January 2, 2009
Authored by: Robert Klingler
On December 23, 2008, the Treasury “upgraded” the Securities Purchase Agreement for publicly traded companies under the TARP Capital program. The Securities Purchase Agreement on the Treasury’s website is now identified as version 12 rather than version 11 in the footer of the document.
The Treasury added Sections 4.11 (Bank and Thrift Holding Company Status) and 4.12 (Predominantly Financial) to the Securities Purchase Agreement for publicly traded companies. The private company documents already contained these provisions, so the modifications merely conform the terms for private and public participants. The new provisions add two ongoing obligations for TARP Capital recipients: (a) retaining bank holding company or savings and loan holding company status while the Treasury owns any investments; and (b) remaining predominantly engaged in financial activities. For traditional community banks, we do not foresee any issues in complying with the provisions of 4.11 and 4.12.