TARP Capital Purchase Program 

(Non-Public Holding Companies 

with a Mutual Top-Tier Parent) 

Preferred Stock and Warrants 

Summary of Preferred Terms

Issuer: Qualifying Financial Institution (“QFI”) means any Bank Holding 

Company (“BHC”) or Savings and Loan Holding Company 

(“SLHC”) that (i) engages solely or predominately in activities 

permissible for financial holding companies under relevant law, 

(ii) is not publicly traded,1

 and (iii) is directly owned and 

controlled by a BHC or SLHC that is organized in mutual form (a 

“Mutual HC”). Separate Term Sheets are being issued for BHCs 

and SLHCs that are directly owned and controlled by a Mutual 

HC but are publicly traded, and for Mutual HCs that do not 

directly own and control any BHC or SLHC. The term QFI shall 

not mean any institution that is controlled by a foreign bank or 

company. For purposes of this program, “U.S. bank”, “U.S. 

savings association”, “BHC” and “SLHC” means a bank, savings 

association, BHC or SLHC organized under the laws of the 

United States or any State of the United States, the District of 

Columbia, any territory or possession of the United States, Puerto 

Rico, Northern Mariana Islands, Guam, American Samoa, or the 

Virgin Islands. The United States Department of the Treasury 

will determine the eligibility and allocation for QFIs after 

consultation with the appropriate Federal banking agency. 

Initial Holder: United States Department of the Treasury (the “UST”). 

 

1 For the purposes of this term sheet “publicly traded” means a company (1) whose securities are traded on 

a national securities exchange and (2) required to file, under the federal securities laws, periodic reports 

such as the annual (Form 10-K) and quarterly (Form 10-Q) reports with either the Securities and Exchange 

Commission or its primary federal bank regulator. A company may be required to do so by virtue of having 

securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange 

Act”), which applies to all companies that are traded on an exchange or that have $10 million in assets and 

500 shareholders of record or Section 15(d) of the Exchange Act which requires companies that have filed 

a registration statement under the Securities Act of 1933, as amended, and have 300 or more security 

holders of record of the registered class to file reports required under Section 13 of the Exchange Act, e.g., 

periodic reports. 
Size: QFIs may sell preferred to the UST subject to the limits and terms 

described below. 

Each QFI may issue an amount of Preferred equal to not less than 

1% of its risk-weighted assets and not more than the lesser of (i) 

$25 billion and (ii) 3% of its risk-weighted assets. 

Security: Preferred, liquidation preference $1,000 per share. (Depending 

upon the QFI’s available authorized preferred shares, the UST 

may agree to purchase Preferred with a higher liquidation 

preference per share, in which case the UST may require the QFI 

to appoint a depositary to hold the Preferred and issue depositary 

receipts.) 

Ranking: Senior to common stock and pari passu with existing preferred 

shares other than preferred shares which by their terms rank 

junior to any existing preferred shares. 

Regulatory 

Capital 

Status: Tier 1. 

Term: Perpetual life. 

Dividend: The Preferred will pay cumulative dividends at a rate of 5% per 

annum until the fifth anniversary of the date of this investment 

and thereafter at a rate of 9% per annum. Dividends will be 

payable quarterly in arrears on February 15, May 15, August 15 

and November 15 of each year. 

Redemption: All redemptions of the Preferred shall be at 100% of the issue 

price, plus any accrued and unpaid dividends, and shall be subject 

to the approval of the QFI’s primary federal bank regulator. 

Restrictions on 

Dividends: Subject to certain exceptions, for as long as any Preferred is 

outstanding, no dividends may be declared or paid on junior 

preferred shares, preferred shares ranking pari passu with the 

Preferred, or common shares (other than in the case of pari passu 

preferred shares, dividends on a pro rata basis with the Preferred), 

nor may the QFI repurchase or redeem any junior preferred 

shares, preferred shares ranking pari passu with the Preferred or 

common shares, unless all accrued and unpaid dividends for all 

past dividend periods on the Preferred are fully paid. 

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Common Dividends: The UST’s consent shall be required for any increase in common 

dividends per share until the third anniversary of the date of this 

investment. After the third anniversary and prior to the tenth 

anniversary, the UST’s consent shall be required for any increase 

in aggregate common dividends per share greater than 3% per 

annum; provided that no increase in common dividends may be 

made as a result of any dividend paid in common shares, any 

stock split, or similar transaction. The restrictions in this 

paragraph no longer apply if the Preferred and Warrant Preferred 

are redeemed in whole or the UST has transferred all of the 

Preferred and Warrant Preferred to third parties. 

Repurchases: The UST’s consent shall be required for any repurchases of equity 

securities or trust preferred securities (other than (i) repurchases 

of the Preferred and (ii) repurchases of junior preferred shares or 

common shares in connection with any benefit plan in the 

ordinary course of business consistent with past practice) until the 

tenth anniversary of the date of this investment unless prior to 

such tenth anniversary the Preferred and the Warrant Preferred 

are redeemed in whole or the UST has transferred all of the 

Preferred and the Warrant Preferred to third parties. In addition, 

there shall be no share repurchases of junior preferred shares, 

preferred shares ranking pari passu with the Preferred, or common 

shares if prohibited as described above under “Restrictions on 

Dividends”. 

