, the General Disclosure Package or the Prospectus,
including any information incorporated by reference therein, any preliminary or other prospectus deemed to be a part thereof that
has not been superseded or modified, and each such Issuer Free Writing Prospectus, as supplemented by and taken together with the
General Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading; provided that this representation and warranty shall not apply to statements or omissions made in an Issuer Free
Writing Prospectus in reliance upon and in strict conformity with information furnished in writing to the Company by an Underwriter
through the Representative expressly for use therein, it being understood and agreed that the only such information provided by
any Underwriter is that identified as such in Section 8(b) hereof;
(iv) The
documents incorporated or deemed to be incorporated by reference in the Registration Statement, any Rule 462(b) Regulation Statement,
the General Disclosure Package and the Prospectus, at the time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission
thereunder (the “Exchange Act Regulations”) and, when read together with the other information in the Registration
Statement, the General Disclosure Package and the Prospectus, at the time the Registration Statement became effective, or any amendment
thereto became effective, at the time the Prospectus was issued and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements
therein not misleading;
(v) The
Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Maryland,
with corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration
Statement, the General Disclosure Package and the Prospectus, and to enter into and perform its obligations under this Agreement,
and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except
where the failure so to qualify or be in good standing would not have a material adverse effect, or any development that could
be expected to result in a material adverse effect, on the general affairs, business, properties, prospects, management, financial
position, stockholders’ equity or results of operations, whether or not arising from transactions in the ordinary course
of business, of the Company and the Subsidiaries, considered as one enterprise (a “
Material Adverse Effect
”);
(vi) Each
“subsidiary” (as is defined in Rule 405) of the Company (each, a “
Subsidiary
”), has been duly incorporated
(or organized) and is validly existing as a corporation or other organization (or, in the case of the Community Bank of the Chesapeake
(the “
Bank
”), as a Maryland-chartered commercial bank) in good standing under the laws of the jurisdiction of
its incorporation (or organization), with power and authority to own, lease and operate its properties and conduct its business
as described in the Registration Statement, the General Disclosure Package and the Prospectus, and has been duly qualified as a
foreign corporation (or other organization) for the transaction of business and is in good standing under the laws of each other
jurisdiction in which its owns or leases properties or conducts any business so as to require such qualification except where the
failure to qualify or to be in good standing would not result in a Material Adverse Effect; all of the issued and outstanding capital
stock (or other ownership interests) of each Subsidiary has been duly and validly authorized and issued, is fully paid and non-assessable
and is owned by the Company, directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. The only Subsidiaries of the Company are the Subsidiaries listed on Schedule IV hereto;
(vii) The
authorized, issued and outstanding capital stock of the Company is as set forth in the Registration Statement, the General Disclosure
Package and the Prospectus under the caption “Capitalization” (other than for subsequent issuances, if any, pursuant
to employee benefit plans, or upon the exercise of outstanding options, in each case described in the Registration Statement, the
General Disclosure Package and the Prospectus). All of the issued and outstanding shares of capital stock of the Company have been
duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with all applicable federal
and state securities laws. None of the outstanding shares of capital stock of the Company were issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized
or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the Company or any of the Subsidiaries other than those
described in the Registration Statement, the General Disclosure Package and the Prospectus. The descriptions of the Company’s
stock option, stock bonus and other stock plans or compensation arrangements, and the options or other rights granted thereunder,
incorporated by reference into the Registration Statement, the General Disclosure Package and the Prospectus accurately and fairly
presents, in all material respects, the information required to be describe therein with respect to such plans, arrangements, options
and rights;
(viii) This
Agreement has been duly authorized, executed and delivered by the Company;
(ix) The
Indenture has been duly authorized by the Company and duly qualified under the 1939 Act and, when duly executed and delivered by
the Company and the Trustee, will constitute a valid and legally binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as may be limited by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally
or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). The Indenture
conforms in all material respects to the description of the Indenture contained in the Registration Statement, the General Disclosure
Package and the Prospectus.
(x) The
Securities to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when authenticated in the manner provided for in the Indenture and delivered by the Company pursuant
to this Agreement against payment of the consideration set forth herein, will constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting
creditor’s rights generally or by general principles of equity (regardless of whether enforcement is considered in a proceeding
in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture.
(xi) The
Securities will conform in all material respects to the respective statements relating thereto contained in the Registration Statement,
the General Disclosure Package and the Prospectus and will be in substantially the respective forms filed or incorporated by reference,
as the case may be, as exhibits to the Registration Statement.
(xii) The
Company and each Subsidiary has been and is in compliance with all applicable laws, rules and regulations of (including, without
limitation, all applicable regulations and orders of, or agreements with, the Board of Governors of the Federal Reserve System
(“
Federal Reserve
”), the Federal Deposit Insurance Corporation (“
FDIC
”), the Maryland Commissioner
of Financial Regulation (“
Commissioner
”), the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, all other applicable fair lending laws or other laws relating to discrimination,
the Bank Secrecy Act, Title III of the USA Patriot Act, the Currency and Foreign Transaction Reporting Act of 1970, as amended,
and the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency), except where failure to be so in compliance
could not be expected, individually or in the aggregate, to have a Material Adverse Effect;
(xiii) The
issue and sale of the Securities, the execution of this Agreement by the Company, the execution of the Indenture and the compliance
by the Company with the provisions of this Agreement and the Indenture and the consummation of the transactions herein and therein
contemplated: (A) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute
a default or result in a Repayment Event (as hereinafter defined) under any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, except for
conflicts, breaches, violations, defaults or Repayment Events, as could not be expected, individually or in the aggregate, to have
a Material Adverse Effect; (B) nor will such action result in any violation of the provisions of the articles of incorporation
or bylaws (or other organization documents) of the Company or any of the Subsidiaries or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties;
and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Securities or the consummation by the Company of the transactions contemplated
by this Agreement, except the registration under the Securities Act of the Securities and such consents, approvals, authorizations,
registrations or qualifications as may be required under the rules and regulations of the Nasdaq Stock Market (“Nasdaq”)
or the Financial Industry Regulatory Authority (“FINRA”) and state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters; as used herein, a “
Repayment Event
” means any
event or condition which gives the holder of any note, debenture or other financing instrument (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a portion of the related financing by the Company
or any of its Subsidiaries;
(xiv) Stegman
& Company who have certified certain financial statements (which term as used in this Agreement includes the related notes
thereto), filed with the Commission as part of the Registration Statement, the General Disclosure Package and the Prospectus, of
the Company and the Subsidiaries, are (A) independent public accountants as required by the Securities Act, the Exchange Act and
the rules of the Public Company Accounting Oversight Board (“
PCAOB
”), (B) in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X promulgated under the Securities Act
and (C) a registered public accounting firm as defined by the PCAOB whose registration has not been suspended or revoked and who
has not requested such registration to be withdrawn;
(xv) The
financial statements, together with related schedules and notes, included in the Registration Statement, the General Disclosure
Package and the Prospectus comply in all material respects with the requirements of the Securities Act and present fairly the consolidated
financial position, results of operations, comprehensive income, and changes in financial position of the Company and the Subsidiaries
on the basis stated in the Registration Statement at the respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein; and the selected financial data, the summary financial data
and the capitalization information included in the General Disclosure Package present fairly the information shown therein and
have been compiled on a basis consistent with that of the financial statements included in the Registration Statement. The pro
forma financial statements of the Company and the Subsidiaries and the related notes thereto included in the Registration Statement,
the General Disclosure Package and the Prospectus present fairly the information shown therein, have been prepared in accordance
with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances referred to therein. No other financial statements or supporting
schedules are required to be included in the Registration Statement or the General Disclosure Package. All disclosures, if any,
contained in the Registration Statement, any preliminary prospectus, the General Disclosure Package or the Prospectus that constitute
non-GAAP financial measures (as defined under the Securities Act and the Exchange Act) comply in all material respects with Regulation
G promulgated under the Exchange Act and Item 10 of Regulation S-K promulgated under the Securities Act, as applicable. The Company’s
ratios of earnings to fixed charges and preferred stock dividends set forth in the Registration Statement and the Prospectus under
the caption “Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends” and in Exhibit 12.1 to the
Registration Statement have been calculated in compliance with Item 503(d) of Regulation S-K promulgated under the Securities Act.
To the Company’s knowledge, no person who has been suspended or barred from being associated with a registered public accounting
firm, or who has failed to comply with any sanction pursuant to Rule 5300 promulgated by the PCAOB, has participated in or otherwise
aided the preparation of, or audited, the financial statements, supporting schedules or other financial data filed with the Commission
as a part of the Registration Statement, the General Disclosure Package and the Prospectus;
(xvi) Neither
the Company nor any Subsidiary has sustained, since the date of the latest audited financial statements included in the Registration
Statement, the General Disclosure Package and the Prospectus, any material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Registration Statement, the General Disclosure Package and the Prospectus;
and, since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package
and the Prospectus, (A) there has not been any change in the capital stock (other than issuances as a result of exercise of stock
options) or long-term debt of the Company or any of the Subsidiaries other than in the ordinary course of business, (B) there has
not been any Material Adverse Effect, or any development that might reasonably be expected to result in a Material Adverse Effect,
(C) there have been no transactions entered into by, and no obligations or liabilities, contingent or otherwise, incurred by the
Company or any of the Subsidiaries, whether or not in the ordinary course of business, which are material to the Company and the
Subsidiaries, considered as one enterprise, otherwise than as set forth or contemplated in the Registration Statement, the General
Disclosure Package and the Prospectus, or (D) except for regular quarterly dividends on the common stock and preferred stock of
the Company in amounts consistent with past practice, there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock;
(xvii) Neither
the Company nor any Subsidiary is (A) in violation of its articles of incorporation or bylaws (or other organization documents),
(B) in violation of any decree of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries,
or (C) in default in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries
is a party or by which any of them or any of their respective properties may be bound, except, in the case of clauses (B) and (C),
where any such violation or default, individually or in the aggregate, would not have a Material Adverse Effect;
(xviii) Each
of the Company and each Subsidiary has good and marketable title to all real and personal property owned by it, in each case free
and clear of all mortgages, pledges, liens, encumbrances, restrictions and defects except such as are described in the Registration
Statement, the General Disclosure Package and the Prospectus or such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by the Company or any Subsidiary; and any real property
and buildings held under lease by the Company or any Subsidiary are held under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by
the Company or any Subsidiary;
(xix) Other
than as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property of the Company or any of
the Subsidiaries is the subject which, if determined adversely to the Company or the Subsidiary, individually or in the aggregate,
would have or may reasonably be expected to have a Material Adverse Effect, or would prevent or impair the consummation of the
transactions contemplated by this Agreement, or which are required to be described in the Registration Statement, the General Disclosure
Package and the Prospectus; and, to the Company’s knowledge, no such proceedings are threatened or contemplated by governmental
authorities or others;
(xx) The
Company and each Subsidiary possesses all permits, licenses, approvals, consents and other authorizations (collectively, “
Permits
”)
issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the businesses now
operated by them; the Company and each Subsidiary is in compliance with the terms and conditions of all such Permits and all of
the Permits are valid and in full force and effect, except, in each case, where the failure so to comply or where the invalidity
of such Permits or the failure of such Permits to be in full force and effect, individually or in the aggregate, would not have
a Material Adverse Effect; and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or material modification of any such Permits;
(xxi) The
Company and each Subsidiary owns or possesses all inventions, patent applications, patents, trademarks (both registered and unregistered),
trade names, service names, service marks, copyrights, trade secrets and other proprietary information described in the Registration
Statement, the General Disclosure Package and the Prospectus and as being owned or licensed by any of them or which is necessary
for the conduct of, or material to, any of their respective businesses (collectively, the “
Intellectual Property
”),
and the Company is unaware of any claim to the contrary or any challenge by any other person to the rights of the Company or any
Subsidiary with respect to the Intellectual Property; to the Company’s knowledge, neither the Company nor any Subsidiary
has infringed or is infringing the intellectual property of a third party, and neither the Company nor any Subsidiary has received
notice of a claim by a third party to the contrary;
(xxii) No
material labor dispute with the employees of the Company or the Subsidiaries exists, or, to the knowledge of the Company, is imminent.
The Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any Subsidiary’s
principal suppliers, manufacturers, customers or contractors, which, individually or in the aggregate, may reasonably be expected
to result in a Material Adverse Effect;
(xxiii) The
Company and each Subsidiary is insured by insurers of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they are engaged including, but not limited to, policies covering
real and personal property owned or leased by the Company and each Subsidiary against theft, damage, destruction, acts of vandalism
and earthquakes; neither the Company nor any Subsidiary has been refused any insurance coverage sought or applied for; and the
Company has no reason to believe that either it or any Subsidiary will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business
at a cost that would not have a Material Adverse Effect;
(xxiv) The
Company and each Subsidiary has made and keeps books, records and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Company and the Subsidiaries in all material respects. The Company
maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed
in accordance with management’s general or specific authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability
for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; (D)
the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences; and (E) the interactive data in eXtensible Business Reporting Language included or incorporated
by reference in the Registration Statement is in conformity with generally accepted accounting principles, has been prepared in
accordance with the Commission’s rules and guidelines applicable thereto and is updated as necessary to comply in all material
respects with the requirements of the Securities Act and the Commission’s rules and guidelines applicable thereto and present
fairly the consolidated financial position, results of operations and changes in financial position of the Company and the Subsidiaries
on the basis stated in the Registration Statement at the respective dates or for the respective periods to which they apply;
(xxv) Since
the date of the latest audited financial statements included in the Prospectus, (A) the Company has not been advised of (i) any
significant deficiencies in the design or operation of internal controls that could adversely affect the ability of the Company
or any Subsidiary to record, process, summarize and report financial data, or any material weaknesses in internal controls, and
(ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the internal
controls of the Company and each of the Subsidiaries, and (B) there has been no change in the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting;
(xxvi) The
Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the
Exchange Act), which (A) are designed to ensure that material information relating to the Company, including its consolidated subsidiaries,
is made known to the Company’s principal executive officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; (B) have been
evaluated by management of the Company for effectiveness as of the end of the Company’s most recent fiscal quarter; and (iii)
are effective in all material respects to perform the functions for which they were established;
(xxvii) All
United States federal income tax returns of the Company and the Subsidiaries required by law to be filed have been filed and all
taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which
appeals have been or will be promptly taken and as to which adequate reserves have been provided. The Company and the Subsidiaries
have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other
law, except insofar as the failure to file such returns, individually or in the aggregate, would not result in a Material Adverse
Effect, and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary
except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Company and the Subsidiaries in respect of any income and corporation tax liability for
any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years
not finally determined;
(xxviii)
All of the information provided to the Underwriters or to counsel for the Underwriters by the Company, its counsel, its officers
and directors and the holders of any securities (debt or equity) or options to acquire any securities of the Company in connection
with the offering of the Securities is true, complete, correct and compliant with FINRA’s rules and any letters, filings
or other supplemental information provided to FINRA pursuant to FINRA Rules or the NASD Conduct Rules (administered by FINRA) is
true, complete and correct;
(xxix) There
are no statutes, regulations, documents or contracts of a character required to be described in the Registration Statement, the
General Disclosure Package and the Prospectus to be filed as an exhibit to the Registration Statement which are not described or
filed as required;
(xxx) There are
no business relationships or related-party transactions involving the Company or any Subsidiary or any other person required to
be described in the Registration Statement, the General Disclosure Package and the Prospectus that have not been described as required;
(xxxi) Neither
the Company nor any of the Subsidiaries is in violation of any statute or any rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the use, production, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively,
“
environmental laws
”), owns or operates any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject
to any claim relating to any environmental laws, which violation, contamination, liability or claim, individually or in the aggregate,
would have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim;
(xxxii) Each
employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“
ERISA
”),
that is maintained, administered or contributed to by the Company or any Subsidiary for employees or former employees of the Company
and its affiliates has been maintained in compliance in all material respects with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the
“
Code
”). No prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code has
occurred with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption. No
“reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee
benefit plan” established or maintained by the Company, the Subsidiaries or any of their ERISA Affiliates (as hereinafter
defined). No “employee benefit plan” (as defined under ERISA) established or maintained by the Company, the Subsidiaries
or any of their ERISA Affiliates, if such employee benefit plan were terminated, would have any material “amount of unfunded
benefit liabilities” (as defined under ERISA). Neither the Company, the Subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
employee benefit plan established or maintained by the Company, the Subsidiaries or any of their ERISA Affiliates that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether
by action or failure to act, which would cause the loss of such qualification. “
ERISA Affiliate
” means, with
respect to the Company or a Subsidiary, any member of any group of organizations described in Sections 414(b), (c), (m) or (o)
of the Code or Section 400(b) of ERISA of which the Company or such Subsidiary is a member;
(xxxiii)
There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities
as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications;
(xxxiv)
There are no persons with registration rights or other similar rights to have securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the Securities Act;
(xxxv)
Neither the Company nor the Bank is and, after giving effect to the offering and sale of the Securities as contemplated herein
and the application of the net proceeds therefrom as described in the Registration Statement, the General Disclosure Package and
the Prospectus, will be, an “investment company,” as such term is defined in the Investment Company Act of 1940, as
amended (the “
Investment Company Act
”);
(xxxvi)
The Company has not distributed and, prior to the later to occur of the Closing Date (as defined in Section 3 hereof) and completion
of distribution of the Securities will not distribute any offering materials in connection with the offering and sale of the Securities,
other than the Registration Statement, any preliminary prospectus, the Prospectus and, subject to compliance with Sections 4(c),
(q) and (r) hereof, any Issuer Free Writing Prospectus;
(xxxvii) Neither
the Company nor any of the Subsidiaries has taken, directly, or indirectly, and neither the Company nor any of the Subsidiaries
will take, directly or indirectly, any action designed to cause or result in, or which constitutes or might reasonably be expected
to constitute, the stabilization or manipulation of the price of any security of the Company or any “
reference security
”
(as defined in Rule 100 of Regulation M promulgated under the Exchange Act) to facilitate the sale or resale of the Securities
or otherwise, and has taken no action which would directly or indirectly violate Regulation M promulgated under the Exchange Act;
(xxxviii) The
statistical, market and industry-related data included in the Registration Statement, the General Disclosure Package and the Prospectus
are based on or derived from sources which the Company reasonably believes to be reliable and accurate or represent the Company’s
good faith estimates that are made on the basis of data derived from such sources, and the Company has obtained the written consent
to the use of such data from sources to the extent required;
(xxxix) Neither
the Company nor any Subsidiary, nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other
person acting on behalf of the Company or any Subsidiary has, in the course of its actions for, or on behalf of, the Company or
any Subsidiary (A) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (B) made any direct or indirect unlawful payment to any domestic government official, “foreign official”
(as defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively,
the “
FCPA
”) or employee from corporate funds; (C) violated or is in violation of any provision of the FCPA
or any applicable non-U.S. anti-bribery statute or regulation; or (D) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any domestic government official, such foreign official or employee; and the Company and
the Subsidiaries and the Company’s affiliates have conducted their respective businesses in compliance with the FCPA and
have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure,
continued compliance therewith in all material respects;
(xl) Each
Road Show, as supplemented by and taken together with the General Disclosure Package, does not contain any untrue statement of
material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided that this representation and warranty shall not apply to statements or omissions made
in such presentation made in reliance upon and in strict conformity with information furnished to the Company in writing by any
Underwriter through the Representative expressly for use therein, it being understood and agreed that the only such information
provided by any Underwriter is that identified as such in Section 8(b) hereof;
(xli) The
operations of the Company and each of the Subsidiaries are, and have been conducted at all times, in compliance with applicable
financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar
applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “
Money
Laundering Laws
”) and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any of the Subsidiaries with respect to the Money Laundering Laws is pending or, to
the best knowledge of the Company, threatened;
(xlii) Neither
the Company nor any of the Subsidiaries nor, to the knowledge of the Company, after due inquiry, any director, officer, agent,
employee, affiliate or person acting on behalf of the Company or any of the Subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“
OFAC
”); and the Company
will not directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make available such proceeds
to any Subsidiary, or any joint venture partner or other person or entity, for the purpose of financing the activities of or business
with any person, or in any country or territory, that currently is the subject to any U.S. sanctions administered by OFAC or in
any other manner that will result in a violation by any person (including any person participating in the transaction whether as
underwriter, advisor, investor or otherwise) of U.S. sanctions administered by OFAC;
(xliii) Except
pursuant to this Agreement, there is no broker, finder or other party that is entitled to receive from the Company any brokerage
or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement;
(xliv) Each
financial or operational projection or other “forward-looking statement” (as defined by Section 27A of the Securities
Act or Section 21E of the Exchange Act) contained in the Registration Statement, the General Disclosure Package and the Prospectus
(i) was so included by the Company in good faith and with reasonable basis after due consideration by the Company of the underlying
assumptions, estimates and other applicable facts and circumstances, and (ii) is accompanied by meaningful cautionary statements
identifying those factors that could cause actual results to differ materially from those in such forward-looking statement. No
such statement was made with the knowledge of an executive officer or director of the Company that it was false or misleading;
(xlv) Any
certificate signed by any officer of the Company delivered to the Underwriters or to counsel for the Underwriters shall be deemed
a representation and warranty by the Company to the Underwriters as to the matters covered thereby;
(xlvi) The
Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, and meets in all material
respects the applicable requirements for qualification as such. The activities of the Subsidiaries are permitted of subsidiaries
of a bank holding company under applicable law and the rules and regulations of the Federal Reserve set forth in Title 12 of the
Code of Federal Regulations. The Bank holds the requisite authority to do business as a Maryland state-chartered bank with banking
powers under the laws of the State of Maryland. The Bank is the only depository institution subsidiary of the Company and the Bank
is a member in good standing of the Federal Home Loan Bank System. The activities of the Bank are permitted under the laws and
regulations of the Commissioner;
(xlvii)
The Company and the Bank have no knowledge of any facts and circumstances, and has no reason to believe that any facts or circumstances
exist, that would cause the Bank to be deemed not to be in satisfactory compliance with the Community Reinvestment Act (“
CRA
”)
and the regulations promulgated thereunder or to be assigned a CRA rating by federal or state banking regulators of lower than
“satisfactory”;
(xlviii) Since
2011, the Company, the Bank and each of its subsidiaries have filed all material reports, registrations and statements, together
with any required amendments thereto, that it was required to file with the Federal Reserve, the FDIC, the Commissioner and any
other applicable federal or state securities or banking authorities, except where the failure to file any such report, registration
or statement would not reasonably be expected to result in a Material Adverse Effect. All such reports and statements filed with
any such regulatory body or authority are collectively referred to herein as the “
Company Reports
.” As of their
respective dates, the Company Reports complied as to form in all material respects with all the rules and regulations promulgated
by the Federal Reserve, the FDIC, the Commissioner and any other applicable federal or state securities or banking authorities,
as the case may be;
(xlix) As
of September 30, 2014, the Bank met or exceeded the standards necessary to be considered “well capitalized” under the
FDIC’s regulatory framework for prompt corrective action;
(l) Except
as described in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor any of its
Subsidiaries is subject or is party to, or has received any notice or advice that any of them may become subject or party to any
investigation with respect to, any corrective, suspension or cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with or by, or is a party to any commitment letter or
similar undertaking to, or is subject to any directive by, or has been a recipient of any supervisory letter from, or has adopted
any board resolutions at the request of, any Regulatory Agency (as defined below) that currently relates to or restricts in any
material respect the conduct of their business or that in any manner relates to their capital adequacy, credit policies, management
or business (each, a “
Regulatory Agreement
”), nor has the Company or any of its Subsidiaries been advised by
any Regulatory Agency that it is considering issuing or requesting any Regulatory Agreement. There is no unresolved violation,
criticism or exception by any Regulatory Agency with respect to any report or statement relating to any examinations of the Company
or any of its subsidiaries except as disclosed to the Representative or the Underwriters. The Company and its Subsidiaries are
in compliance in all material respects with all applicable laws administered by the Regulatory Agencies. As used herein, the term
“
Regulatory Agency
” means the Federal Reserve, the FDIC, the Commissioner or any other federal or state agency
charged with the supervision or regulation of depositary institutions or holding companies of depositary institutions, or engaged
in the insurance of depositary institution deposits, or any court, administrative agency or commission or other authority, body
or agency having supervisory or regulatory authority with respect to the Company or any of its Subsidiaries;
(li) Except
as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Bank and each of
its subsidiaries has properly administered all accounts for which it acts as a fiduciary, including accounts for which it serves
as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms
of the governing documents, applicable federal and state law and regulation and common law. Neither the Bank nor any of its subsidiaries
or any of their respective directors, officers or employees has committed any breach of trust or fiduciary duty with respect to
any such fiduciary account that would reasonably be expected to result in, individually or in the aggregate, a Material Adverse
Effect. Except as would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect, the
accountings for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account;
(lii) The
deposit accounts of the Bank are insured by the FDIC up to the legal maximum, the Bank has paid all premiums and assessments required
by the FDIC and the regulations thereunder and no proceeding for the termination or revocation of such insurance is pending or,
to the knowledge of the Company, threatened;
(liii) Except
as disclosed in the Registration Statement, any preliminary prospectus and the Prospectus, each of the Company and its Subsidiaries
has good and indefeasible title to all securities held by it (except securities sold under repurchase agreements, pledged to secure
deposits or derivative contracts or held in any fiduciary or agency capacity) free and clear of any lien, claim, charge, option,
encumbrance, mortgage, pledge or security interest or other restriction of any kind, except to the extent such securities are pledged
in the ordinary course of business consistent with prudent business practices to secure obligations of the Company or any of its
Subsidiaries and except for such defects in title or liens, claims, charges, options, encumbrances, mortgages, pledges or security
interests or other restrictions of any kind that would not, individually or in the aggregate, result in a Material Adverse Effect.
The value of such securities as reflected in the accounting records of the Company and its Subsidiaries has been determined in
accordance with generally accepted accounting principles used in the United States;
(liv) To
the knowledge of the Company, after inquiry of its officers and directors, there are no affiliations with any FINRA member firm
among the Company’s officers, directors, or principal shareholders, except as set forth in the Registration Statement, the
General Disclosure Package and the Prospectus, or as otherwise disclosed in writing to the Underwriters;
(lv) Other
than the Securities, the Company has no debt securities to which a rating is accorded by any “nationally recognized statistical
rating organization”, as defined in Section 3(a)(62) of the Exchange Act;
(lvi) Neither
the Company nor any of the Subsidiaries has sent or received any communication regarding termination of, or intent not to renew,
any of the contracts or agreements referred to or described in the Registration Statement, the General Disclosure Package or the
Prospectus, or referred to or described in, or filed as an exhibit to, the Registration Statement, and no such termination or non-renewal
has been threatened by the Company or any of the Subsidiaries or, to the Company’s knowledge, any other party to any such
contract or agreement, which threat of termination or non-renewal has not been rescinded as of the date hereof;
(lvii) The
Company has complied with, and is and will be in compliance with, the provisions of that certain Florida act relating to disclosure
of doing business with Cuba, codified as Section 517.075 of the Florida statutes, and the rules and regulations thereunder (collectively,
the “Cuba Act”) or is exempt therefrom; and
(lviii) No
Subsidiary of the Company is prohibited or restricted, directly or indirectly, from paying dividends to the Company, or from making
any other distribution with respect to such Subsidiary’s equity securities or from repaying to the Company or any other Subsidiary
of the Company any amounts that may from time to time become due under any loans or advances to such Subsidiary from the Company
or from transferring any property or assets to the Company or to any other Subsidiary.
The Company has a reasonable
basis for making each of the representations set forth in this Section 1(a). The Company acknowledges that the Underwriters and,
for purposes of the opinions to be delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the Underwriters,
may rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
(b) The Bank represents
and warrants to, and agrees with, each of the Underwriters that, as of the date hereof, as of the Applicable Time, and as of the
Closing Date:
(i) The Bank has
been duly chartered and is validly existing as a Maryland-chartered commercial bank in good standing under the laws of the State
of Maryland, and has been duly qualified as a foreign bank for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification or
is subject to no material liability or disability by reason of the failure to be so qualified in any such other jurisdiction;
(ii) Neither the
Bank nor any of its subsidiaries is in violation of its articles of incorporation, bylaws or other organizational or governing
documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or instrument to which the Bank or any of its
subsidiaries is a party or by which any of them is bound or to which any of the property or assets of the Bank or any of its subsidiaries
is subject (collectively, the “
Bank Instruments
”);
(iii) The execution,
delivery and performance of this Agreement by the Bank, compliance by the Bank with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated
have been duly authorized by all necessary corporate action on
the part of the Bank and do not and will not contravene, conflict with, or result in a breach or violation of any of the terms
or provisions of, or constitute a default or Repayment Event under, any Bank Instrument, nor does or will any such action contravene,
conflict with or result in a breach or violation of any of the terms or provisions of the articles of incorporation or bylaws of
the Bank, any Regulatory Agreement or any statute, order, rule or regulation of any court or governmental entity having jurisdiction
over the Bank or any of its subsidiaries or any of their properties; and
(iv) Except as described
in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Bank nor its subsidiary is subject
or is party to, or has received any notice or advice that either of them may become subject or party to any investigation with
respect to a Regulatory Agreement nor has the Bank or its subsidiary been advised by any Regulatory Agency that it is considering
issuing or requesting any Regulatory Agreement. There is no unresolved violation, criticism or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations of the Bank or its subsidiary. The Bank and its subsidiary
are in compliance in all material respects with all laws administered by the Regulatory Agencies.
The Bank has a reasonable
basis for making each of the representations set forth in this Section 1(b). The Bank acknowledges that the Underwriters and, for
purposes of the opinions to be delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the Underwriters,
may rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
Section
2.
Subject to the terms and conditions herein set forth, the Company agrees to sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at the price equal to 98.5% of the aggregate principal amount of
the Securities, the aggregate principal amount of the Securities set forth in Schedule I opposite the name of such Underwriter,
plus any additional number of Securities which such Underwriter may become obligated to purchase pursuant to the provisions of
Section 9.
Section
3.
(a) It is
understood that the several Underwriters propose to offer the Securities for sale to the public upon the terms and conditions set
forth in the Prospectus.
(b) Delivery
of the Securities shall be made at the offices of Silver, Freedman, Taff & Tiernan LLP, 3299 K Street, N.W., Suite 100, Washington
DC 20007, or at such other place as shall be agreed upon by the Representative and the Company, at 9:30 a.m. (Eastern time) on
February 6, 2015 (unless postponed in accordance with the provisions of Section 10), or such other time not later than seven
days after such date as shall be agreed upon by the Representative and the Company (such time and date of payment and delivery
being herein called “
Closing Date
”).
