Bailout Report

The standardized terms on which Treasury will invest up to $250 Billion as senior preferred equity in U.S. controlled banks, savings associations, and “certain bank and savings and loan holding companies engaged only in financial activities”:

• Minimum subscription amount available to a participating institution is 1 percent of risk-weighted assets. The amount is the lesser of $25 billion or 3 percent of risk-weighted assets.
• Will qualify as Tier 1 capital and will rank senior to common stock and pari passu with existing preferred shares, other than preferred shares which by their terms rank junior to any other existing preferred shares.
• Will pay a cumulative dividend of 5 percent for the first five years and will reset to 9 percent after year five.
• Raising dividend on common stock requires consent of Treasury.
• Non-voting, other than class voting rights on matters that could adversely affect the shares including any increase in common stock dividends.
• Callable at par after three years. Prior to the end of three years, the senior preferred may be redeemed with the proceeds from a qualifying equity offering of any Tier 1 perpetual preferred or common stock.
• Are transferable.
• Treasury will receive warrants to purchase common stock with an aggregate market price equal to 15 percent of the senior preferred investment with an exercise price calculated on a 20-trading day trailing average at the time of issuance.
• Participating companies must adopt the Treasury Department’s standards for executive compensation and corporate governance for the holding period (in other words, the salaries of the CEO, CFO, and next three most highly compensated executive officers will be taxable to the company).
• Participating financial institutions must 1) ensure that incentive compensation for senior executives does not encourage unnecessary and excessive risks, 2) clawback any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains or other criteria that are later proven to be materially inaccurate, 3) not make any golden parachute payments to senior s, and 4) not deduct for tax purposes executive compensation in excess of $500,000 for each senior executive.
• Must elect to participate before 5:00 pm on November 14, 2008.
• Treasury will fund by year-end

Capital Purchase Progra Term Sheet