UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On December 20, 2024, Ponce Financial Group, Inc. (the “Company”) entered into an ECIP Securities Purchase Option Agreement (the “Agreement”) with the United States Department of the Treasury (“Treasury”). Treasury is currently the record and beneficial owner of all 225,000 shares of the Company’s Senior Non-Cumulative Preferred Stock (the “Preferred Stock”), which was issued pursuant to the Treasury’s Emergency Capital Investment Program (“ECIP”) on June 7, 2022 (the “Original Closing Date”), as previously disclosed. Pursuant to the Agreement, Treasury has granted the Company an option to purchase all of the Preferred Stock during the Option Period, which is the first fifteen years following the Original Closing Date. The purchase price for the Preferred Stock pursuant to the purchase option is determined based on a formula equal to the present value of the Preferred Stock, calculated as set forth in the Agreement, together with any accrued and unpaid dividends thereon, as of the closing date. Subject to variations in interest rates and the equity risk premium, which are components included in the purchase price calculation, the Company presently expects that the purchase price will be at a substantial discount from the face value of the Preferred Stock.
The purchase option may not be exercised unless and until at least one of the Threshold Conditions under the Agreement has been met. The Threshold Conditions are as follows: during the ten years that follow the Original Closing Date (the “ECIP Period”) either (1) over any sixteen consecutive quarters, an average of at least 60% of the Company’s Total Originations, as defined pursuant to the terms of the ECIP, qualifies as “Deep Impact Lending,” as defined pursuant to the terms of the ECIP (the “Deep Impact Condition”); (2) over any twenty-four consecutive quarters, an average of at least 85% of the Company’s Total Originations qualifies as “Qualified Lending,” as defined pursuant to the terms of the ECIP (the “Qualified Lending Condition”); or (3) the Preferred Stock has a dividend rate of no more than 0.5%, which dividend rate is calculated pursuant to the ECIP and the terms thereof, at each of six consecutive Reset Dates, as defined in the ECIP.
The earliest possible date by which a Threshold Condition may be met is June 30, 2026, which is the end of the sixteenth consecutive quarter following the Original Closing Date. However, the Company does not currently meet any of the Threshold Conditions to exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met. At present, the Company has reported 9 consecutive quarters for which it has met both the Deep Impact and Qualified Lending Conditions. The Preferred Stock currently has a dividend rate of 0.5%.
In addition to the requirement that a Threshold Condition be met, the Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an MDI, and meeting other legal and regulatory criteria. Although the Company currently meets the general eligibility criteria, other than satisfying one of the Threshold Conditions, there can be no assurance that the Company will meet such criteria in the future.
Statements contained in this Current Report on Form 8-K regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the United States federal securities laws. Such statements, including statements regarding the Company’s ability to exercise the purchase option in the future and the anticipated purchase price of the Preferred Stock, involve risks and uncertainties. The risks and uncertainties include the fact that the Company is required to satisfy a number of factual, legal and regulatory conditions in order to exercise the option and the fact that the purchase price calculation involves factors outside of the Company’s control, such as interest rates. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless otherwise required by law.
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The description above is qualified in its entirety by the Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
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Description |
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10.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Ponce Financial Group, Inc. |
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Date: |
December 23, 2024 |
By: |
/s/ Carlos P. Naudon |
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Carlos P. Naudon |
Execution Version
Exhibit 10.1
PREFERRED STOCK
ECIP SECURITIES PURCHASE OPTION AGREEMENT
by and between
THE UNITED STATES DEPARTMENT OF THE TREASURY
and
PONCE FINANCIAL GROUP, INC.
Dated as of December 20, 2024
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS 2
Section 1.01 Definitions of Certain Terms 2
Section 1.02 Interpretation 7
ARTICLE II SECURITIES PURCHASE OPTION 8
Section 2.01 Option 8
Section 2.02 Designation of Mission Aligned Nonprofit Affiliate as the Purchaser 8
Section 2.03 Purchase and Sale of the ECIP Securities 8
Section 2.04 Treasury Disposition Consideration. 8
Section 2.05 Closing 9
ARTICLE III REPRESENTATIONS AND WARRANTIES 9
Section 3.01 Representations and Warranties of the Recipient 9
Section 3.02 Representations and Warranties of Treasury 13
ARTICLE IV COVENANTS 13
Section 4.01 Forbearances of Treasury 13
Section 4.02 Further Action 13
Section 4.03 Remaining Obligations 13
Section 4.04 Transfer Confirmation 13
ARTICLE V CONDITIONS TO THE CLOSING 14
Section 5.01 Conditions to Each Party’s Obligations 14
Section 5.02 Condition to Obligations of Treasury 15
ARTICLE VI TERMINATION 15
Section 6.01 Termination Events 15
Section 6.02 Effect of Termination 15
ARTICLE VII MISCELLANEOUS 16
Section 7.01 Waiver; Amendment 16
Section 7.02 Counterparts 16
Section 7.03 Governing Law; Choice of Forum; Waiver of Jury Trial 16
Section 7.04 Expenses 16
Section 7.05 Notices 16
Section 7.06 Entire Understanding; No Third Party Beneficiaries 17
Section 7.07 Assignment 17
Section 7.08 Severability 17
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ECIP SECURITIES PURCHASE OPTION AGREEMENT
THIS ECIP SECURITIES PURCHASE OPTION AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this “ Agreement”) is dated as of December 20, 2024, and is entered into by and between the United States Department of the Treasury (the “Treasury”) and Ponce Financial Group, Inc. (the “Recipient”).