Payment shall be made
to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Underwriters of the Securities to be purchased by them. It is understood
that each Underwriter has authorized the Representative, for its account, to accept delivery of, receipt for, and make payment
of the purchase price for, the Securities which it has agreed to purchase. The Representative, individually and not as representative
of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased
by any Underwriter whose funds have not been received by the Closing Date, but such payment shall not relieve such Underwriter
from its obligations hereunder.
(c) The Securities
shall be in such denominations and registered in such names as the Representative may request in writing at least one full business
day before the Closing Date. The Company shall deliver the Securities through the facilities of DTC unless the Representative shall
otherwise instruct.
Section
4.
The Company further covenants
and agrees with each of the Underwriters as follows:
(a) The Company,
subject to Section 4(b) hereof, will comply with the requirements of Rule 430B under the Securities Act, and will notify the Representative
immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become
effective, or any amendment or supplement to the Prospectus shall have been filed (and to furnish the Representative with copies
thereof, and to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under
the Securities Act), (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending
the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes, and (v) if the Company becomes the
subject of a proceeding under Section 8A of the Securities Act in connection with the offering of the Securities. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) under the Securities Act and will take such steps as it deems necessary
to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) (without reliance on Rule 424(b)(8))
was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company
will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) During
the period when a prospectus relating to the Securities is required by the Securities Act to be delivered (whether physically or
through compliance with Rule 172 under the Securities Act or any similar rule), the Company (i) will furnish to the Representative
for review, a reasonable period of time prior to the proposed time of filing of any proposed amendment or supplement to the Registration
Statement or a Final Term Sheet, a copy of each such amendment or supplement or such Final Term Sheet, and (ii) will not amend
or supplement the Registration Statement or file such Final Term Sheet without the Representative’s prior written consent.
Prior to amending or supplementing any preliminary prospectus or the Prospectus, the Company shall furnish to the Representative
for review, a reasonable amount of time prior to the time of filing or use of the proposed amendment or supplement or Final Term
Sheet, a copy of each such proposed amendment or supplement. The Company shall not file or use any such proposed amendment or supplement
or Final Term Sheet without the Representative’s prior written consent. The Company shall file with the Commission within
the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such rule.
(c) The Company
shall furnish to the Representative for review, a reasonable amount of time prior to the proposed time of filing or use thereof,
a copy of each proposed free writing prospectus or any amendment or supplement thereto or Term Sheet prepared by or on behalf of,
used by, or referred to by the Company, and the Company shall not file, use or refer to any proposed free writing prospectus or
any amendment or supplement thereto without the Representative’s prior written consent. The Company shall furnish to each
Underwriter, without charge, as many copies of any free writing prospectus prepared by or on behalf of, used by or referred to
by the Company as such Underwriter may reasonably request. If at any time when a prospectus is required by the Securities Act to
be delivered (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule) in connection
with sales of the Securities (but in any event if at any time through and including the Closing Date) there occurred or occurs
an event or development as a result of which any free writing prospectus prepared by or on behalf of, used by, or referred to by
the Company conflicted or would conflict with the information contained in the Registration Statement or the Prospectus or included
or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances prevailing at such time, not misleading, the Company shall promptly
amend or supplement such free writing prospectus to eliminate or correct such conflict so that the statements in such free writing
prospectus as so amended or supplemented will not include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances prevailing at such time, not misleading, as
the case may be; provided that prior to amending or supplementing any such free writing prospectus, the Company shall furnish to
the Representative for review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of such
proposed amended or supplemented free writing prospectus, and the Company shall not file, use or refer to any such amended or supplemented
free writing prospectus without the Representative’s prior written consent.
(d) The Company
will use its best efforts to qualify the Securities for offering and sale under the securities laws of such jurisdictions as the
Underwriters may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that nothing in
this Section 4(d) shall require the Company to qualify as a foreign corporation in any jurisdiction in which it is not already
so qualified, to file a general consent to service of process in any jurisdiction or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
(e) The Company
has furnished or will deliver upon request to the Representative, without charge, signed copies of the Registration Statement as
originally filed, any Rule 462(b) Registration Statement and of each amendment to each (including exhibits filed therewith or incorporated
by reference therein) and signed copies of all consents and certificates of experts, and will also, upon request, deliver to the
Representative, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished
to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(f) The Company
has delivered to each Underwriter, without charge, as many written and electronic copies of each preliminary prospectus as such
Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities
Act. The Company will furnish to each Underwriter, without charge, prior to 10:00 a.m.
Eastern time on the business day
next succeeding the date of this Agreement and from time to time thereafter during the period when the Prospectus is required to
be delivered in connection with sales of the Securities under the Securities Act or the Exchange Act such number of written and
electronic copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and
any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(g) The Company
will make generally available (within the meaning of Section 11(a) of the Securities Act) to its security holders and to the Representative
as soon as practicable, but not later than 45 days after the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earnings statement (in form complying with the provisions of Rule 158 under
the Securities Act) covering a period of at least twelve consecutive months beginning after the effective date of the Registration
Statement.
(h) The Company
will use the net proceeds received by it from the sale of the Securities in the manner specified in the Registration Statement,
the General Disclosure Package and the Prospectus under the heading “Use of Proceeds.”
(i) During
the period beginning on the date hereof and continuing to and including the Closing Date, the Company will not, and will not permit
any Subsidiary to, without the prior written consent of the Representative, directly or indirectly, issue, sell, offer or contract
to sell, grant any option for the sale of, or otherwise transfer or dispose of, any debt securities or nonconvertible preferred
stock of the Company or any of its subsidiaries.
(j) The Company,
during the period when a prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required
by the Securities Act to be delivered in connection with sales of the Securities, will file all documents required to be filed
with the Commission pursuant to the Exchange Act within the time periods required by, and each such document will meet the requirements
of, the Exchange Act and the Exchange Act Regulations.
(k) The Company
will prepare the Final Term Sheet set forth in Schedule II in form and substance satisfactory to the Representative and the Company
represents and agrees that, unless it obtains the prior consent of the Representative and each Underwriter represents and agrees
that, unless it obtains the prior consent of the Company and the Representative, it has not made and will not make any offer relating
to the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would
otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission.
Any such free writing prospectus consented to by the Representative and the Company is hereinafter referred to as a “Permitted
Free Writing Prospectuses” and is listed on Schedule III hereto. The Company represents that it has treated or agrees that
it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433,
and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including
timely filing with the Commission where required, legending and record keeping. Notwithstanding the foregoing, the Company consents
to the use by any Underwriter of a free writing prospectus that contains only (a)(i) information describing the preliminary terms
of the Securities or their offering, (ii) information meeting the requirements of Rule 134 of the Securities Act Regulations, (iii)
information that describes the final terms of the Securities or their offering and that is included in the Final Term Sheet or
(iv) other customary information that is neither “issuer information,” as defined in Rule 433, nor otherwise an Issuer-Represented
Free Writing Prospectus.
(l) The Company
shall use its commercial reasonable best efforts to permit the Securities to be eligible for clearance, settlement and trading
in book-entry-only form through the facilities of DTC.
(m) During
a period of three years from the effective date of the Registration Statement, the Company will furnish to the Representative copies
of all reports or other communications (financial or other) furnished to shareholders generally, and deliver (i) as soon as they
are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business
and financial condition of the Company and its Subsidiaries as the Representative may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the accounts of the Company and the Subsidiaries are consolidated
in reports furnished to its shareholders generally or to the Commission). For purposes of this section, any document filed with
the Commission pursuant to EDGAR shall be deemed delivered to the Representative.
(n) The Company
shall not invest or otherwise use the proceeds received by the Company from its sale of the Securities in such a manner as would
require the Company or any of the Subsidiaries to register as an investment company under the Investment Company Act.
(o) If so
requested by the Representative, the Company shall cause to be prepared and delivered, at its expense, within one (1) business
day from the effective date of this Agreement, to the Representative an “electronic Prospectus” to be used by the Underwriters
in connection with the offering and sale of the Securities. As used herein, the term “electronic Prospectus” means
a form of preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus, and any amendment or supplement thereto,
that meets each of the following conditions: (i) it shall be encoded in an electronic format, satisfactory to the Representative,
that may be transmitted electronically by the Representative and the other Underwriters to offerees and purchasers of the Securities,
(ii) it shall disclose the same information as such paper preliminary prospectus, Issuer Free Writing Prospectus or the Prospectus,
as the case may be, and (iii) it shall be in or convertible into a paper format or an electronic format, satisfactory to the Representative,
that will allow investors to store and have continuously ready access to such preliminary prospectus, Issuer Free Writing Prospectus
or the Prospectus at any future time, without charge to investors (other than any fee charged for subscription to the Internet
generally). The Company hereby confirms that, if so requested by the Representative, it has included or will include in the Prospectus
filed with the Commission an undertaking that, upon receipt of a request by an investor or his or her representative, the Company
shall transmit or cause to be transmitted promptly, without charge, a paper copy of such paper preliminary prospectus, Issuer Free
Writing Prospectus or the Prospectus to such investor or representative.
(p) The Company
will not take, and will ensure that no affiliate of the Company will take, directly or indirectly, any action designed to cause
or result in or which constitutes or might reasonably be expected to constitute stabilization or manipulation of the price of the
Securities or any reference security with respect to the Securities, whether to facilitate the sale or resale of the Securities
or otherwise, and the Company will, and shall cause each of its affiliates to, comply with all applicable provisions of Regulation
M.
(q) During
the period beginning on the date hereof and ending on the later of the fifth anniversary of the Closing Date or the date on which
the Underwriters receive full payment in satisfaction of any claim for indemnification or contribution to which they may be entitled
pursuant to Section 8 of this Underwriting Agreement, neither the Company nor the Bank shall, without the prior written consent
of the Representative, take or permit to be taken any action that could result in the Bank’s common stock becoming subject
to any security interest, mortgage, pledge, lien or encumbrance; provided that this covenant shall be null and void if the Federal
Reserve, the FDIC or any federal or state bank regulator or regulatory authority having jurisdiction over the Bank, by regulation,
policy statement or interpretive release or by written order or written advice addressed to the Bank and specifically addressing
the provisions of Section 8 hereof, permits indemnification of the Underwriters by the Bank as contemplated by such provisions.
(r) The Company
shall use its reasonable best efforts to obtain a rating of at least BBB- from Kroll Bond Rating Agency, Inc. (“Kroll”)
with regard to the Securities.
Section 5.
The
Company covenants and agrees with the Underwriters that, whether or not the transactions contemplated by this Agreement are consummated,
the Company will pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including,
but not limited to, (i) the fees, disbursements and expenses of the Company’s counsel, accountants and other advisors; (ii)
filing fees and all other expenses in connection with the preparation, printing and filing of the Registration Statement, each
preliminary prospectus, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters and dealers; (iii) the cost of printing or producing this Agreement, closing
documents (including any compilations thereof) and such other documents as may be required in connection with the offering, purchase,
sale and delivery of the Securities; (iv) all expenses in connection with the qualification of the Securities for offering and
sale under state securities laws as provided in Section 4(d), including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (v) the costs, fees
and expenses, if any, incurred by the Underwriters in connection with obtaining any approvals or non-objections from FINRA related
to the Underwriters’ participation in the offering and distribution of the Securities, including any related filing fees
and the legal fees of, and disbursements by, counsel to the Underwriters; (vi) all fees and expenses in connection with the preparation,
issuance and delivery of the certificates representing the Securities to the Underwriters, including any stock or other transfer
taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Underwriters; (vii) the
fees and expenses of the Trustee, including fees and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities; (viii) the cost and charges of any transfer agent or registrar; (ix) the transportation and other expenses
incurred by the Company in connection with presentations to prospective purchasers of Securities; (x) the costs and expenses
of the Company relating to investor presentations on any Road Show, including, without limitation, expenses associated with the
preparation or dissemination of any electronic road show, expenses associated with the production of Road Show slides and graphics,
fees and expenses of any consultants engaged in connection with the Road Show presentations with the prior approval of the Company,
travel and lodging expenses of the Representative, employees and officers of the Company and any such consultants, and the cost
of any aircraft chartered in connection with the Road Show; (xi) any fees payable in connection with the rating of the Securities;
and (xii) the fees and expenses incurred in connection with having the Securities eligible for clearance, settlement and trading
through the facilities of DTC.
The Company agrees
to reimburse the Representative for its reasonable and documented out-of-pocket expenses incurred in connection with the performance
of its obligations under this Agreement including, without
limitation,
expenses related to document and presentation materials, travel, external database and communications services, courier and delivery
services, and the fees and expenses of its outside legal counsel incurred in connection with the transactions contemplated by this
Agreement; provided, however, that legal fees and expenses of the Representative’s outside legal counsel will not exceed
$75,000
. All fees and expenses to which the Representative shall be entitled to reimbursement under this paragraph of this
Section 5 shall be due and payable upon receipt by the Company of a written accounting therefor setting forth in reasonable
detail the expenses incurred by the Representative. The provisions of this paragraph shall not apply to the provisions of Section
8 hereof.
Section 6.
The
several obligations of the Underwriters hereunder to purchase the Securities on the Closing Date are subject to the performance
by the Company of its obligations hereunder and to the following additional conditions:
(a) The Prospectus
shall have been filed with the Commission pursuant to Rule 424(b) under the Securities Act within the applicable time period prescribed
for such filing by the Securities Act and in accordance with Section 4(a) hereof (or a post-effective amendment shall have been
filed and declared effective in accordance with the requirements of Rule 430B); all material required to be filed by the Company
pursuant to Rule 433(d) under the Securities Act, including the Final Term Sheet, shall have been filed with the Commission within
the applicable time period prescribed for such filing by Rule 433 under the Securities Act; if the Company has elected to rely
upon Rule 462(b) under the Securities Act, the Rule 462(b) Registration Statement shall have become effective by 5:30 p.m., Eastern
time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof
or the Prospectus or any part thereof or any Issuer Free Writing Prospectus shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission or any state securities commission; and all requests for additional information
on the part of the Commission shall have been complied with to the reasonable satisfaction of your counsel.
(b) The respective
representations and warranties of the Company and the Bank contained herein are true and correct on and as of the Closing Date
as if made on and as of the Closing Date and the Company and the Bank shall have complied in all material respects with all agreements
and all conditions on its respective part to be performed or satisfied hereunder at or prior to the Closing Date.
(c) As of or prior
to the date hereof, the Securities shall be rated at least BBB- by Kroll and the Company shall have delivered to the Representative
a letter dated no later than the date hereof, from such rating agency, or other evidence satisfactory to the Representative, confirming
that the Securities have such rating; such letter shall be in full force and effect as of the Closing Date. Subsequent to the execution
and delivery of this Agreement and prior to the Closing Date, there shall not have occurred any downgrading, nor shall any notice
have been given of (i) any downgrading below a rating of BBB-, (ii) any intended or potential downgrading below a rating of BBB-,
or (iii) any review or possible change below a rating of BBB- that does not indicate an improvement, in the rating accorded any
securities of or guaranteed by the Company or any Subsidiary by any “nationally recognized statistical rating organization,”
as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) (i) Neither
the Company nor any Subsidiary shall have sustained since the date of the latest audited financial statements included in the Registration
Statement, the General Disclosure Package and the Prospectus any material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and (ii) since the respective dates as of which information
is given in the Registration Statement, the General Disclosure Package and the Prospectus, (A) there shall not have been any change
in the capital stock (other than for subsequent issuances, if any, pursuant to employee benefit plans, or upon the exercise of
outstanding options, in each case described in the Registration Statement, the General Disclosure Package and the Prospectus) or
long-term debt of the Company or any Subsidiary, or (B) there shall not have been any Material Adverse Effect, whether arising
in the ordinary course or not, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the
Representative so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities being delivered at such Closing Date on the terms and in the manner contemplated in the Prospectus.
(e) The Representative
shall have received on and as of the Closing Date a certificate of two executive officers of each of the Company and the Bank,
at least one of whom with regard to each of the Company and the Bank has specific knowledge about the Company’s and the Bank’s
financial matters, satisfactory to the Representative, to the effect (i) set forth in Section 6(b) (with respect to the respective
representations, warranties, agreements and conditions of the Company) and Section 6(c), (ii) that no stop order suspending the
effectiveness of the Registration Statement has been issued and to the knowledge of the Company, no proceedings for that purpose
have been instituted or are pending or contemplated by the Commission and (iii) no event of default under the Indenture or default
with notice and/or lapse of time that would be an event of default in respect of the Securities has occurred and is continuing.
(f) On the
Closing Date, Kilpatrick Townsend & Stockton, LLP, counsel for the Company, shall have furnished to the Representative their
favorable written opinion, dated the Closing Date, in form and substance satisfactory to counsel for the Underwriters, to the effect
set forth in
Exhibit A
hereto and to such further effect as counsel for the Underwriters may reasonably request. Such counsel
may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates
of officers and other representatives of the Company and its Subsidiaries and certificates of public officials.
(g) Stegman
& Company shall have furnished to the Representative a letter, dated the date of this Agreement, in form and substance satisfactory
to the Representative, containing statements and information of the type customarily included in accountants’ “comfort
letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration
Statement, the General Disclosure Package, the Prospectus and each Issuer Free Writing Prospectus, if any.
(h) On the
Closing Date, the Representative shall have received from Stegman & Company a letter, dated the Closing Date, to the effect
that they reaffirm the statements made in the letter or letters furnished pursuant to Section 6(g), except that the specified date
referred to therein for the carrying out of procedures shall be not more than three business days prior to the Closing Date.
(i) On the
Closing Date, the Representative shall have received the opinion of Silver, Freedman, Taff & Tiernan LLP, counsel for the Underwriters
in connection with the offer and sale of the Securities, in form and substance satisfactory to the Underwriters, dated as of such
date.
(j) If applicable,
FINRA shall have confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting
terms and conditions.
(k) Prior
to the Closing Date, the Company, Computershare (or another transfer agent acceptable to the Underwriters) and DTC shall have executed
and delivered the Letter of Representations, dated the Closing Time, and the Securities shall be eligible for clearance, settlement
and trading through the facilities of DTC.
(l) The Company
shall have furnished to the Underwriters the General Disclosure Package prior to the Applicable Time and the Prospectus on the
business day next succeeding the date of this Agreement.
(m) On or
prior to the Closing Date, the Company and the Bank shall have furnished to the Representative such further information, certificates
and documents as the Representative shall reasonably request.
(n) On or
after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange, the NYSE MKT LLC or on Nasdaq; (ii) a suspension or material limitation
in trading in the Company’s securities on Nasdaq; (iii) a general moratorium on commercial banking activities declared by
any of Federal, New York State or Maryland State authorities or a material disruption in commercial banking or securities settlement
or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration
by the United States of a national emergency or war; or (v) the occurrence of any other calamity or crisis or any change in financial,
political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or
(v) in the judgment of the Representative makes it impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities being delivered at such Closing Date on the terms and in the manner contemplated in the Prospectus.
(o) As of
or prior to the date hereof, the FRB shall have issued its written approval or non-objection to the Company’s request to
be permitted to redeem all 20,000 shares of Senior Non-Cumulative Perpetual Preferred Stock Series C issued by the Company to the
U.S. Treasury, such approval or non-objection shall remain in full force and effect as of the Closing Date, and no order has been
issued by the FRB suspending or revoking such approval or non-objection.
If any condition specified
in this Section 6 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated, subject
to the provisions of Section 10, by the Representative by notice to the Company at any time at or prior to the Closing Date, and
such termination shall be without liability of any party to any other party, except as provided in Section 5, Section 7 and Section
10.
Section
7.
1) The Company and the Bank, jointly and severally agree, to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act against any and all losses, liabilities, claims, damages and expenses whatsoever as incurred (including without limitation,
reasonable attorneys’ fees and any and all reasonable expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim
or litigation), joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or
any amendment thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (ii) any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus, any free writing prospectus that the Company has used, referred to or filed, or is required
to file, pursuant to Rule 433(d) of the Securities Act, the General Disclosure Package, any Term Sheet or the Prospectus (or any
amendment or supplement to the foregoing), or the omission or alleged omission to state therein a material fact necessary in order
to make the statements, in the light of the circumstances under which they were made, not misleading; provided that the Company
will not be liable in any such case to the extent that any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement,
as originally filed or any amendment thereof, the Registration Statement, or any post-effective amendment thereof, any preliminary
prospectus, the General Disclosure Package or the Prospectus, or in any supplement thereto or amendment thereof, any Issuer Free
Writing Prospectus, in reliance upon and in strict conformity with written information furnished to the Company by any Underwriter
expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter is the information
described as such in Section 7(b) hereof. Notwithstanding the foregoing, the indemnification and contribution provided for in this
Section 7 shall not apply to the Bank to the extent that such indemnification or contribution, as the case may be, by the Bank
is found in a final judgment by a court of competent jurisdiction to constitute a covered transaction under Section 23A of the
Federal Reserve Act.
(b) Each Underwriter
severally, and not jointly, agrees to indemnify and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever as incurred (including without limitation, reasonable attorneys’ fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, as originally filed or any amendment thereof, the Registration Statement,
or any post-effective amendment thereof, or any preliminary prospectus or the Prospectus, or in any supplement thereto or amendment
thereof, any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent,
but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in strict conformity with
written information furnished to the Company by or on behalf of such Underwriter through the Representative expressly for use therein,
it being understood and agreed that the only such information furnished by any Underwriter consists of the following information
in the Prospectus furnished on behalf of each Underwriter: the last paragraph at the bottom of the cover page of the Prospectus
concerning the terms of the offering by the Underwriters.
(c) Promptly
after receipt by an indemnified party under Section 7(a) or 7(b) hereof of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the indemnifying party under such Section, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party
shall not relieve it from any liability which it may have under this Section 7). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and jointly with any other indemnifying party similarly notified, to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnified party). Notwithstanding the foregoing, the indemnified party or parties shall have the right
to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to have charge
of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party
or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses
shall be borne by the indemnifying parties. In no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations
or circumstances, which counsel, in the event of indemnified parties under Section 7(a), shall be selected by the Representative.
No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure
to act, by or on behalf of any indemnified party.
(d) If the
indemnification provided for in this Section 7 is unavailable to or insufficient to hold harmless an indemnified party under Section
7(a) or 7(b) in respect of any losses, liabilities, claims, damages or expenses (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities. If, however,
the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other from the offering of the Securities shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or
the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The Company and the
Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in this Section 7(d). The amount paid or payable by an
indemnified party as a result of the losses, liabilities, claims, damages or expenses (or actions in respect thereof) referred
to above in this Section 7(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. The obligations of the Company and the Bank in this Section
7(d) to contribute are joint and several. Notwithstanding the provisions of this Section 7(d), no Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this Section 7(d) to
contribute are several in proportion to their respective underwriting obligations and not joint.
(e) The obligations
of the parties to this Agreement contained in this Section 7 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
Section
8.
(a) If one or more
of the Underwriters shall fail on the Closing Date to purchase the Securities which it or they are obligated to purchase under
this Agreement (the “
Defaulted Securities
”), the Representative shall have the right, within 36 hours thereafter,
to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less
than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 36-hour period, then:
(i) if the number
of Defaulted Securities does not exceed 10% of the aggregate principal amount of Securities to be purchased on such date, each
of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters;
or
(ii) if the number
of Defaulted Securities exceeds 10% of the aggregate principal amount of Securities to be purchased on such date, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter.
(b) In the event of
any such default which does not result in a termination of this Agreement, either the Representative or the Company shall have
the right to postpone the Closing Date for a period not exceeding seven days, in order to effect any required changes to the Registration
Statement or Prospectus or any other documents or arrangements. As used in this Agreement, the term “Underwriter” includes
any person substituted for an Underwriter under this Section 8.
(c) No action taken
pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default.
Section
9.
Notwithstanding anything herein contained, this Agreement may be terminated, subject to the provisions of Section 10,
in the absolute discretion of the Representative, by notice given to the Company, if after the execution and delivery of this Agreement
and prior to the Closing Date, (a) trading generally on the New York Stock Exchange, NYSE MKT LLC or on the Nasdaq shall have been
suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the Commission, FINRA or any other governmental or regulatory
authority, (b) trading of any securities of or guaranteed by the Company or any Subsidiary shall have been suspended on any exchange
or in any over-the-counter market, (c) a general moratorium on commercial banking activities in New York or Maryland shall have
been declared by Federal, New York State or Maryland State authorities or a new restriction materially adversely affecting the
distribution of the Securities shall have become effective, (d) there has occurred any material adverse change in the financial
markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change in national or international political, financial
or economic conditions or if there has been, since the time of execution of this Agreement or since the respective dates as of
which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, the occurrence of Material
Adverse Effect with regard to the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary
course of business, or (e) there has occurred any other Material Adverse Effect, in each case the effect of which is such as to
make it, in the judgment of the Representative, impracticable to market the Securities to be delivered on the Closing Date, or
to enforce contracts for the sale of the Securities.
If this Agreement is
terminated pursuant to this Section 9, such termination will be without liability of any party to any other party except as provided
in Section 5 and Section 10 hereof; provided that the provisions of Section 7 shall at all times be effective and shall survive
such termination.
Section
10.
(a) The respective
indemnities, agreements, representations, warranties and other statements of the Company, the Bank or their respective officers
and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the Company, the Bank or any of
their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for
the Securities.
(b) If this Agreement
is terminated pursuant to Section 6, 8 or 9 or if for any reason the purchase of any of the Securities by the Underwriters is not
consummated, the Company and the Bank shall remain jointly and severally responsible for the expenses to be paid or reimbursed
by them pursuant to Section 5, the respective obligations of the Company and the Bank, on the one hand, and the Underwriters on
the other pursuant to Section 8 and the provisions of Sections 8 and 9 shall remain in effect and, if any Securities have been
purchased hereunder, the representations and warranties in Section 1 and all obligations under Section 5, Section 6 and Section
7 shall also remain in effect.
(c) If this
Agreement shall be terminated by the Underwriters, or any of them, under Section 6 or otherwise because of any failure or refusal
on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason
the Company shall be unable to perform its obligations under this Agreement or any condition of the Underwriters’ obligations
cannot be fulfilled, the Company agrees to reimburse the Underwriters or such Underwriters as have so terminated this Agreement
with respect to themselves, severally, for all out-of-pocket expenses (including the fees and expenses of its counsel reasonably
incurred by the Underwriter in connection with this Agreement or the offering contemplated hereunder.
Section 11.
This
Agreement shall inure to the benefit of and be binding upon the Company and the Bank and the Underwriters, the officers and directors
of the Company referred to herein, any controlling persons referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal
or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Securities
from any Underwriter shall be deemed to be a successor or assign by reason merely of such purchase.
Section 12.
All
notices and other communications hereunder shall be in writing and shall be deemed to have been duly given upon receipt thereof
by the recipient if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be given
to the Representative, c/o Keefe, Bruyette & Woods, Inc., 787 Seventh Avenue, 4
th
Floor, New York, New York 10019,
(fax no.:212-582-1592); Attention: Dennis O’Rourke
with a copy, which shall not constitute notice, to Silver, Freedman,
Taff & Tiernan LLP, 3299 K Street, NW, Suite 100, Washington, D.C. 20007, attention Philip R. Bevan, Esq. Notices to the Company
shall be given to it at The Community Financial Corporation, 3035 Leonardtown Road, Waldorf, Maryland 20601 (fax no.: 301-885-1430);
Attention: William J. Pasenelli, President and Chief Executive Officer, with a copy, which shall not constitute notice, to Kilpatrick
Townsend & Stockton LLP, 607 14
th
Street, NW, Suite 900, Washington, D.C. 20005, attention Gary R. Bronstein, Esq.
Section 13.
This
Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and
the same instrument.
Section 14.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO SUCH STATE’S
PRINCIPLES OF CONFLICTS OF LAWS.
Section 15.
(a) The parties hereby
submit to the jurisdiction of and venue in the state and federal courts located in the City of New York, New York, in connection
with any dispute related to this Agreement, any transaction contemplated hereby, or any other matter contemplated hereby.
(b) The Company and
the Bank each acknowledge and agree that (i) the purchase and sale of the Securities pursuant to this Agreement, including the
determination of the public offering price of the Securities and any related discounts and commissions, is an arm’s-length
commercial transaction between the Company and the Bank on the one hand, and the several Underwriters, on the other, (ii) in connection
therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or
fiduciary of the Company and the Bank or their respective shareholders, creditors, employees or any other party, (iii) no Underwriter
has assumed an advisory or fiduciary responsibility in favor of the Company and the Bank with respect to the offering contemplated
hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company
and the Bank on other matters) or any other obligation to the Company and the Bank except the obligations expressly set forth in
this Agreement, and (iv) the Company and the Bank has consulted its own legal and financial advisors to the extent it deemed appropriate.
The Company and the Bank agrees that each will not claim that the Underwriters, or any of them, has rendered advisory services
of any nature or respect, or owes a fiduciary or similar duty to the Company and the Bank in connection with such transaction or
the process leading thereto.
(c) The Company acknowledges
that the Underwriters’ research analysts and research departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies, and that such Underwriters’ research analysts
may hold views and make statements or investment recommendations and/or publish research reports with respect to the Company and/or
the offering that differ from the views of their respective investment banking divisions. The Company hereby waives and releases,
to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any conflict
of interest that may arise from the fact that the views expressed by their independent research analysts and research departments
may be different from or inconsistent with the views or advice communicated to the Company by such Underwriters’ investment
banking divisions. The Company acknowledges that each of the Underwriters is a full service securities firm and as such from time
to time, subject to applicable securities laws, may effect transaction for its own account or the account of its customers and
hold long or short positions in debt or equity securities of the companies that may be the subject of the transactions contemplated
by this Agreement.
(d) Notwithstanding
anything herein to the contrary, the Company is authorized to disclose to any persons the U.S. federal and state income tax treatment
and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided
to the Company relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However,
any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not
apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax structure”
is limited to any facts that may be relevant to that treatment.
(e) This Agreement
supersedes all prior agreements and understandings (whether written or oral) between the Company and the Bank and the Underwriters,
or any of them, with respect to the subject matter hereof.
(f) The Company and
the Bank and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
If the foregoing is
in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Bank and the Underwriters as of the date first above written.
|
|
Very truly yours,
|
|
|
|
|
|
|
THE COMMUNITY FINANCIAL
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ William J. Pasenelli
|
|
|
|
Name: William J. Pasenelli
|
|
|
|
Title: President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
COMMUNITY BANK OF THE CHESAPEAKE
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ William J. Pasenelli
|
|
|
|
Name: William J. Pasenelli
|
|
|
|
Title: President and Chief Executive Officer
|
The foregoing Underwriting Agreement is
hereby confirmed and accepted by the Representative in New York, New York as of the date first above written.
