Recitals
Exhibit 4.34
EXECUTION
Replacement Capital Covenant, dated as of November 8, 2006 (this “Replacement
Capital Covenant”), by Countrywide Financial Corporation, a Delaware corporation (together with its
successors and assigns, the “Corporation”), in favor of and for the benefit of each Covered
Debtholder (as defined below).
Recitals
Whereas, on the date hereof, the Corporation is issuing $1,496,000,000 aggregate
principal amount of its 7% Junior Subordinated Deferrable Interest Debentures (the “Subordinated
Debentures”) to Countrywide Capital V (the “Trust”).
Whereas, on the date hereof, the Trust is issuing $1,495,000,000 aggregate
liquidation amount of its 7% Capital Securities (the “Capital Securities” and together with the
Subordinated Debentures, the “Securities”).
Whereas, this Replacement Capital Covenant is the “Replacement Capital Covenant”
referred to in the Prospectus Supplement, dated November 1, 2006, relating to the Capital
Securities (together with the Prospectus, dated October 27, 2006 attached thereto, the “Prospectus
Supplement”).
Whereas, the Corporation is entering into and disclosing the content of this
Replacement Capital Covenant in the manner provided below with the intent that the covenants
provided for in this Replacement Capital Covenant be enforceable by each Covered Debtholder and
that the Corporation be estopped from disregarding the covenants in this Replacement Capital
Covenant, in each case to the fullest extent permitted by applicable law.
Whereas, the Corporation acknowledges that reliance by each Covered Debtholder upon
the covenants in this Replacement Capital Covenant is reasonable and foreseeable by the Corporation
and that, were the Corporation to disregard its covenants in this Replacement Capital Covenant,
each Covered Debtholder would have sustained an injury as a result of its reliance on such
covenants.
Now Therefore, the Corporation hereby covenants and agrees as follows in favor of and
for the benefit of each Covered Debtholder.
SECTION 1. Definitions. Capitalized terms used in this Replacement Capital Covenant
(including the Recitals) have the meanings set forth in Schedule I hereto.
SECTION 2. Limitations on Redemption and Repurchase of Securities. The Corporation
hereby promises and covenants to and for the benefit of each Covered Debtholder that the
Corporation shall not, and shall cause the Trust not to, repay, redeem or repurchase, and no
Subsidiary of the Corporation shall purchase, all or any part of the Securities on or before
October 15, 2046 except to the extent that (a) with respect to any redemption or repurchase, the
Corporation has obtained the prior approval of the Federal Reserve, if such approval is then
required under the Federal Reserve’s capital guidelines applicable to bank holding companies and
(b) the principal amount repaid or the applicable redemption or repurchase price does not exceed
the sum of the following amounts:
(i) the Applicable Percentage of the aggregate amount of net cash proceeds
received by the Corporation and its Subsidiaries since the most recent Measurement Date
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from the sale of Common Stock and rights to acquire Common Stock to Persons other than
the Corporation and its Subsidiaries; plus
(ii) 100% of the aggregate amount of net cash proceeds received by the
Corporation and its Subsidiaries since the most recent Measurement Date from the sale of
Mandatorily Convertible Preferred Stock and Debt Exchangeable for Equity to Persons other
than the Corporation and its Subsidiaries; plus
(iii) 100% of the aggregate amount of net cash proceeds received by the
Corporation and its Subsidiaries since the most recent Measurement Date from the sale of
Qualifying Capital Securities to Persons other than the Corporation and its Subsidiaries;
provided, however, that the provisions of this Section 2 shall not apply to (i) the purchase of the
Securities or any portion thereof in connection with the distribution thereof or (ii) repurchases
of the Securities or any portion thereof by broker-dealer Subsidiaries of the Corporation in
connection with their market-making or other secondary-market activities; and provided, further,
that the provisions of this Section 2 shall not apply to any distribution of the Subordinated
Debentures to holders of the Capital Securities upon a dissolution of the Trust.
SECTION 3. Covered Debt. (a) The Corporation represents and warrants that the
Initial Covered Debt is Eligible Debt.