RECITALS
WHEREAS, Treasury is, as of the date hereof, the record and beneficial owner of 225,000 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share (the “ECIP Securities”), issued by the Recipient, and purchased by Treasury on June 7, 2022 (the “Original Closing Date”), pursuant to the letter agreement dated June 7, 2022 (the “Letter Agreement”), between the Recipient and Treasury, which incorporates by reference the Securities Purchase Agreement – Standard Terms attached thereto as Exhibit A (such Letter Agreement, including the Schedules thereto, and such Securities Purchase Agreement, including the Annexes thereto, as such Letter Agreement or Securities Purchase Agreement may be amended, supplemented, or restated from time to time in accordance with its respective terms, are collectively referred to as the “Original Securities Purchase Agreement”);
WHEREAS, the ECIP Statute (as defined below) provides that Treasury may sell, dispose of, transfer, exchange or enter into securities loans, repurchase transactions, or other financial transactions in regard to, any preferred stock or other financial instrument or asset purchased or acquired under the ECIP Statute, upon terms and conditions and at a price determined by Treasury;
WHEREAS, on November 20, 2024, Treasury adopted the ECIP Disposition Policy (the “Policy”); and
WHEREAS, the Recipient has advised Treasury of its potential desire for Treasury to dispose of all the ECIP Securities pursuant to the terms of the ECIP Statute and the Policy (the “Securities Disposition”).
NOW, THEREFORE, in consideration of the premises, and of the various representations, warranties, covenants and other agreements and undertakings of the parties hereto, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows.
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AGREEMENT ARTICLE I DEFINITIONS
Section 1.01 Definitions of Certain Terms. For purposes of this Agreement, the following terms are used with the meanings assigned below (such definitions to be equally applicable to both the singular and plural forms of the terms herein defined):
“Acknowledgment” has the meaning set forth in the form of Exhibit D hereto. “Affiliate” means any company or other entity that controls, is controlled by, or is
under common control with another company or other entity. For purposes of this definition, “control” of a company or other entity means: (1) ownership, control, or power to vote 25% or more of the outstanding shares of any class of voting securities of the company or other entity, directly or indirectly or acting through one or more other persons; (2) control in any manner over the election of a majority of the directors, trustees, or general partners (or individuals exercising similar functions) of the company or other entity; or (3) power to exercise, directly or indirectly, a controlling influence over the management, credit or investment decisions, or policies of the company or other entity. Whether a company or other entity has the power to exercise a “controlling influence” over another company or other entity shall be determined by Treasury in its sole discretion and consistent with the Policy.
“Aggregate Liquidation Value” has the meaning set forth in Annex 1 hereto. “Agreement” has the meaning set forth in the introductory paragraph of this
agreement.
“Anti-Money Laundering Laws” means the BSA, together with 26 U.S.C. 2313a,
and their implementing regulations.
“Appropriate Federal Banking Agency” means the “appropriate Federal banking agency” for the Recipient as defined in Section 3(q) of the Federal Deposit Insurance Act (12
U.S.C. Section 1813(q)), or any successor provision, or the National Credit Union Administration, as applicable, if the Recipient is a federally-insured credit union.
“Appropriate State Banking Agency” means, (i) if the Recipient is a state- bank or savings association, the Recipient’s state bank supervisor (as defined in Section 3(r) of the Federal Deposit Insurance Act, 12 U.S.C. § 1813(r), or (ii) if the Recipient is a state-chartered credit union, the Recipient’s state supervisor.
“Bank Holding Company” means a company registered as a bank holding company with the Federal Reserve pursuant to 12 U.S.C. § 1842.
“Baseline” has the meaning set forth in Section 1.1 of the Original Securities Purchase Agreement.
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“BSA” means the Bank Secrecy Act (12 U.S.C. 1829b, 1951 et seq. and 31 U.S.C. 5311-5314, 5316-5336, including notes thereto).
“Business Day” means any day that is not a Saturday, a Sunday or another day on which banking organizations in the State of New York or in the District of Columbia are authorized or required by Law to be closed.
“CDFI” means a community development financial institution certified by the CDFI Fund as of the relevant date pursuant to 12 C.F.R. § 1805.201(a) as having satisfied the eligibility requirements of the Community Development Financial Institutions Program and that satisfies the eligibility requirements for a community development financial institution set forth in 12 C.F.R. § 1805.201(b)(1)–(6).
“CDFI Fund” means the Community Development Financial Institution Fund of the United States Department of the Treasury.
“Certificate of Designations” has the meaning set forth in Section 2.3(d) of the Original Securities Purchase Agreement.
“Closing” has the meaning set forth in Section 2.05. “Closing Date” has the meaning set forth in Section 2.05.
“Cost of Equity” has the meaning set forth in Annex 1 hereto.
“De Minimis Purchase Price” means an amount equal to 0.50% of the aggregate liquidation preference of the ECIP Securities, together with accrued and unpaid dividends, as will be calculated by Treasury as of the Closing Date.
“Deemed Exchange” has the meaning set forth in the form of Exhibit D hereto. “Deep Impact Lending” has the meaning set forth in the definition of “Deep Impact
Lending” in the applicable Supplemental Report.
“Deep Impact Threshold” means that over any sixteen consecutive quarters during the ECIP Period an average of at least 60% of the Recipient’s Total Originations has been Deep Impact Lending, as set forth in the Policy.
“Dividend Rate” has the meaning set forth in Annex 1 hereto.