KEEFE, BRUYETTE & WOODS, INC.
For themselves and as Representative of
the
other Underwriters named in Schedule I
hereto
Keefe, Bruyette & Woods, Inc.
|
By:
|
/s/ David P. Lazar
|
|
|
|
Name: David P. Lazar
|
|
|
|
Title: Managing Director
|
|
SCHEDULE I
|
Underwriters
|
|
Principal Amount of Securities to be Purchased
|
|
|
Keefe, Bruyette & Woods, Inc.
|
|
$
|
23,000,000
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
23,000,000
|
|
SCHEDULE II
PRICING TERM SHEET
Term Sheet filed February 4, 2015
Issuer Free Writing Prospectus
Dated February 3, 2015
Filed Pursuant to Rule 433
Registration No. 333-199455
PRICING TERM SHEET
|
Issuer
|
The Community Financial Corporation
|
|
Securities Offered
|
6.25% Fixed to Floating Rate Subordinated Notes due February 15, 2025
|
|
Aggregate Principal Amount
|
$23,000,000
|
|
Maturity Date
|
February 15, 2025.
|
|
Interest Rate
|
From and including the issue date to but excluding
February 15, 2020:
·
a
fixed per annum rate of 6.25%
From
and including February 15, 2020 to but excluding the maturity date:
·
a
floating rate equal to LIBOR determined on the determination date of the applicable interest period plus 479 basis points, payable
quarterly in arrears.
For any determination date, “LIBOR” means the rate as published by Bloomberg (or other commercially
available source providing quotations of such rate as selected by the Trustee from time to time) at approximately 11:00 a.m.,
London time, two business days prior to the commencement of the relevant quarterly interest period, as the rate for dollar deposits
in the London interbank market with a three-month maturity. If such rate is not available at such time for any reason, then the
rate for that interest period will be determined by such alternate method as reasonably selected by the Company.
|
|
Interest Payment Date(s)
|
Each February 15 and August 15, commencing August 15, 2015, through February 15, 2020, and thereafter February 15, May 15, August 15 and November 15 of each year through the maturity date or earlier redemption date.
|
|
Record Dates
|
Interest on each Subordinated Note will be payable to the person in whose name such Subordinated Note is registered on the February 1 or August 1 (whether or not a business day) through February 15, 2020, and thereafter the February 1, May 1, August 1 and November 1 immediately preceding the applicable interest payment date.
|
|
Subordination, Ranking
|
The Subordinated Notes will be unsecured, subordinated and:
·
will rank junior in right of payment and upon our liquidation to our existing and all of our future senior indebtedness (as defined
in the Indenture and described below under “Description of the Notes” in the prospectus supplement dated February 3,
2015 (the “Prospectus Supplement”));
·
will rank equally in right of payment and upon our liquidation with our existing and all of our future indebtedness the terms of
which provide that such indebtedness ranks equally with promissory notes, bonds, debentures and other evidences of indebtedness
of types that include the Subordinated Notes;
·
will rank senior in right of payment and upon liquidation to our existing junior subordinated debentures, as well as any indebtedness
the terms of which provide that such indebtedness ranks junior to promissory notes, bonds, debentures and other evidences of indebtedness
of types that include the Subordinated Notes; and
·
will be effectively subordinated to all of the existing and future indebtedness, deposits and other liabilities of the Bank and
our other current and future subsidiaries, including without limitation the Bank’s liabilities to depositors in connection
with the deposits in the Bank, liabilities to general and trade creditors and liabilities arising during the ordinary course of
business or otherwise.
The Indenture does not contain any limitation
on the amount of debt or other obligations ranking senior to or equally with the indebtedness evidenced by the Subordinated Notes
that we may incur hereafter.
Because we are a holding company, our cash
flows and, consequently, our ability to pay and discharge our obligations, including the principal of, and premium, if any, and
interest on, our debt securities depends on the dividends paid and distributions and other payments made to us by our subsidiaries,
and funds we obtain from our corporate borrowings or by selling our securities. Accordingly, our right to receive any payments
or assets of our subsidiaries upon their liquidation or reorganization, and the consequent right of the holders of the Subordinated
Notes to participate in the proceeds of those payments or assets, will be effectively subordinated to the claims of our subsidiaries’
respective creditors and preferred equity holders, if any.
As of September 30, 2014, Community Bank
of the Chesapeake had outstanding indebtedness, total deposits and other liabilities of $915 million, excluding intercompany liabilities.
For more information, see “Description
of Subordinated Notes—Subordination of the Notes” in the Prospectus Supplement.
|
|
Redemption
|
The Company may, at its option, beginning with the interest payment date of February 15, 2020 and on any interest payment date thereafter, redeem the Subordinated Notes, in whole or in part at a redemption price equal to 100% of the principal amount of the Subordinated Notes to be redeemed plus accrued and unpaid interest to the date of redemption. Any partial redemption will be made pro rata among all holders of the Subordinated Notes. The Subordinated Notes are not subject to repayment at the option of the holders. We may also redeem the Subordinated Notes, at our option, in whole, at any time, or in part from time to time, if (1) a change or prospective change in law occurs that could prevent us from deducting interest payable on the notes for U.S. federal income tax purposes, (2) a subsequent event occurs that precludes the notes from being recognized as Tier 2 Capital for regulatory capital purposes, or (3) we are required to register as an investment company under the Investment Company Act of 1940, as amended, in each case, at a redemption price equal to 100% of the principal amount of the Subordinated Notes plus any accrued and unpaid interest through, but excluding, the redemption date. For more information, see “Description of the Notes—Redemption and Redemption Upon Special Events” in the Prospectus Supplement.
|
|
Events of Default; Remedies
|
The Subordinated Notes will contain customary payment, covenant and insolvency events of default. The trustee and the holders of the Subordinated Notes may not accelerate the maturity of the Subordinated Notes upon the occurrence of any payment or covenant event of default. However, if an insolvency-related event of default occurs, the principal of, and accrued and unpaid interest on, the Subordinated Notes will become immediately due and payable without any action of the Trustee or the holders of the Subordinated Notes. In the event of such an acceleration of the maturity of the Subordinated Notes, all of our obligations to holders of our senior indebtedness will be entitled to be paid in full before any payment or distribution, whether in cash, securities or other property, can be made on account of the principal of, or interest on, the Subordinated Notes. See “Description of Subordinated Notes—Events of Default; Limitation on Suits” in the Prospectus Supplement.
|
|
Denomination; Form
|
The Subordinated Notes will be issued only in fully registered form without coupons, in denominations of $1,000 and integral multiples of $1,000. The Subordinated Notes will be evidenced by a global note deposited with the trustee for the Subordinated Notes, as custodian for DTC. Beneficial interests in the global note will be shown on, and transfers of those beneficial interests can only be made through, records maintained by DTC and its participants. See “Description of Subordinated Notes—Clearance and Settlement” in the Prospectus Supplement.
|
|
Sinking Fund
|
None
|
|
Security
|
None. The Subordinated Notes are unsecured subordinated obligations of the Company.
|
|
Use of Proceeds
|
We estimate that the net proceeds of this offering will be approximately $22.3 million, after deducting the underwriting discount and the payment of the transaction expenses payable by us. We plan to use the net proceeds of the offering: (1) to redeem all $20.0 million of the Company’s Series C preferred stock currently outstanding; and (2) for general corporate purposes, including, but not limited to, contributing capital to Community Bank of the Chesapeake. For additional details, see “Use of Proceeds” at page S-13 of the Prospectus Supplement.
|
|
Risk Factors
|
Investing in the Subordinated Notes involves risks. You should carefully consider the information under “Risk Factors” beginning on page S-8 and the other information included or incorporated by reference in the Prospectus Supplement and the accompanying prospectus before investing in the Subordinated Notes.
|
|
Trustee
|
Wilmington Trust, National Association
|
|
CUSIP
|
20368XAA9
|
|
Listing
|
The Subordinated Notes will not be listed on any national securities exchange or included in any automated dealer quotation system. Currently, there is no market for the Subordinated Notes, and there can be no assurances that any public market for the Subordinated Notes will develop.
|
|
United States Federal Income Tax Consequences
|
See “U.S. Federal Income Tax Consequences” at page S-23 of the Prospectus Supplement.
|
|
Governing Law
|
The Subordinated Notes and the Indenture will be governed by New York law.
|
SCHEDULE III
Issuer Free Writing Prospectuses
Investor Presentation dated February 2015
filed February 3, 2015
Issuer Free Writing Prospectus
Dated February 3, 2015
Filed Pursuant to Rule 433
Registration No. 333-199455
1 Parent of: Investor Presentation February 2015
2 Certain statements contained in this presentation are “forward - looking statements” within the meaning of the protections of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . These forward - looking statements are covered by the safe harbor provisions for forward - looking statements contained in the Private Securities Litigation Reform Act of 1995 , and we are including this statement for purposes of invoking these safe harbor provisions . Forward - looking statements are made based on our management’s expectations and beliefs concerning future events impacting our company and are subject to uncertainties and factors relating to our operations and economic environment, all of which are difficult to predict and many of which are beyond our control . You can identify these statements from our use of the words “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “may” and similar expressions . These forward - looking statements may include, among other things : ▪ statements relating to projected growth, anticipated improvements in earnings, earnings per share , asset quality, and other financial performance measures, and management’s long - term performance goals ; ▪ statements relating to the anticipated effects on results of operations or our financial condition from expected developments or events ; ▪ statements relating to our business and growth strategies ; and ▪ any other statements which are not historical facts . Forward - looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements to differ materially from our expectations of future results, performance or achievements, or industry results, expressed or implied by these forward - looking statements . These forward - looking statements may not be realized due to a variety of factors, including without limitation : ▪ the effects of future economic, business and market conditions ; ▪ changes in interest rates ; ▪ governmental monetary and fiscal policies ; ▪ changes in prices and values of real estate ; ▪ legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, including changes in the cost and scope of FDIC insurance ; ▪ the failure of assumptions regarding the levels of non - performing assets and the adequacy of the allowance for loan losses ; ▪ weaker than anticipated market conditions in our primary market areas ; ▪ the effects of competition in our market areas ; ▪ liquidity risks through an inability to raise funds through deposits, borrowings or other sources, or to maintain sufficient liquidity at the Company separate from the Bank’s liquidity ; ▪ volatility in the capital and credit markets ; and ▪ the other risk factors discussed from time to time in the periodic reports that we file with the SEC, including our Annual Report on Form 10 - K for the year ended December 31 , 2013 . You should not place undue reliance on any forward - looking statement . Forward - looking statements speak only as of the date made . We undertake no obligation to update any forward - looking statement to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events . NOTE REGARDING NON - GAAP FINANCIAL MEASURES This presentation contains financial information determined by methods other than those prescribed by accounting principles generally accepted in the United States of America ("GAAP") . These non - GAAP financial measures include the following : efficiency ratio, tangible common equity, tangible book value per common share, tangible common equity to tangible assets and tangible equity to tangible assets . Management uses these non - GAAP financial measures because it believes that they are useful for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance . Management believes these non - GAAP financial measures provide users of our financial information with meaningful measures for assessing our financial results, as well as comparison to financial results for prior periods . These non - GAAP financial measures should not be considered as a substitute for financial measures determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies . For a reconciliation of the differences between our non - GAAP financial measures and the most comparable GAAP measures, please refer to the Appendix of this presentation . Forward Looking Information
3 Offering Overview Issuer The Community Financial Corporation (NASDAQ: TCFC) Security Structure Unsecured Subordinated Debt Subordinated Debt Rating BBB - (Kroll) Maturity 10 Year Redemption Option After Year 5 Registration SEC Registered Transaction Size Up to $30 Million Par Value $1,000 Interest Payment Fixed - to - floating coupon structure; semi - annually during fixed rate period and quarterly during floating rate period (after year 5) Use of Proceeds Redeem SBLF preferred and general corporate purposes, including: supporting organic growth, accretive acquisition opportunities and payment of dividends Book - running Manager Keefe, Bruyette & Woods, Inc.
4 Subordinated Debt Offering – Pro Forma Impact As Reported 9/30/14 (1) Pro Forma $30M Sub. Debt Offering & SBLF Redemption Tier 1 Common Ratio (%) 10.86% 10.84% Tier 1 Leverage Ratio (%) 12.28% 10.26% Tier 1 Capital Ratio (%) 14.50% 12.20% Total Capital Ratio (%) 15.45% 16.54% Source: Management. Note: Pro forma statistics assume 20% risk - weighting on proceeds. (1) Ratios presented on a consolidated basis. x Total capital position remains strong x Accretive to earnings per share as SBLF steps up to 9% in March 2016
5 Corporate Overview
6 The Community Financial Corporation x The Community Financial Corporation (NASDAQ: TCFC) is the bank holding company for Community Bank of the Chesapeake (the “Bank”) x $1.1 billion in assets and market capitalization of approximately $90 Million (1) x Headquartered in Waldorf, MD with 15 locations in Maryland and Virginia • Branches: 10 in the Southern Maryland counties of Calvert, Charles and St. Mary’s and 2 in Virginia in King George county and the City of Fredericksburg • Loan Production Offices (LPOs): 4 in Maryland (Annapolis, La Plata, Prince Frederick and Leonardtown) and 1 in Virginia (Fredericksburg) x Opened Annapolis, MD LPO in October 2014 x 2 nd branch planned in Fredericksburg market x Relationship banking focus; high touch with direct access to senior decision makers x Current platform has capacity to support future organic growth x ~17% insider ownership (2) Geographic Footprint Source: SNL Financial and Management. Note: Fredericksburg and Leonardtown branch locations and LPOs are co - located. (1) Market data as of 1/22/15. (2) Includes ESOP ownership. Branches LPOs
7 Financial Highlights Source: SNL Financial, company regulatory and GAAP filings. TCFC has had no intangible assets in all presented periods. Gross lo ans presented net of deferred loan fees. (1) Non - GAAP financial measures. Refer to Appendix to this presentation for a reconciliation. (2) NPLs include nonaccrual loans, loans 90+ days past due and accruing TDRs. NPAs include NPLs and OREO. (3) Efficiency Ratio = Noninterest expense before OREO valuation allowance and OREO expense and amortization of impairment of intangibles / interest income + noninterest revenues (excludes securities gains, OREO gains and losses, and nonrecurring items). Refer to Appendix to this presentation for a reconciliation of the efficiency ratio. (4) In October 2013, the Company issued 1,591,300 shares of common stock at a price of $18.75 per share resulting in net proceeds of $27.4 million after commissions and related offering expenses. x Year over year net interest margin expansion to 3.66% x 10% year over year loan growth x 2014 YTD ROAA 0.65% x 2014 YTD income affected by one - time loan sale costs and continued investments to support organic growth Recent Financial Highlights x x 2011 FY 2012 FY 2013 FY 2013 YTD 2014 YTD ($000s except per share) 12/31/11 12/31/12 12/31/13 9/30/13 9/30/14 Balance Sheet Total Assets 983,480$ 981,639$ 1,023,824$ 992,904$ 1,042,481$ Total Gross Loans 717,744 755,888 807,268 767,960 845,253 Total Deposits 827,253 820,231 821,295 817,247 829,820 Tangible Common Equity (1) 55,454 59,047 90,730 62,148 94,765 Consolidated Capital (%) Tier 1 Risk Based Ratio 11.65 % 11.76 % 14.66 % 11.78 % 14.50 % Risk-Based Capital Ratio 12.69 12.84 15.62 12.79 15.45 TBV Per Share (1)(4) 18.32 19.34 19.52 20.39 20.21 Asset Quality (%) NPAs/ Assets (2) 2.61 % 2.50 % 2.60 % 2.70 % 1.96 % NCOs/ Avg Loans 0.61 0.27 0.14 0.15 0.17 Reserves/ NPLs (2) 37.1 46.7 41.1 40.9 58.8 7655 8247 8138 8034 8,050.00 Profitability Net Income to Common 2,489$ 4,790$ 6,451$ 4,857$ 4,795$ ROAA 0.35 % 0.52 % 0.69 % 0.69 % 0.65 % ROACE 4.5 8.3 9.4 10.5 6.9 Net Interest Margin 3.21 3.31 3.56 3.53 3.66 Efficiency Ratio (1)(3) 64.7 67.7 66.8 66.7 66.9 Diluted EPS (4) 0.82$ 1.57$ 1.88$ 1.60$ 1.03$ x x
8 Preliminary 4 th Quarter and Year End Financial Results Source: Company 2014 year end earnings release filing. Gross loans presented net of deferred loan fees. Note: 2014 year end and fourth quarter data is preliminary and unaudited. (1) NPLs include nonaccrual loans, loans 90+ days past due and accruing TDRs. NPAs include NPLs and OREO. (2) In October 2013, the Company issued 1,591,300 shares of common stock at a price of $18.75 per share resulting in net proceeds of $27.4 million after commissions and related offering expenses. TCFC has had no intangible assets in all presented periods. x Organic loan growth continues x Net interest margin continues to expand on a year over year and comparable quarter basis x 2014 NCOs increased as a result of the 2 nd quarter loan sale and the classification of two relationships as TDRs in the 4 th quarter Preliminary Financial Highlights x x 2013 FY 2014 FY ($000s except per share) 12/31/13 12/31/14 Balance Sheet Total Assets 1,023,824$ 1,082,878$ Total Gross Loans 807,268 870,890 Total Deposits 821,295 869,384 Consolidated Capital (%) Tier 1 Risk Based Ratio 14.66 % 14.26 % Risk-Based Capital Ratio 15.62 15.21 Book Value Per Share (2) 19.52 20.53 Q4 Q4 Asset Quality (%) 2013 2014 NPAs/ Assets (1) 2.60 % 2.71 % NCOs/ Avg Loans 0.14 0.28 0.13 % 0.62 % Reserves/ NPLs (1) 41.1 36.1 8138 0 8034 8,050.00 Profitability Net Income to Common 6,451$ 6,290$ 1,594$ 1,495$ Provision for Loan Losses 940 2,653 300 1,502 ROAA 0.69 % 0.63 % 0.67 % 0.59 % ROACE 9.4 6.7 7.1 6.2 Net Interest Margin 3.56 3.68 3.67 3.73 Diluted EPS (2) 1.88$ 1.35$ 0.35$ 0.32$ x x
9 Investment Highlights x Strong Fundamental Operating Trends • 28 consecutive years of profitability • Net interest margin improvement driven by stable loan yields and improving funding costs x Robust Lending Pipeline x Strong Market Share and Brand Recognition • Top community bank aggregate deposit market share in operating counties in Southern Maryland and the Northern Neck of Virginia • Successful results in new markets through local hiring, community outreach and grassroots marketing x Excellent Regional Demographics Driven by Proximity to Department of Defense (“DoD”) Headquarters, Homeland Security and Other Federal Agencies • Approximately $12B in annual procurement contracts to companies in Maryland from the DoD • 45% of Maryland’s DoD work force is made up of skilled civilian contractors conducting research, development, testing and evaluation projects • Distribution center for Dominion Power – Cove Point L iquefied Natural Gas Terminal x Experienced Senior Management Team with Strong Track Record • Average of 29 years in banking and 16 years with the Company • Proven ability to grow organically through recent economic cycle
10 $94,575 $51,579 $0 $20,000 $40,000 $60,000 $80,000 $100,000 Weighted Avg. Franchise US 4.7% 3.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Weighted Avg. Franchise US Major Market Demographics x Positioned in demographically attractive markets x Diversified economy including military, federal and state governments, research and development , technology, education , energy import/export, healthcare and professional services x Strong demographics and household income metrics, with below average unemployment rates Unemployment Rate (November 2014) (1) Note: Weighted average by deposits. (1) Source: US Bureau of Labor Statistics, not seasonally adjusted. (2) Source: SNL Financial. Population Change (2014 – 2019) (2 ) Median 2014 HH Income (2) 4.8% 5.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Weighted Avg. Franchise US
11 Complementary New Market Demographics x Expanded branch franchise into Fredericksburg, VA market in July 2014 to support existing successful LPO x Annapolis LPO opened in October 2014 x Economies and demographics for new markets strongly mirror those of the legacy TCFC franchise Unemployment Rate (November 2014) (1) Note: Weighted average by county population . Fredericksburg market assumed to include Fredericksburg City, Spotsylvania and Stafford counties in Virginia. (1) Source: US Bureau of Labor Statistics, not seasonally adjusted. (2) Source: SNL Financial . Population Change (2014 – 2019) ( 2) Median HH Income (2) 4.7% 5.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Weighted Avg. Franchise (Incl. Fredericksburg & Anne Arundel) US $90,097 $51,579 $0 $20,000 $40,000 $60,000 $80,000 $100,000 Weighted Avg. Franchise (Incl. Fredericksburg & Anne Arundel) US 5.1% 3.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Weighted Avg. Franchise (Incl. Fredericksburg & Anne Arundel) US
12 Significant In - Market Federal Agency Presence x Department of Defense in - market presence: • National Energetics Center – Naval Support Facility at Indian Head (Charles County) • Naval Surface Warfare – Naval Support Facility at Dahlgren (King George County) • Air Force One – Andrews AFB (Prince Georges County) • US Marines – Quantico (Prince William County) • Defense Intelligence Agency & Defense Intelligence Analysis Center – Joint Base Anacostia - Bolling (Prince Georges County) • Naval Air Station Patuxent River (St. Mary’s County) − Annual county economic impact $2.3 billion x Additional major in - market Federal Agency presence: • Federal Aviation Administration (FAA) Unmanned Aerial Vehicle (UAV) Drones Program • Homeland Security • FBI & DEA – Quantico (Prince William County)
13 $174 $198 $201 $221 $292 $373 $426 $458 $548 $624 $662 $718 $756 $807 $845 $168 $183 $203 $228 $267 $363 $418 $445 $525 $640 $725 $827 $820 $821 $830 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD Gross Loans ($MM) Deposits ($MM) Gross Loan CAGR: 12.2% (1) Over a Decade of Loan Growth Source: SNL Financial and Company filings. 2014 YTD as of 9/30/14 . Gross loans presented net of deferred loan fees. (1) Represents the period from 12/31/00 – 9/30/14 x 2005 & 2007 – Strategic hires from Mercantile Bancshares x 2012 & 2013 – Open a branch and a loan production office in Virginia x 2014 – Expansion into Annapolis in October 2014
14 Residential & Consumer 21% Construction 4% CRE & C&I 75% Migration into a True Commercial Bank Loan Composition (12/31/2000) $174 M illion Loan Composition (9/30/2014) Source: Management and SEC filings. Gross loans presented net of deferred loan fees . $845 M illion 57% 1 - 4 family real estate and consumer loans 75% commercial real estate and commercial & industrial loans CRE and C&I 33% Residential & Consumer 57% Construction 10% YTD Yield: 4.82%
15 NIM Consistent With Peers Net Interest Margin Source SNL Financial regulatory data and Management. Peers include all BHCs headquartered in Maryland, Virginia or Washington DC with assets between $500 million and $1.5 billion . E xcludes H Bancorp LLC. Yield on Earning Assets TCFC Δ - 14 bps Peer Δ - 67 bps TCFC Δ +69 bps Peer Δ - 24 bps 3.05% 3.15% 3.28% 3.28% 3.54% 3.52% 3.47% 3.60% 3.67% 3.60% 3.63% 3.74% 4.03% 3.83% 3.86% 3.93% 3.81% 3.74% 3.77% 3.80% 3.85% 3.58% 3.61% 3.79% 3.00% 3.50% 4.00% 4.50% 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 TCFC Regional BHC Peer Median 4.57% 4.50% 4.51% 4.41% 4.54% 4.41% 4.38% 4.43% 4.43% 4.34% 4.35% 4.43% 4.93% 4.71% 4.72% 4.64% 4.65% 4.46% 4.40% 4.41% 4.44% 4.21% 4.24% 4.26% 4.00% 4.20% 4.40% 4.60% 4.80% 5.00% 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 TCFC Regional BHC Peer Median
16 Investment Portfolio – Highlights and Composition By Investment Grade (9/30/14) By Investment Type (9/30/14 ) Source: Management. Excludes FHLB stock. Note: AFS securities shown at fair market value. HTM securities shown at book value. “Not Rated” securities include bond mut ual funds and corporate equities. $120 M illion Agency RMBS , $20.2M , 17% Agency Resi CMOs $92.6M 77% Non - Agency CMOs $2.3M 2% US Gov. Obligations , $0.8M , 1% Bond Mutual Funds $4.3M 3% Corporate Equities nil AAA , $112.8M , 94% AA+ $0.8M 1% BBB 0.4M Nil Non - Investment Grade , $1.9M , 2% Not Rated $4.3M 3%
17 Liability and Deposit Composition Total Deposits (9/30/14): $830 Million Total Deposits 830M 90% FHLB Borrowings & Repo Agreements 77M 8% TruPS 12M 1% Other 9M 1% Total Liabilities (9/30/14): $928 Million Source: Management. Time > $100K 224M 27% Time <$100K 172M 21% Noninterest Bearing Transaction 101M 12% Interest Bearing Transaction 333M 40%
18 Deposit Franchise Cost of Funding x Significant deposit franchise - with 73% “core” (1) x Effectively managing the cost of funds which declined to 0.76% for the nine months ended September 30, 2014 from 0.90% for the same time period in 2013 x Increased average balance of noninterest bearing transaction accounts by $10.3 million, or 11.8%, over last twelve months (2) x Continue to shift deposit mix away from CDs. At September 30, 2014, the Bank’s deposit funding consisted of 52.3% transaction accounts compared to 44.9% at December 31, 2011 Source: Management. YTD data for the nine month period ended 9/30/14. (1) “Core ” deposits defined as all deposits less time deposits > $ 100,000. Data as of 9/30/14. ( 2 ) Comparison reflects nine month average balance as of 9/30/14 as compared to nine month average balance as of 9/30/13. 3.06% 2.35% 1.78% 1.59% 1.21% 0.88% 0.76% 2.77% 2.11% 1.61% 1.43% 1.05% 0.71% 0.58% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y 2014YTD Cost of funds Cost of deposits
19 Asset Quality Overview Source: SNL Financial and Management. Note: Data as of 12/31/14 is preliminary and unaudited. (1) NPLs include nonaccrual loans, loans 90+ days past due and accruing TDRs. NPAs include NPLs and OREO . (2) Classified assets include loans graded as substandard, doubtful or loss, non - investment grade securities and OREO. Classified Asset Trends Nonperforming Asset Composition (12/31/2014) (1) x More than 30% improvement in NPAs from their Q3 2010 peak of $42.9 million; TDRs as of 12/31/2014 include $10.1 million related to two loan relationships restructured during the fourth quarter of 2014 x 34%, or $27.9 million, reduction in classified assets (2) since their peak in Q3 2011 from $81.9 million to $54.0 million at Q4 2014 Non - Accrual Loans $10.3M TDRs $13.2M OREO $5.9M $29.4M $79.6 $58.6 $56.9 $54.0 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 2011 2012 2013 2014
20 Significant Organic Growth Opportunities Ahead x Fredericksburg & Annapolis Areas • Opened loan production office in Fredericksburg in Q3 2013 • Branch opened in Fredericksburg in July 2014. Second Fredericksburg branch planned • Two seasoned lenders hired in Q2 2014 to develop Annapolis LPO service area. Annapolis LPO opened in October 2014 x Contiguous Market Area Strategy • Entry into new markets initially through loan production offices • Opportunistic expansion of deposit franchise TCFC Branch TCFC LPO Existing Branch Footprint Fredericksburg LPO Service Area Annapolis LPO Service Area Source: SNL Financial and Management. Note: Fredericksburg and Leonardtown branch locations and LPOs are co - located.
21 Capital Position 9/30/2014 Consolidated Capital Ratios (%) x Regulatory capital levels are well above “well - capitalized” levels x Redeemed CPP by issuing $20 million of SBLF in September 2011 x SBLF dividend rate is currently 1.0%, will step - up to 9.0% in March 2016 x $5 million of trust preferred yielding 3 Month LIBOR + 170 bps and $7 million of trust preferred yielding 3 Month LIBOR + 260 bps Source: Management as of 9/30/14. (1) Measure is a non - GAAP financial measure. Refer to Appendix to this presentation for a reconciliation . 9.09% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% TCE Ratio Leverage Ratio Tier 1 Risk- Based Ratio Total Risk- Based Capital Ratio 9/30/14 Capital Ratios SBLF TruPS 12.28% 14.50% 15.45% (1)
22 Concluding Remarks x Profitable Franchise x Organic Growth Capacity x Positioned in Demographically Attractive Markets x Appealing Competitive Dynamics x Strong, Experienced Management Team
23 Appendix
24 $8.93 $10.02 $10.48 $10.98 $12.06 $13.09 $14.28 $16.79 $17.23 $17.43 $18.25 $18.32 $19.34 $19.52 $20.21 $- $5.00 $10.00 $15.00 $20.00 $25.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 9/30/14 Tangible Book Value Per Share Consistent Shareholder Value Creation Source: SNL Financial and company filings. Note: Tangible book value per share is a non - GAAP financial measure. Refer to Appendix to this presentation for a reconciliation. In October 2013, the Company issued 1,591,300 shares of common stock at a price of $18.75 per share resulting in net proceeds of $27.4 million after commissions and related offering expenses. The additional shares outstanding impacted year to year comparability of per share book value amounts beginning with the year end ed December 31, 2013.