(b) On or during the 30-day period immediately preceding any Redesignation Date with
respect to the Covered Debt then in effect, the Corporation shall identify the series of Eligible
Debt that will become the Covered Debt on and after such Redesignation Date in accordance with the
following procedures:
(i) the Corporation shall identify each series of its then outstanding
long-term indebtedness for money borrowed that is Eligible Debt;
(ii) if only one series of the Corporation’s then outstanding long-term
indebtedness for money borrowed is Eligible Debt, such series shall become the Covered Debt
commencing on the related Redesignation Date;
(iii) if the Corporation has more than one outstanding series of long-term
indebtedness for money borrowed that is Eligible Debt, then the Corporation shall identify
the series that has the latest occurring final maturity date as of the date the Corporation
is applying the procedures in this Section 3(b) and such series shall become the Covered
Debt on the next Redesignation Date;
(iv) if the Corporation has no outstanding series of long-term indebtedness
for money borrowed that is Eligible Debt, but Countrywide Home Loans, Inc. is a Subsidiary
of the Corporation and Countrywide Home Loans, Inc. has only one outstanding series of
long-term indebtedness for money borrowed that is Eligible Debt, such series shall become
the Covered Debt commencing on the related Redesignation Date so long as such indebtedness
is fully and unconditionally guaranteed by the Corporation;
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(v) if the Corporation has no outstanding series of long-term indebtedness
for money borrowed that is Eligible Debt, but Countrywide Home Loans, Inc. is a Subsidiary
of the Corporation and Countrywide Home Loans, Inc. has more than one outstanding series of
long-term indebtedness for money borrowed that is Eligible Debt, then the Corporation shall
identify the series that has the latest occurring final maturity date as of the date the
Corporation is applying the procedures in this Section 3(b) and such series shall become
the Covered Debt on the next Redesignation Date so long as such indebtedness is fully and
unconditionally guaranteed by the Corporation;
(vi) the series of outstanding long-term indebtedness for money borrowed
that is determined to be Covered Debt pursuant to clause (ii), (iii), (iv) or (v) above
shall be the Covered Debt for purposes of this Replacement Capital Covenant for the period
commencing on the related Redesignation Date and continuing to but not including the
Redesignation Date as of which a new series of outstanding long-term indebtedness is next
determined to be the Covered Debt pursuant to the procedures set forth in this Section
3(b); and
(vii) in connection with such identification of a new series of Covered
Debt, the Corporation shall give the notice provided for in Section 3(c) within the time
frame provided for in such section.
(c) Notice. In order to give effect to the intent of the Corporation described in
Recital D, the Corporation covenants that (i) simultaneously with the execution of this Replacement
Capital Covenant or as soon as practicable after the date hereof, it shall give notice to the
Holders of the Initial Covered Debt, in the manner provided in the indenture relating to the
Initial Covered Debt, of this Replacement Capital Covenant and the rights granted to such Holders
hereunder; (ii) so long as the Corporation is a reporting company under the Securities Exchange
Act, the Corporation will include in each annual report filed with the Commission on Form 10-K
under the Securities Exchange Act a description of the covenant set forth in Section 2 and identify
the series of long-term indebtedness for borrowed money that is Covered Debt as of the date such
Form 10-K is filed with the Commission; (iii) if a series of the Corporation’s or Countrywide Home
Loans, Inc.’s long-term indebtedness for money borrowed (1) becomes Covered Debt or (2) ceases to
be Covered Debt, give notice of such occurrence within 30 days to the holders of such long-term
indebtedness for money borrowed in the manner provided for in the indenture, fiscal agency
agreement or other instrument under which such long-term indebtedness for money borrowed was issued
and report such change in the Corporation’s next quarterly report on Form 10-Q or annual report on
Form 10-K, as applicable; (iv) if, and only if, the Corporation ceases to be a reporting company
under the Securities Exchange Act, post on its website the information otherwise required to be
included in Securities Exchange Act filings pursuant to clauses (ii) and (iii) of this Section
3(c); and (v) promptly upon request by any Holder of Covered Debt, provide such Holder with an
executed copy of this Replacement Capital Covenant.