Other Dividend and 

Repurchase 

Restrictions: From and after the tenth anniversary of the date of this 

investment, the QFI shall be prohibited from paying common 

dividends or repurchasing any equity securities or trust preferred 

securities until all equity securities held by the UST are redeemed 

in whole or the UST has transferred all of such equity securities to 

third parties. 

Voting Rights: The Preferred shall be non-voting, other than class voting rights 

on (i) any authorization or issuance of shares ranking senior to the 

Preferred, (ii) any amendment to the rights of Preferred, or (iii) 

any merger, exchange or similar transaction which would 

adversely affect the rights of the Preferred. 

If dividends on the Preferred are not paid in full for six dividend 

periods, whether or not consecutive, the Preferred will have the 

right to elect 2 directors. The right to elect directors will end 

when full dividends have been paid for all prior dividend periods. 

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Transferability: The Preferred will not be subject to any contractual restrictions on 

transfer or the restrictions of any stockholders’ agreement or 

similar arrangement that may be in effect among the QFI and its 

stockholders at the time of the Preferred investment or thereafter; 

provided that the UST and its transferees shall not effect any 

transfer of the Preferred which would require the QFI to become 

subject to the periodic reporting requirements of Section 13 or 

15(d) of the Exchange Act. If the QFI otherwise becomes subject 

to such reporting requirements, the QFI will file a shelf 

registration statement covering the Preferred as promptly as 

practicable and, if necessary, shall take all action required to 

cause such shelf registration statement to be declared effective as 

soon as possible. In addition, the UST and its transferees shall 

have piggyback registration rights for the Preferred. Subject to 

the above, the QFI shall take all steps as may be reasonably 

requested to facilitate the transfer of the Preferred 

Executive 

Compensation 

Transparency, 

Accountability, 

Monitoring: As a condition to the closing of this investment, the QFI and its 

covered officers and employees shall agree to comply with the 

rules, regulations and guidance of the UST with respect to 

executive compensation, transparency, accountability and 

monitoring, as published and in effect at the time of the 

investment closing. 

Related Party 

Transactions: For as long as the UST holds any debt or equity securities 

(including the Preferred) of the QFI, the QFI and its parents and 

subsidiaries will not enter into a transaction with related persons 

(within the meaning of Item 404 under the SEC’s Regulation SK) unless such transaction is (i) on terms no less favorable to the 

QFI and its parents and subsidiaries than could be obtained 

from an unaffiliated third party, and (ii) has been approved by the 

audit committee or a comparable body of independent directors of 

the QFI, or if there are no “independent directors,” the board of 

directors of the QFI but only if the board of directors maintains 

written documentation supporting its determination that the 

transaction meets the requirements of (i) of this paragraph. 

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Summary of Warrant Terms

Warrant: The UST will receive warrants to purchase, upon net settlement, a 

number of net shares of preferred stock of the QFI (the “Warrant 

Preferred”) having an aggregate liquidation preference equal to 

5% of the Preferred amount on the date of investment. The initial 

exercise price for the warrants shall be $0.01 per share or such 

greater amount as the charter may require as the par value per 

share of Warrant Preferred. The UST intends to immediately 

exercise the warrants. 

Term: 10 years. 

Exercisability: Immediately exercisable, in whole or in part 

Warrant Preferred: The Warrant Preferred shall have the same rights, preferences, 

privileges, voting rights and other terms as the Preferred, except 

that (1) the Warrant Preferred will pay dividends at a rate of 9% 

per annum and (2) the Warrant Preferred may not be redeemed 

until all the Preferred has been redeemed. 

Transferability: The warrants will not be subject to any contractual restrictions on 

transfer or the restrictions of any stockholders’ agreement or 

similar arrangement that may be in effect among the QFI and its 

stockholders at the time of this investment or thereafter; provided 

that the UST shall not effect any transfer of the warrants or 

underlying Warrant Preferred which would require the QFI to 

become subject to the periodic reporting requirements of Section 

13 or 15(d) of the Exchange Act. 

If the QFI otherwise becomes subject to the periodic reporting 

requirements of Section 13 or 15(d) of the Exchange Act, the QFI 

will file a shelf registration statement covering the warrants and 

the Warrant Preferred underlying the warrants as promptly as 

practicable and, if necessary, shall take all action required to 

cause such shelf registration statement to be declared effective as 

soon as possible. In addition, the UST and its transferees shall 

have piggyback registration rights for the warrants and the 

Warrant Preferred underlying the warrants. Subject to the above, 

the QFI shall take all steps as may be reasonably requested to 

facilitate the transfer of the warrants or the Warrant Preferred.