25 Asset Quality Trends NPAs & 90+PD / Assets (1) Allowance for Loan Losses / Loans Allowance for Loan Losses / NPLs (2) NCOs / Avg. Loans Source: SNL Financial and Management. Peers include all BHCs headquartered in Maryland, Virginia or Washington DC with total assets between $500 million and $1.5 billion . Excludes H Bancorp LLC. Peer data is as of 9/30/14, 12/31/14 data is unavailable and is excluded from the exhibits. Note: TCFC data as of 9/30/14 is unaudited and data as of 12/31/14 is preliminary and unaudited. (1) Nonperforming Assets = Nonaccrual + accruing TDRs + 90 day past due + OREO. (2) Nonperforming Loans = Nonaccrual + accruing TDRs + 90 day past due. 4.58% 2.61% 2.50% 2.60% 1.96% 2.71% 2.71% 1.48% 2.04% 2.17% 1.65% 1.49% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2010Y 2011Y 2012Y 2013Y 9/30/14 12/31/14 TCFC TCFC Excl. TDRs Regional BHC Peer Median 1.16% 1.07% 1.09% 1.01% 0.98% 0.97% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2010Y 2011Y 2012Y 2013Y 9/30/14 12/31/14 TCFC Regional BHC Peer Median 56.7% 80.5% 62.8% 52.7% 75.9% 82.6% 25.5% 37.1% 46.7% 41.1% 58.8% 36.1% 0% 20% 40% 60% 80% 100% 2010Y 2011Y 2012Y 2013Y 9/30/14 12/31/14 TCFC Excl. TDRs TCFC Regional BHC Peer Median 0.61% 0.61% 0.27% 0.14% 0.17% 0.28% 0.00% 0.25% 0.50% 0.75% 1.00% 2010Y 2011Y 2012Y 2013Y 9/30/14 YTD 2014Y TCFC Regional BHC Peer Median
26 Financial Summary Source: SNL Financial and Management. TCFC has had no intangible assets in all presented periods. Gross loans presented net of deferred loan fees . (1) Non - GAAP financial measures. Refer to Appendix to this presentation for a reconciliation. (2) Texas Ratio = NPAs / Tangible Equity + ALLL. (3) NPLs include nonaccrual loans, loans 90+ days past due and accruing TDRs. (4) NPAs include NPLs as defined above and OREO. (5) In October 2013, the Company issued 1,591,300 shares of common stock at a price of $18.75 per share resulting in net proceeds of $27.4 million after all commissions and related offering expenses. x x 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2013 FQ4 2014 FQ1 2014 FQ2 2014 FQ3 ($ in thousands except per share data) 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/13 3/31/14 6/30/14 9/30/14 Balance Sheet Total Assets 815,043$ 885,936$ 983,480$ 981,639$ 1,023,824$ 1,023,824$ 1,016,938$ 1,034,707$ 1,042,481$ Total Gross Loans 624,064 662,119 717,744 755,888 807,268 807,268 818,681 845,177 845,253 Total Deposits 640,419 724,582 827,253 820,231 821,295 821,295 809,119 818,544 829,820 Tangible Common Equity (1) 51,873 54,788 55,454 59,047 90,730 90,730 92,133 93,226 94,765 Profitability (%) Net Income Avail. to Common ($000) 2,020$ 3,919$ 2,489$ 4,790$ 6,451$ 1,594$ 1,671$ 1,285$ 1,839$ ROAA 0.38 % 0.57 % 0.35 % 0.52 % 0.69 % 0.67 % 0.69 % 0.53 % 0.73 % ROACE 3.9 7.2 4.5 8.3 9.4 7.1 7.2 5.5 7.8 Net Interest Margin 3.02 3.32 3.21 3.31 3.56 3.67 3.60 3.63 3.74 Efficiency Ratio (1) 64.8 60.2 64.7 67.7 66.8 66.9 66.7 70.1 64.1 Balance Sheet Ratios / Consolidated Capital (%) Loans/ Deposits 97.4 % 91.4 % 86.8 % 92.2 % 98.3 % 98.3 % 101.2 % 103.3 % 101.9 % Tangible Equity/ Tangible Assets 8.37 8.03 7.67 8.05 10.82 10.82 11.03 10.94 11.01 Tangible Common Equity/ Tang Assets (1) 6.36 6.18 5.64 6.02 8.86 8.86 9.06 9.01 9.09 Tier 1 Risk Based Ratio 12.30 11.84 11.65 11.76 14.66 14.66 14.78 14.45 14.50 Total Risk Based Capital Ratio 13.46 12.94 12.69 12.84 15.62 15.62 15.75 15.38 15.45 Leverage Ratio 10.03 9.44 9.17 9.39 12.50 12.50 12.46 12.43 12.28 Texas Ratio (2) 42.0 51.5 30.9 28.1 22.4 22.4 24.5 17.8 16.6 Asset Quality (%) NPLs/ Loans (3) 4.95 % 4.54 % 2.87 % 2.34 % 2.45 % 2.45 % 2.70 % 1.78 % 1.66 % NPAs/ Assets (4) 3.90 4.58 2.61 2.50 2.60 2.60 2.90 2.09 1.96 NCOs/ Avg Loans 0.20 0.61 0.61 0.27 0.14 0.13 0.07 0.35 0.08 Reserves/ Loans 1.20 1.16 1.07 1.09 1.01 1.01 1.00 0.95 0.98 Reserves/ NPLs (3) 24.2 25.5 37.1 46.7 41.1 41.1 37.1 53.4 58.8 Reserves/ NPAs (4) 23.5 18.9 29.8 33.6 30.6 30.6 27.8 37.2 40.5 7471 7669 7655 8247 8138 8138 8197 8050 8273 Per Share Data Book Value Per Share 17.43$ 18.25$ 18.32$ 19.34$ 19.52$ 19.52$ 19.66$ 19.89$ 20.21$ Tangible Book Value Per Share (1)(5) 17.43 18.25 18.32 19.34 19.52 19.52 19.66 19.89 20.21 Earnings Per Share (5) 0.68 1.30 0.82 1.57 1.88 0.35 0.36 0.28 0.39 Common Dividends Per Share 0.40 0.40 0.40 0.40 0.40 0.10 0.10 0.10 0.10 x s
27 Non - GAAP Reconciliation Tangible Book Value Per Share & Tangible Common Equity / Tangible Assets ‘‘Tangible book value per share’’ is defined as tangible stockholders’ equity less preferred equity and intangible assets divided by total common shares outstanding. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Source: Management. (dollars in thousands, except share data) For the Years Ended 2000 2001 2002 2003 2004 2005 2006 2007 2008 Stockholders' Equity 23,430$ 25,586$ 26,873$ 27,912$ 31,124$ 34,578$ 37,729$ 48,847$ 67,114$ Intangible Assets - - - - - - - - - Preferred Equity - - - - - - - - (16,317) Tangible Common Equity 23,430$ 25,586$ 26,873$ 27,912$ 31,124$ 34,578$ 37,729$ 48,847$ 50,797$ Shares Outstanding 2,624,670 2,554,218 2,564,252 2,542,314 2,580,444 2,641,487 2,642,288 2,909,974 2,947,759 Tangible Book Value per Share 8.93$ 10.02$ 10.48$ 10.98$ 12.06$ 13.09$ 14.28$ 16.79$ 17.23$ (dollars in thousands, except share data) For the Years Ended For the Quarter Ended 2009 2010 2011 2012 2013 12/31/2013 3/31/2014 6/30/2014 9/30/2014 Stockholders' Equity 68,190$ 71,105$ 75,454$ 79,047$ 110,730$ 110,730$ 112,133$ 113,226$ 114,765$ Intangible Assets - - - - - - - - - Preferred Equity (16,317) (16,317) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) Tangible Common Equity 51,873$ 54,788$ 55,454$ 59,047$ 90,730$ 90,730$ 92,133$ 93,226$ 94,765$ Total Assets 815,043$ 885,936$ 983,480$ 981,639$ 1,023,824$ 1,023,824$ 1,016,938$ 1,034,707$ 1,042,481$ Intangible Assets - - - - - - - - - Tangible Assets 815,043$ 885,936$ 983,480$ 981,639$ 1,023,824$ 1,023,824$ 1,016,938$ 1,034,707$ 1,042,481$ Shares Outstanding 2,976,046 3,002,616 3,026,557 3,052,416 4,647,407 4,647,407 4,686,157 4,687,766 4,688,152 Tangible Book Value per Share 17.43$ 18.25$ 18.32$ 19.34$ 19.52$ 19.52$ 19.66$ 19.89$ 20.21$ Tangible Common Equity / Tang. Assets 6.36% 6.18% 5.64% 6.02% 8.86% 8.86% 9.06% 9.01% 9.09%
28 Non - GAAP Reconciliation Efficiency Ratio ‘‘Efficiency ratio’’ is defined as recurring non - interest expense less foreclosed real estate (OREO) expenses and valuation allowances, less amortization of intangible assets divided by operating revenue. Operating revenue is equal to net interest income plus non - interest income excluding gains and losses on securities and foreclosed real estate. In our judgment, the adjustments made to non - interest expense and operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one - time items and other discrete items that are unrelated to our core business. (dollars in thousands) For the Years Ended For the Quarter Ended Year to Date 2009 2010 2011 2012 2013 12/31/2013 3/31/2014 6/30/2014 9/30/2014 9/30/2013 9/30/2014 Non-Interest Expense 16,580$ 18,195$ 22,249$ 23,804$ 24,844$ 6,348$ 6,331$ 6,767$ 6,485$ 18,495$ 19,583$ OREO Valuation Allowance (148) (416) (2,452) (674) (601) (100) (82) (152) - (501) (234) OREO Operating Expenses - - - (97) (186) (81) (47) (13) (37) (105) (98) Non-Recurring Expense (344) - - - - - - - - - - Adjusted Non-Interest Expense (Numerator) 16,088$ 17,779$ 19,797$ 23,033$ 24,057$ 6,167$ 6,202$ 6,602$ 6,448$ 17,889$ 19,251$ Net Interest Income 21,721$ 25,957$ 26,838$ 29,689$ 32,032$ 8,380$ 8,434$ 8,570$ 9,004$ 23,651$ 26,008$ Non-Interest income 2,810 3,580 4,193 4,410 4,174 797 895 855 1,118 3,377 2,868 (Gains) / Losses on OREO Disposals - - (454) (89) (179) 36 - (4) (56) (215) (60) Realized (Gain) / Loss on Other Assets - - - - - - - (7) - (11) (7) Realized (Gain) / Loss on Securities 280 - - - - - (24) - - - (24) Operating Revenue (Denominator) 24,811$ 29,537$ 30,577$ 34,010$ 36,027$ 9,213$ 9,305$ 9,414$ 10,066$ 26,802$ 28,785$ Efficiency Ratio 64.8% 60.2% 64.7% 67.7% 66.8% 66.9% 66.7% 70.1% 64.1% 66.7% 66.9% Source: Management.
29 Senior Management Team William J. Pasenelli Michael L. Middleton x Executive Chairman x Joined in 1973 x President and Chief Executive Officer (1979 - 2014) x EVP and Chief Risk Officer x Joined in 2005 x Former EVP and Senior Loan Officer at Mercantile Southern Maryland Bank x President and Chief Executive Officer x Joined in 2000 x Former CFO of Acacia Federal Savings Bank (1987 - 2000) Gregory Cockerham x EVP and Chief Lending Officer x Joined in 1988 x Former Executive with Maryland National Bank James M. Burke Todd L. Capitani James F. Di Misa x EVP and Chief Operating Officer x Joined in 2005 x Former EVP at Mercantile Southern Maryland Bank x EVP and Chief Financial Officer x Joined in 2009 x Former Senior Finance Manager with Deloitte Consulting and CFO of Ruesch International, Inc.
30 Senior Management Team Rebecca J. Henderson Christy
M. Lombardi x Chief Administ
SCHEDULE IV
SUBSIDIARIES OF THE COMPANY
|
|
Community Bank of the Chesapeake
|
|
|
|
Tri-County Capital Trust I
|
|
|
|
Tri-County Capital Trust II
|
|
|
|
Community Mortgage Corporation of Tri-County
|
|
Exhibit 4.1
THE COMMUNITY FINANCIAL CORPORATION
Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION
Trustee
INDENTURE
Dated as of _______________, 2015
SUBORDINATED DEBT SECURITIES
THE COMMUNITY FINANCIAL CORPORATION
CERTAIN SECTIONS OF THIS INDENTURE
RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
TRUST INDENTURE ACT OF 1939:
|
Trust Indenture Act Section
|
|
Indenture Section
|
|
§310(a)(1)
|
|
609
|
|
(a)(2)
|
|
609
|
|
(a)(3)
|
|
Not Applicable
|
|
(a)(4)
|
|
Not Applicable
|
|
(b)
|
|
608; 610
|
|
§311(a)
|
|
613
|
|
(b)
|
|
613
|
|
§312(a)
|
|
701; 702
|
|
(b)
|
|
702
|
|
(c)
|
|
702
|
|
§313(a)
|
|
703
|
|
(b)
|
|
703
|
|
(c)
|
|
703
|
|
(d)
|
|
703
|
|
§314(a)
|
|
704
|
|
(a)(4)
|
|
1004
|
|
(b)
|
|
Not Applicable
|
|
(c)(1)
|
|
102
|
|
(c)(2)
|
|
102
|
|
(c)(3)
|
|
Not Applicable
|
|
(d)
|
|
Not Applicable
|
|
(e)
|
|
102
|
|
§315(a)
|
|
601; 603
|
|
(b)
|
|
602
|
|
(c)
|
|
601
|
|
(d)
|
|
601
|
|
(e)
|
|
514
|
|
§316(a)
|
|
101
|
|
(a)(1)(A)
|
|
502; 512
|
|
(a)(1)(B)
|
|
513
|
|
(a)(2)
|
|
Not Applicable
|
|
(b)
|
|
508
|
|
(c)
|
|
104
|
|
§317(a)(1)
|
|
503
|
|
(a)(2)
|
|
504
|
|
(b)
|
|
1003
|
|
§318(a)
|
|
107
|
NOTE: This reconciliation and tie shall
not, for any purpose, be deemed to be a part of the Indenture.
TABLE OF CONTENTS
|
|
|
Page
|
|
|
|
|
|
ARTICLE I
|
|
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
|
|
|
|
|
|
Section 1.01.
|
Definitions
|
1
|
|
Section 1.02.
|
Compliance Certificates and Opinions
|
8
|
|
Section 1.03.
|
Form of Documents Delivered to Trustee
|
8
|
|
Section 1.04.
|
Acts of Holders; Record Dates
|
9
|
|
Section 1.05.
|
Notices, Etc., to Trustee and the Company
|
10
|
|
Section 1.06.
|
Notice to Holders; Waiver
|
10
|
|
Section 1.07.
|
Conflict with Trust Indenture Act
|
11
|
|
Section 1.08.
|
Effect of Headings and Table of Contents
|
11
|
|
Section 1.09.
|
Successors and Assigns
|
11
|
|
Section 1.10.
|
Separability Clause
|
11
|
|
Section 1.11.
|
Benefits of Indenture
|
11
|
|
Section 1.12.
|
Governing Law
|
11
|
|
Section 1.13.
|
Legal Holidays
|
12
|
|
Section 1.14.
|
Language of Notices, Etc.
|
12
|
|
Section 1.15.
|
Interest Limitation
|
12
|
|
Section 1.16.
|
No Personal Liability of Officers, Directors, Employees or Shareholders
|
13
|
|
Section 1.17.
|
Applicability of Depositary
|
13
|
|
|
|
|
|
ARTICLE II
|
|
SECURITY FORMS
|
|
|
|
|
|
Section 2.01.
|
Forms Generally
|
14
|
|
Section 2.02.
|
Form of Face of Security
|
14
|
|
Section 2.03.
|
Form of Reverse of Security
|
18
|
|
Section 2.04.
|
Global Securities
|
22
|
|
Section 2.05.
|
Form of Trustee’s Certificate and Authorization
|
23
|
|
|
|
|
|
ARTICLE III
|
|
THE SECURITIES
|
|
|
|
|
|
Section 3.01.
|
Amount Unlimited; Issuable in Series
|
24
|
|
Section 3.02.
|
Denominations
|
27
|
|
Section 3.03.
|
Execution, Authentication, Delivery and Dating
|
27
|
|
Section 3.04.
|
Temporary Securities
|
29
|
|
Section 3.05.
|
Registration, Registration of Transfer and Exchange
|
29
|
|
Section 3.06.
|
Mutilated, Destroyed, Lost and Stolen Securities
|
31
|
|
Section 3.07.
|
Payment of Interest; Interest Rights Preserved
|
32
|
|
Section 3.08.
|
Persons Deemed Owners
|
33
|
|
Section 3.09.
|
Cancellation
|
33
|
|
Section 3.10.
|
Computation of Interest
|
34
|
TABLE OF CONTENTS
(continued)
|
|
|
Page
|
|
|
|
|
|
Section 3.11.
|
CUSIP Numbers
|
34
|
|
|
|
|
|
ARTICLE IV
|
|
SATISFACTION AND DISCHARGE
|
|
|
|
|
|
Section 4.01.
|
Satisfaction and Discharge of Indenture
|
34
|
|
Section 4.02.
|
Application of Trust Money
|
35
|
|
|
|
|
|
ARTICLE V
|
|
REMEDIES
|
|
|
|
|
|
Section 5.01.
|
Events of Default
|
35
|
|
Section 5.02.
|
Acceleration of Maturity; Rescission and Annulment
|
36
|
|
Section 5.03.
|
Collection of Indebtedness and Suits for Enforcement by Trustee
|
37
|
|
Section 5.04.
|
Trustee May File Proofs of Claim
|
38
|
|
Section 5.05.
|
Trustee May Enforce Claims Without Possession of Securities
|
38
|
|
Section 5.06.
|
Application of Money Collected
|
38
|
|
Section 5.07.
|
Limitation on Suits
|
39
|
|
Section 5.08.
|
Unconditional Right of Holders to Receive Principal, Premium and Interest
|
40
|
|
Section 5.09.
|
Restoration of Rights and Remedies
|
40
|
|
Section 5.10.
|
Rights and Remedies Cumulative
|
40
|
|
Section 5.11.
|
Delay or Omission Not Waiver
|
40
|
|
Section 5.12.
|
Control by Holders
|
40
|
|
Section 5.13.
|
Waiver of Past Defaults
|
41
|
|
Section 5.14.
|
Undertaking for Costs
|
41
|
|
|
|
|
|
ARTICLE VI
|
|
THE TRUSTEE
|
|
|
|
|
|
Section 6.01.
|
Certain Duties and Responsibilities
|
41
|
|
Section 6.02.
|
Notice of Defaults
|
43
|
|
Section 6.03.
|
Certain Rights of Trustee
|
43
|
|
Section 6.04.
|
Not Responsible for Recitals or Issuance of Securities
|
44
|
|
Section 6.05.
|
May Hold Securities
|
44
|
|
Section 6.06.
|
Money Held in Trust
|
45
|
|
Section 6.07.
|
Compensation and Reimbursement
|
45
|
|
Section 6.08.
|
Disqualification; Conflicting Interests
|
46
|
|
Section 6.09.
|
Corporate Trustee Required; Eligibility
|
46
|
|
Section 6.10.
|
Resignation and Removal; Appointment of Successor
|
46
|
|
Section 6.11.
|
Acceptance of Appointment by Successor
|
47
|
|
Section 6.12.
|
Merger, Conversion, Consolidation or Succession to Business
|
48
|
|
Section 6.13.
|
Preferential Collection of Claims Against the Company
|
49
|
|
Section 6.14.
|
Appointment of Authenticating Agent
|
49
|
|
|
|
|
TABLE OF CONTENTS
(continued)
|
|
|
Page
|
|
|
|
|
|
ARTICLE VII
|
|
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND THE COMPANY
|
|
|
|
|
|
Section 7.01.
|
The Company to Furnish Trustee Names and Addresses of Holders
|
51
|
|
Section 7.02.
|
Preservation of Information; Communications to Holders
|
51
|
|
Section 7.03.
|
Reports by Trustee
|
51
|
|
Section 7.04.
|
Reports by the Company
|
52
|
|
|
|
|
|
ARTICLE VIII
|
|
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
|
|
|
|
|
|
Section 8.01.
|
The Company May Consolidate, Etc., Only on Certain Terms
|
52
|
|
Section 8.02.
|
Successor Substituted
|
53
|
|
|
|
|
|
ARTICLE IX
|
|
SUPPLEMENTAL INDENTURES
|
|
|
|
|
|
Section 9.01.
|
Supplemental Indentures Without Consent of Holders
|
53
|
|
Section 9.02.
|
Supplemental Indentures with Consent of Holders
|
54
|
|
Section 9.03.
|
Execution of Supplemental Indentures
|
55
|
|
Section 9.04.
|
Effect of Supplemental Indentures
|
55
|
|
Section 9.05.
|
Conformity with Trust Indenture Act
|
55
|
|
Section 9.06.
|
Reference in Securities to Supplemental Indentures
|
55
|
|
|
|
|
|
ARTICLE X
|
|
COVENANTS
|
|
|
|
|
|
Section 10.01.
|
Payment of Principal, Premium and Interest
|
56
|
|
Section 10.02.
|
Maintenance of Office or Agency
|
56
|
|
Section 10.03.
|
Money for Securities Payments to Be Held in Trust
|
57
|
|
Section 10.04.
|
Statement by Officers as to Default
|
58
|
|
Section 10.05.
|
Waiver of Certain Covenants
|
58
|
|
|
|
|
|
ARTICLE XI
|
|
REDEMPTION OF SECURITIES
|
|
|
|
|
|
Section 11.01.
|
Applicability of Article
|
58
|
|
Section 11.02.
|
Election to Redeem; Notice to Trustee
|
58
|
|
Section 11.03.
|
Selection by Trustee of Securities to be Redeemed
|
59
|
|
Section 11.04.
|
Notice of Redemption
|
59
|
|
Section 11.05.
|
Deposit of Redemption Price
|
60
|
|
Section 11.06.
|
Securities Payable on Redemption Date
|
60
|
|
Section 11.07.
|
Securities Redeemed in Part
|
60
|
TABLE OF CONTENTS
(continued)
|
|
|
Page
|
|
|
|
|
|
ARTICLE XII
|
|
SINKING FUNDS
|
|
|
|
|
|
Section 12.01.
|
Applicability of Article
|
61
|
|
Section 12.02.
|
Satisfaction of Sinking Fund Payments with Securities
|
61
|
|
Section 12.03.
|
Redemption of Securities for Sinking Fund
|
61
|
|
|
|
|
|
ARTICLE XIII
|
|
DEFEASANCE
|
|
|
|
|
|
Section 13.01.
|
Applicability of Article
|
62
|
|
Section 13.02.
|
Legal Defeasance
|
62
|
|
Section 13.03.
|
Covenant Defeasance
|
64
|
|
Section 13.04.
|
Application by Trustee of Funds Deposited for Payment of Securities
|
65
|
|
Section 13.05.
|
Repayment to the Company
|
65
|
|
Section 13.06.
|
Reinstatement
|
65
|
|
|
|
|
|
ARTICLE XIV
|
|
SUBORDINATION OF SECURITIES
|
|
|
|
|
|
Section 14.01.
|
Securities Subordinated to Senior Debt
|
66
|
INDENTURE dated as
of _________, 2015, between
The Community Financial Corporation
, a Maryland corporation
(the “Company”), having its principal office at 3035 Leonardtown Road, Waldorf, Maryland 20601, and Wilmington Trust,
National Association, a national banking association (the “Trustee”), having an office at 1100 North Market Street,
Wilmington, Delaware 19890.
RECITALS OF THE COMPANY
The Company has duly
authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured subordinated
debentures, notes or other evidences of indebtedness (the “Securities”), to be issued in one or more series as provided
in this Indenture.
All things necessary
to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
This Indenture is subject
to the provisions of the Trust Indenture Act that are required to be a part of this Indenture and, to the extent applicable, shall
be governed by such provisions.
WITNESSETH:
NOW, THEREFORE, THIS
INDENTURE
For and in consideration
of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, as follows:
ARTICLE
I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section
1.01.
Definitions
For all purposes of
this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the
terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all
other terms used herein which are defined in the Trust Indenture Act, either directly, or by reference therein, have the meanings
assigned to them therein;
(3) all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly provided, the term “
generally accepted accounting
principles
” with respect to any computation required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States at the date of such computation;
(4) the
words “
herein
”, “
hereof
” and “
hereunder
” and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
(5) the
words “
Article
” and “
Section
” refer to an Article and Section, respectively, of this Indenture;
and
(6) “or”
is not exclusive.
“
Act
”,
when used with respect to any Holder, has the meaning specified in Section 1.04.
“
Affiliate
”
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition, “
control
” when used with respect
to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms “
controlling
” and “
controlled
”
have meanings correlative to the foregoing.
“
Authenticating
Agent
” means any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
“
Authorized
Newspaper
” means a newspaper, in the English language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place
in connection with which the term is used or in the financial community of such place.
“
Bankruptcy
Law
” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors or the protection of creditors.
“
Board of Directors
”
means the board of directors of the Company, or the executive or any other committee of that board duly authorized to act in respect
thereof.
“
Board Resolution
”
means a copy of a resolution certified by the Corporate Secretary of the Company, the principal financial officer of the Company
or any other authorized officer of the Company or a Person duly authorized by any of them, to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“
Business
Day
” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New
York, New York or the principal Place of Payment are authorized or required by law, regulation or executive order to remain
closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
“
Commission
”
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
“
Company
”
means the Person named as the “
Company
” in the first paragraph of this instrument until a successor Person shall
have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such
successor Person.
“
Company Request
”
or “
Company Order
” means a written request or order signed in the name of the Company by the Chairman of the
Board, the Vice Chairman, the President or a Vice President of the Company, and by the Treasurer or Secretary of the Company, and
delivered to the Trustee.
“
Corporate
Trust Office
” means the office of the Trustee at which at any particular time its corporate trust business related to
this Indenture shall be principally administered, which at the date hereof is 1100 North Market Street, Wilmington, Delaware 19890.
“
Corporation
”
includes corporations, associations, partnerships (general or limited), limited liability companies, joint-stock companies and
business trusts.
“
Covenant
defeasance
” has the meaning specified in Section 13.03.
“
Custodian
”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
“
Debt
”
means any debt for money borrowed.
“
Default
”
means, with respect to a series of Securities, any event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to Securities of such series.
“
Defaulted
Interest
” has the meaning specified in Section 3.07.
“
Defeasance
”
has the meaning specified in Section 13.02.
“
Definitive
Security
” means a Security other than a Global Security or a temporary Security.
“
Depositary
”
means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section
3.01, until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter
shall mean or include each Person which is then a Depositary hereunder, and if at any time there is more than one such Person,
shall be a collective reference to such Persons.
“
Dollar
”
or “
$
” means the coin or currency of the United States of America as at the time of payment is legal tender
for the payment of public and private debts.
“
Event of
Default
” has the meaning specified in Section 5.01.
“
Exchange
Act
” means the Securities Exchange Act of 1934, as amended from time to time, and any statute successor thereto.
“
Fiscal Year
”
means, with respect to the Company, each 12-month period beginning on October 1 and ending on September 30;
provided
,
however
,
that, with respect to a series of Securities, the first fiscal year will begin on the date such series of Securities is authenticated
and delivered under this Indenture. The Company will notify the Trustee in writing if its fiscal year changes.
“
Global Security
”
means a Security in global form that evidences all or part of the Securities of any series and is registered in the name of the
Depositary for such Securities or a nominee thereof.
“
Holder
”
means a Person in whose name a Security is registered in the Security Register.
“
Indenture
”
means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument,
and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this
instrument and any such supplemental indenture, respectively. The term “Indenture” also shall include the terms of
particular series of Securities established as contemplated by Section 3.01.
“
Interest
”,
when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
“
Interest
Payment Date
”, when used with respect to any Security, means the Stated Maturity of an installment of interest on such
Security.
“
Maturity
”,
when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption
or otherwise.
“
Notice of
Default
” means a written notice of the kind specified in Section 5.01(3).
“
Officers’
Certificate
” of a Person means a certificate signed by any two of the Chairman of the Board, the Vice Chairman, the President
or a Vice President of the Person, or if such Person is a partnership, of its general partner, and delivered to the Trustee. One
of the officers or such other Persons (as applicable) signing an Officers’ Certificate given pursuant to Section 1004 shall
be the principal executive, financial or accounting officer of the Person, or if such Person is a partnership, of its general partner.
“
Opinion of
Counsel
” means a written opinion of legal counsel, who may be an employee of or counsel for the Company, which opinion
shall comply with the provisions of Sections 1.02 and 1.03. Such counsel shall be acceptable to the Trustee, whose acceptance shall
not be unreasonably withheld.
“
Original
Issue Discount Security
” means any Security which provides for an amount less than the stated principal amount thereof
to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02.
“
Outstanding
”,
when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities
theretofore previously canceled by the Trustee or delivered to the Trustee for cancellation pursuant to a Company Order;
(ii) Securities
for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities;
provided, however
, that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor has been made;
(iii) Securities
which have been paid pursuant to Section 3.06 or in exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the
Trustee proof that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the
Company; and
(iv) Securities,
except to the extent provided in Sections 13.02 and 13.03, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article XIII;
provided, however
, that in determining
whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, (A) the principal amount of an Original Issue Discount Security that shall be deemed
to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination
upon acceleration of the Maturity thereof on such date pursuant to Section 5.02, (B) the principal amount of a Security denominated
in one or more currencies or currency units other than U.S. dollars shall be the U.S. dollar equivalent of such currencies or currency
units, determined in the manner provided as contemplated by Section 3.01 on the date of original issuance of such Security, of
the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent (as so determined) on
the date of original issuance of such Security, of the amount determined as provided in Clause (A) above) of such Security, and
(C) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned as described in Clause (C) above which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act
with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor.
“
Paying Agent
”
means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the
Company.
“
Periodic
Offering
” means an offering of Securities of a series from time to time, the specific terms of which Securities, including,
without limitation, the rate or rates of interest or formula for determining the rate or rates of interest thereon, if any, the
Stated Maturity or Stated Maturities thereof, the original issue date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by Section 3.01 with respect thereto, are to be determined by the
Company upon the issuance of such Securities.
“
Person
”
means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
“
Place
of Payment
”, when used with respect to the Securities of any series, means, unless otherwise specifically provided
for with respect to such series as contemplated by Section 3.01, the office or agency of the Company (which may be an office
of the Paying Agent) in Waldorf, Maryland and such other place or places where, subject to the provisions of Section 10.02,
the principal of and any premium and interest on the Securities of that series are payable as specified as contemplated by
Section 3.01.
“
Predecessor
Security
” of any particular Security means every previous Security evidencing all or a portion of the same Debt as that
evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under
Section 3.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same
Debt as the mutilated, destroyed, lost or stolen Security.
“
Redemption
Date
”, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant
to this Indenture.
“
Redemption
Price
”, when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant
to this Indenture.
“
Regular Record
Date
” for the interest payable on any Interest Payment Date on the Securities of any series means the date specified
for that purpose as contemplated by Section 3.01.
“
Securities
”
has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
“
Security
Register
” and “
Security Registrar
” have the respective meanings specified in Section 3.05.