SECTION 4. Termination, Amendment and Waiver. (a) The obligations of the
Corporation pursuant to this Replacement Capital Covenant shall remain in full force and effect
until the earliest date (the “Termination Date”) to occur of (i) October 15, 2046, (ii) the date,
if any, on which the Holders of a majority by principal amount of the then-effective series of
Covered Debt consent or agree in writing to the termination of this Replacement Capital Covenant
and the obligations of the Corporation hereunder and (iii) the date on which neither the
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Corporation nor Countrywide Home Loans, Inc. has any series of outstanding Eligible Senior
Debt or Eligible Subordinated Debt (in each case without giving effect to the rating requirement in
clause (ii) of the definition of each such term). From and after the Termination Date, the
obligations of the Corporation pursuant to this Replacement Capital Covenant shall be of no further
force and effect.
(b) This Replacement Capital Covenant may be amended or supplemented from time to
time by a written instrument signed by the Corporation with the consent of the Holders of a
majority by principal amount of the then-effective series of Covered Debt, provided that
this Replacement Capital Covenant may be amended or supplemented from time to time by a written
instrument signed only by the Corporation (and without the consent of the Holders of the then
effective series of Covered Debt) if the effect of such amendment or supplement is solely to impose
additional restrictions on the ability of the Corporation to repay, redeem or repurchase Securities
in any circumstance or such amendment or supplement is not adverse to the Holders of any series of
Covered Debt and an officer of the Corporation has delivered to the Holders of the then effective
series of Covered Debt in the manner provided for in the indenture, fiscal agency agreement or
other instrument with respect to such Covered Debt a written certificate stating that, in his or
her determination, such amendment or supplement is not adverse to the Holders of any series of
Covered Debt.
(c) For purposes of Sections 4(a) and 4(b), the Holders whose consent or agreement
is required to terminate, amend or supplement the obligations of the Corporation under this
Replacement Capital Covenant shall be the Holders of the then-effective Covered Debt as of a record
date established by the Corporation that is not more than 30 days prior to the date on which the
Corporation proposes that such termination, amendment or supplement becomes effective.
SECTION 5. Miscellaneous. (a) This Replacement Capital Covenant shall be
governed by and construed in accordance with the laws of the State of New York.
(b) This Replacement Capital Covenant shall be binding upon the Corporation and its
successors and assigns and shall inure to the benefit of the Covered Debtholders as they exist from
time-to-time (it being understood and agreed by the Corporation that any Person who is a Covered
Debtholder at the time such Person acquires, holds or sells Covered Debt shall retain its status as
a Covered Debtholder for so long as the series of long-term indebtedness for borrowed money owned
by such Person is Covered Debt and, if such Person initiates a claim or proceeding to enforce its
rights under this Replacement Capital Covenant after the Corporation has violated its covenants in
Section 2 and before the series of long-term indebtedness for money borrowed held by such Person is
no longer Covered Debt, such Person’s rights under this Replacement Capital Covenant shall not
terminate by reason of such series of long-term indebtedness for money borrowed no longer being
Covered Debt).
(c) All demands, notices, requests and other communications to the Corporation under
this Replacement Capital Covenant shall be deemed to have been duly given and made if in writing
and (i) if served by personal delivery upon the Corporation, on the day so delivered (or, if such
day is not a Business Day, the next succeeding Business Day), (ii) if delivered by registered post
or certified mail, return receipt requested, or sent to the Corporation by a national or
international courier service, on the date of receipt by the Corporation (or, if such
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date of receipt is not a Business Day, the next succeeding Business Day), or (iii) if sent by
telecopier, on the day telecopied, or if not a Business Day, the next succeeding Business Day,
provided that the telecopy is promptly confirmed by telephone confirmation thereof, and in each
case to the Corporation at the address set forth below, or at such other address as the Corporation
may thereafter notify to Covered Debtholders or post on its website as the address for notices
under this Replacement Capital Covenant:
Countrywide Financial Corporation
0000 Xxxx Xxxxxxx Xxxx.
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Facsimile No: (000) 000-0000
0000 Xxxx Xxxxxxx Xxxx.
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Facsimile No: (000) 000-0000
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IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant to be
executed by its duly authorized officer, as of the day and year first above written.
| Countrywide Financial Corporation |
||||
| By: | /s/ Xxxxxxxx X. Xxxxxxxx | |||
| Title: | /s/ Xxxxxxxx X. Xxxxxxxx | |||
| Name: | Senior Managing Director and Treasurer | |||
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Schedule 1
Definitions
“Applicable Percentage” means one divided by (a) 75% with respect to any repayment, redemption
or repurchase on or prior to October 15, 2016, (b) 50% with respect to any repayment, redemption or
repurchase after October 15, 2016 and on or prior to October 15, 2036, and (c) 25% with respect to
any repayment, redemption or repurchase after October 15, 2036.