“ECIP Period” means the first 10 years following the Original Closing Date. For avoidance of doubt, “ECIP Period” is not intended to have the meaning set forth in the ECIP Interim Final Rule at 31 C.F.R. Part 35, Subpart B.
“ECIP Securities” has the meaning set forth in the Recitals to this Agreement. “ECIP Statute” means section 522 of Division N of the Consolidated Appropriations Act, 2021.
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“Equity Risk Premium” has the meaning set forth in Annex 1 hereto. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Exercise Notice” means an exercise notice in the form of Exhibit C hereto.
“Governmental Entity” means any court, administrative agency or commission or other governmental or regulatory authority or instrumentality or self-regulatory organization.
“IDI Subsidiary” has the meaning set forth in Section 1.1 of the Original Securities Purchase Agreement.
“Insured CDFI” means a CDFI that is any of the following: (i) an Insured Depository Institution; (ii) a Bank Holding Company; or (iii) a Savings and Loan Holding Company.
“Insured Depository Institution” means an insured depository institution, as defined in 12 U.S.C. Section 1813(c)(2) or an insured credit union as defined in 12 U.S.C Section 1752(7).
“Joinder Agreement” means a fully executed agreement in the form of either Exhibit A or Exhibit B hereto pursuant to which a party other than the Recipient agrees to purchase the ECIP Securities and become a Purchaser.
“Law” means any law, statute, code, ordinance, rule, regulation, judgment, order, award, writ, decree or injunction issued, promulgated or entered into by or with any Governmental Entity.
“Letter Agreement” has the meaning set forth in the Recitals to this Agreement. “Liens” means any liens, licenses, pledges, charges, encumbrances, adverse rights
or claims and security interests whatsoever.
“Liquidation Amount” has the meaning set forth in the Certificate of Designations. “Material Adverse Effect” means a material adverse effect on (i) the business,
results of operation or financial condition of the Recipient and its consolidated subsidiaries taken as a whole; provided, however, that Material Adverse Effect shall not be deemed to include the effects of (A) changes after the date of this Agreement in general business, economic or market conditions (including changes generally in prevailing interest rates, credit availability and liquidity, currency exchange rates and price levels or trading volumes in the United States or foreign securities or credit markets), or any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism, in each case generally affecting the industries in which the Recipient and its subsidiaries operate (including any such changes resulting from a contagion event), (B) changes or proposed changes after the date of this Agreement in generally accepted accounting principles in the United States, or authoritative interpretations thereof, or (C) changes or proposed changes after the date of this Agreement in securities, banking and other laws of general applicability or
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related policies or interpretations of Governmental Entities (including any law in respect of taxes, and laws newly enacted for, relating to or arising out of efforts to implement contagion event
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measures and address the spread of any contagion event) (in the case of each of these clauses (A),
(B) and (C), other than changes or occurrences to the extent that such changes or occurrences have or would reasonably be expected to have a materially disproportionate adverse effect on the Recipient and its consolidated subsidiaries taken as a whole relative to comparable U.S. banking or financial services organizations); or (ii) the ability of the Recipient to consummate the transactions contemplated by this Agreement and perform its obligations hereunder or thereunder on a timely basis.
“MDI” means a minority depository institution, (i) as defined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. § 1463 et seq.); or (ii) considered to be a minority depository institution by the Appropriate Federal Banking Agency or the National Credit Union Administration; or (iii) as listed in the Federal Deposit Insurance Corporation’s Minority Depository Institutions List published for the most recent quarter available as of the date hereof or the Closing Date, as applicable.
“Mission Aligned Entity” means an organization or entity the primary purpose of which is to provide financial products, financial services, or other services to, or make investments in, low- and moderate-income, minority, rural, and underserved communities, including persistent poverty counties, and the activities of which are purposefully directed toward improving the social and/or economic conditions of underserved people and/or residents of economically distressed communities, as determined in Treasury’s sole discretion in accordance with the Policy.
“Mission Aligned Nonprofit Affiliate” means an Affiliate of the Recipient that is a Mission Aligned Entity and that is exempt from taxation and described in Section 501(c)(3) of the Internal Revenue Code.
“Option” has the meaning set forth in Section 2.01
“Option Period” means the first 15 years following the Original Closing Date. “Original Closing Date” has the meaning set forth in the Recitals to this Agreement. “Original Securities Purchase Agreement” has the meaning set forth in the Recitals
to this Agreement.
“Policy” has the meaning set forth in the Recitals to this Agreement. “Present Value Amount” has the meaning set forth in Annex 1 hereto.
“Present Value Make Whole Amount” has the meaning set forth in the form of Exhibit D hereto.
“Present Value Purchase Price” means an amount equal to the present value of the expected payments on the ECIP Securities, together with accrued and unpaid dividends, as determined by Treasury and calculated as of the Closing Date in accordance with Annex 1 hereto.