“
Senior Debt
”
” means: (i) the principal and any premium or interest for money borrowed or purchased by the Company (including interest
accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such
claim for post petition interest is allowed in such proceedings); (ii) the principal and any premium or interest for money
borrowed or purchased by another Person and guaranteed by the Company; (iii) any deferred obligation for the payment of the
purchase price of property or assets evidenced by a note or similar agreement; (iv) an obligation arising from direct credit substitutes;
and (v) any obligation associated with derivative products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements; in each case, whether outstanding on the date this Subordinated Indenture becomes effective,
or created, assumed or incurred after that date;
provided
,
however
, that Senior Debt excludes (a) any indebtedness,
obligation or liability referred to in clauses (i) through (v) above as to which, in the instrument creating or evidencing
that indebtedness, obligation or liability, it is expressly provided that the indebtedness, obligation or liability is junior to,
or ranks equally in right of payment with, the Securities; and (b) the junior subordinated debentures issued to Tri-County Capital
Trust I and Tri-County Capital Trust II and any guarantee of the Company in respect of the equity securities or other securities
of Tri-County Capital Trust I and Tri-County Capital Trust II.
“
Special Record
Date
” for the payment of any Defaulted Interest means a date fixed by the Company pursuant to Section 3.07.
“
Stated Maturity
”,
when used with respect to the principal of any Security or any installment of principal thereof or interest thereon, means the
date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest
is due and payable.
“
Subsidiary
”
means, with respect to any Person, any entity of which more than 50% of the total voting power of the equity interests entitled,
without regard to the occurrence of any contingency, to vote in the election of directors, managers or trustees thereof; or any
partnership of which more than 50% of the partners’ equity interests, considering all partners’ equity interests as
a single class, is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or combination thereof.
“
Trust Indenture
Act
” means the Trust Indenture Act of 1939, as so amended.
“
Trustee
”
means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include
each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, “Trustee” as used
with respect to the Securities of any series shall mean each Trustee with respect to Securities of that series.
“
U.S. Government
Obligations
” means securities which are (i) direct obligations of the United States for the payment of which its full
faith and credit is pledged, or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality
of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States,
each of which are not callable or redeemable at the option of the issuer thereof.
“
Vice President
”,
when used with respect to the Company, means any vice president of the Company, or when used with respect to the Trustee, means
any vice president of the Trustee.
Section
1.02.
Compliance Certificates and Opinions
Upon any application
or request by the Company to the Trustee to take or refrain from taking any action under any provision of this Indenture, the Company
shall furnish to the Trustee an Officers’ Certificate in form satisfactory to the Trustee stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have
been complied with, and an Opinion of Counsel in form satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with. Each such certificate or opinion shall be given in the form of an Officers’
Certificate, if to be given by officers of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with
the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture.
Every Officers’
Certificate or Opinion of Counsel (except for certificates provided for in Section 10.04) shall include:
(1) a
statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a
statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a
statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
Section
1.03.
Form of Documents Delivered to Trustee
In any case where several
matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or
opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company, stating that the information with respect to such factual matters is
in the possession of the Company, unless such counsel knows that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is
required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one instrument.
Section
1.04.
Acts of Holders; Record Dates
Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed (either physically
or by means of a facsimile or an electronic transmission,
provided
that such electronic transmission is transmitted through
the facilities of a Depositary) by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or instruments are delivered (either physically or
by means of a facsimile or an electronic transmission,
provided
that such electronic transmission is transmitted through
the facilities of a Depositary) to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders
signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
Without limiting the
generality of the foregoing, a Holder, including a Depositary that is a Holder of a Global Security, may make, give or take, by
a proxy or proxies, duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other
action provided in this Indenture to be made, given or taken by Holders, and a Depositary that is a Holder of a Global Security
may provide its proxy or proxies to the beneficial owners of interests in any such Global Security.
The fact and date of
the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or
by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The
fact and date of the execution of any such instrument or writing or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
The ownership, principal
amount and serial numbers of Securities held by any Person, and the date of commencement of such Person’s holding the same,
shall be proved by the Security Register.
Any request, demand,
authorization, direction, notice, consent, waiver or other action of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor
or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
Without limiting the foregoing, a Holder entitled hereunder
to give or take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal
amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard
to all or any different part of such principal amount.
The Company may set
any day as the record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture
to be given or taken by Holders of Securities of such series, but the Company shall have no obligation to do so. With regard to
any record date set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date
(or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not
such Holders remain Holders after such record date.
Section
1.05.
Notices, Etc., to Trustee and the Company
Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the
Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made in writing and actually received
by the Trustee at its office at 1100 North Market Street, Wilmington, Delaware 19890, or at any other address previously furnished
in writing by the Trustee, or
(2) the
Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company, addressed to it at 3035 Leonardtown Road, Waldorf, Maryland
20601, to the attention of the Corporate Secretary, or at any other address previously furnished in writing to the Trustee by the
Company.
Section
1.06.
Notice to Holders; Waiver
Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid (if international mail, by air mail), to each Holder affected by such event,
at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest
date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure
to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have
been received by such Holder, whether or not such Holder actually receives such notice.
Notwithstanding any
other provision of this Indenture or any Security, where this Indenture or any Security provides for notice of any event (including
any notice of redemption) to a Holder of a Global Security (whether by mail or otherwise), such notice shall be sufficiently given
if given to the Depositary for such Security (or its designee) pursuant to the standing instructions from the Depositary (or its
designee), including by electronic mail in accordance with accepted practices at the Depositary.Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case of the suspension
of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification
as shall be made with the approval of the Company shall constitute a sufficient notification for every purpose hereunder.
Section
1.07.
Conflict with Trust Indenture Act
If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture
as so modified or excluded, as the case may be.
Section
1.08.
Effect of Headings and Table of Contents
The Article and Section
headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
Section
1.09.
Successors and Assigns
All covenants and agreements
in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
Section
1.10.
Separability Clause
In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section
1.11.
Benefits of Indenture
Nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder,
the holders of Senior Debt and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section
1.12.
Governing Law
This Indenture and
the Securities shall be governed by and construed in accordance with the law of the State of New York.
Section
1.13.
Legal Holidays
In any case where any
Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities (other than a provision of the Securities of any series which specifically
states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not
be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity,
provided
that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
Section
1.14.
Language of Notices, Etc.
Any request, demand,
authorization, direction, notice, consent, waiver or Act required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country of publication.
Section
1.15.
Interest Limitation
It is the intention
of the Company to conform strictly to all applicable usury laws and any subsequent revisions, repeals or judicial interpretations
thereof. Accordingly, if the transactions contemplated hereby would be usurious under any applicable law then, in that event, notwithstanding
anything to the contrary in the Securities or this Indenture, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law with respect to a Security shall under no circumstances exceed the maximum amount allowed
by applicable law, and any excess shall be credited to the principal amount of such Security (or, if the principal amount of such
Security shall have been paid in full, refunded to the Company), to the extent permitted by applicable law; and (ii) in the event
that the maturity of any Security is accelerated or in the event of any redemption of such Security, then such consideration that
constitutes interest under applicable law may never include more than the maximum amount allowed by applicable law, and any excess
shall be credited to the principal amount of such Security (or, if the principal amount of such Security shall be paid in full,
refunded to the Company), to the extent permitted by applicable law. All calculations (as determined by the Company and communicated
to the Trustee and the Paying Agent in a Company Order) made to compute the rate of interest with respect to a Security for the
purpose of determining whether such rate exceeds the maximum amount allowed by applicable law shall be made, to the extent permitted
by such applicable law, by allocating and spreading during the period of the full stated term of such Security all interest any
time contracted for, taken, reserved, charged or received by such Holder or by the Trustee on behalf of any such Holder in connection
therewith so that the amount or rate of interest charged for any and all periods of time during the term of the Security does not
exceed the maximum amount or rate of interest allowed to be charged by law during the relevant period of time. Notwithstanding
any of the foregoing, if at any time applicable laws shall be changed so as to permit a higher rate or amount of interest to be
charged than that permitted prior to such change, then unless prohibited by law, references in this Indenture or any Security to
“applicable law” when used in the context of determining the maximum interest or rate of interest that can be charged
shall be deemed to refer to such applicable law as so amended to allow the greater amount or rate of interest.
The right to accelerate
maturity of any Security does not include the right to accelerate any interest which has not otherwise accrued to the date of such
acceleration, provided, however, that the foregoing shall not prohibit the continuing accrual after acceleration of interest in
accordance with the terms of the Indenture and such Security.
Section
1.16.
No Personal Liability of Officers, Directors, Employees or Shareholders
Obligations of the
Company under this Indenture and the Securities hereunder are payable only out of cash flow and assets of the Company. Each Holder
of a Security by its acceptance thereof, will be deemed to have agreed in this Indenture that no director, officer, employee, or
shareholder, as such, of the Company, the Trustee, or any Affiliate of any of the foregoing entities shall have any personal liability
in respect of the obligations of the Company under this Indenture or such Securities by reason of his, her or its status. The agreements
set forth in this Section are part of the consideration for the issuance of the Securities.
Section
1.17.
Applicability of Depositary
Notwithstanding any
other provision of this Indenture, so long as a series of Securities is a Global Security, the parties hereto will be bound at
all times by the applicable procedures of the Depositary with respect to such series.
Section
1.18.
Force Majeure
.
In no event shall
the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or
caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents,
acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss
or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee
shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon
as practicable under the circumstances.
Section 1.19.
U.S.A.
Patriot Act
.
The parties hereto acknowledge that in
accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help
fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each
person or legal entity that establishes a relationship or opens an account with the Trustee.
ARTICLE
II
SECURITY FORMS
Section
2.01.
Forms Generally
The Securities of each
series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant
to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable laws or the
rules of any securities exchange or automated quotation system on which the Securities of such series may be listed or traded or
of any Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced
by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized Person
on behalf of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section
3.03 for the authentication and delivery of such Securities.
The Definitive Securities
shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined
by the Officers executing such Securities, as evidenced by their execution of such Securities.
Section
2.02.
Form of Face of Security
[Insert any legend required by the United
States Internal Revenue Code and the regulations thereunder.]
[If a Global Security,
as required by Section 2.04 of this Indenture, insert
—
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A
NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY
AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL
SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.]
[If applicable, insert
—
UNLESS
THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE COMMUNITY FINANCIAL CORPORATION
[TITLE OF SECURITY]
|
NO.
|
U.S.$_____________
|
|
|
|
|
[CUSIP No. ]
|
|
THE COMMUNITY FINANCIAL CORPORATION, a Maryland corporation
(herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to __________________, or registered assigns, the principal sum of
United States
Dollars [state other currency] on _____________ __, 20__, [if the Security is to bear interest prior to Maturity, insert—,
and to pay interest thereon from ______________ __, 20__, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually on and in each year, commencing ____________, at the rate of _____% per annum, until the
principal hereof is paid or made available for payment [if applicable, insert—, and at the rate of _____% per annum on any
overdue principal and premium and on any overdue installment of interest]. [If applicable, insert — (The amount of interest
payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year. The amount of interest payable
for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the days elapsed in any partial
month. In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the interest
payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment
in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable. A “Business
Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in ____________________
or any applicable Place of Payment are authorized or required by law, regulation or executive order to remain closed or (iii) a
day on which the Corporate Trust Office of the Trustee is closed for business.)]. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest,
which shall be the ____________________ or ___________________ (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Company, notice of which shall be given to Holders of Securities of this series not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Securities of this series may be listed or traded, and upon such notice as may be required
by such exchange or automated quotation system, all as more fully provided in such Indenture].
[If the Security is
not to bear interest prior to Maturity, insert—(The principal of this Security shall not bear interest except in the case
of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal
of this Security shall bear interest at the rate of ______% per annum, which shall accrue from the date of such default in payment
to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on
demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of _____% per
annum, which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided
for, and such interest shall also be payable on demand.)].
[If a Global Security,
insert—(Payment of the principal of [(and premium, if any)] and [if applicable, insert—any such] interest on this Security
will be made by transfer of immediately available funds to a bank account designated by the Holder 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 [state other currency].]
[If a Definitive Security,
insert—(Payment of the principal of [(and premium, if any)] and [if applicable, insert—any such] interest on this Security
will be made at the office or agency of the Company maintained for that purpose in __________________, [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] [state other
currency] [or subject to any laws or regulations applicable thereto and to the right of the Company (as provided in the Indenture)
to rescind the designation of any such Paying Agent, at the [main] offices of _____________ in _______________ and in ________________________,
or at such other offices or agencies as the Company may designate, by [United States Dollar] [state other currency] check drawn
on, or transfer to a [United States Dollar] account maintained by the payee with, a bank in ____________________ (so long as the
applicable Paying Agent has received proper transfer instructions in writing at least 15 days prior to the payment date)] [if applicable,
insert—;
provided, however
, that payment of interest may be made at the option of the Company through the Paying Agent
by [United States Dollar] [state other currency] check mailed to the addresses of the Persons entitled thereto as such addresses
shall appear in the Security Register] [or by transfer to a [United States Dollar] [state other currency] account maintained by
the payee with a bank in ______________________ (so long as the applicable Paying Agent has received proper transfer instructions
in writing by the Record Date prior to the applicable Interest Payment Date)].]
Reference is hereby
made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate
of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF,
the Company has caused this instrument to be duly executed.
Dated: _______________
|
|
THE COMMUNITY FINANCIAL CORPORATION,
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
This is one of the
Securities of the series designated therein referred to in the within-mentioned Indenture.
|
Wilmington Trust, National Association,
|
|
|
|
As Trustee
|
|
|
|
|
|
|
By:
|
|
|
|
|
Authorized Signatory
|
|
Dated: [_______________________]
Section
2.03.
Form of Reverse of Security
This Security is one
of a duly authorized issue of securities of the Company (the “Securities”), issued and to be issued in one or more
series under an Indenture dated as of [______________] (the “Indenture”), between the Company and ____________________,
as Trustee (the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or
more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear
interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking,
purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the
Indenture provided or permitted. This Security is one of the series designated on the face hereof [if applicable, insert—,
limited in aggregate principal amount to U.S. $ _____________].
[If applicable, insert—The
Securities of this series are subject to redemption upon not less than 30 nor more than 60 days’ notice by mail, [if applicable,
insert—(1) on in any year commencing with the year 20__ and ending with the year 20__ through operation of the sinking fund
for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [if applicable, insert—on
or after __________ __, 20__], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed
as percentages of the principal amount): If redeemed [if applicable, insert—on or before__________ __, 20__, ____%, and if
redeemed] during the 12-month period beginning ____________ of the years indicated,
|
Year
|
Redemption Price
|
Year
|
Redemption Price
|
|
|
|
|
|
and thereafter at a Redemption Price equal
to _____% of the principal amount, together in the case of any such redemption [if applicable, insert—(whether through operation
of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities,
of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert—The
Securities of this series are subject to redemption upon not less than 30 nor more than 60 days’ notice by mail, (1) on _____________
in any year commencing with the year 20__ and ending with the year 20__ through operation of the sinking fund for this series at
the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set
forth in the table below, and (2) at any time [if applicable, insert—on or after ____________ __, 20__, as a whole or in
part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning
__________________ of the years indicated,
|
Year
|
Redemption Price for
Redemption Through Operation
of the Sinking Fund
|
Redemption Price for Redemption
Otherwise Than Through Operation of
the Sinking Fund
|
|
|
|
|
and thereafter at a Redemption Price equal to ____% of the principal
amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest
to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable
to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record
Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert—The
sinking fund for this series provides for the redemption on in each year beginning with the year 20__ and ending with the year
20__ of [if applicable,—not less than $
(“mandatory sinking fund”) and not more than] $__________ aggregate
principal amount of Securities of this series. Securities of this series acquired or redeemed by the Company otherwise than through
[if applicable,—mandatory] sinking fund payments may be credited against subsequent [if applicable,—mandatory] sinking
fund payments otherwise required to be made [if applicable,—in the inverse order in which they become due].]
[If the Security is
subject to redemption in part of any kind, insert—In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.]
[If applicable, insert—The
Securities of this series are not redeemable prior to Stated Maturity.]
[If the Security is
not an Original Issue Discount Security, insert—If an Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture.]
[If the Security is
an Original Issue Discount Security, insert—If an Event of Default with respect to Securities of this series shall occur
and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture. Such amount shall be equal to—insert formula for determining the amount. Upon payment
(1) of the amount of principal so declared due and payable, and (2) of interest on any overdue principal and overdue interest,
all of the Company’s obligations in respect of the payment of the principal of and interest, if any, on the Securities of
this series shall terminate.]
The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company
and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of not less than the Holders of a majority in aggregate principal amount of the Outstanding Securities
of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of a majority
in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class), on behalf of the Holders
of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture permits,
with certain exceptions as therein provided, the Holders of a majority in principal amount of Securities of any series then Outstanding
to waive past defaults under the Indenture with respect to such series 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 notation of such
consent or waiver is made upon this Security.
As provided in and
subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this
series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have
made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of
this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding,
for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted
by the Holder of this Security for the enforcement of any payment of principal hereof or [any premium or] interest hereon on or
after the respective due dates expressed herein.
No reference herein
to the Indenture and no provision of this Security or of the Indenture shall, without the consent of the Holder, alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the principal of and [any premium and] interest on this
Security at the times, place(s) and rate, and in the coin or currency, herein prescribed, except for Section 1.15 of the Indenture
(which limits interest to the maximum amount permissible by law), the provisions of which are incorporated herein by reference.
[If a Global Security,
insert—This Global Security or portion hereof may not be exchanged for Definitive Securities of this series except in the
limited circumstances provided in the Indenture.
The holders of beneficial
interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described
in the Indenture and will not be considered the Holders thereof for any purpose under the Indenture.]
[If a Definitive Security,
insert—As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is
registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of
the Company in [if applicable, insert — any place where the principal of and any premium and interest on this Security are
payable] [if applicable, insert— _____________] [, or, subject to any laws or regulations applicable thereto and to the right
of the Company (limited as provided in the Indenture) to rescind the designation of any such transfer agent, at the [main] offices
of ___________________ in ______________________ and in _____________________ or at such other offices or agencies as the Company
may 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 his attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued
to the designated transferee or transferees.]
The Securities of this
series are issuable only in registered form without coupons in minimum denominations of U.S. $_______ [state other currency] and
any integral multiple of [_____] in excess thereof. As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like
tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall
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
of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue,
and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
This Security is subordinated
in right of payment to Senior Debt, to the extent provided in the Indenture.
Obligations of the
Company under the Indenture and the Securities thereunder, including this Security, are payable only out of cash flow and assets
of the Company. Each Holder of a Security by its acceptance hereof, will be deemed to have agreed in the Indenture that no director,
officer, employee, or shareholder, as such, of the Company, the Trustee, or any Affiliate of any of the foregoing entities shall
have any personal liability in respect of the obligations of the Company under the Indenture or such Securities by reason of his,
her or its status.
The Indenture contains
provisions that relieve the Company from the obligation to comply with certain restrictive covenants in the Indenture and for satisfaction
and discharge at any time of the entire indebtedness upon compliance by the Company with certain conditions set forth in the Indenture.
This Security shall
be governed by and construed in accordance with the laws of the State of New York.
All terms used in this
Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
[If a Definitive Security, insert as a
separate page—
FOR VALUE RECEIVED,
the undersigned hereby sell(s), assign(s) and transfer(s) unto________________ (Please Print or Typewrite Name and Address of Assignee)
the within instrument of THE COMMUNITY FINANCIAL CORPORATION., and does hereby irrevocably constitute and appoint _____________
Attorney to transfer said instrument on the books of the within-named Company, with full power of substitution in the premises.
Please Insert Social Security or
Other Identifying Number of Assignee:
|
Dated:_________________
|
|
|
|
|
|
(Signature)
|
Signature Guarantee:
(Participant in a Recognized Signature
Guaranty Medallion Program)
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.]
Section
2.04.
Global Securities
Every Global Security
authenticated and delivered hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF,
ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR
IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
If Securities of a
series are issuable in whole or in part in the form of one or more Global Securities, as contemplated by Section 3.01, then, notwithstanding
Clause (9) of Section 3.01 and the provisions of Section 3.02, any Global Security shall represent such of the Outstanding Securities
of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities
from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to
time be reduced or increased, as the case may be, to reflect exchanges. Any endorsement of a Global Security to reflect the amount,
or any reduction or increase in the amount, of Outstanding Securities represented thereby shall be made in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in a Company Order. Subject to the provisions of
Sections 3.03, 3.04 and 3.05, the Trustee shall deliver and redeliver any Global Security in the manner and upon instructions given
by the Person or Persons specified therein or in the applicable Company Order. Any instructions by the Company with respect to
endorsement or delivery or redelivery of a Global Security shall be in a Company Order (which need not comply with Section 1.02
and need not be accompanied by an Opinion of Counsel).
The provisions of the
last sentence of Section 3.03 shall apply to any Security represented by a Global Security if such Security was never issued and
sold by the Company and the Company delivers to the Trustee the Global Security together with a Company Order (which need not comply
with Section 1.02 and need not be accompanied by an Opinion of Counsel) with regard to the reduction or increase, as the case may
be, in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence
of Section 3.03.
Section
2.05.
Form of Trustee’s Certificate and Authorization
The Trustee’s
certificates of authentication shall be in substantially the following form:
This is one of the
Securities of the series designated therein referred to in the within-mentioned Indenture.
|
Wilmington Trust, National Association,
|
|
|
|
As Trustee
|
|
|
|
|
|
|
By:
|
|
|
|
|
Authorized Signatory
|
|
Dated: [__________________]
ARTICLE
III
THE
SECURITIES
Section
3.01.
Amount Unlimited; Issuable in Series
The aggregate principal
amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may
be issued in one or more series. There shall be established in or pursuant to a Board Resolution (and, subject to Section 3.03,
to the extent established pursuant to rather than set forth in a Board Resolution, in an Officers’ Certificate or Company
Order setting forth, or determining the manner of, such establishment) or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series,
(1) the
form and title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other
series);
(2) any
limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities
of the series pursuant to Section 3.04, 3.05, 3.06, 9.06 or 11.07 and except for any Securities which, pursuant to Section 3.03,
are deemed never to have been authenticated and delivered hereunder);
(3) [Intentionally
Omitted]
(4) the
date or dates on which the Securities will be issued and on which the principal of, and premium, if any, on the Securities of the
series is payable or the method of determination thereof;
(5) the
rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, if any, or the method
of determination thereof, the date or dates from which such interest shall accrue, or the method of determination thereof, the
Interest Payment Dates on which any such interest shall be payable and the Regular Record Date for any interest payable on any
Interest Payment Date;
(6) the
place or places where, subject to the provisions of Section 10.02, the principal of and any premium and interest on Securities
of the series shall be payable, Securities of the series may be surrendered for registration of transfer, Securities of the series
may be surrendered for exchange and notices, and demands to or upon the Company in respect of the Securities of the series and
this Indenture may be served;
(7) the
period or periods, if any, within which, the price or prices at which and the terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option of the Company or otherwise, if the Company is to have that option;
(8) the
obligation, if any, and the option, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any
sinking fund or analogous provisions or upon the happening of a specified event or at the option of a Holder thereof and the period
or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be
redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;
(9) if
other than minimum denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series
shall be issuable;
(10) whether
payment of principal of and premium, if any, and interest, if any, on the Securities of the series shall be without deduction for
taxes, assessments or governmental charges paid by Holders of the series;
(11) the
currency, currencies or currency units in which payment of the principal of and any premium and interest on any Securities of the
series shall be denominated, payable, redeemable or purchasable if other than the currency of the United States of America and
the manner of determining the equivalent thereof in the currency of the United States of America for purposes of the definition
of “
Outstanding
” in Section 1.01;
(12) if
the amount of payments of principal of or any premium or interest on any Securities of the series may be determined with reference
to an index, the manner in which such amounts shall be determined;
(13) if
the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or
a Holder thereof, in one or more currencies or currency units other than that or those in which the Securities are stated to be
payable, the currency, currencies or currency units in which payment of the principal of and any premium and interest on Securities
of such series as to which such election is made shall be payable, and the periods within which and the terms and conditions upon
which such election is to be made;
(14) the
right, if any, of the Company to defer payments of interest by extending the interest payment periods and specify the duration
of such extension, the Interest Payment Dates on which such interest shall be payable and whether and under what circumstances
additional interest on amounts deferred shall be payable;
(15) if
other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to Section 5.02 or provable in bankruptcy pursuant to Section
5.04 or the method of determination thereof;
(16) if
and as applicable, that the Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities
(and whether in temporary or permanent global form) and, in such case, the Depositary or Depositaries for such Global Security
or Global Securities and any circumstances other than those set forth in Section 3.05 in which any such Global Security may be
transferred to, and registered and exchanged for Securities registered in the name of, a Person other than the Depositary for such
Global Security or a nominee thereof and in which any such transfer may be registered;
(17) any
deletions from, modifications of or additions to the Events of Default set forth in Section 5.01 or the covenants of the Company
set forth in Article X pertaining to the Securities of the series;
(18) if
and the terms and conditions upon which any Securities of the series may be converted into or exchanged for securities, which may
include, without limitation, capital stock, of any class or series of the Company or any other issuer;
(19) if
the amount of payments of principal of or any premium or interest on any Securities of the series may be determined with reference
to an index, including, but not limited to an index based on a currency or currencies other than that in which the Securities of
that series are payable, or any other type of index, the manner in which such amounts shall be determined;
(20) if
other than as provided in Sections 13.02 and 13.03, the terms and conditions upon which and the manner in which such series of
Securities may be defeased or discharged;
(21) if
other than the Trustee, the identity of any other trustee, the Security Registrar and any Paying Agent;
(22) any
restrictions or other provisions with respect to the transfer or exchange of the Securities; and
(23) any
other terms of the Securities of the series (which terms shall not be inconsistent with the provisions of this Indenture, except
as permitted by Section 9.01(3)).
All Securities of any
one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to
the Board Resolution or Officers’ Certificate referred to above or in any such indenture supplemental hereto.
Any such Board Resolution
or Officers’ Certificate referred to above with respect to Securities of any series filed with the Trustee on or before the
initial issuance of the Securities of such series shall be incorporated herein by reference with respect to Securities of such
series and shall thereafter be deemed to be a part of the Indenture for all purposes relating to Securities of such series as fully
as if such Board Resolution or Officers’ Certificate were set forth herein in full.
All Securities of any
one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the consent of
the Holders, for increases in the aggregate principal amount of such series of Securities and issuances of additional Securities
of such series or for the establishment of additional terms with respect to the Securities of such series.
If any of the terms
of the series are established by action taken by or pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized Officer or other authorized person of the Company and delivered to the Trustee at or prior
to the delivery of the Officers’ Certificate setting forth, or providing the manner for determining, the terms of the series.
With respect to Securities
of a series subject to a Periodic Offering, such Board Resolution or Officers’ Certificate may provide general terms for
Securities of such series and provide either that the specific terms of particular Securities of such series shall be specified
in a Company Order or an indenture supplemental thereto, or that such terms shall be determined by the Company, or one or more
of the Company’s agents designated in an Officers’ Certificate, in accordance with a Company Order.
Section
3.02.
Denominations
The Securities of each
series shall be issuable only in registered form without coupons in such minimum denominations as shall be specified as contemplated
by Section 3.01. In the absence of any such specified minimum denomination with respect to the Securities of any series, the Securities
of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.
Section
3.03.
Execution, Authentication, Delivery and Dating
The Securities shall
be executed on behalf of the Company by the Chairman of the Board, Vice Chairman, Chief Executive Officer, Chief Financial Officer,
President or any Vice President of the Company and need not be attested. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing
the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.
At any time and from
time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities;
provided, however
,
that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from
time to time in accordance with such other procedures (including, without limitation, the receipt by the Trustee of electronic
instructions from the Company or its duly authorized agents, thereafter promptly confirmed in writing) acceptable to the Trustee
as may be specified by or pursuant to a Company Order delivered to the Trustee prior to the time of the first authentication of
Securities of such series. If the form or terms of the Securities of the series have been established in or pursuant to one or
more Board Resolutions as permitted by Sections 2.01 and 3.01, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, in addition to
any Officers’ Certificate and Opinion of Counsel required to be furnished to the Trustee pursuant to Section 1.02, and (subject
to Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel stating,
(1) the
form and terms (or the manner of determining the terms) of such Securities have been established by or pursuant to Board Resolution
as permitted by Section 2.01, that such form or forms have been established in conformity with the provisions of this Indenture;
(2) if
the terms of such Securities have been, or in the case of Securities of a series offered in a Periodic Offering, will be, established
by or pursuant to a Board Resolution as permitted by Section 3.01, that such terms have been, or in the case of Securities of a
series offered in a Periodic Offering, will be, established in conformity with the provisions of this Indenture, subject, in the
case of Securities of a series offered in a Periodic Offering, to any conditions specified in such Opinion of Counsel;
(3) that
such Securities, when authenticated and delivered by the Trustee upon receipt of a Company Order and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles
and entitled to the benefits of this Indenture, equally and ratably with all other Securities, if any, of such series Outstanding;
(4) such
other matters as the Trustee may request; and
(5) if
the authentication and delivery relates to a new series of Securities created by an indenture supplemental hereto, also stating
that all conditions precedent to the execution of the supplemental indenture with respect to that series of Securities have been
complied with, the Company has the power to execute and deliver any such supplemental indenture and has taken all necessary action
for those purposes and any such supplemental indenture has been executed and delivered and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium or other laws and legal principles affecting creditors’ rights
generally from time to time in effect and to general equitable principles, whether applied in an action at law or in equity).
If such form or forms
or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee’s own rights, duties, liabilities or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
With respect to Securities
of a series not to be originally issued at one time, the Trustee may rely upon the Opinion of Counsel and the other documents delivered
pursuant to Sections 2.01 and 3.01 and this Section, as applicable, in connection with the first authentication of Securities of
such series and any subsequent request by the Company to the Trustee to authenticate Securities of such series upon original issuance
shall constitute a representation and warranty by the Company that as of the date of such request, the statements made in the Officers’
Certificate shall be true and correct as if made on such date.
Each Security shall
be dated the date of its authentication.
No Security shall be
entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if
any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section 3.09 for all purposes of this Indenture, such Security
shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
Section
3.04.
Temporary Securities
Pending the preparation
of Definitive Securities of any series, the Company may execute, and upon receipt of the documents required by Section 3.03, together
with a Company Order, the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities of
like series in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations
as the Officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities
of any series are issued, the Company will cause Definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of Definitive Securities of such series, the temporary Securities of such series shall be exchangeable for
Definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company
maintained pursuant to Section 10.02 for the purpose of exchanges of Securities of such series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall
upon receipt of a Company Order authenticate and deliver in exchange therefor one or more Definitive Securities of the same series,
of any authorized denominations and of a like aggregate principal amount and tenor. Until so exchanged the temporary Securities
of any series shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities of such series
and tenor.
Section
3.05.