“Business Day” means each day other than (a) a Saturday or Sunday or (b) a day on which
banking institutions in The City of New York are authorized or required by law or executive order
to remain closed.
“Capital Securities” has the meaning specified in the second recital in the preamble hereto.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means common stock of the Corporation (including treasury shares of common
stock and shares of common stock sold pursuant to the Corporation’s dividend reinvestment plan and
employee benefit plans).
“Corporation” has the meaning specified in the introduction to this instrument.
“Covered Debt” means (a) at the date of this Replacement Capital Covenant and continuing to
but not including the first Redesignation Date, the Initial Covered Debt and (b) thereafter,
commencing with each Redesignation Date and continuing to but not including the next succeeding
Redesignation Date, the Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for
such period.
“Covered Debtholder” means each Person (whether a Holder or a beneficial owner holding through
a participant in a clearing agency) that buys, holds or sells long-term indebtedness for money
borrowed of the Corporation or Countrywide Home Loans, Inc. during the period that such long-term
indebtedness for money borrowed is Covered Debt.
“Debt Exchangeable for Equity” means a security (or combination of securities) that:
(i) gives the holder a beneficial interest in (a) debt securities of the Corporation
that are Non-Cumulative and that are the most junior subordinated debt of the Corporation
(or rank equally with the most junior subordinated debt of the Corporation) and (b) a
fractional interest in a stock purchase contract;
(ii) includes a remarketing feature pursuant to which the subordinated debt of the
Corporation is remarketed to new investors commencing within five years from the date of
issuance of the security (provided that such remarketing is completed or such remarketing
is deemed to be a failed remarketing not later than the sixth-year anniversary of such date
of issuance) or earlier in the event of an early settlement event based on (a)
the capital ratios of the Corporation, (b) the capital ratios of the Corporation as
anticipated by the Federal Reserve, or (c) the dissolution of the issuer of such Debt
Exchangeable for Equity;
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(iii) provides for the proceeds raised in the remarketing to be used to purchase
Qualifying Non-Cumulative Preferred Stock;
(iv) includes a replacement capital covenant substantially similar to this Replacement
Capital Covenant, provided that such replacement capital covenant will apply to such
security (or combination of securities) and to the Qualifying Non-Cumulative Preferred
Stock and will not include Debt Exchangeable for Equity in the definition of “Qualifying
Capital Securities”; and
(v) after the issuance of such Qualifying Non-Cumulative Preferred Stock, provides the
holder of the security with a beneficial interest in such Qualifying Non-Cumulative
Preferred Stock.
“Distribution Date” means, as to any securities or combination of securities, the dates on
which periodic Distributions on such securities are scheduled to be made.
“Distribution Period” means, as to any securities or combination of securities, each period
from and including a Distribution Date for such securities to but not including the next succeeding
Distribution Date for such securities.
“Distributions” means, as to a security or combination of securities, dividends, interest
payments or other income distributions to the holders thereof that are not Subsidiaries of the
Corporation.
“Eligible Debt” means, at any time, Eligible Subordinated Debt or, if no Eligible Subordinated
Debt is then outstanding, Eligible Senior Debt.
“Eligible Senior Debt” means, at any time in respect of any issuer, each series of outstanding
long-term indebtedness for money borrowed of such issuer that (a) upon a bankruptcy, liquidation,
dissolution or winding up of the issuer, ranks most senior among the issuer’s then outstanding
classes of indebtedness for money borrowed, (b) is then assigned a rating by at least one NRSRO
(provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer
has outstanding senior long-term indebtedness for money borrowed that satisfies the requirements of
clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an
outstanding principal amount of not less than $100,000,000, and (d) was issued through or with the
assistance of a commercial or investment banking firm or firms acting as underwriters, initial
purchasers or placement or distribution agents. For purposes of this definition as applied to
securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has
(or, if such indebtedness is held by a trust or other intermediate entity established directly or
indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP
number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed
that is separate from each other series of such indebtedness.
