TARP Capital Purchase Program 

(Public Holding Companies 

with a Mutual Top-Tier Parent) 

Senior Preferred Stock and Warrants 

Summary of Senior 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 publicly traded1

 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 not 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 Senior 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: Senior Preferred, liquidation preference $1,000 per share. 

(Depending upon the QFI’s available authorized preferred shares, 

the UST may agree to purchase Senior Preferred with a higher 

liquidation preference per share, in which case the UST may 

require the QFI to appoint a depositary to hold the Senior 

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 Senior 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 Senior 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. 

Following the redemption in whole of the Senior Preferred held 

by the UST, the QFI shall have the right to repurchase any other 

equity security of the QFI held by the UST at fair market value.

Restriction on 

Dividends: 

For as long as any Senior Preferred is outstanding, no dividends 

may be declared or paid on junior preferred shares, preferred 

shares ranking pari passu with the Senior Preferred, or common 

shares (other than in the case of pari passu preferred shares, 

dividends on a pro rata basis with the Senior Preferred), nor may 

the QFI repurchase or redeem any junior preferred shares, 

preferred shares ranking pari passu with the Senior Preferred or 

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common shares, unless all accrued and unpaid dividends for all 

past dividend periods on the Senior Preferred are fully paid. 

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 unless prior to such third anniversary the Senior 

Preferred is redeemed in whole or the UST has transferred all of 

the Senior Preferred to third parties. 

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

(other than (i) repurchases of the Senior 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 third anniversary 

of the date of this investment unless prior to such third 

anniversary the Senior Preferred is redeemed in whole or the UST 

has transferred all of the Senior Preferred to third parties. In 

addition, there shall be no share repurchases of junior preferred 

shares, preferred shares ranking pari passu with the Senior 

Preferred, or common shares if prohibited as described above 

under “Restrictions on Dividends”. 

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

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

to the Senior Preferred, (ii) any amendment to the rights of Senior 

Preferred, or (iii) any merger, exchange or similar transaction 

which would adversely affect the rights of the Senior Preferred. 

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

dividend periods, whether or not consecutive, the Senior Preferred 

will have the right to elect 2 directors. The right to elect directors 

will end when full dividends have been paid for four consecutive 

dividend periods. 

Transferability: The Senior Preferred will not be subject to any contractual 

restrictions on transfer. The QFI will file a shelf registration 

statement covering the Senior Preferred as promptly as 

practicable after the date of this investment and, if necessary, 

shall take all action required to cause such shelf registration 

statement to be declared effective as soon as possible. The QFI 

will also grant to the UST piggyback registration rights for the 

Senior Preferred and will take such other steps as may be 

reasonably requested to facilitate the transfer of the Senior 

Preferred including, if requested by the UST, using reasonable 

efforts to list the Senior Preferred on a national securities 

exchange. If requested by the UST, the QFI will appoint a 

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depositary to hold the Senior Preferred and issue depositary 

receipts. 

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. 

Summary of Warrant Terms

Warrant: The UST will receive warrants to purchase a number of shares of 

common stock of the QFI having an aggregate market price equal 

to 15% of the Senior Preferred amount on the date of investment, 

subject to reduction as set forth below under “Reduction”. The 

initial exercise price for the warrants, and the market price for 

determining the number of shares of common stock subject to the 

warrants, shall be the market price for the common stock on the 

date that the UST Office of Financial Stability's investment 

committee recommends approval of the Senior Preferred 

investment to the Assistant Secretary for Financial Stability 

(calculated on a 20-trading day trailing average), subject to 

customary anti-dilution adjustments. The exercise price shall be 

reduced by 15% of the original exercise price on each six-month 

anniversary of the issue date of the warrants if the consent of the 

QFI stockholders described below has not been received, subject 

to a maximum reduction of 45% of the original exercise price. 

Term: 10 years. 

Exercisability: Immediately exercisable, in whole or in part 

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

transfer; provided that the UST may only transfer or exercise an 

aggregate of one half of the warrants prior to the earlier of (i) the 

date on which the QFI has received aggregate gross proceeds of 

not less than 100% of the issue price of the Senior Preferred from 

one or more Qualified Equity Offerings (as defined below) and 

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(ii) December 31, 2009. The QFI will file a shelf registration 

statement covering the warrants and the common stock 

underlying the warrants as promptly as practicable after the date 

of this investment and, if necessary, shall take all action required 

to cause such shelf registration statement to be declared effective 

as soon as possible. The QFI will also grant to the UST piggyback 

registration rights for the warrants and the common 

stock underlying the warrants and will take such other steps as 

may be reasonably requested to facilitate the transfer of the 

warrants and the common stock underlying the warrants. The QFI 

will apply for the listing on the national exchange on which the 

QFI’s common stock is traded of the common stock underlying 

the warrants and will take such other steps as may be reasonably 

requested to facilitate the transfer of the warrants or the common 

stock. 

“Qualified Equity Offering” shall mean the sale by the QFI after 

the date of this investment of Tier 1 qualifying perpetual preferred 

stock or common stock for cash. 

Voting: The UST will agree not to exercise voting power with respect to 

any shares of common stock of the QFI issued to it upon exercise 

of the warrants. 

Reduction: In the event that the QFI has received aggregate gross proceeds of 

not less than 100% of the issue price of the Senior Preferred from 

one or more Qualified Equity Offerings on or prior to December 

31, 2009, the number of shares of common stock underlying the 

warrants then held by the UST shall be reduced by a number of 

shares equal to the product of (i) the number of shares originally 

underlying the warrants (taking into account all adjustments) and 

(ii) 0.5. 

Consent: In the event that the QFI does not have sufficient available 

authorized shares of common stock to reserve for issuance upon 

exercise of the warrants and/or stockholder approval is required 

for such issuance under applicable stock exchange rules, the QFI 

will call a meeting of its stockholders as soon as practicable after 

the date of this investment to increase the number of authorized 

shares of common stock and/or comply with such exchange rules, 

and to take any other measures deemed by the UST to be 

necessary to allow the exercise of warrants into common stock. 

Substitution: In the event the QFI is no longer listed or traded on a national 

securities exchange or securities association, or the consent of the 

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QFI stockholders described above has not been received within 

18 months after the issuance date of the warrants, the warrants 

will be exchangeable, at the option of the UST, for senior term 

debt or another economic instrument or security of the QFI such 

that the UST is appropriately compensated for the value of the 

warrant, as determined by the UST.