Registration, Registration of Transfer and Exchange
The Company shall cause
to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office or in any other office
or agency of the Company in a Place of Payment being herein sometimes referred to as the “Security Register”) in which,
subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. The Company shall, prior to the issuance of any Securities hereunder, appoint the Trustee as the initial
“Security Registrar” for the purpose of registering Securities and transfers of Securities as herein provided. The
Company may at any time replace such Security Registrar, change such office or agency or act as its own Security Registrar. The
Company will give prompt written notice to the Trustee of any change of the Security Registrar or of the location of such office
or agency. At all reasonable times the Security Register shall be available for inspection by the Trustee.
Upon surrender for
registration of transfer of any Security of any series at the office or agency of the Company maintained pursuant to Section 10.02
for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal
amount and tenor.
At the option of the
Holder, Securities of any series (except a Global Security) may be exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office
or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee upon receipt of
a Company Order shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
All Securities issued
upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
Every Security presented
or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed,
by the Holder thereof or his attorney duly authorized in writing.
No service charge shall
be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 3.04 or 11.07 not involving any transfer.
Neither the Trustee
nor the Company shall be required (1) to issue, register the transfer of or exchange Securities of any series (or of any series
and specified tenor, as the case may be) during a period beginning at the opening of business 15 days before the day of delivery
of a notice of redemption of Securities of that series selected for redemption under Section 11.03 and ending at the close of business
on the day of such delivery, or (2) to register the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any
other provision in this Indenture and except as otherwise specified as contemplated by Section 3.01, no Global Security may be
transferred to, or registered or exchanged for Securities registered in the name of, any Person other than the Depositary for such
Global Security or any nominee thereof, and no such transfer may be registered, except as provided in this paragraph. Every Security
authenticated and delivered upon registration or transfer of, or in exchange for or in lieu of, a Global Security shall be a Global
Security, except as provided in this paragraph. If (1) (A) the Depositary for a Global Security notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or ceases to be a clearing agency registered under the Exchange
Act, and (B) a successor Depositary is not appointed by the Company within 90 days, (2) an Event of Default has occurred and is
continuing with respect to the Securities of such series and the Security Registrar has received a written request from the Depositary
to issue certificated securities in lieu of all or a portion of the Global Securities of such series (in which case the Company
shall deliver certificated securities within 30 days of such request) or (3) the Company determines in its sole discretion that
Securities of a series issued in global form shall no longer be represented by a Global Security, then such Global Security may
be exchanged by such Depositary for Definitive Securities of the same series, of any authorized denomination and of a like aggregate
principal amount and tenor, registered in the names of, and the transfer of such Global Security or portion thereof may be registered
to, such Persons as such Depositary shall direct.
Section
3.06.
Mutilated, Destroyed, Lost and Stolen Securities
If any mutilated Security
is surrendered to the Trustee, together with such security or indemnity bond as may be required by the Company or the Trustee to
protect each of them and any agent of either of them harmless, the Company shall execute and upon its request the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing
a number not contemporaneously Outstanding.
If there shall be delivered
to the Company and the Trustee (1) evidence to their satisfaction of the destruction, loss or theft of any Security and (2) such
security or indemnity bond as may be required by them to protect each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company
shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security,
a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously Outstanding.
If, after the delivery of such new Security, a bona fide purchaser of the original Security in lieu of which such new Security
was issued presents for payment or registration such original Security, the Trustee shall be entitled to recover such new Security
from the party to whom it was delivered or any party taking therefrom, except a bona fide purchaser, and shall be entitled to recover
upon the security or indemnity bond provided therefor to the extent of any loss, damage, cost or expense incurred by the Company
and the Trustee in connection therewith.
In case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, pay such Security.
Upon the issuance of
any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith. Every new Security of any series issued pursuant to this Section in exchange for any mutilated Security or in lieu of
any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or
not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this
Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section
3.07.
Payment of Interest; Interest Rights Preserved
Except as otherwise
provided as contemplated by Section 3.01 with respect to any series of Securities, interest on any Security which is payable, and
is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.
Any interest on any
Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein
called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Company shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Company shall promptly notify the Trustee of such Special Record Date and, in the name
and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be sent to each Holder of Securities of such series at his address as it appears in the Security Register,
not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so sent, such Defaulted Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The
Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent
with the requirements of any securities exchange or automated quotation system on which such Securities may be listed or traded,
and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing
provisions of this Section and Section 3.05, each Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security, shall carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
For each series of
Securities, the Company shall, prior to 10:30 a.m. (Eastern time) on each payment date for principal and premium, if any, and interest,
if any, deposit with the Trustee money in immediately available funds sufficient to make cash payments due on the applicable payment
date.
Section
3.08.
Persons Deemed Owners
Except as otherwise
provided as contemplated by Section 3.01 with respect to any series of Securities, prior to due presentment of a Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security
is registered in the Security Register as the owner of such Security for the purpose of receiving payment of principal of and any
premium and (subject to Sections 3.05 and 3.07) any interest on such Security and for all other purposes whatsoever, whether or
not such Security is overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected
by notice to the contrary.
No holder of any beneficial
interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such
Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as
the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or
the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of
beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Section
3.09.
Cancellation
All Securities surrendered for payment,
redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired
in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation
any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall
be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled
as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall
be disposed of in accordance with its customary procedures, and the Trustee shall thereafter, from time to time upon written request,
deliver to the Company a certificate with respect to such disposition.
Section
3.10.
Computation of Interest
Except as otherwise specified as contemplated
by Section 3.01 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day
year of twelve 30-day months and interest on the Securities of each series for any partial period shall be computed on the basis
of a 360-day year of twelve 30-day months and the number of days elapsed in any partial month.
Section
3.11.
CUSIP Numbers
The Company in issuing the Securities may
use “CUSIP” numbers (in addition to the other identification numbers printed on the Securities), and, if so, the Trustee
shall use “CUSIP” numbers in notices of redemption as a convenience to Holders;
provided, however
, that any
such notice may state that no representation is made as to the correctness of such “CUSIP” numbers either as printed
on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such “CUSIP”
numbers. The Company will promptly notify the Trustee in writing of any change in the “CUSIP” numbers.
ARTICLE
IV
SATISFACTION AND DISCHARGE
Section
4.01.
Satisfaction and Discharge of Indenture
This Indenture shall upon Company Request
cease to be of further effect with respect to Securities of any series (except as to any surviving rights of registration of transfer
or exchange of such Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with respect to such Securities, when
(1) either
(A) all
such Securities theretofore authenticated and delivered (other than (i) such Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.06, and (ii) such Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.03) have been delivered to the Trustee for cancellation; or
(B) all
such Securities not theretofore delivered to the Trustee for cancellation
(i) have
become due and payable,
(ii) will
become due and payable at their Stated Maturity within one year, or
(iii) are
to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company,
and the Company in the case of (i), (ii)
or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for this purpose an
amount of money in the currency or currency units in which such Securities are payable sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest
to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the
Company has paid or caused to be paid all other sums payable hereunder by the Company with respect to such Securities; and
(3) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to such Securities have
been complied with.
Notwithstanding the
satisfaction and discharge of this Indenture with respect to Securities of any series, (i) the obligations of the Company to the
Trustee under Section 6.07, the obligations of the Trustee to any Authenticating Agent under Section 6.14 and the right of the
Trustee to resign under Section 6.10 shall survive, and (ii) if money shall have been deposited with the Trustee pursuant to subclause
(B) of Clause (1) of this Section, the obligations of the Company and/or the Trustee under Sections 4.02, 6.06, 7.01 and 10.02
and the last paragraph of Section 10.03 shall survive.
Section
4.02.
Application of Trust Money
Subject to the provisions
of the last paragraph of Section 10.03, all money deposited with the Trustee pursuant to Section 4.01 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal and any premium and interest for whose payment such money has been deposited with the Trustee.
ARTICLE
V
REMEDIES
Section
5.01.
Events of Default
“
Event of
Default
”, wherever used herein with respect to Securities of any series, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(1) default
in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default
for a period of 30 days (whether or not such payment is prohibited by the provisions of Article XIV hereof); or
(2) default
in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity (whether or not such payment
is prohibited by the provisions of Article XIV hereof); or
(3) default
in the performance, or breach, of any term, covenant or warranty of the Company in this Indenture (other than a term, covenant
or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly
been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such
default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by Holders of at least 25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “
Notice
of Default
” hereunder; or
(4) the
Company pursuant to or within the meaning of any Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of any
order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially
all of its property, or (D) makes a general assignment for the benefit of its creditors; or
(5) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company in
an involuntary case, (B) appoints a Custodian of the Company or for all or substantially all of its property, or (C) orders the
liquidation of the Company; and the order or decree remains unstayed and in effect for 90 days; or
(6) any
other Event of Default provided as contemplated by Section 3.01 with respect to Securities of that series.
Section
5.02.
Acceleration of Maturity; Rescission and Annulment
If an Event of Default
with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee
or Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount
of (or, if any of the Securities of that series are Original Issue Discount Securities, such portion of the principal amount of
such Securities as may be specified in the terms thereof) all of the Securities of that series to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount
(or specified amount) shall become immediately due and payable.
At any time after such
a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment
of the money due has been obtained by the Trustee as hereinafter in this Article provided, Holders of a majority in principal amount
of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if
(1) the
Company has paid or deposited with the Trustee a sum sufficient to pay
(A) all
overdue interest on all Securities of that series,
(B) the
principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,
(C) to
the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in
such Securities, and
(D) all
sums paid or advanced by the Trustee hereunder and the compensation and reasonable expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all
Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that
series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13.
No such rescission
shall affect any subsequent Default or impair any right consequent thereon.
When any Default has
occurred and is continuing under this Indenture, the Company shall, within five (5) Business Days after becoming aware of such
Default, deliver to the Trustee an Officers’ Certificate specifying such Default.
Section
5.03.
Collection of Indebtedness and Suits for Enforcement by Trustee
The Company covenants that if
(1) default
is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for
a period of 30 days (whether or not such payment is prohibited by the provisions of Article XIV hereof), or
(2) default
is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof (whether or not such payment
is prohibited by the provisions of Article XIV hereof),
the Company will pay to the Trustee, for
the benefit of Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium
and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of collection, including the compensation and reasonable
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails
to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree
and may enforce the same against the Company, or any other obligor upon such Securities and collect the moneys adjudged or decreed
to be payable in the manner provided by law out of the property of the Company, or any other obligor upon such Securities, wherever
situated.
If an Event of Default
with respect to Securities of any series occurs and is continuing, the Trustee, provided the Trustee has knowledge of such Event
of Default, may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such
series by such appropriate judicial proceedings to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
Section
5.04.
Trustee May File Proofs of Claim
In case of any judicial
proceeding relative to the Company, or any other obligor upon the Securities, their property or their creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall
be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to Holders, to pay to the Trustee any amount due it for the compensation and reasonable expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.07.
No provision of this
Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder in any such proceeding;
provided, however
, that the Trustee may,
on behalf of Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’
or other similar committee.
Section
5.05.
Trustee May Enforce Claims Without Possession of Securities
All rights of action
and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment
of the compensation and reasonable expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable
benefit of Holders of the Securities in respect of which such judgment has been recovered.
Section
5.06.
Application of Money Collected
Any money or property
collected or to be applied by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest,
upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment
of all amounts due the Trustee under Section 6.07;
SECOND: Subject to
Article XIV, to the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities
in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal and any premium and interest, respectively; and
THIRD: The balance,
if any, to the Company.
Section
5.07.
Limitation on Suits
No Holder of any Security
of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or a Security,
or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such
Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that
series;
(2) Holders
of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such
Holder or Holders have offered and, if requested, provided to the Trustee reasonable security or indemnity against the costs, expenses
and liabilities to be incurred in compliance with such request;
(4) the
Trustee for 60 days after its receipt of such notice, request and offer and, if requested, provision of security or indemnity has
failed to institute any such proceeding; and
(5) no
written direction inconsistent with such written request has been given to the Trustee during such 60-day period by Holders of
a majority in principal amount of the Outstanding Securities of that series;
it being understood and intended that no
one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all of such Holders.
Section
5.08.
Unconditional Right of Holders to Receive Principal, Premium and Interest
Notwithstanding any
other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Sections 3.05 and 3.07) interest on such Security on the respective
Stated Maturity expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section
5.09.
Restoration of Rights and Remedies
If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then in every such case, subject
to any determination in such proceeding, the Company, the Trustee and Holders shall be restored severally and respectively to their
former positions hereunder, and thereafter all rights and remedies of the Trustee and Holders shall continue as though no such
proceeding had been instituted.
Section
5.10.
Rights and Remedies Cumulative
Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.06, no right or remedy herein conferred upon or reserved to the Trustee or to Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section
5.11.
Delay or Omission Not Waiver
No delay or omission
of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section
5.12.
Control by Holders
Subject to the provisions
of Section 6.03, Holders of a majority in aggregate principal amount of the Outstanding Securities of any series shall have the
right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of such series;
provided, however
, that
(1) such
direction shall not be in conflict with any rule of law or with this Indenture;
(2) the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and
(3) subject
to the provisions of Section 6.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good
faith shall determine that the proceeding so directed would involve the Trustee in personal liability or would otherwise be contrary
to applicable law.
Section
5.13.
Waiver of Past Defaults
Holders of a majority
in aggregate principal amount of the Outstanding Securities of any series may on behalf of Holders of all the Securities of such
series waive any past default hereunder with respect to such series and its consequences, except
(1) a
continuing default in the payment of the principal of or any premium or interest on any Security of such series, or
(2) a
default in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected.
Upon any such waiver,
such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section
5.14.
Undertaking for Costs
In any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted
by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and
may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act;
provided,
however
, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking
or to make such an assessment in any suit instituted by the Trustee, in any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series to which the suit relates,
or in any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturity expressed by such Security (or, in the case of redemption or repayment,
on or after the Redemption Date).
ARTICLE
VI
THE TRUSTEE
Section
6.01.
Certain Duties and Responsibilities
(a) Except
during the continuance of an Event of Default with respect to any series of Securities,
(1) the
Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture with respect to
the Securities of such series, and no implied covenants or obligations shall read into this Indenture against the Trustee (it being
agreed that the permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty); and
(2) in
the absence of bad faith on its part, the Trustee may, with respect to Securities of such series, conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee
conforming on their face to the requirements of this Indenture; but in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine only whether or not they conform on their face to the requirements of this Indenture (but need not confirm or investigate
the accuracy of mathematical calculations or other facts, statements, opinions or conclusions stated therein).
(b) In
case an Event of Default with respect to any series of Securities has occurred and is continuing, the Trustee shall exercise with
respect to the Securities of such series such rights and powers vested in it by this Indenture, and use the same degree of care
and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such person’s
own affairs.
(c) No
provisions of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(1) this
Subsection shall not be construed to limit the effect of Subsection (a) of this Section;
(2) the
Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(3) the
Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders or a majority in principal amount of the Outstanding Securities of any series relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture with respect to the Securities of such series; and
(4) no
provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether
or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Section.
Section
6.02.
Notice of Defaults
If a Default occurs
and is continuing with respect to the Securities of any series, the Trustee shall, within 90 days after it occurs and is known
to an officer of the Trustee responsible for this Indenture, transmit, in the manner and to the extent provided in Section 313(c)
of the Trust Indenture Act, notice of all uncured or unwaived Defaults known to it;
provided, however
, that, except in the
case of a Default in payment on the Securities of any series, the Trustee shall be protected in withholding the notice if and so
long as the board of directors, the executive committee or a trust committee of directors or responsible officers of the Trustee
determine in good faith that withholding such notice is in the interests of Holders of Securities of such series.
For all purposes of
this Indenture (including, without limitation, Section 6.01) and the securities, the Trustee shall not be deemed to have notice
or be charged with knowledge of any Default, except a Default under Sections 5.01(1) or 5.01(2) herein, unless the Trustee shall
have received from the Company or from any Holder written notice thereof at its Corporate Trust Office, and such notice references
the Securities in this Indenture. In the absence of any such notice, the Trustee may conclusively assume that no such Default exists.
Section
6.03.
Certain Rights of Trustee
Subject to the provisions
of Section 6.01:
(1) the
Trustee may rely on and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(2) any
request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company
Order (or in the case of a Periodic Offering, as agreed in procedures set forth in a Company Order pursuant to Section 3.03) and
any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever
in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence
of bad faith on its part, rely upon an Officers’ Certificate;
(4) the
Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory
to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(6) the
Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may, without obligation to do so, make such further inquiry or
investigation into such facts or matters as it may see fit; and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;
(7) the
Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(8) the
Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles
of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may
be signed by any Person authorized to sign an Officers’ Certificate, including any Person specified as so authorized in any
such certificate previously delivered and not superseded;
(9) the
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other
Person employed to act hereunder; and
(10) In
no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action.
Section
6.04.
Not Responsible for Recitals or Issuance of Securities
The recitals contained
herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the
Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. Neither the Trustee nor any
Authenticating Agent makes any representations as to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds
thereof.
Section
6.05.
May Hold Securities
The Trustee, any Authenticating
Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal with the Company with the
same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
Section
6.06.
Money Held in Trust
Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder.
Section
6.07.
Compensation and Reimbursement
The Company agrees:
(1) to
pay to the Trustee from time to time such compensation for all services rendered by it hereunder as shall be mutually agreed upon
by the Company and the Trustee in writing (which compensation shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) to
reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement or advance as may be attributable to its gross negligence or willful
misconduct; and
(3) to
indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without gross negligence or
willful misconduct on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of enforcing this Indenture against the Company (including this Section 6.07) and defending itself
against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
The obligations of
the Company under this Section to compensate the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder.
Without limiting any
rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.01(4) or Section 5.01(5), the expenses (including the reasonable charges and expenses of
its counsel) and the compensation for such services are intended to constitute expenses of administration under any applicable
Bankruptcy Law.
To secure the Company’s
payment obligations in this Section 6.07, the Trustee is hereby granted a lien prior to the Securities against all money or property
held or collected by the Trustee, in its capacity as Trustee.
The provisions of this
Section shall survive the satisfaction and discharge of this Indenture and the defeasance of the Securities and the resignation
or removal of the Trustee.
Section
6.08.
Disqualification; Conflicting Interests
If the Trustee has
or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and
this Indenture.
Section
6.09.
Corporate Trustee Required; Eligibility
There shall at all
times be one or more Trustees hereunder with respect to the Securities of each series, at least one of which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus required by the Trust
Indenture Act. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of a supervising
or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section
6.10.
Resignation and Removal; Appointment of Successor
No resignation or removal
of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11.
The Trustee may resign
at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 6.11 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may, at the expense of the Company, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
The Trustee may be
removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the removed Trustee
may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
If at any time:
(1) the
Trustee shall fail to comply with Section 6.08 after written request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(2) the
Trustee shall cease to be eligible under Section 6.09 and shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the
Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to all Securities, or (B) subject to Section 5.14, any Holder who has been
a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
If the Trustee shall
resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees
with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with
respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect
to the Securities of any particular series) and shall comply with the applicable requirements of Section 6.11. If, within one year
after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of Holders of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee with respect to the Securities
of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or Holders and accepted appointment in the manner required
by Section 6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
The Company shall give
notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided
in Section 1.06. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and
the address of its Corporate Trust Office.
Section
6.11.
Acceptance of Appointment by Successor
(1) In
case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges and all amounts due to
it under Section 6.07, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts
of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder.
(2) In
case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (A) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates, (B) if the retiring Trustee is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (C) shall add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Trustees as co-trustees of the same trust and that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, but, on request of the Company, or any successor Trustee,
such retiring Trustee shall, upon payment of its charges and all amounts due to it under Section 6.07, duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities
of that or those series to which the appointment of such successor Trustee relates.
(3) Upon
request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (1) or (2) of this Section,
as the case may be.
(4) No
successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
Section
6.12.
Merger, Conversion, Consolidation or Succession to Business
Any corporation into
which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided
such corporation shall
be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
Section
6.13.
Preferential Collection of Claims Against the Company
If and when the Trustee
shall be or become a creditor of the Company, or any other obligor upon the Securities, the Trustee shall be subject to the provisions
of the Trust Indenture Act regarding the collection of claims against the Company or any such other obligor.
Section
6.14.
Appointment of Authenticating Agent
The Trustee (upon notice
to the Company) may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized
to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue (in accordance with procedures
acceptable to the Trustee) and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.06,
and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of
Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication
and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the
Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company.
Any corporation into
which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all
or substantially all of the corporate agency or corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent.
An Authenticating Agent
may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable
to the Company..
Except with respect
to an Authenticating Agent appointed at the request of the Company, the Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with
respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition
to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
This is one of the
Securities of the series designated therein referred to in the within-mentioned Indenture.
|
|
Wilmington Trust, National Association
|
|
|
|
|
|
|
|
|
As Trustee
|
|
|
|
|
|
Date:
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
As Authenticating Agent
|
|
|
|
|
|
|
By:
|
|
|
|
|
Authorized Signatory
|
ARTICLE
VII
HOLDERS’
LISTS AND REPORTS BY TRUSTEE AND THE COMPANY
Section
7.01.
The Company to Furnish Trustee Names and Addresses of Holders
The Company will furnish
or cause to be furnished to the Trustee
(1) not
later than five (5) Business Days before each Interest Payment Date, a list for each series of Securities, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders of Securities of such series as of the preceding Regular
Record Date, and
(2) at
such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;
provided, however
, that if and so
long as the Trustee shall be the Security Registrar for Securities of a series, no such list need be furnished with respect to
such series of Securities.
Section
7.02.
Preservation of Information; Communications to Holders
The Trustee shall comply
with the obligations imposed upon it pursuant to Section 312 of the Trust Indenture Act.
The rights of the Holders
to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
Every Holder of Securities,
by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of information as to the names and addresses of Holders
made pursuant to the Trust Indenture Act.
Section
7.03.
Reports by Trustee
As promptly as
practicable after each November 15 beginning with the November 15 following the date of this Indenture, the Trustee
shall send to each Holder a brief report dated as of November 15 that complies with Trust Indenture Act Section 313(a). The
Trustee also shall comply with Trust Indenture Act Section 313(b). Prior to delivery to the Holders, the Trustee shall
deliver to the Company a copy of any report it delivers to Holders pursuant to this Section 7.03;
provided
,
however
,
that no recourse may be taken against the Trustee for its failure to deliver a copy of such report to the Company prior to
its delivery of the report to the Holders.
A copy of each such
report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities
are listed, with the Commission and with the Company. The Company will notify the Trustee in writing when any Securities are listed
on any stock exchange.
Section
7.04.
Reports by the Company
The Company shall file
with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to the Trust Indenture
Act;
provided
that with respect to any such information, documents and reports filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval (or EDGAR) system, the Company shall notify the Trustee in the manner prescribed
herein of each such filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving
the financial information so filed. The Trustee shall have no duty to search for or obtain any electronic or other filings that
the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of
reports, information and documents to the Trustee pursuant to this Section 7.04 shall be solely for purposes of compliance with
this Section 7.04 and, if applicable, with Section 314(a) of the Trust Indenture Act, but shall not relieve the Company of the
requirement to deliver the Officers’ Certificates referred to below. The Trustee’s receipt of such reports,
information and documents is for informational purposes only and the Trustee’s receipt of such shall not constitute actual
or constructive knowledge or notice to it of the content thereof or any matter determinable from the contents thereof, including
the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’
Certificates. The Trustee will have no responsibility whatsoever to monitor whether such filing or posting has occurred or the
timeliness of such filing or posting.
ARTICLE
VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section
8.01.
The Company May Consolidate, Etc., Only on Certain Terms
The Company shall not
consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety
to, any Person, unless:
(1) the
Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia
and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment
of the principal of and any premium and interest on all the Securities and the performance or observance of every other covenant
of this Indenture on the part of the Company to be performed or observed;
(2) immediately
after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary
as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event
of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and
be continuing;
(3) if,
as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture,
the Company or such successor Person, as the case may be, shall take such steps as shall be necessary effectively to secure the
Securities equally and ratably with (or prior to) all indebtedness secured thereby; and
(4) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and such supplemental indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Section
8.02.
Successor Substituted
Upon any consolidation
of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section 8.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein and thereafter, except in the case of a lease, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities and coupons and may liquidate and dissolve.
ARTICLE
IX
SUPPLEMENTAL INDENTURES
Section
9.01.
Supplemental Indentures Without Consent of Holders
Without the consent
of any Holders of Securities, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures
supplemental hereto, for any of the following purposes:
(1) to
evidence the succession of another Person to the Company under this Indenture and the Securities and the assumption by such successor
Person of the obligations of the Company hereunder;
(2) to
add covenants and Events of Default for the benefit of the Holders of all or any series of such Securities or to surrender any
right or power conferred by this Indenture upon the Company or to make any change that does not adversely affect the legal rights
hereunder of any Holder in any material respect;
(3) to
add to, change or eliminate any of the provisions of this Indenture,
provided
that any such addition, change or elimination
shall become effective only after there are no such Securities of any series entitled to the benefit of such provision outstanding;
(4) to
establish the forms or terms of the Securities of any series issued hereunder;
(5) to
cure any ambiguity or correct any defect or inconsistency in this Indenture;
(6) to
evidence the acceptance of appointment by a successor Trustee with respect to one or more series of Securities or otherwise;
(7) to
qualify this Indenture under the Trust Indenture Act;
(8) to
provide for uncertificated securities in addition to certificated securities;
(9) to
supplement any provisions of this Indenture necessary to permit or facilitate the defeasance and discharge of any series of Securities,
provided
that such action does not adversely affect the interests of the Holders of Securities of such series or any other
series; and
(10) to
comply with the rules or regulations of any securities exchange or automated quotation system on which any of the Securities may
be listed or traded.
Section
9.02.
Supplemental Indentures with Consent of Holders
With the consent of
the Holders of not less than a majority in aggregate principal amount of all Outstanding Securities affected by such supplemental
indenture (voting as one class), the Company and the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture, or
modifying in any manner the rights of Holders of Securities of such series under this Indenture;
provided
that the Company
and the Trustee may not, without the consent of the Holder of each Outstanding Security affected thereby,
(1) change
the Stated Maturity of the principal of, or any installment of principal of or interest, if any, on, any Security, or reduce the
principal amount thereof or premium, if any, on or the rate of interest thereon or adversely affect any right to convert or exchange
any Security into any other security, or alter the method of computation of interest;
(2) reduce
the percentage in principal amount of Securities required for any such supplemental indenture or for any waiver provided for in
this Indenture;
(3) change
the Company’s obligation to maintain an office or agency for payment of Securities and the other matters specified herein;
(4) impair
the right to institute suit for the enforcement of any payment of principal of, premium, if any, or interest on, any Security;
(5) modify
the provisions of this Indenture with respect to the subordination of any Security in a manner adverse to the Holder thereof; or
(6) modify
any of the provisions of this Indenture relating to the execution of supplemental indentures with the consent of Holders of Securities
which are discussed in this Section or modify any provisions relating to the waiver by Holders of Securities of past defaults and
covenants, except to increase any required percentage or to provide that other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security affected thereby.
A supplemental indenture
which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series
with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders
of Securities of any other series.
It shall not be necessary
for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.
Section
9.03.
Execution of Supplemental Indentures
In executing, or accepting
the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be fully protected in
relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee shall enter into any supplemental indenture which does not adversely
affect the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which adversely affects the Trustee’s own rights, duties,
liabilities or immunities under this Indenture or otherwise.
Section
9.04.
Effect of Supplemental Indentures
Upon the execution
of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.
Section
9.05.
Conformity with Trust Indenture Act
Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.
Section
9.06.
Reference in Securities to Supplemental Indentures
Securities of any series
authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, bear a notation as
to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified
as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. Failure to make a notation or
issue a new Security shall not affect the validity and effect of any amendment, supplement or waiver.
ARTICLE
X
COVENANTS
Section
10.01.
Payment of Principal, Premium and Interest
The Company covenants
and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and
interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.
An
installment of principal or interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds
as of 10:30 a.m., New York City time, money sufficient to pay all principal and interest then due and the Trustee or the Paying
Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.
Section
10.02.
Maintenance of Office or Agency
The Company will maintain
in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered
for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time
the Company shall fail to maintain any such required office or agency where Securities of that series may be presented or surrendered
for payment, where Securities of that series may be surrendered for registration of transfer or exchange or shall fail to furnish
the Trustee with the address thereof, such presentations and surrenders, may be made at the Corporate Trust Office of the Trustee,
and the Company hereby appoints the Trustee as its agent to receive all such presentations and surrenders.
The Company may also
from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such designations;
provided, however
, that no
such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such other office or agency.
Except as otherwise
specified with respect to a series of Securities as contemplated by Section 3.01, the Company hereby initially designates as the
Place of Payment for each series of Securities to be the Corporate Trust Office of the Trustee, and initially appoints the Trustee
as Paying Agent at its office at 1100 North Market Street, Wilmington, Delaware 19890, as the Company’s office or agency
for each such purpose in such city.
Section
10.03.
Money for Securities Payments to Be Held in Trust
If the Company or any
of its Subsidiaries shall at any time act as Paying Agent with respect to any series of Securities, it will, on or before each
due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee
in writing of its action or failure so to act.
Whenever the Company
shall have one or more Paying Agents for any series of Securities, it will, on or prior to each due date of the principal of or
any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such
sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly
notify the Trustee in writing of its action or failure so to act.
The Company will cause
each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) hold
all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Securities of that series
in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that
series) in the making of any payment of principal (and premium, if any) or interest, if any, on the Securities of that series;
and (3) during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums
held in trust by such Paying Agent for payment in respect of the Securities of that series.
The Company may at
any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited
with the Trustee or any Paying Agent in trust for the payment of the principal of or any premium or interest on any Security of
any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be
paid to the state which escheat laws control and the Trustee or any Paying Agent shall be discharged from such trust; and the Holder
of such Security shall thereafter, as an unsecured general creditor, look only to the state which escheat laws control for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company
as trustee thereof, shall thereupon cease;
provided, however,
that the Trustee or such Paying Agent, before being required
to make any such payment, may at the expense of the Company cause to be published once, in an Authorized Newspaper, notice that
such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid to the state whose escheat laws control.
Section
10.04.
Statement by Officers as to Default
The Company will deliver
to the Trustee, within 150 days after the end of each Fiscal Year of the Company ending after the date hereof, an Officers’
Certificate, stating whether or not to the best knowledge of the signer or signers thereof the Company is in default in the performance
and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement
of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof
of which they may have knowledge.
Section
10.05.