“Eligible Subordinated Debt” means, at any time in respect of any issuer, each series of the
issuer’s then-outstanding long-term indebtedness for money borrowed that (a) upon a bankruptcy,
liquidation, dissolution or winding up of the issuer, ranks subordinate to the issuer’s then
outstanding series of indebtedness for money borrowed that ranks most senior, (b) is then assigned
a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date
only if on such date the issuer has outstanding subordinated long-term
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indebtedness for money borrowed that satisfies the requirements in clauses (a), (c) and (d)
that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of
not less than $100,000,000, and (d) was issued through or with the assistance of a commercial or
investment banking firm or firms acting as underwriters, initial purchasers or placement or
distribution agents. For purposes of this definition as applied to securities with a CUSIP number,
each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is
held by a trust or other intermediate entity established directly or indirectly by the issuer, the
securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a
series of the issuer’s long-term indebtedness for money borrowed that is separate from each other
series of such indebtedness.
“Federal Reserve” means the Board of Governors of the Federal Reserve System.
“Holder” means, as to the Covered Debt then in effect, each holder of such Covered Debt as
reflected on the securities register maintained by or on behalf of the Corporation with respect to
such Covered Debt.
“Indenture” means the Junior Subordinated Indenture, dated as of November 8, 2006, between the
Company and The Bank of New York, as Trustee, as supplemented by the supplemental indenture dated
as of November 8, 2006.
“Initial Covered Debt” means the Corporation’s 6.75% Junior Subordinated Deferrable Interest
Debentures, due April 1, 2033.
“Intent-Based Replacement Disclosure” means, as to any security or combination of securities,
that the issuer has publicly stated its intention, either in the prospectus or other offering
document under which such securities were initially offered for sale or in filings with the
Commission made by the issuer under the Securities Exchange Act prior to or contemporaneously with
the issuance of such securities, that the issuer will redeem or repurchase such securities only
with the proceeds of specified replacement capital securities that have terms and provisions at the
time of redemption or repurchase that are as or more equity-like than the securities then being
redeemed or repurchased, raised within 180 days prior to the applicable redemption or repurchase
date. Notwithstanding the use of the term “Intent-Based Replacement Disclosure” in the definitions
of “Qualifying Capital Securities” and “Qualifying Non-Cumulative Preferred Stock”, the requirement
in each such definition that a particular security or the related transaction documents include
Intent-Based Replacement Disclosure shall be disregarded and given no force or effect for so long
as the Corporation is a bank holding company within the meaning of the Bank Holding Company Act of
1956, as amended.
“Mandatorily Convertible Preferred Stock” means cumulative preferred stock with (a) no
prepayment obligation on the part of the issuer thereof, whether at the election of the holders or
otherwise, and (b) a requirement that the preferred stock convert into Common Stock of the
Corporation within three years from the date of its issuance.