“Prohibited Investor” means (i) a person named on the Specially Designated Nationals and Blocked Persons List, the Foreign Sanctions Evaders List, the Sectoral Sanctions
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Identification List, or any other similar list of sanctioned persons administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any similar list of sanctioned persons administered by the European Union or any individual European Union member state, or the United Kingdom (collectively, “Sanctions Lists”); (ii) directly or indirectly owned or controlled by, or acting on behalf of, one or more persons on a Sanctions List; (iii) organized, incorporated, established, located, or resident in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Crimea, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Cuba, Iran, North Korea, Syria, the Kherson oblast, and the Zaporizhzhia oblast regions of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States, the European Union or any individual European Union member state, or the United Kingdom; (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515; (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank; (vi) a senior non-U.S. political figure or an immediate family member or close associate of such figure; (vii) a person with whom a U.S. citizen or entity is prohibited from transacting business, whether such prohibition arises under U.S. law, regulation, executive order, anti-money laundering, antiterrorist, financial institution and asset control laws, regulations, rules or orders, or as a result of any list published by the U.S. Department of Commerce, the U.S. Department of the Treasury, or the U.S. Department of State, including any agency or office thereof; (viii) a person who has funded or supported terrorism or a suspected terrorist organization or who has engaged in, or derived funds from, activities that relate to the laundering of the proceeds of illegal activity; or (ix) a person that would cause the Recipient to violate any applicable Law (including bank or other financial institution regulatory laws, regulations or orders) to which the Recipient is subject by reason of such person’s or entity’s purchase of the ECIP Securities.
“Purchaser” means any entity that executes and delivers to Treasury a Joinder Agreement prior to the Closing Date; provided that if no such entity has executed and delivered to Treasury a Joinder Agreement prior to the Closing Date, then the Purchaser will be the Recipient.
“Qualified Lending” has the meaning set forth in Section 1.1 of the Original Securities Purchase Agreement.
“Qualified Lending Threshold” means that over any twenty-four consecutive quarters during the ECIP Period an average of at least 85% of the Recipient’s Total Originations has been Qualified Lending, as set forth in the Policy.
“Quarterly Supplemental Report” has the meaning set forth in Section 4.1(g)(i) of the Original Securities Purchase Agreement.
“Rate Reduction Threshold” means that the ECIP Securities have had a dividend rate of no more than 0.5% at each of six consecutive Reset Dates during the ECIP Period, as set forth in the Policy.
“Recipient” has the meaning set forth in the preamble to this Agreement. “Recipient Subsidiary or Recipient Subsidiaries” has the meaning set forth in
Section 3.01(C)(2).
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“Regulatory Agreement” has the meaning set forth in Section 3.01(E). “Related Party” has the meaning set forth in Section 3.01(F).
“Reset Date” has the meaning set forth in the Certificate of Designations. “RFR” has the meaning set forth in Annex 1 hereto.
“Savings and Loan Holding Company” means a company registered as a savings and loan holding company with the Federal Reserve pursuant to 12 U.S.C. § 1467(a).
“Securities Act” means the Securities Act of 1933, as amended.
“Securities Disposition” has the meaning set forth in the Recitals to this Agreement. “Supplemental Report” has the meaning set forth in Section 1.1 of the Original
Securities Purchase Agreement.
“Threshold Condition” means any one of the Deep Impact Threshold, the Qualified Lending Threshold or the Rate Reduction Threshold.
“Total Originations” has the meaning set forth in the definition of “Total Originations” in the applicable Supplemental Report.
“Treasury” has the meaning set forth in the preamble to this Agreement. “Treasury Disposition Consideration” has the meaning set forth in Section 2.04. “Troubled Condition” has the meaning given to such term under 12 C.F.R. §
303.101(c) (Federal Deposit Insurance Corporation), 12 C.F.R. § 225.71(d) (Board of Governors of the Federal Reserve System), 12 C.F.R. § 5.51(c)(7) (Office of the Comptroller of the Currency), or 12 C.F.R. § 700.2 (National Credit Union Administration), as applicable based on the Recipient’s Appropriate Federal Banking Agency.
Section 1.02 Interpretation. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The term “person” as used in this Agreement shall mean any individual, corporation, limited liability company, limited or general partnership, joint venture, government or any agency or political subdivision thereof, or any other entity or any group (as defined in Section 13(d)(3) of the Exchange Act) comprised of two or more of the foregoing. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. In this Agreement, all references to “dollars” or “$” are to United States dollars. This Agreement and any documents or instruments delivered pursuant hereto or in connection herewith shall be construed without regard to the identity of the person who drafted the various provisions of the same. Each and every provision of this Agreement and
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such other documents and instruments shall be construed as though all of the parties participated equally in the drafting of the same. Consequently, the parties acknowledge and agree that any rule of construction that a document is to be construed against the drafting party shall not be applicable either to this Agreement or such other documents and instruments.
ARTICLE II SECURITIES PURCHASE OPTION
Section 2.01 Option.
Section 2.02 Designation of Mission Aligned Nonprofit Affiliate as the Purchaser. If the Recipient designates an entity that it believes to be a Mission Aligned Nonprofit Affiliate as the Purchaser, the Purchaser shall submit such information as Treasury may reasonably request to enable Treasury to make a determination, in its sole discretion, of whether such designated Purchaser is a Mission Aligned Nonprofit Affiliate in accordance with the Policy. Treasury shall inform the Recipient and the Purchaser of its determination not later than 90 (ninety) days after Treasury receives all such information. If Treasury determines that the designated Purchaser is not a Mission Aligned Nonprofit Affiliate, the Recipient may withdraw its Exercise Notice and may subsequently deliver a new Exercise Notice in accordance with Section 2.01(B).
Section 2.03 Purchase and Sale of the ECIP Securities. Subject to, and on the terms and conditions of, this Agreement, following exercise of the Option, the Purchaser shall purchase from Treasury, and Treasury shall sell, transfer, convey, assign and deliver to the Purchaser, effective at the Closing, the ECIP Securities for a purchase price equal to the Treasury Disposition Consideration.