Waiver of Certain Covenants
The Company may omit
in any particular instance to comply with any term, provision or condition set forth in Sections 10.02 through 10.03 with respect
to the Securities of any series if before the time for such compliance Holders of at least a majority in aggregate principal amount
of the Outstanding Securities of all affected series (voting as one class) shall, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full
force and effect.
A waiver which changes
or eliminates any term, provision or condition of this Indenture which has expressly been included solely for the benefit of one
or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect
to such term, provision or condition, shall be deemed not to affect the rights under this Indenture of the Holders of Securities
of any other series.
ARTICLE
XI
REDEMPTION OF SECURITIES
Section
11.01.
Applicability of Article
Securities of any series
which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified
as contemplated by Section 3.01 for Securities of any series) in accordance with this Article.
Section
11.02.
Election to Redeem; Notice to Trustee
The election of the
Company to redeem any Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, not less than 35 nor more than 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee and
provided
, notice may be given
more than 60 days prior to a redemption date if the notice is issued in connection with Articles IV or XIII), notify the Trustee
of such Redemption Date, of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of
the Securities to be redeemed. In the case of any redemption of Securities (1) prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this Indenture, or (2) pursuant to an election of the Company
which is subject to a condition specified in the terms of such Securities, the Company shall furnish the Trustee with an Officers’
Certificate evidencing compliance with such restriction or condition.
Section
11.03.
Selection by Trustee of Securities to be Redeemed
If less than all the
Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed),
the particular Securities to be redeemed shall be selected not more than 35 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series not previously called for redemption, on a
pro rata
basis, by lot or by any other
method which the Trustee deems fair and appropriate and which complies with any securities exchange or other applicable requirements
for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple
thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly
notify the Company in writing of the Securities selected for redemption.
For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in
the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which
has been or is to be redeemed.
Section
11.04.
Notice of Redemption
Notice of redemption
shall be given by first-class mail (if international mail, by air mail), postage prepaid, mailed not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register;
provided
, notice may be given more than 60 days prior to a redemption date if the notice is issued in connection with Articles
IV or XIII.
All notices of redemption
shall state:
(1) the
Redemption Date,
(2) the
Redemption Price,
(3) if
less than all the Outstanding Securities of any series and of a specified tenor are to be redeemed, the identification (and, in
the case of partial redemption of any Securities, the principal amounts) of the particular Securities to be redeemed,
(4) that
on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(5) the
place or places where such Securities are to be surrendered for payment of the Redemption Price, and
(6) that
the redemption is for a sinking fund, if such is the case.
Notice of redemption
of Securities to be redeemed shall be given by the Company or, at the Company’s request made in the form of an Officers’
Certificate (made to the Trustee at least 5 days (or such shorter period as shall be satisfactory to the Trustee) prior to the
mailing of such notice), by the Trustee in the name and at the expense of the Company. Any such request will set forth the information
to be stated in such notice, as provided by this Section 11.04.
Section
11.05.
Deposit of Redemption Price
On or prior to 10:30
a.m. (Eastern time) on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company
is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an amount of money sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section
11.06.
Securities Payable on Redemption Date
Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price
and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance
with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption
Date;
provided, however
, that, unless otherwise specified as contemplated by Section 3.01, installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions
of Section 3.07.
If any Security called
for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the Security.
Section
11.07.
Securities Redeemed in Part
Any Security which
is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor,
of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered.
ARTICLE
XII
SINKING FUNDS
Section
12.01.
Applicability of Article
The provisions of this
Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated
by Section 3.01 for Securities of such series.
The minimum amount
of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a “mandatory sinking
fund payment,” and any payment in excess of such minimum amount provided for by the terms of Securities of any series is
herein referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.02. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
Section
12.02.
Satisfaction of Sinking Fund Payments with Securities
The Company (1) may
deliver Outstanding Securities of a series (other than any previously called for redemption), and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the
terms of such Securities as provided for by the terms of such series;
provided
that such Securities have not been previously
so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in
such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
Section
12.03.
Redemption of Securities for Sinking Fund
Not less than 45 days
prior to each sinking fund payment date for any series of Securities (unless a shorter period shall be satisfactory to the Trustee),
the Company will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing sinking fund payment
for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash
and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section
12.02 and stating the basis for such credit and that such Securities have not been previously so credited, and will also deliver
to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.03 and cause
notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section
11.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated
in Sections 11.06 and 11.07.
ARTICLE
XIII
DEFEASANCE
Section
13.01.
Applicability of Article
The provisions of this
Article shall be applicable to each series of Securities except as otherwise specified as contemplated by Section 3.01 for Securities
of such series.
Section
13.02.
Legal Defeasance
In addition to discharge
of the Indenture pursuant to Section 4.01, the Company shall be deemed to have paid and discharged the entire indebtedness on all
the Securities of such a series on the 91st day after the date of the deposit referred to in Clause (1) below, and the provisions
of this Indenture with respect to the Securities of such series shall no longer be in effect (except as to (i) rights of registration
of transfer and exchange of Securities of such series and the Company’s right of optional redemption, if any, (ii) substitution
of mutilated, destroyed, lost or stolen Securities, (iii) rights of Holders of Securities to receive payments of principal thereof
and interest thereon, upon the original stated due dates therefor or on the specified redemption dates therefor (but not upon acceleration),
and remaining rights of the holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and
immunities of the Trustee hereunder, and the Company’s obligations in connection therewith (including, but not limited to,
Section 6.07), (v) the rights, if any, to convert or exchange the Securities of such series, (vi) the rights of Holders of Securities
of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them,
and (vii) the obligations of the Company under Section 10.02), and the Trustee, at the expense of the Company, shall, upon a Company
Request, execute proper instruments acknowledging the same, if the conditions set forth below are satisfied (hereinafter, “
defeasance
”):
(1) The
Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust, for the purposes of making
the following payments, specifically pledged as security for, and dedicated solely to, the benefit of Holders of the Securities
of such series (A) cash in an amount, or (B) in the case of any series of Securities the payments on which may only be made in
legal coin or currency of the United States, U.S. Government Obligations, maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash, or (C) a combination thereof, certified to be sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the
Trustee, to pay (i) the principal and interest and premium, if any, on all Securities of such series on each date that such principal,
interest or premium, if any, is due and payable or on any Redemption Date established pursuant to Clause (3) below, and (ii) any
mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture
and the Securities of such series;
(2) The
Company has delivered to the Trustee an Opinion of Counsel based on the fact that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (B) since the date hereof, there has been a change in the applicable
federal income tax law, in either case to the effect that, and such opinion shall confirm that, Holders of the Securities of such
series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge
and will be subject to federal income tax on the same amount and in the same manner and at the same times, as would have been the
case if such deposit, defeasance and discharge had not occurred;
(3) If
the Securities are to be redeemed prior to Stated Maturity (other than from mandatory sinking fund payments or analogous payments),
notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee
shall have been made;
(4) No
Event of Default or event which with notice or lapse of time or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit;
(5) Such
defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all
Securities are in default within the meaning of such Act);
(6) Such
defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which
the Company is a party or by which it is bound;
(7) Such
defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from registration thereunder;
and
(8) The
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this provision have been complied with.
For this purpose, such
defeasance means that the Company and any other obligor upon the Securities of such series shall be deemed to have paid and discharged
the entire debt represented by the Securities of such series, which shall thereafter be deemed to be “
Outstanding
”
only for the purposes of Section 13.04 and the rights and obligations referred to in Clauses (i) through (vii), inclusive, of the
first paragraph of this Section, and to have satisfied all its other obligations under the Securities of such series and this Indenture
insofar as the Securities of such series are concerned.
Section
13.03.
Covenant Defeasance
The Company and any
other obligor shall be released on the 91st day after the date of the deposit referred to in Clause (1) below from its obligations
under Sections 7.04 and 8.01 with respect to the Securities of any series on and after the date the conditions set forth below
are satisfied (hereinafter, “
covenant defeasance
”), and the Securities of such series shall thereafter be deemed
to be not “
Outstanding
” for the purposes of any request, demand, authorization, direction, notice, waiver, consent
or declaration or other action or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed Outstanding for all other purposes hereunder. For this purpose, such covenant defeasance means that, with
respect to the Securities of such series, the Company may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section, whether directly or indirectly by reason of any reference elsewhere herein
to such Section or by reason of any reference in such Section to any other provision herein or in any other document and such omission
to comply shall not constitute a Default or an Event of Default under Section 5.01, but, except as specified above, the remainder
of this Indenture and the Securities of such series shall be unaffected thereby. The following shall be the conditions to application
of this Section 13.03:
(1) The
Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated solely to, the benefit of Holders of the Securities
of such series, (A) cash in an amount, or (B) in the case of any series of Securities the payments on which may only be made in
legal coin or currency of the United States, U.S. Government Obligations, maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash, or (C) a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay
(i) the principal and interest and premium, if any, on all Securities of such series on each date that such principal, interest
or premium, if any, is due and payable or on any Redemption Date established pursuant to Clause (2) below, and (ii) any mandatory
sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the
Securities of such series;
(2) If
the Securities are to be redeemed prior to Stated Maturity (other than from mandatory sinking fund payments or analogous payments),
notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee
shall have been made;
(3) No
Event of Default or event which with notice or lapse of time or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit;
(4) The
Company has delivered to the Trustee an Opinion of Counsel which shall confirm that Holders of the Securities of such series will
not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will
be subject to federal income tax on the same amount and in the same manner and at the same time as would have been the case if
such deposit and covenant defeasance had not occurred;
(5) Such
covenant defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming
all Securities are in default within the meaning of such Act);
(6) Such
covenant defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument
to which the Company is a party or by which it is bound;
(7) Such
covenant defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning
of the Investment Company Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from registration
thereunder; and
(8) The
Company has delivered to the Trustee an Officers’ Certificate and Opinion of Counsel stating that all conditions precedent
provided for relating to the covenant defeasance contemplated by this provision have been complied with.
Section
13.04.
Application by Trustee of Funds Deposited for Payment of Securities
Subject to the provisions
of the last paragraph of Section 10.03, all moneys or U.S. Government Obligations deposited with the Trustee pursuant to Section
13.02 or 13.03 (and all funds earned on such moneys or U.S. Government Obligations) shall be held in trust and applied by it to
the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to Holders of
the particular Securities of such series for the payment or redemption of which such moneys have been deposited with the Trustee,
of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except
to the extent required by law. Subject to Sections 13.02 and 13.03, the Trustee shall promptly pay to the Company upon Company
Order any moneys held by it at any time, which, in the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification delivered to the Trustee, are in excess of the amounts required to effect the defeasance with
respect to the Outstanding Securities in question.
Section
13.05.
Repayment to the Company
The Trustee and any
Paying Agent promptly shall pay or return to the Company upon Company Request any money and U.S. Government Obligations held by
them at any time that are not required for the payment of the principal of and any interest on the Securities of any series for
which money or U.S. Government Obligations have been deposited pursuant to Section 13.02 or 13.03, which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written certification delivered to the Trustee, are in excess
of the amounts required to effect the defeasance with respect to the Outstanding Securities in question.
The provisions of the
last paragraph of Section 10.03 shall apply to any money held by the Trustee or any Paying Agent under this Article that remains
unclaimed for two years after the Maturity of any series of Securities for which money or U.S. Government Obligations have been
deposited pursuant to Section 13.02 or 13.03.
Section
13.06.
Reinstatement
If the Trustee or the
Paying Agent is unable to apply any money or U. S. Government Obligations in accordance with this Article by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the obligations of the Company under this Indenture and the Securities of the applicable series shall be revived
and reinstated as though no deposit had occurred pursuant to this Indenture until such time as the Trustee or the Paying Agent
is permitted to apply all such money or U. S. Government Obligations in accordance with this Article;
provided, however
,
that if the Company has made any payment of principal of or interest on any Securities of such series because of the reinstatement
of its obligations, the Company shall be subrogated to the rights of Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or the Paying Agent.
ARTICLE
XIV
SUBORDINATION OF SECURITIES
Section
14.01.
Securities Subordinated to Senior Debt
The payment by the
Company of the principal of, premium, if any, and interest, if any, on any series of Securities issued hereunder shall be subordinated
to the extent set forth in an indenture supplemental hereto relating to such Securities.
[
Remainder of Page Intentionally
Left Blank
]
IN WITNESS WHEREOF, the
parties hereto have caused this Indenture to be duly executed in multiple counterparts, each of which so executed shall be deemed
to be an original, but all of which shall together constitute but one and the same instrument, all as of the day and year first
above written.
|
|
THE COMMUNITY FINANCIAL CORPORATION
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ William J. Pasenelli
|
|
|
|
Name: William J. Pasenelli
|
|
|
|
Title: President and Chief Executive Officer
|
|
|
|
|
|
|
|
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ William J. Pasenelli
|
|
|
|
Name: William J. Pasenelli
|
|
|
|
Title: President and Chief Executive Officer
|
Exhibit 4.2
The
Community Financial Corporation
and
Wilmington
Trust
, NATIONAL ASSOCIATION
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of ______, 2015
to
SUBORDINATED DEBT INDENTURE
Dated as of __________, 2015
6.25% Fixed to Floating Rate Subordinated
Notes due February 15, 2025
THIS FIRST SUPPLEMENTAL INDENTURE (this
“
First Supplemental Indenture
”), dated as of _______, 2015, between THE COMMUNITY FINANCIAL CORPORATION, a corporation
duly organized and existing under the laws of the State of Maryland (the “
Company
”), and WILMINGTON TRUST, NATIONAL
ASSOCIATION, a national banking association duly organized and existing under the laws of the United States, as Trustee (the “
Trustee
”),
under the Base Indenture (as hereinafter defined).
RECITALS
WHEREAS, the Company and the Trustee have
heretofore executed and delivered the Subordinated Debt Indenture, dated as of _______, 2015 (the “
Base Indenture
”
and, as hereby supplemented and amended, the “
Indenture
”), providing for the establishment from time to time
of Series of the Company’s subordinated unsecured debt securities, which may be notes, bonds, debentures or other evidences
of indebtedness of the Company (hereinafter called the “
Securities
”) and the issuance from time to time of Securities
under the Indenture;
WHEREAS, Section 9.01(4) of the Base Indenture
provides that the Company and the Trustee may enter into an indenture supplemental to the Base Indenture to establish a Series
of Securities thereunder and the form and terms, provisions and conditions of Securities of such Series of Securities as permitted
by Section 2.01 and Section 3.01 of the Base Indenture;
WHEREAS, pursuant to Section 3.01 of the
Base Indenture, the Company desires to establish a new Series of Securities under the Indenture to be known as its “6.25%
Fixed to Floating Rate Subordinated Notes due February 15, 2025” (the “
2025 Series
”) and to establish
and set the form and terms, provisions and conditions of the notes of the 2025 Series (the “
Notes
”), as provided
in this First Supplemental Indenture and to provide for the initial issuance of Notes of the 2025 Series in the aggregate principal
amount of $23,000,000; and
WHEREAS, the Company has requested that
the Trustee execute and deliver this First Supplemental Indenture; and all requirements necessary to make (i) this First Supplemental
Indenture a valid, binding and enforceable instrument in accordance with its terms, and (ii) the Notes, when executed by the Company
and authenticated and delivered by the Trustee, the valid, binding and enforceable obligations of the Company, have been satisfied;
and the execution and delivery of this First Supplemental Indenture has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the
covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Relation to Base Indenture.
This First Supplemental Indenture constitutes an integral part of the Base Indenture.
Section 1.02 Definition of Terms.
For all purposes of this First Supplemental Indenture:
(a) Capitalized terms used herein without
definition shall have the meanings set forth in the Base Indenture,
provided
that if the definition of a capitalized term
defined in this First Supplemental Indenture conflicts with the definition of that capitalized term in the Base Indenture, the
definition of that capitalized term in this First Supplemental Indenture shall control for purposes of this First Supplemental
Indenture and the Notes;
(b) a term defined anywhere in this First
Supplemental Indenture has the same meaning throughout;
(c) the singular includes the plural
and vice versa;
(d) headings are for convenience of reference
only and do not affect interpretation;
(e) unless otherwise specified or unless
the context requires otherwise, (i) all references in this First Supplemental Indenture to Sections refer to the corresponding
Sections of this First Supplemental Indenture and (ii) the terms “herein”, “hereof”, “hereunder”
and any other word of similar import refer to this First Supplemental Indenture; and
(f) for purposes of this First Supplemental
Indenture and the Notes, the following terms have the meanings given to them in this Section 1.02(f):
“
Business Day
” means any day other
than (i) a Saturday, Sunday or other day on which banking institutions in The City of New York, New York are authorized or obligated
by law, regulation or executive order to close or (ii) a day on which the Corporate Trust Office of the trustee is closed for business.
“
DTC
” shall have the meaning set
forth in Section 2.03 hereof.
“
Existing Company Subordinated Indebtedness
”
shall mean any (a) indebtedness, obligation or liability existing as of the date hereof which, by its terms, is junior to, or ranks
equally in right of payment with, the Notes; and (b) the junior subordinated debentures issued to Tri-County Capital Trust I and
Tri-County Capital Trust II and any guarantee of the Company in respect of the equity securities or other securities of Tri-County
Capital Trust I and Tri-County Capital Trust II (the “Existing Junior Subordinated Debentures”).
“
Federal Reserve Board”
means the
Board of Governors of the Federal Reserve System or any successor regulatory authority with jurisdiction over bank holding companies.
“
Global Note
” shall be a Global
Security and have the meaning set forth in Section 2.04 hereof.
“
Independent Bank Regulatory Counsel
”
means a law firm, a member of a law firm or an independent practitioner that is experienced in matters of federal bank holding
company and banking regulatory law, including the laws, rules and the guidelines of the Federal Reserve Board relating to regulatory
capital, and shall include any person who, under the standards of professional conduct then prevailing and applicable to such counsel,
would not have a conflict of interest in representing the Company or the Trustee in connection with providing the legal opinion
contemplated by the definition of the term “Tier 2 Capital Event.”
“
Independent Tax Counsel
” means
a law firm, a member of a law firm or an independent practitioner that is experienced in matters of federal income taxation law,
including the deductibility of interest payments made with respect to corporate debt instruments, and shall include any person
who, under the standards of professional conduct then prevailing and applicable to such counsel, would not have a conflict of interest
in representing the Company or the Trustee in connection with providing the legal opinion contemplated by the definition of the
term “Tax Event.”
“
Interest Payment Date
” shall have
the meaning set forth in Section 2.05(b) hereof.
“LIBOR”
means the rate as published
by Bloomberg (or other commercially available source providing quotations of such rate as selected by the Trustee from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate
for dollar deposits in the London interbank market with a three-month maturity. If such rate is not available at such time from
such source for any reason, then the rate for that Interest Period will be determined by such alternate method as reasonably selected
by the Company.
“
Maturity Date
” shall have the
meaning set forth in Section 2.02 hereof.
“
Regular Record Date
” shall mean,
with respect to each Interest Payment Date that is on February 1 or August 1 (whether or not a Business Day) through February 15,
2020, and thereafter the February 1, May 1, August 1 and November 1, as the case may be (whether or not a Business Day), next preceding
such Interest Payment Date.
“
Responsible Officer
” shall mean
any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer
of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge
of and familiarity with the particular subject, and in each case, who shall have direct responsibility for the administration of
this Indenture.
“
Tax Event
” shall mean the receipt
by the Company of an opinion of Independent Tax Counsel to the effect that, as a result of:
|
|
a.
|
any amendment to or change (including any announced prospective
amendment or change) in any law or treaty, or any regulation thereunder, of the United States or any of its political subdivisions
or taxing authorities;
|
|
|
b.
|
any judicial decision, administrative action, official
administrative pronouncement, ruling, regulatory procedure, regulation, notice or announcement, including any notice or announcement
of intent to adopt or promulgate any ruling, regulatory procedure or regulation (any of the foregoing, an “administrative
or judicial action”);
|
|
|
c.
|
any amendment to or change in any official position with
respect to, or any interpretation of, an administrative or judicial action or a law or regulation of the United States that differs
from the previously generally accepted position or interpretation; or
|
|
|
d.
|
a threatened challenge asserted in writing in connection
with an audit of the Company’s federal income tax returns or positions or a similar audit of any of its Subsidiaries, or
a publicly known threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance
of securities that are substantially similar to the Notes,
|
in each case, occurring or becoming publicly known
on or after the first date on which any Notes are sold, there is more than an insubstantial increase in the risk that interest
paid by the Company on the Notes is not, or, within 90 days of the date of such opinion, will not be, deductible by the Company,
in whole or in part, for United States federal income tax purposes.
“
Tier 2 Capital Event
” shall mean
the receipt by the Company of an opinion of Independent Bank Regulatory Counsel to the effect that, as a result of:
|
|
a.
|
any amendment to, or change (including any announced prospective change) in, the laws or any regulations thereunder of the
United States or any rules, guidelines or policies of an applicable regulatory authority for the Company; or
|
|
|
b.
|
any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations,
|
which amendment or change is effective or which pronouncement
or decision is announced on or after the date of original issuance of the Notes, the Notes do not constitute, or within 90 days
of the date of such opinion will not constitute, Tier 2 capital (or its then equivalent if the Company were subject to such capital
requirement) for purposes of capital adequacy guidelines of the Federal Reserve Board, as then in effect and applicable to the
Company.
The terms “
Company
,” “
Trustee
,”
“
Base Indenture
,” and “
Notes
” shall have the respective meanings set forth in the recitals
to this First Supplemental Indenture and the paragraph preceding such recitals.
ARTICLE 2
ESTABLISHMENT OF THE 2025 SERIES AND
GENERAL TERMS AND CONDITIONS OF THE NOTES
Section 2.01 Establishment of the Series
of the Notes and Designation
. There is hereby authorized and established a Series of Securities designated as the “6.25%
Fixed to Floating Rate Subordinated Notes due February 15, 2025.” The Securities that are a part of such Series of Securities
shall be in the form and have the terms, provisions and conditions as set forth in the Base Indenture, this First Supplemental
Indenture and the Notes in the form attached hereto as
Exhibit A
.
Section 2.02 Maturity.
The date upon
which the entire principal amount of the Notes shall become due and payable, together with any accrued and unpaid interest then
owing, which shall be the earlier of February 15, 2025 or the date on which principal becomes due as a result of an acceleration
under Section 5.02 of the Base Indenture (the “
Maturity Date
”).
Section 2.03 Form, Payment and Appointment.
Except as provided in the eighth paragraph of Section 3.05 of the Base Indenture, the Notes will be issued only in book-entry form,
will be represented by one or more Global Notes (as defined below) registered in the name of or held by The Depository Trust Company
(and any successor thereto) (“
DTC
”) or its nominee. Principal or the Redemption Price, if any, of a Note shall
be payable to the Person in whose name that Note is registered on the Maturity Date or Redemption Date, as the case may be, provided
that principal of, the Redemption Price, if any, of and interest on the Notes represented by one or more Global Notes (as hereinafter
defined) registered in the name of or held by DTC or its nominee will be payable in immediately available funds to DTC or its nominee,
as the case may be, as the registered holder of such Global Notes. The principal of any certificated Notes will be payable at the
Place of Payment set forth below;
provided
,
however
, that payment of interest may be made at the option of the Company
through the Paying Agent by check mailed to the Person entitled thereto at such address as shall appear in the Security Register
or by wire transfer to an account appropriately designated by the Person entitled to payment;
provided
that the Paying Agent
shall have received written notice of such account designation at least five Business Days prior to the date of such payment (subject
to surrender of the relevant Note in the case of a payment of interest on the Maturity Date).
The Notes shall have such other terms as
are set forth in the form thereof attached hereto as
Exhibit A
.
The Security Registrar, Authenticating Agent
and Paying Agent for the Notes shall initially be the Trustee.
The Place of Payment for the Notes shall
be an office or agency of the Company maintained for such purpose, which shall initially be the Corporate Trust Office of the Trustee
in Wilmington, Delaware.
The Notes will be issuable and may be transferred
only in minimum denominations of $1,000 or an integral multiple of $1,000 in excess thereof. The amounts payable with respect to
the Notes shall be payable in U.S. Dollars.
Section 2.04 Global Note.
The Notes
shall be issued initially in the form of one or more fully registered global notes (each such global note, a “
Global Note
”)
registered in the name of DTC or its nominee and deposited with DTC or its designated custodian or such other Depositary as any
officer of the Company may from time to time designate. Unless and until a Global Note is exchanged for Notes in certificated form,
such Global Note may be transferred, in whole but not in part, and any payments on the Notes shall be made, only to DTC or a nominee
of DTC, or to a successor Depositary selected or approved by the Company or to a nominee of such successor Depositary as provided
in the Indenture.
Section 2.05 Interest.
(a) Interest payable on any Interest
Payment Date, the Maturity Date or the Redemption Date, if any, with respect to the Notes shall be the amount of interest accrued
from, and including, the immediately preceding Interest Payment Date in respect of which interest has been paid or duly provided
for (or from and including the initial original issue date of Notes of the 2025 Series, if no interest has previously been paid
or duly provided for with respect to any of the Notes of the 2025 Series) to, but excluding, such Interest Payment Date, Maturity
Date or the Redemption Date, if any, as the case may be (each, an “
Interest Period
”).
(b) From and including the initial original issue date
of the Notes of the 2025 Series to but excluding February 15, 2020 the rate at which the Notes shall bear interest shall be 6.25%
per annum, computed on the basis of a 360-day year consisting of twelve 30-day months, and payable semi-annually in arrears; from
and including February 15, 2020 to but excluding the Maturity Date, the rate at which the Notes shall bear interest shall be a
floating rate equal to LIBOR determined on the determination date of the applicable Interest Period plus 479 basis points, computed
on the basis of a 360-day year and the actual number of days elapsed, and payable quarterly in arrears (the “Floating Rate
Period”). The date from which interest shall accrue on the Notes shall be February 6, 2015 or the most recent Interest Payment
Date to which interest has been paid or duly provided for; the Interest Payment Dates for the Notes shall be February 15 and August
15 of each year through February 15, 2020, and thereafter February 15, May 15, August 15 and November 15 of each year through the
Maturity Date or earlier Redemption Date (each such payment date, an “
Interest Payment Date
”). In the event
that any scheduled Interest Payment Date for the Notes falls on a day that is not a Business Day, then payment of interest payable
on such Interest Payment Date will be postponed to the next succeeding day which is a Business Day (and no interest on such payment
will accrue for the period from and after such scheduled Interest Payment Date) except that, in the case of any Floating Rate Period,
if such business day is in the next succeeding calendar month, interest will be payable on the immediately preceding business day,
and no interest will accrue or fail to accrue as a result of that postponement or earlier payment.
(c) In the event that the Maturity Date for any Note
falls on a day that is not a Business Day, then the related payments of principal of, and interest on, the Notes may be made on
the next succeeding day that is a Business Day (and no additional interest will accrue on the amount payable for the period from
and after the Maturity Date). Interest due on the Maturity Date (whether or not an Interest Payment Date) of any Notes will be
paid to the Person to whom principal of such Notes is payable.
Section 2.06 Subordination.
(a) The Company, for itself, its successors and assigns,
covenants and agrees, and each Holder of Notes by the Holder’s acceptance thereof, likewise covenants and agrees, that the
payment of the principal of and interest on each and all of the Notes is and will be expressly subordinated in right of payment
to the prior payment in full of all Senior Debt, subject to clause (j) of this Section 2.06, to the extent and in the manner described
in this Section 2.06 and Section 14.01 of the Base Indenture. The Company shall give prompt written notice to the Trustee upon
the incurrence of any Senior Debt as well as the representative for such Senior Debt (each identified representative, an “Identified
Representative”).
(b) Upon any distribution of assets of the Company upon
any termination, winding up, liquidation or reorganization of the Company, whether in bankruptcy, insolvency, reorganization or
receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise (subject to the power of a court of competent jurisdiction to make other equitable provision reflecting
the rights conferred upon the Senior Debt and the holders thereof with respect to the Notes and the Holders thereof by a lawful
plan of reorganization under applicable bankruptcy law):
|
|
(i)
|
the holders of all Senior Debt shall first be entitled
to receive payment in full in accordance with the terms of such Senior Debt of the principal thereof, premium, if any, and the
interest due thereon (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization
of the Company under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) before the Holders of the
Notes are entitled to receive any payment upon the principal of or interest on indebtedness evidenced by the Notes;
|
|
|
(ii)
|
any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to which the Holders of the Notes would be entitled except
for the provisions of Section 14.01 of the Base Indenture and this Section 2.06, including any such payment or distribution that
may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment
of the Notes, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Debt or their representative
or representatives (including any Identified Representatives) or to the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Debt may have been issued, in accordance with the priorities then existing among holders
of Senior Debt for payment of the aggregate amounts remaining unpaid on account of the principal, premium, if any, and interest
(including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company
under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) on the Senior Debt held or represented
by each, to the extent necessary to make payment in full of all Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt; it being understood that if the Holders of the Notes shall fail to
file a proper claim in the form required by any proceeding referred to in this subparagraph (ii) prior to 30 days before the expiration
of the time to file such claim or claims, then the holders of Senior Debt are hereby authorized to file an appropriate claim or
claims for and on behalf of the Holders of the Notes, in the form required in any such proceeding; and
|
|
|
(iii)
|
in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including
any such payment or distribution that may be payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinate to the payment of the Notes shall be received by the Trustee or Holders of the Notes before all Senior
Debt is paid in full, such payment or distribution shall be paid over as described in the following paragraph until all such Senior
Debt shall have been paid in full.
|
Subject to the payment in full of all Senior
Debt, the Holders of the Notes shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions
of cash, property or securities of the Company applicable to the Senior Debt until the principal of and interest on the Notes shall
be paid in full and no such payments or distributions to holders of such Senior Debt to which the Holders of the Notes would be
entitled except for the provisions hereof of cash, property or securities otherwise distributable to the holders of Senior Debt
shall, as between the Company, its creditors, other than the holders of Senior Debt, and the Holders of the Notes, be deemed to
be a payment by the Company to or on account of the Senior Debt. It is understood that the provisions of this Section 2.06 are
intended solely for the purpose of defining the relative rights of the Holders of the Notes, on the one hand, and the holders of
Senior Debt, on the other hand, and, in the case of clause (j) of this Section 2.06, the holders of Existing Company Subordinated
Indebtedness. Nothing contained in this Section 2.06 or elsewhere in the Base Indenture, this First Supplemental Indenture or any
supplemental indenture issued pursuant to Section 3.01 or Article Nine of the Base Indenture or in the Notes is intended to or
shall impair, as between the Company, its creditors, other than the holders of Senior Debt, and the Holders of the Notes, the obligation
of the Company, which is unconditional and absolute, to pay to the Holders of the Notes the principal of and interest on the Notes
as and when the same shall become due and payable in accordance with their terms or to affect the relative rights of the Holders
of the Notes and creditors of the Company, other than the holders of the Senior Debt, nor, except as otherwise expressly provided
in the Base Indenture, this First Supplemental Indenture and the Notes with respect to the limitation on the rights of the Trustee
and the Holders of Notes, to accelerate the maturity of the Notes and pursue remedies upon such an acceleration, shall anything
herein or in the Notes prevent the Trustee or the Holder of any Notes from exercising all remedies otherwise permitted by applicable
law upon any Event of Default under the Indenture occurring, subject to the rights, if any, under this Section 2.06 of the holders
of Senior Debt, in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any
payment or distribution of assets of the Company referred to in this Section 2.06(b), the Trustee and the Holders of the Notes
shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such termination, winding up,
liquidation or reorganization proceeding is pending or upon a certificate of the liquidating trustee or agent or other Person making
any distribution to the Trustee or to the Holders of the Notes (such party, a “Liquidating Agent”) for the purpose
of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness
of the Company, the amount hereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Section 2.06. In the absence of any such certificate from a Liquidating Agent, the Trustee shall rely upon a
written notice from an Identified Representative as to the distributions to be made with respect to the Senior Debt. If a Person
that is not an Identified Representative or a party identified by the Liquidating Agent claims to be a holder of Senior Debt (or
a trustee or representative on behalf of such holder) (such Person, a “Claiming Representative”) the Trustee may defer
any payments to all parties, including any Identified Representative and Claiming Representatives, pending judicial determination
as to the right of the Persons to receive such payment.