“Mandatory Trigger Provision” means, as to any security or combination of securities,
provisions in the terms thereof or of the related transaction agreements that (A) require, or at
its option in the case of non-cumulative perpetual preferred stock permit, the issuer of such
security or combination of securities to make payment of Distributions on such securities only
pursuant to the issuance and sale of shares of Common Stock, rights to purchase Common Stock or
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Qualifying Non-Cumulative Preferred Stock, within two years of a failure by the Corporation to
satisfy one or more financial tests set forth in the terms of such securities or related
transaction agreements, in amount such that the net proceeds of such sale are at least equal the
amount of unpaid Distributions on such securities (including without limitation all deferred and
accumulated amounts) and in either case require the application of the net proceeds of such sale to
pay such unpaid Distributions, (B) in the case of securities other than non-cumulative perpetual
preferred stock, prohibit the Corporation from repurchasing any of its Common Stock prior to the
date six months after the issuer applies the net proceeds of the sales described in clause (A) to
pay such unpaid Distributions in full and (C) upon any liquidation, dissolution, winding up,
reorganization or in connection with any insolvency, receivership or proceeding under any
bankruptcy law with respect to the Corporation, limit the claim of the holders of such securities
(other than non-cumulative perpetual preferred stock) for Distributions that accumulate during a
period in which the Corporation fails to satisfy one or more financial tests set forth in the terms
of such securities or related transaction agreements to (x) 25% of the principal amount of such
securities then outstanding in the case of securities not permitting the issuance and sale pursuant
to the provisions described in clause (A) above of securities other than Common Stock or rights to
acquire Common Stock or (y) two years of accumulated and unpaid Distributions (including compounded
amounts thereon) in all other cases. No remedy other than Permitted Remedies will arise by the
terms of such securities or related transaction agreements in favor of the holders of such
securities as a result of the issuer’s failure to pay Distributions because of the Mandatory
Trigger Provision or as a result of the issuer’s exercise of its right under an Optional Deferral
Provision until Distributions have been deferred for one or more Distribution Periods that total
together at least ten years. It is acknowledged that as of the date hereof, the Federal Reserve
has not permitted a Mandatory Trigger Provision in any securities issued by a bank holding company
and treated any such securities as Tier 1 capital for that bank holding company.
“Market Disruption Events” means one or more events or circumstances substantially similar to
those listed as “Market Disruption Events” in the Supplemental Indenture.
“Measurement Date” means, with respect to any repayment, redemption or repurchase of
Securities, the later of (a) the date 180 days prior to the delivery of notice of such repayment or
redemption or the date of such repurchase and (b) to the extent that any Subordinated Debentures
remain outstanding after November 1, 2036, the most recent date, if any, on which a notice of
repayment or redemption was delivered in respect of, or on which the Corporation or the Trust
repurchased, any Securities.
“Non-Cumulative” means, with respect to any securities, that the issuer thereof may elect not
to make any number of periodic Distributions without any remedy arising under the terms of the
securities or related agreements in favor of the holders, other than one or more Permitted
Remedies. Securities that include provisions requiring the Corporation to issue Non-Cumulative
perpetual preferred stock and rights to purchase Common Stock and apply the proceeds to pay unpaid
Distributions on terms substantially similar to the terms of the alternative payment mechanism
described in Section 2.1(h) of the Supplemental Indenture shall also be deemed to be
“Non-Cumulative” securities for all purposes of this Replacement Capital Covenant other than the
definition of “Qualifying Non-Cumulative Preferred Stock”.
“NRSRO” means a nationally recognized statistical rating organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act.
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“Optional Deferral Provision” means, as to any securities, a provision in the terms thereof or
of the related transaction agreements to the following effect:
(a) the issuer of such securities may, in its sole discretion, defer in whole or in
part payment of Distributions on such securities for one or more consecutive Distribution
Periods of up to five years or, if an event substantially similar to a Market Disruption
Event is continuing, ten years, without any remedy other than Permitted Remedies and the
obligation described in clause (b) below; and
(b) if the issuer of such securities has exhausted its right to defer Distributions
and no event substantially similar to a Market Disruption Event is continuing, the issuer
will be obligated to issue and sell shares of its common stock, rights to purchase common
stock and/or non-cumulative perpetual preferred stock in an amount such that the net
proceeds of such sale equal or exceed the amount of unpaid Distributions on such securities
(including without limitation all deferred and accumulated amounts) and to apply the net
proceeds of such sale to pay such unpaid Distributions in full.
“Permitted Remedies” means, with respect to any securities, one or more of the following
remedies:
(a) rights in favor of the holders of such securities permitting such holders to elect
one or more directors of the issuer (including any such rights required by the listing
requirements of any stock or securities exchange on which such securities may be listed or
traded), and
(b) complete or partial prohibitions on the issuer paying Distributions on or
repurchasing common stock or other securities that rank equally with or junior as to
Distributions to such securities for so long as Distributions on such securities, including
unpaid Distributions, remain unpaid.
“Person” means any individual, corporation, partnership, joint venture, trust, limited
liability company or corporation, unincorporated organization or government or any agency or
political subdivision thereof.