Section 2.04 Treasury Disposition Consideration.
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Section 2.05 Closing.
ARTICLE III REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Recipient. The Recipient hereby represents and warrants to Treasury as of the date hereof and as of the Closing Date as follows:
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its properties and conduct its business in all material respects as it is being currently conducted, and except as has not, individually or in the aggregate, had and would not reasonably be expected to have a Material Adverse Effect, has been duly qualified as a foreign corporation for the transaction of business and, if applicable, 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; each subsidiary of the Recipient that would be considered a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the Securities Act, has been duly organized and is validly existing and, if applicable, in good standing under the laws of its jurisdiction of organization.
C.F.R. § 208.43 and 12 C.F.R. Part 217 Subpart B (Board of Governors of the Federal Reserve System); 12 C.F.R. § 702.102 (National Credit Union Administration).
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and performance by the Recipient of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Recipient and its stockholders, and no further approval or authorization is required on the part of the Recipient. This Agreement is a valid and binding obligation of the Recipient enforceable against the Recipient in accordance with its terms, subject to any limitations by applicable bankruptcy, insolvency, reorganization, moratorium, conservatorship, receivership or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity.
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Recipient Subsidiaries have all permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Recipient or such Recipient Subsidiary. Except as set forth on Schedule A, the Recipient and the Recipient Subsidiaries have complied in all respects and are not in default or violation of, and none of them is, to the knowledge of the Recipient, under investigation with respect to or, to the knowledge of the Recipient, have been threatened to be charged with or given notice of any violation of, any applicable domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity, other than such noncompliance, defaults or violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except for statutory or regulatory restrictions of general application or as set forth on Schedule A, no Governmental Entity has placed any restriction on the business or properties of the Recipient or any Recipient Subsidiary that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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Subsidiary that is not on arms-length terms, or (ii) direct or indirect ownership interest in any person or entity with which the Recipient or any Recipient Subsidiary has a material business relationship that is not on arms-length terms (not including publicly-traded entities in which such person owns less than two percent (2%) of the outstanding capital stock). For purposes of this Section 3.01(F), “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act.
Section 3.02 Representations and Warranties of Treasury. Treasury owns the ECIP Securities free and clear of any Liens. Treasury has the requisite power and authority to convey the ECIP Securities to the Purchaser at Closing in accordance with the terms of this Agreement and pursuant to the ECIP Statute and the Policy.
ARTICLE IV COVENANTS
Section 4.01 Forbearances of Treasury. From the date hereof until the earlier to
occur of the Closing and the end of the Option Period, without the prior written consent of the Recipient, Treasury shall not:
Notwithstanding the foregoing, Treasury may undertake any of the actions set forth in Section 4.01(A) with an affiliate of Treasury so long as this Agreement is assigned to, and assumed by, such affiliate in accordance with Section 7.07 of this Agreement. For the avoidance of doubt, until the Closing or other disposition of the ECIP Securities by Treasury, except as expressly set forth in this Section 4.01, Treasury shall continue to be able to exercise all rights and privileges with respect to the ECIP Securities. For purposes of this Section 4.01, “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act.
Section 4.02 Further Action. The Recipient and, if different, the Purchaser shall each execute and deliver, or shall cause to be executed and delivered, such documents and other instruments and shall take, or shall cause to be taken, such further action as may be reasonably necessary to carry out the provisions of this Agreement and give effect to the transactions contemplated by this Agreement.
Section 4.03 Remaining Obligations. The Recipient acknowledges and agrees to comply with the requirements pursuant to the Original Securities Purchase Agreement, the ECIP Securities and the ECIP Statute following the Closing. The Recipient shall comply with all relevant banking regulations applicable to the Securities.
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Section 4.04 Transfer Confirmation. At Closing, Treasury shall deliver to Purchaser and, if different, the Recipient a written confirmation, in the form attached as Exhibit E
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hereto, whereby Treasury confirms that full right, title and possession of the ECIP Securities transferred from Treasury to Purchaser as of the Closing.
ARTICLE V CONDITIONS TO THE CLOSING
Section 5.01 Conditions to Each Party’s Obligations. The respective obligations
of the Purchaser and Treasury to consummate the Securities Disposition are subject to the fulfillment, or written waiver by the Purchaser and Treasury, at or prior to the Closing and as of each other relevant date of determination, including as set forth in Section 2.05(A), of each of the following conditions:
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Section 5.02 Condition to Obligations of Treasury. The obligation of Treasury to consummate the Securities Disposition is also subject to the fulfillment, or written waiver by Treasury, prior to the Closing, of the following conditions:
ARTICLE VI TERMINATION
Section 6.01 Termination Events. This Agreement shall be terminated at any
time prior to the Closing:
(3) the expiration of the Option Period without the exercise of the Option;
Section 6.02 Effect of Termination. In the event of termination of this Agreement as provided in Section 6.01, this Agreement shall forthwith become void and have no effect, and none of Treasury, the Recipient, a Purchaser, if any, that is not the Recipient, any affiliates of any of the foregoing, or any of their officers, directors or employees or any of their respective affiliates shall have any liability of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except that this Section 6.02 and Sections 7.03, 7.04, 7.05 and 7.06 shall survive any termination of this Agreement. For purposes of this Section 6.02, “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act.
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ARTICLE VII MISCELLANEOUS
Section 7.01 Waiver; Amendment. Any provision of this Agreement may be (A)
waived in writing by the party benefiting from the provision, or (B) amended or modified at any time by an agreement in writing signed by each of the parties hereto. Neither any failure nor any delay by any party in exercising any right, power or privilege under this Agreement or any of the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege.