With respect to the holders of Senior Debt,
the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this
Section 2.06, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Section
2.06 against the Trustee. The Trustee, however, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt by
reason of the execution of the Base Indenture, this First Supplemental Indenture, or any other supplemental indenture entered into
pursuant to Section 3.01 or Article Nine of the Base Indenture, and shall not be liable to any such holders if it shall mistakenly
pay over or distribute to or on behalf of Holders of the Notes or the Company moneys or assets to which any holders of Senior Debt
shall be entitled by virtue of this Section 2.06.
(c) In the event and during the continuation of any default
in the payment of principal of, or premium, if any, or interest on, any Senior Debt, beyond any applicable period of grace, or
if any event of default with respect to any Senior Debt shall have occurred and be continuing, or would occur as a result of the
payment referred to hereinafter, permitting the holders of such Senior Debt (or a trustee on behalf of the holders thereof) to
accelerate the maturity thereof, then, unless and until such default or event of default shall have been cured or waived or shall
have ceased to exist, no payment or principal of or interest on the Notes, or in respect of any retirement, purchase or other acquisition
of any of the Notes, shall be made by the Company. The Trustee shall have no independent responsibility to determine whether such
events exist that would prohibit a payment on the Notes and may rely solely on the Company (or upon written notice from any Identified
Representative) with respect to any such determinations.
(d) Nothing contained in the Base Indenture, this First
Supplemental Indenture, any other supplemental indenture entered into pursuant to Section 3.01 or Article Nine of the Base Indenture,
or in any of the Notes shall: (i) impair, as between the Company and Holders of the Notes, the obligations of the Company, to make,
or prevent the Company from making, at any time except as provided in clauses (b), (c), or (j) of this Section 2.06, payments of
principal of, or interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization
of the Company under any applicable bankruptcy, insolvency, or similar law now or hereafter in effect) on, the Notes, as and when
the same shall become due and payable in accordance with the terms of the Notes; (ii) affect the relative rights of the Holders
of the Notes and creditors of the Company other than the holders of the Senior Debt; (iii) except as otherwise expressly provided
in the Base Indenture, this First Supplemental Indenture and the Notes with respect to the limitation on the rights of the Trustee
and the Holders of Notes, to accelerate the maturity of the Notes and pursue remedies upon such an acceleration, prevent the Holder
of any Notes or the Trustee from exercising all remedies otherwise permitted by applicable law upon default thereunder, subject
to the rights, if any, under this Section 2.06 of the holders of Senior Debt in respect of cash, property or securities of the
Company received upon the exercise of such remedy; or (iv) prevent the application by the Trustee or any Paying Agent of any moneys
deposited with it hereunder to the payment of or on account of the principal of, or interest on, the Notes or prevent the receipt
by the Trustee or any Paying Agent of such moneys, if, prior to the third Business Day prior to such deposit, the Trustee or such
Paying Agent did not have written notice from the Company or any Identified Representative of any event prohibiting the making
of such deposit by the Company.
(e) Each Holder by his acceptance of any Notes authorizes
and expressly directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to effectuate
the subordination provided in the Indenture, and appoints the Trustee such Holder’s attorney-in-fact for such purposes, including,
in the event of any termination, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of creditors by the Company, a marshalling of the assets
and liabilities of the Company or otherwise) tending toward the liquidation of the property and assets of the Company, the filing
of a claim for the unpaid balance of the Notes in the form required in those proceedings.
The Company shall give prompt written notice
to the Trustee of any fact known to the Company that would prohibit the Company from making any payment to or by the Trustee in
respect of the Notes pursuant to the provisions of this Section 2.06 or Article Fourteen of the Base Indenture. The Trustee shall
not be charged with the knowledge of the existence of any default or event of default with respect to any Senior Debt or of any
other facts that would prohibit the making of any payment to or by the Trustee unless and until a Responsible Officer of the Trustee
shall have received notice in writing at its Corporate Trust Office to that effect signed by an Officer of the Company, or by an
Identified Representative, the Trustee shall, subject to Article Six of the Base Indenture, be entitled to assume that no such
facts exist; provided that, if the Trustee shall not have received the written notice provided for in this Section 2.06 at least
three Business Days prior to the date upon which, by the terms of the Indenture, any monies shall become payable for any purpose
(including, without limitation, the payment of the principal of or interest on any Note), then, notwithstanding anything herein
to the contrary, the Trustee shall have full power and authority to receive any monies from the Company and to apply the same to
the purpose for which they were received, and shall not be affected by any notice to the contrary that may be received by it on
or after such prior date except for an acceleration of the Notes prior to such application. The foregoing shall not apply if the
Paying Agent is the Company. The Trustee shall be entitled to rely without further investigation on the delivery to it of a written
notice by an Identified Representative to establish that such notice has been given by a holder of such Senior Debt or a trustee
or agent on behalf of any such holder.
In the event that the Trustee determines
in good faith that any evidence is required with respect to the right of any Claiming Representative as a holder of Senior Debt
to participate in any payment or distribution pursuant to this Section 2.06 or Article Fourteen of the Base Indenture, the Trustee
may request such Claiming Representative to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Section 2.06 or Article Fourteen of the Base Indenture and, if
such evidence is not furnished to the Trustee, the Trustee may defer any payment to such Person pending such evidence being furnished
to the Trustee or a judicial determination that such Claiming Representative has the right to receive such payment.
(f) Notwithstanding the provisions of this Section 2.06
or any other provisions of the Base Indenture, this First Supplemental Indenture or any other supplemental indenture issued pursuant
to Section 3.01 or Article Nine of the Base Indenture, neither the Trustee nor any Paying Agent shall be charged with knowledge
of the existence of any Senior Debt or of any event that would prohibit the making of any payment or moneys to or by the Trustee
or such Paying Agent, unless and until a Responsible Officer of the Trustee or such Paying Agent shall have received written notice
thereof from the Company or from the holder of any Senior Debt or from the representative of any such holder.
(g) The Trustee shall be entitled to all of the rights
set forth in this Section 2.06 in respect of any Senior Debt at any time held by it in its individual capacity to the same extent
as any other holder of such Senior Debt, and nothing in the Base Indenture, this First Supplemental Indenture or any other supplemental
indenture issued pursuant to Section 3.01 or Article Nine of the Base Indenture shall be construed to deprive the Trustee of any
of its rights as such holder.
(h) The failure to make a payment pursuant to the Notes
by reason of any provision in this Section 2.06 shall not be construed as preventing the occurrence of a Default or any Event of
Default.
(i) Nothing contained in this Section 2.06 shall apply
to the claims of, or payments to, the Trustee under or pursuant to Section 6.07 of the Base Indenture. Similarly, the Trustee shall
be entitled to exercise its charging lien granted pursuant to Section 6.07 of the Base Indenture on any funds received before application
of the subordination provisions of this Section 2.06.
(j) Subject to the provisions of this clause (j) of Section
2.06 and to any provisions established or determined with respect to Securities of any Series pursuant to Section 3.01 of the Base
Indenture, the Notes shall rank
pari passu
in right of payment with the Existing Company Subordinated Indebtedness other
than the Existing Junior Subordinated Debentures to which the Notes shall rank senior in right of payment thereto. Upon the occurrence
of any of the events specified in clause (b) of this Section 2.06, the provisions of that clause and the corresponding provisions
of each indenture or other instrument or document establishing or governing the terms of any Existing Company Subordinated Indebtedness
shall be given effect on a pro rata basis to determine the amount of cash, property or securities that may be payable or deliverable
as between the holders of Senior Debt, on the one hand, and the Holders of the Notes and holders of Existing Company Subordinated
Indebtedness, on the other hand.
(k) The subordination provisions in this Section 2.06
or Article Fourteen of the Base Indenture do not apply to amounts due to the Trustee pursuant to other sections of the Indenture,
including Section 6.07 of the Base Indenture.
Section 2.07 Events of Default; Acceleration.
All of the Events of Default set forth in clauses (1), (2), (4) and (5) of Section 5.01 of the Base Indenture will apply with
respect to the Notes and clause (3) under the Base Indenture shall not apply with respect to the Notes. Notwithstanding the foregoing,
because the Company will treat the Notes as Tier 2 capital (or its then equivalent if the Company were subject to such capital
requirement) for purposes of capital adequacy guidelines of the Federal Reserve Board as then in effect and applicable to the Company,
upon the occurrence of an Event of Default other than an Event of Default set forth in clause (4) or (5) of Section 5.01 of the
Base Indenture, neither the Trustee nor the holders of the Notes may accelerate the Maturity of the Notes and make the principal
of, and any accrued and unpaid interest on, the Notes, immediately due and payable. If an Event of Default specified in clause
(4) or (5) of
Section 5.01
of the Base Indenture occurs, then the principal amount of all of the outstanding Notes, including
any accrued and unpaid interest on the Notes and premium, if any, shall become and be immediately due and payable without any declaration
or other act on the part of the Trustee or the holders of the Notes.
Section 2.08 No Sinking Fund.
The
Notes are not entitled to the benefit of any sinking fund.
Section 2.09 No Conversion or Exchange
Rights.
The Notes shall not be convertible into or exchangeable for any equity securities, other securities or other assets
of the Company or any Subsidiary.
Section 2.10 No Defeasance or Covenant
Defeasance
. Sections 12.02 and 12.03 of the Base Indenture shall not be applicable to the Notes.
ARTICLE 3
REDEMPTION OF THE NOTES
Section 3.01 Redemption.
The Company
may, at its option, redeem the Notes, in whole or in part, on any Interest Payment Date on or after February 15, 2020. The Company
may also, at its option, redeem the Notes before the Maturity Date in whole, at any time, upon the occurrence of a Tier 2 Capital
Event or a Tax Event or if the Company is required to register as an investment company pursuant to the Investment Company Act
of 1940 (15 U.S.C. 80a-1 et seq.). Any such redemption will be at a Redemption Price equal to the principal amount of the Notes
to be redeemed, plus accrued and unpaid interest to, but excluding, the Redemption Date fixed by the Company, provided that, for
avoidance of doubt, the payment of such accrued and unpaid interest paid as a part of the Redemption Price shall satisfy in full
the obligation of the Company to pay accrued and unpaid interest on the Notes redeemed from and including the most recent Interest
Payment Date on which all accrued and unpaid interest on the Notes was paid or provided for through, but excluding, the Redemption
Date. No such redemption of the Notes by the Company prior to the Maturity Date shall be made without the prior approval of the
Federal Reserve Board if such prior approval is or will be required at the scheduled Redemption Date in order for the Notes to
qualify as Tier 2 capital of the Company under the rules and guidelines of the Federal Reserve Board. The provisions of Article
Eleven of the Base Indenture shall apply to any redemption of the Notes pursuant to this Article 3.
ARTICLE 4
FORM OF NOTES
Section 4.01 Form of Notes
. The Notes
and the Trustee’s Certificate of Authentication thereon are to be substantially in the form attached as
Exhibit A
hereto, with such changes therein as the officers of the Company executing the Notes (by manual or facsimile signature) may approve,
such approval to be conclusively evidenced by their execution thereof.
ARTICLE 5
ISSUE OF NOTES
Section 5.01 Original Issue of Notes.
Notes having an aggregate principal amount of $23,000,000 may from time to time, upon execution of this First Supplemental Indenture,
be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver
said Notes in accordance with a Company Order pursuant to Section 3.03 of the Base Indenture without any further action by the
Company (other than as required by the Base Indenture).
Section 5.02 Additional Issues of Notes
.
The Company may from time to time, without notice to or the consent of the holders of the Notes, issue additional Notes, which
Notes will rank
pari passu
with the Notes and be identical in all respects as the Notes previously issued except for their
issuance date, the offering price, the payment of interest accruing prior to the issue date of such additional Notes and the first
payment of interest following the issue date of such additional Notes in order that such additional Notes may be consolidated and
form a single Series with the Notes outstanding immediately prior to the issuance of such additional Notes and have the same terms
as to status, redemption or otherwise as the Notes; provided, that if any additional Notes are not fungible with the initial Notes
for U.S. income tax purposes, such additional Notes will have a separate CUSIP number.
ARTICLE 6
IMMUNITY OF STOCKHOLDERS, EMPLOYEES,
AGENTS, OFFICERS AND DIRECTORS
Section 6.01 Indenture and Notes Solely
Corporate Obligations.
No recourse for the payment of the principal of or interest on any Note, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer, director, employee or agent, as such,
past, present or future, of the Company or of any successor Person to the Company, it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this First Supplemental
Indenture and the issue of the Notes.
ARTICLE 7
MISCELLANEOUS
Section 7.01 Ratification of Base Indenture.
The Base Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.
Section 7.02 Trustee Not Responsible
for Recitals.
The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall
be taken as statements of the Company and not those of the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the Company of the Notes or of the proceeds thereof.
Section 7.03 New York Law To Govern.
THIS FIRST SUPPLEMENTAL INDENTURE AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
New York
.
Section 7.04 Separability.
In case
any provision in this First Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected or impaired by such invalid, illegal or unenforceable
provision.
Section 7.05 Counterparts.
This First
Supplemental Indenture may be executed in any number of counterparts each of which shall be an original, but such counterparts
shall together constitute but one and the same instrument. The exchange of copies of this First Supplemental Indenture and of signature
pages by facsimile or electronic format (i.e., “.pdf” or “.tif”) transmission shall constitute effective
execution and delivery of this First Supplemental Indenture as to the parties hereto and may be used in lieu of the original First
Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronic format (i.e.,
“.pdf” or “.tif”) shall be deemed to be their original signatures for all purposes.
Section 7.06 Benefits of First Supplemental
Indenture.
Nothing in this First Supplemental Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties to this First Supplemental Indenture and their successors under this First Supplemental Indenture and the Persons
in whose names the Notes are registered on the Security Register from time to time, any benefit or any legal or equitable right,
remedy or claim under this First Supplemental Indenture.
Section 7.07 Conflict with Base Indenture.
If any provision of this First Supplemental Indenture relating to the Notes is inconsistent with any provision of the Base Indenture,
such provision of this First Supplemental Indenture shall control.
Section 7.08 Provisions of Trust Indenture
Act Controlling.
This First Supplemental Indenture is subject to the provisions of the Trust Indenture Act that are required
to be part of the Indenture and shall, to the extent applicable, be governed by such provisions. If any provision of this First
Supplemental Indenture limits, qualifies, or conflicts with a provision of the Trust Indenture Act that is required under the Trust
Indenture Act to be a part of and govern this First Supplemental Indenture, the provision of the Trust Indenture Act shall control.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK.]
IN WITNESS WHEREOF, the parties hereto
have caused this First Supplemental Indenture to be duly executed as of the day and year first written above.
|
|
THE COMMUNITY FINANCIAL CORPORATION
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
William J. Pasenelli
|
|
|
Title:
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
[Signature Page to First Supplemental Indenture]
EXHIBIT A
[Note: The following legend is to be
placed at the beginning of any Global Note representing Notes.]
GLOBAL NOTE
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE REFERRED TO IN THIS SECURITY AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR ITS NOMINEE. THIS SECURITY MAY NOT BE TRANSFERRED
TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE OR
A SUCCESSOR OF SUCH DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR
IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER 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 IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY AND THE OBLIGATIONS OF THE COMPANY (AS DEFINED
HEREIN) AS EVIDENCED HEREBY (1) ARE NOT DEPOSITS WITH OR HELD BY THE COMPANY AND ARE NOT INSURED OR GUARANTEED BY ANY FEDERAL AGENCY
OR INSTRUMENTALITY, INCLUDING, WITHOUT LIMITATION, THE FEDERAL DEPOSIT INSURANCE CORPORATION AND (2) ARE SUBORDINATE IN THE RIGHT
OF PAYMENT TO THE SENIOR DEBT (AS DEFINED IN THE SUBORDINATED DEBT INDENTURE IDENTIFIED HEREIN).
A-1
THE COMMUNITY FINANCIAL CORPORATION
6.25% Fixed to Floating Rate Subordinated
Notes due February 15, 2025
|
|
|
|
No.
|
CUSIP: 20368XAA9
|
|
|
ISIN: __________
|
$23,000,000
The Community Financial Corporation, a
Maryland corporation (hereinafter called the “
Company
”, which term includes any successor corporation under
the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum
of $23,000,000 (or such other amount as set forth in the Schedule of Increases or Decreases in Note attached hereto) on February
15, 2025, (such date is hereinafter referred to as the “
Scheduled
Maturity Date
”), and to pay interest
thereon from February 6, 2015 (the “Issue Date”) or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semi-annually in arrears on February 15 and August 15 of each year through February 15, 2020, and
thereafter quarterly in arrears on February 15, May 15, August 15 and November 15 of each year through the Maturity Date or earlier
Redemption Date (each, an “Interest Payment Date”), commencing August 15, 2015, at the rate of 6.25% per annum, computed
on the basis of a 360-day year consisting of twelve 30-day months, from the Issue Date to but excluding February 15, 2020, and
at a floating rate equal to LIBOR determined on the determination date of the applicable Interest Period plus 479 basis points,
computed on the basis of a 360-day year and the actual number of days elapsed, from and including February 15, 2020 to but excluding
the Maturity Date, until the principal hereof is paid or made available for payment, provided that any principal and premium, and
any such installment of interest, which is overdue shall bear interest at the rate of 6.25% per annum (to the extent that the payment
of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment,
and such interest shall be payable on demand. The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on the Regular Record Date for such interest, which shall be the February 1 or August 1
(whether or not a Business Day) through February 15, 2020, and thereafter the February 1, May 1, August 1 and November 1, as the
case may be, next preceding such Interest Payment Date.
Payment of the principal of and interest
on this Note will be made at the office or agency of the Company maintained for that purpose, which shall initially be the Corporate
Trust Office of the Trustee, 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;
provided
,
however
, that payment of interest may be made at the option of
the Company through the Paying Agent by check mailed to the Person entitled thereto at such address as shall appear in the Security
Register or by wire transfer to an account appropriately designated by the Person entitled to payment;
provided
, that the
Paying Agent shall have received written notice of such account designation at least five Business Days prior to the date of such
payment (subject to surrender of the relevant Note in the case of a payment of interest on the Maturity Date).
Reference is hereby made to the further
provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication
hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed.
Dated: ____________
|
|
THE COMMUNITY FINANCIAL CORPORATION
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the Series
designated therein referred to in the within-mentioned Indenture.
|
|
Dated:
|
|
|
|
|
|
|
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
|
|
|
|
|
|
|
By:
|
|
|
|
|
Authorized Signatory
|
REVERSE OF NOTE
THE COMMUNITY FINANCIAL CORPORATION
6.25% Fixed to Floating Rate Subordinated
Notes due February 15, 2025
This Note is one of a duly authorized issue
of Securities of the Company of a Series designated as the “6.25% Fixed to Floating Rate Subordinated Notes due February
15, 2025” (herein called the “
Notes
”) initially issued in an aggregate principal amount of $23,000,000
on February 6, 2015. Such Series of Securities has been established pursuant to, and is one of an indefinite number of Series of
subordinated debt securities of the Company issued or issuable under and pursuant to, the Subordinated Debt Indenture (the “
Base
Indenture
”), dated as of ________, 2015, between the Company and Wilmington Trust, National Association, as Trustee (herein
called the “
Trustee
,” which term includes any successor trustee), as supplemented and amended by the First Supplemental
Indenture between the Company and the Trustee, dated as of ________, 2015, thereto (the “
First Supplemental Indenture
”
and the Base Indenture as supplemented and amended by the First Supplemental Indenture the “
Indenture
”), to
which Indenture and any other indentures supplemental thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Persons in whose names Notes are registered
on the Security Register from time to time and of the terms upon which the Notes are, and are to be, authenticated and delivered.
The terms, conditions and provisions of the Notes are those stated in the Indenture, those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended, and those set forth in this Note. To the extent that the terms, conditions and
provisions of this Note modify, supplement or are inconsistent with those of the Indenture, then the terms, conditions and other
provisions of this Note shall govern to the extent such terms, conditions and other provisions of this Note are not inconsistent
with the terms, conditions and provisions made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended.
All capitalized terms used in this Note
and not defined herein that are defined in the Base Indenture or the First Supplemental Indenture shall have the meanings assigned
to them in the Base Indenture or the First Supplemental Indenture. If any capitalized term used in this Note and defined herein
is also defined in the Base Indenture or the First Supplemental Indenture, in the event of any conflict in the meanings ascribed
to such capitalized term, the definition of the capitalized term in this Note shall control.
The indebtedness of the Company evidenced
by the Notes, including the principal thereof and interest thereon, is, to the extent and in the manner set forth in the First
Supplemental Indenture, subordinate and junior in right of payment to obligations of the Company constituting the Senior Debt (as
defined in the Indenture) on the terms and subject to the terms and conditions as provided and set forth in Section 2.06 of the
First Supplemental Indenture and shall rank
pari passu
in right of payment with all other Notes and with all other unsecured
subordinated indebtedness of the Company issued under the Indenture and not by its terms subordinate and junior in right of payment
to the promissory notes, bonds, debentures or other evidences of indebtedness of types that include the Notes other than the Existing
Junior Subordinated Debentures (as defined in the Indenture) to which the Notes shall rank senior in right of payment. Each Holder
of this Security, by the acceptance hereof, agrees to and shall be bound by such provisions of the Indenture and pursuant to Section
2.06 of the First Supplemental Indenture authorizes and directs the Trustee on his behalf to take such actions as may be necessary
or appropriate to effectuate the subordination so provided.
The Notes are intended to be treated as
Tier 2 capital (or its then equivalent if the Company were subject to such capital requirement) for purposes of capital adequacy
guidelines of the Board of Governors of the Federal Reserve System (or any successor regulatory authority with jurisdiction over
bank holding companies) (the “
Federal Reserve Board
”) as then in effect and applicable to the Company. If an
Event of Default with respect to Notes shall occur and be continuing, the principal and interest owed on the Notes shall only become
due and payable in accordance with the terms and conditions set forth in Article Five of the Base Indenture and Section 2.07 of
the First Supplemental Indenture.
Accordingly, the holder of this Note has no right to accelerate the maturity of this Note
in the event the Company fails to pay interest on any of the Notes, fails to perform any other obligations under the Notes or in
the Indenture that are applicable to the Notes.
The Company may, at its option, redeem
the Notes, in whole or in part, on any Interest Payment Date on or after February 15, 2020. The Company may also redeem the Notes
before the Scheduled Maturity Date upon the occurrence of a Tier 2 Capital Event or a Tax Event or if the Company is required to
register as an investment company pursuant to the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.). Any such redemption
will be at a Redemption Price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the Redemption Date fixed by the Company. No such redemption of the Notes by the Company prior to the Scheduled Maturity
Date shall be made without the prior approval of the Federal Reserve Board if such prior approval is or will be required at the
scheduled Redemption Date in order for the Notes to qualify as Tier 2 Capital of the Company under the rules and guidelines of
the Board of Governors of the Federal Reserve System.
The Notes of this Series are not entitled
to the benefit of any sinking fund. The Notes are not convertible into or exchangeable for any of the equity securities, other
securities or assets of the Company or any Subsidiary.
The Base Indenture provisions relating
to defeasance and covenant defeasance in Sections 12.02 and 12.03 of the Base Indenture shall not be applicable to the Notes.
The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of
the holders of the Notes at any time by the Company and the Trustee with the consent of the holders of a majority in principal
amount of the Notes of each Series (each Series voting as a class) affected thereby and at the time Outstanding. The Indenture
also contains provisions permitting the holders of specified percentages in principal amount of the Notes of a Series at the time
Outstanding, on behalf of the holders of all Notes of such Series, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the holder of this Note shall be conclusive and binding upon such holder and upon all
future holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
As provided in the Indenture and subject
to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of
this Note for registration of transfer at the office or agency of the Company in any place where the principal of and interest
on this Note are payable, 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 his attorney duly authorized in writing, and thereupon one or
more new Notes of this Series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Notes of this Series are issuable only
in registered form without coupons in minimum denominations of $1,000 and any integral multiple of $1,000 in excess thereof.
The Company and the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes,
whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
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 (if any) on this Security at the times, place and rate, and in the coin or currency, herein
prescribed.
[Note: The provisions below that appear
in brackets will be inserted into any Global Note representing Notes.] [This Security is a global note, represented by one or more
permanent global certificates registered in the name of the nominee of The Depository Trust Company (each a “Global Note”
and collectively, the “Global Notes”). Accordingly, unless and until it is exchanged for individual certificates evidencing
the Notes represented hereby, this Security may not be transferred except as a whole by The Depository Trust Company (the “Depositary”)
to a nominee of such Depositary or by a nominee of such Depositary or by the Depositary or any nominee to a successor Depositary
or any nominee of such successor. Ownership of beneficial interests in this Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable Depositary or its nominee (with respect to interest
of persons that have accounts with the Depositary (“Participants”) and the records of Participants (with respect to
interests of persons other than Participants)). Beneficial interests in Notes owned by persons that hold through Participants will
be evidenced only by, and transfers of such beneficial interests with such Participants will be effected only through, records
maintained by such Participants. Except as provided below, owners of beneficial interests in this Security will not be entitled
to have any individual certificates and will not be considered the owners or Holders thereof under the Indenture.
Except in the limited circumstances
set forth in Section 3.05 of the Base Indenture, Participants and owners of beneficial interests in the Global Notes will not be
entitled to receive Securities in definitive form and will not be considered Holders of Notes. Neither the Company nor the principal
Paying Agent will be liable for any delay by the Depositary, its nominee or any direct or indirect participant in identifying the
beneficial owners of the related Notes. The Company and the principal payment agent may conclusively rely on, and will be protected
in relying on, instructions from the Depositary or its nominee for all purposes, including with respect to the registration and
delivery, and the respective principal amounts, of the Notes to be issued.
Except as provided in Section 3.05 of
the Base Indenture, beneficial owners of Global Notes will not be entitled to receive physical delivery of Notes in definitive
form and no Global Note will be exchangeable except for another Global Note of like denomination and tenor to be registered in
the name of the Depositary or its nominee. Accordingly, each person owning a beneficial interest in a Global Note must rely on
the procedures of the Depositary and, if such person is not a Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a Holder under the Notes.
The laws of some jurisdictions may require
that purchasers of securities take physical delivery of those securities in definitive form. Accordingly, the ability to transfer
interests in the Notes represented by a Global Note to those persons may be limited. In addition, because the Depositary can act
only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of
a person having an interest in Notes represented by a Global Note to pledge or transfer such interest to persons or entities that
do not participate in the Depositary’s system, or otherwise to take actions in respect of such interest, may be affected
by the lack of a physical definitive security in respect of such interest. None of the Company, the Trustee, the Paying Agent and
the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on
account of Notes by the Depositary, or for maintaining, supervising or reviewing any records of the Depositary relating to the
Notes.]
Wilmington Trust, National Association
will act as the Company’s principal Paying Agent with respect to the Notes through its Corporate Trust Office presently located
at 1100 North Market Street, Wilmington, Delaware 19890. The Company may at any time rescind the designation of a Paying Agent,
appoint a successor Paying Agent, or approve a change in the office through which any Paying Agent acts.
Notices to the Holders of registered Notes
will be given to such Holders at their respective addresses in the Security Register will be deemed to have been given on the fourth
weekday (being a day other than Saturday or Sunday) after the date of mailing, or in the case of Global Notes, electronic delivery
in accordance with DTC’s applicable procedures. The Indenture contains provisions setting forth certain conditions to the
institution of proceedings by the Holders of Notes with respect to the Indenture or for any remedy under the Indenture.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF SAID STATE.
ASSIGNMENT FORM
To assign the within Security, fill in the form below:
I or we assign and transfer the within Security to:
____________________________________________
(Insert assignee’s
legal name)
____________________________________________
(Insert assignee’s
social security or tax I.D. no.)
____________________________________________
(Print or type assignee’s name, address
and zip code)
and irrevocably appoint as agent to transfer this Security on
the books of The Community Financial Corporation. The agent may substitute another to act for it.
|
|
|
Your Signature: _______________________________________
|
|
(Sign exactly as your name appears
on the other side of this Security)
|
|
|
|
Your Name:
|
|
|
|
Date:
|
|
|
|
Signature Guarantee: *
|
|
*
|
NOTICE: The Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program (“STAMP”); (ii) The New York Stock Exchange Medallion Program (“MNSP”); (iii) The Stock Exchange Medallion Program (“SEMP”); or (iv) such other guarantee program acceptable to the Trustee.
|
SIGNATURE GUARANTEE
Signatures must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the Security registrar, which requirements include membership or participation
in the Security Transfer Agent Medallion Program (“
STAMP
”) or such other “signature guarantee program”
as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
SCHEDULE OF INCREASES OR DECREASES IN NOTE
The initial principal amount of this Note is $______________.
The following increases or decreases in the principal amount of this Note have been made:
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Amount of
decrease in
principal
amount of this
Note
|
|
Amount of
decrease in
principal
amount of this
Note
|
|
Principal
amount of this
Note following
such decrease
or increase
|
|
Signature of
authorized
signatory of
Trustee
|