“Prospectus Supplement” has the meaning specified in the third recital of the preamble hereto.
“Qualifying Capital Securities” means securities (other than Common Stock, rights to acquire
Common Stock and securities convertible into Common Stock such as Mandatorily Convertible Preferred
Stock and Debt Exchangeable for Equity) that (a) qualify as regulatory capital of the Corporation
under the capital guidelines of the Federal Reserve as then in effect and applicable to bank
holding companies and (b) in the determination of the Corporation’s Board of Directors, reasonably
construing the definitions and other terms of this Replacement Capital Covenant, meet one of the
following criteria:
(i) in connection with any repayment, redemption or repurchase of Subordinated
Debentures or Capital Securities on or prior to October 15, 2016:
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(A) subordinated debentures and guarantees issued by the Corporation with
respect to trust preferred securities if such subordinated debentures and
guarantees (1) rank equally with or junior to the Subordinated Debentures upon the
liquidation, dissolution or winding-up of the Corporation, (2) have terms that are
substantially similar to the terms of the Subordinated Debentures and guarantees
described in the Prospectus Supplement and (3) are subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant or have a
Mandatory Trigger Provision, an Optional Deferral Provision and Intent-Based
Replacement Disclosure;
(B) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with or junior to the Subordinated Debentures upon a liquidation,
dissolution or winding up of the Corporation, (2) are Non-Cumulative, (3) have no
maturity or a maturity of at least 60 years and (3) are subject to a replacement
capital covenant substantially similar to this Replacement Capital Covenant or have
a Mandatory Trigger Provision, an Optional Deferral Provision and Intent-Based
Replacement Disclosure; or
(C) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with or junior to other preferred stock of the issuer, (2) have no maturity
or a maturity of at least 40 years, (3) are subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant and (4) have a
Mandatory Trigger Provision and an Optional Deferral Provision; or
(ii) in connection with any repayment, redemption or repurchase of Subordinated
Debentures or Capital Securities after October 15, 2016 and on or prior to October 15,
2036:
(A) all securities described under clause (i) of this definition;
(B) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with or junior to the Subordinated Debentures upon a liquidation,
dissolution or winding up of the Corporation, (2) are Non-Cumulative, (3) have no
maturity or a maturity of at least 60 years and (4) have Intent-Based Replacement
Disclosure;
(C) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with or junior to the Subordinated Debentures upon a liquidation,
dissolution or winding up of the Corporation, (2) are Non-Cumulative and (3) either
(a) have no maturity or a maturity of at least 60 years and have Intent-Based
Replacement Disclosure or (b) have a maturity greater than 30 but no more than 50
years and are subject to a replacement capital covenant substantially similar to
this Replacement Capital Covenant;
(D) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with or junior to the Subordinated Debentures upon a liquidation,
dissolution or winding up of the Corporation, (2) are Non-Cumulative, (3) have an
Optional Deferral Provision, (4) have no maturity or a maturity of at least 40
years and (4) are subject to a replacement capital covenant substantially similar
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I-6
to this Replacement Capital Covenant or have a Mandatory Trigger Provision and
Intent-Based Replacement Disclosure;
(E) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with the 6.75% Junior Subordinated Deferrable Interest Debentures due April
1, 2033 issued to Countrywide Capital IV by the Corporation and the Corporation’s
guarantee of the capital securities issued by that trust, (2) have a Mandatory
Trigger Provision and an Optional Deferral Provision and (3) have no maturity or a
maturity of at least 60 years;
(F) cumulative preferred stock issued by the Corporation or its Subsidiaries
that (1) has no prepayment obligation on the part of the issuer thereof, whether at
the election of the holders or otherwise, and (2) (a) has no maturity or a maturity
of at least 60 years and (b) is subject to a replacement capital covenant
substantially similar to this Replacement Capital Covenant; or
(G) other securities issued by the Corporation or its Subsidiaries that (1)
rank upon a liquidation, dissolution or winding-up of the Corporation either (a)
equally with or junior to the Subordinated Debentures or (b) equally with the