Section 7.02 Counterparts. This Agreement may be executed by facsimile or other electronic means and in counterparts, all of which shall be considered an original and one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
Section 7.03 Governing Law; Choice of Forum; Waiver of Jury Trial. (A) This Agreement and any claim, controversy or dispute arising under or related to this Agreement, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties shall be enforced, governed, and construed in all respects (whether in contract or in tort) in accordance with the federal law of the United States if and to the extent such law is applicable, and otherwise in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State. Each of the parties hereto agrees (a) to submit to the exclusive jurisdictions and venue of the United States District Court of the District of Columbia or the United States Court of Federal Claims, as applicable, for any and all civil actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby, and (b) that notice may be served upon (i) the Purchaser at the address and in the manner set forth for notices to the Purchaser in Section 7.05, (ii) the Recipient at the address and in the manner set forth for notices to the Recipient in Section 7.05 and (iii) Treasury at the address and in the manner set forth for notices to Treasury in Section 7.05, but otherwise in accordance with federal law.
(B) To the extent permitted by applicable Law, each of the parties hereto hereby unconditionally waives trial by jury in any civil legal action or proceeding relating to this Agreement or the transactions contemplated hereby.
Section 7.04 Expenses. If requested by Treasury, the Recipient shall pay all reasonable out of pocket and documented costs and expenses associated with this Agreement and the transactions contemplated by this Agreement, including, but not limited to, the reasonable fees, disbursements and other charges of Treasury’s legal counsel and financial advisors.
Section 7.05 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly delivered (i) when delivered if sent by email to the party to be notified (provided, that notice given by email shall not be effective unless (A) such notice specifically states that it is being delivered pursuant to this Section 7.05 and (B) there is no “out
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of office”, “bounce back” or similar automated reply), or (ii) on the date of delivery if delivered
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personally. All notices hereunder shall be delivered as set forth below or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
If to the Recipient to:
Carlos P. Naudon; carlos.naudon@poncebank.net; Luis G. Gonzalez Jr.; luisgonzalez@poncebank.net; Madeline Marquez; madeline.marquez@poncebank.net 2244 Westchester Ave
Bronx, New York 10462 If to Treasury to:
United States Department of the Treasury
1500 Pennsylvania Avenue, NW Washington, D.C. 20220
Attention: Emergency Capital Investment Program, Office of Capital Access
E-mail: ECIP@treasury.gov
If to the Purchaser, as set forth in the Joinder Agreement.
Section 7.06 Entire Understanding; No Third Party Beneficiaries. This Agreement (together with the documents, agreements and instruments referred to herein) represents the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all other oral or written agreements heretofore made with respect to the subject matter hereof. Nothing in this Agreement, expressed or implied, is intended to confer upon any person, other than the parties hereto, any rights or remedies hereunder.
Section 7.07 Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any party hereto without the prior written consent of the other parties, and any attempt to assign any right, remedy, obligation or liability hereunder without such consent shall be null and void; provided, however, that, without such consent, Treasury may assign this Agreement to an affiliate of Treasury. If Treasury assigns this Agreement to an affiliate, Treasury shall be relieved of its obligations and liabilities under this Agreement but (i) all rights, remedies, obligations and liabilities of Treasury hereunder shall continue and be enforceable by and against and assumed by such affiliate, (ii) the obligations and liabilities of Recipient and, if different, the Purchaser hereunder shall continue to be outstanding and (iii) all references to Treasury herein shall be deemed to be references to such affiliate. Treasury shall give the Recipient and, if different, the Purchaser notice of any such assignment; provided, that the failure to provide such notice shall not void any such assignment. For the avoidance of doubt the Joinder Agreement, if executed pursuant hereto, shall not be prohibited or affected by this Section 7.07. For purposes of this Section 7.07, “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act.
Section 7.08 Severability. Any term or provision of this Agreement which is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any
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jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid, illegal or unenforceable the remaining terms and provisions of this Agreement or affecting the validity, legality or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction, and if any provision of this Agreement is determined to be so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable, in all cases so long as neither the economic nor legal substance of the transactions contemplated hereby is affected in any manner materially adverse to any party or its shareholders. Upon any such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
UNITED STATES DEPARTMENT OF THE TREASURY
By: 
Name: Jeffrey Stout
Title: Deputy Chief Program Officer for Small Business & Community Investment Programs, Office of Capital Access
PONCE FINANCIAL GROUP, INC.
By:
Name: Carlos P. Naudon
Title: President and Chief Executive Officer
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
UNITED STATES DEPARTMENT OF THE TREASURY
By:
Name:
Title:
PONCE FINANCIAL GROUP, [NC.
By: 
Name: Carlos P. Naudon
Title: President and Chief Executive Officer
/Signature Page to ECIP Securities Purchase Option Agreement/
ANNEX 1
CALCULATION OF PRESENT VALUE PURCHASE PRICE
The Present Value Purchase Price shall be calculated as the sum of: (1) the Present Value Amount (as defined below) plus (2) accrued and unpaid dividends to (but excluding) the Closing Date. The Present Value Purchase Price shall be calculated by Treasury.
The “Present Value Amount” means the amount calculated using the following formula, with parameters as defined as follows:
Present Value Amount
=(Dividend Rate ÷ Cost of Equity)* Aggregate Liquidation Value
“Dividend Rate” means the dividend rate on the ECIP Securities at the Reset Date immediately preceding the Closing Date.
“Aggregate Liquidation Value” is equal to the Liquidation Amount per share of the ECIP Securities multiplied by the number of shares of the ECIP Securities.
“Cost of Equity” is calculated using the following formula, with parameters as defined as follows:
Cost of Equity = RFR + β(Equity Risk Premium)
“RFR” means the higher of: (i) the prevailing Kroll-recommended U.S. normalized risk-free rate, available at https://www.kroll.com/en/insights/publications/cost-of-capital/recommended-us- equity-risk-premium-and-corresponding-risk-free-rates, or if such rate is not available, an alternative rate selected by Treasury in its sole discretion; or (ii) the spot yield on 20-year U.S. Treasury bonds, based on the Daily Treasury Par Yield Curve Rates available on Treasury’s website, or if such source of this data point is not available, an alternative source of this data point selected by Treasury in its sole discretion, as of three Business Days before the Closing Date.
“β” equals 0.5.
“Equity Risk Premium” means the Kroll-recommended U.S. Equity Risk Premium as of three Business Days before the Closing Date, available at https://www.kroll.com/en/insights/publications/cost-of-capital/recommended-us-equity-risk- premium-and-corresponding-risk-free-rates, or if such data point is not available, an alternative data point selected by Treasury in its sole discretion.
SCHEDULE A
COMPLIA CE WITH LAWS
List any exceptions to the representation and warranty in the second sentence of Section 3.0 I (D) of this Agreement.
If none, please so indicate by checking the box: ☒
List any exceptions to the representation and warranty in the last sentence of Section 3.0 I ( D) of this Agreement.
If none, please so indicate by checking the box: ☒
SCHEDULE B
REGULATORY AGREEMENTS
List any exceptions to the representation and warranty in Section 3.0 I (E) of this Agreement.
If none. please so indicate by checking the box: ☒
SCHEDULE C
RELATED PARTY TRANSACTIONS
List any exceptions to the representation and warranty in Section 3.0 I (F) of this Agreement.
If none, please so indicate by checking the box: ☒
EXHIBIT A
ECIP SECURITES PURCHASE OPTION AGREEMENT
JOINDER AGREEMENT — MISSION ALIGNED NONPROFIT AFFILIATE
This Joinder Agreement to the ECIP Securities Purchase Option Agreement (the “Joinder Agreement”) dated as of [●] (the “Agreement”) by and between the United States Department of the Treasury (“Treasury”) and [●] (the “Recipient”) is entered into as of [●] by [●] (“Purchaser”) and acknowledged by the Recipient. Capitalized terms used but not otherwise defined in this Joinder Agreement will have the meanings set forth in the Agreement.
Section 1.01 Agreement to Become the Purchaser. By executing and delivering this Joinder Agreement, [●] hereby agrees to become the Purchaser under, be bound by, and comply with the provisions of, the Agreement applicable to the Purchaser, as subsequently amended from time to time.
Section 1.02 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to Treasury as of the date hereof, and as of the Closing Date, as follows:
Section 1.03 Termination. At any point prior to Closing, this Joinder Agreement may be terminated by the Recipient or Purchaser with written notice to the Purchaser and Treasury, or to the Recipient and Treasury, respectively.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Joinder Agreement to be duly executed by their respective authorized officers as of the day and year first written above.
[PURCHASER]
By: Name:
Title:
With notice to:
[●]
[●]
[●]
[●]
[●]
ACKNOWLEDGED AND ACCEPTED BY: [RECIPIENT]
By: Name:
Title:
EXHIBIT B
ECIP SECURITIES PURCHASE OPTION AGREEMENT JOINDER AGREEMENT — OTHER PURCHASERS
This Joinder Agreement to the ECIP Securities Purchase Option Agreement (the “Joinder Agreement”) dated as of [●] (the “Agreement”) by and between the United States Department of the Treasury (“Treasury”) and [●] (the “Recipient”) is entered into as of [●] by [●] (“Purchaser”) and acknowledged by the Recipient. Capitalized terms used but not otherwise defined in this Joinder Agreement will have the meanings set forth in the Agreement.
Section 1.01 Agreement to Become the Purchaser. By executing and delivering this Joinder Agreement, [●] hereby agrees to become the Purchaser under, be bound by, and comply with the provisions of, the Agreement applicable to the Purchaser, as subsequently amended from time to time.
Section 1.02 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to Treasury as of the date hereof, and as of the Closing Date, as follows:
experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment in the ECIP Securities; (iv) has the ability to bear the economic risks of its prospective investment for an indefinite period of time; (v) can afford the complete loss of such investment; and (vi) recognizes that the investment in the ECIP Securities involves substantial risk.
Section 1.03 Termination. At any point prior to Closing, this Joinder Agreement may be terminated by the Recipient or Purchaser with written notice to the Purchaser and Treasury, or to the Recipient and Treasury, respectively.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Joinder Agreement to be duly executed by their respective authorized officers as of the day and year first written above.