claims of the Corporation’s trade creditors and junior to all of the Corporation’s
long-term indebtedness for money borrowed (other than the Corporation’s long-term
indebtedness for money borrowed from time to time outstanding that by its terms
ranks equally with such securities on a liquidation, dissolution or winding-up of
the Corporation); and (2) either (x) have no maturity or a maturity of at least 40
years, have Intent-Based Replacement Disclosure and have a Mandatory Trigger
Provision and an Optional Deferral Provision or (y) have no maturity or a maturity
of at least 25 years and are subject to a replacement capital covenant
substantially similar to this Replacement Capital Covenant and have a Mandatory
Trigger Provision and an Optional Deferral Provision; or
(iii) in connection with any repayment, redemption or repurchase of Subordinated
Debentures or Capital Securities at any time after October 15, 2036:
(A) all securities described under clause (ii) of this definition;
(B) preferred stock issued by the Corporation that (1) has no maturity or a
maturity of at least 60 years, (2) has Intent-Based Replacement Disclosure and (3)
has an Optional Deferral Provision;
(C) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with or junior to the Subordinated Debentures upon a liquidation,
dissolution or winding up of the Corporation, (2) either (a) have no maturity or a
maturity of at least 60 years and has Intent-Based Replacement Disclosure or (b)
have no maturity or a maturity at least 30 years and are subject to a replacement
capital covenant substantially similar to this Replacement Capital Covenant and (3)
have an Optional Deferral Provision;
(D) securities issued by the Corporation or its Subsidiaries that (1) rank
equally with the 6.75% Junior Subordinated Deferrable Interest Debentures due
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I-7
April 1, 2033 issued to Countrywide Capital IV by the Corporation and the
Corporation’s guarantee of the capital securities issued by that trust, (2) have a
Mandatory Trigger Provision and an Optional Deferral Provision, (3) have no
maturity or a maturity at least 30 years and (4) have Intent-Based Replacement
Disclosure; or
(E) cumulative preferred stock issued by the Corporation or its Subsidiaries
that either (1) has no maturity or a maturity of at least 60 years and Intent-Based
Replacement Disclosure or (2) has a maturity of at least 40 years and is subject to
a replacement capital covenant substantially similar to this Replacement Capital
Covenant.
“Qualifying Non-Cumulative Preferred Stock” means non-cumulative perpetual preferred stock of
the Corporation or its Subsidiaries that (i) ranks equally with or junior to other preferred stock
of the issuer and (ii) contains no remedies other than Permitted Remedies and either is subject to
Intent-Based Replacement Disclosure and has a Mandatory Trigger Provision or is subject to a
replacement capital covenant substantially similar to the Replacement Capital Covenant.
“Redesignation Date” means, as to the Covered Debt in effect at any time, the earliest of (a)
the date that is two years prior to the final maturity date of such Covered Debt, (b) if the
Corporation elects to redeem, or the Corporation or a Subsidiary of the Corporation elects to
repurchase, such Covered Debt either in whole or in part with the consequence that after giving
effect to such redemption or repurchase the outstanding principal amount of such Covered Debt is
less than $100,000,000, the applicable redemption or repurchase date and (c) if such Covered Debt
is not Eligible Subordinated Debt, the date on which the Corporation issues long-term indebtedness
for money borrowed that is Eligible Subordinated Debt.
“Replacement Capital Covenant” has the meaning specified in the introduction to this
instrument.
“Supplemental Indenture” means the Supplemental Indenture, dated as of November 8, 2006,
between the Corporation and The Bank of New York, as Trustee.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Securities” has the meaning specified in the second recital in the preamble hereto.
“Subordinated Debenture” has the meaning specified in the first recital in the preamble
hereto.
“Subsidiary” means, at any time, any Person the shares of stock or other ownership interests
of which having ordinary voting power to elect a majority of the board of directors or other
managers of such Person are at the time owned, or the management or policies of which are otherwise
at the time controlled, directly or indirectly through one or more intermediaries (including other
Subsidiaries) or both, by another Person.
“Termination Date” has the meaning specified in Section 4(a).
Replacement Capital Covenant
I-8
“Trust” has the meaning specified in the first recital to the preamble hereto.
Replacement Capital Covenant
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