[PURCHASER]
By: Name:
Title:
With notice to:
[●]
[●]
[●]
[●]
[●]
ACKNOWLEDGED AND ACCEPTED BY: [RECIPIENT]
By: Name:
Title:
[DATE]
ECIP SECURITIES PURCHASE OPTION AGREEMENT [FORM OF] EXERCISE NOTICE
EXHIBIT C
Reference is made to the ECIP Securities Purchase Option Agreement (the “Agreement”) dated [●], by and between the United States Department of the Treasury (“Treasury”) and [●] (the “Recipient”) [(as supplemented by the Joinder Agreement dated as of [●]) executed by [●] (the “Purchaser”) and acknowledged and accepted by the Recipient (the “Joinder Agreement”)]. This Exercise Notice (the “Exercise Notice”) is being delivered by the Recipient in connection with the Recipient’s exercise of the Option. Capitalized terms used but not defined in this Exercise Notice will have the meaning set forth in the Agreement and the Joinder Agreement.
[In accordance with the Agreement, the Recipient intends to exercise the Option as set forth in the Agreement to purchase the ECIP Securities from Treasury (the “Option”), and such Option is hereby exercised with the Closing to be scheduled for a date that is mutually agreed between Treasury and the Recipient.]1
[In accordance with the Agreement, the Purchaser intends to exercise the Option to purchase the ECIP Securities from Treasury as set forth in the Agreement (the “Option”), and such Option is hereby exercised with the Closing to be scheduled for a date that is mutually agreed among Treasury, the Recipient and the Purchaser.]2
[Pursuant to the terms of the Agreement, the Recipient and Purchaser intend that the Purchaser shall be treated as a Mission Aligned Nonprofit Affiliate, and the Recipient and Purchaser will provide under separate cover such materials as may reasonably be requested by Treasury to confirm such status.]3
If this Exercise Notice is being delivered during the ECIP Period, the Recipient hereby represents and warrants that the following checked conditions, each as defined in the Agreement, have been satisfied: Deep Impact Threshold ☐; Qualified Lending Threshold ☐; Rate Reduction Threshold ☐.
For further information or questions, please contact [●], by email at [●], or by telephone at
[●].
***
1 To be included only for a repurchase by the Recipient.
2 To be included only for a purchase by a third party, including a Mission Aligned Nonprofit Affiliate.
3 To be included only for a Purchaser that intents to be treated as a Mission Aligned Nonprofit Affiliate.
[RECIPIENT]
By: Name:
Title:
[[PURCHASER]
By: Name:
Title:]4
4 To be included only for a purchase by a third party, including a Mission Aligned Nonprofit Affiliate.
EXHIBIT D
ECIP SECURITIES PURCHASE OPTION AGREEMENT ACKNOWLEDGMENT AND AGREEMENT
Reference is made to the ECIP Securities Purchase Option Agreement (the “Agreement”) dated [●], by and between the United States Department of the Treasury (“Treasury”) and [●] (the “Recipient”) [(as supplemented by the Joinder Agreement dated as of [●]) executed by [●] (the “Purchaser”) and acknowledged and accepted by the Recipient]. This Closing Acknowledgment and Agreement (the “Acknowledgment”) is being delivered by the Recipient [and the Purchaser] in connection with the consummation of the Recipient’s exercise of the Option. Capitalized terms used but not defined in this Acknowledgement will have the meaning set forth in the Agreement and the Joinder Agreement.
through the end of the ECIP Period Sections 4.1(e)(i), 4.1(e)(ii), and 4.1(f) of the Original Securities Purchase Agreement will continue to apply following the Closing.
* * *
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Closing Acknowledgment and Agreement to be duly executed by their respective authorized officers as of the day and year first written above.
[RECIPIENT]
By: Name:
Title:
[PURCHASER]
By: Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
UNITED STATES DEPARTMENT OF THE TREASURY
By: Name:
Title:
[DATE]
[FORM OF] TRANSFER CONFIRMATION
UNITED STATES DEPARTMENT OF THE TREASURY 1500 PENNSYLVANIA AVENUE, NW
WASHINGTON, D.C. 20220
EXHIBIT E
Re: Transfer Confirmation Dear [PURCHASER],
In connection with the Closing (as defined in the Agreement) of the transaction contemplated by that certain ECIP Securities Purchase Option Agreement (the “Agreement”), dated [●] (as supplemented by the Joinder Agreement dated as of []), by and among the United States Department of the Treasury (the “Treasury”), [] (the “Recipient”), and [] (the “Purchaser”), Treasury hereby confirms that the full right, title and possession of the ECIP Securities (as defined in the Agreement) have been transferred from Treasury to [Purchaser].
UNITED STATES DEPARTMENT OF THE TREASURY
By: Name: [●]
Title: [●]
INCUMBENCY CERTIFICATE OF PONCE FINANCIAL GROUP, INC.
December 20, 2024
In connection with the ECIP Securities Purchase Option Agreement, dated December 20, 2024, (the "Agreement"), by and between Ponce Financial Group, Inc., a Maryland corporation (the "Recipient"), and the United States Department of the Treasury ("Treasury"), relating to the Recipient's option to purchase Treasury's Preferred Stock under the Emergency Capital Investment Program, the undersigned, as the duly elected Executive Vice President and Chief Operating Officer of the Recipient, does hereby certify in such capacity as follows:
Each of the individuals identified on Exhibit A attached hereto has been duly elected or appointed to the office set forth beside each such individual's respective name, has been duly qualified as, and as of the date hereof is, an officer of the Recipient as listed therein, holding the office set forth opposite such individual's name, and the signature set forth opposite such individual's name is such individual's genuine signature. Such individual who signed any document or certificate relating to the Agreement, was duly authorized to execute and deliver on behalf of the Recipient such document or certificate.
Capitalized terms used but not defined in this certificate shall have the meanings ascribed to such terms in the Agreement.
[Signature page follows]