Recitals
Exhibit 99.1
Replacement Capital Covenant, dated as of January 31, 2008 (this “Replacement Capital
Covenant”), by M&T Bank Corporation, a New York corporation (together with its successors and
assigns, the “Corporation”), in favor of and for the benefit of each Covered Debtholder (as defined
below).
Recitals
A. On the date hereof, the Corporation is issuing $350,010,000 aggregate principal amount of
its 8.500% Junior Subordinated Debentures due 2068 (the “JSDs”) to M&T Capital Trust IV, a Delaware
statutory trust (the “Trust”), and after the date hereof, the Corporation may issue additional JSDs
pursuant to the Indenture.
B. On the date hereof, the Trust is issuing $350,000,000 aggregate liquidation amount of its
8.500% Capital Securities (the “Capital Securities” and, together with the JSDs, the “Securities”).
C. This Replacement Capital Covenant is the “Replacement Capital Covenant” referred to in the
Prospectus Supplement, dated January 24, 2008 (the “Prospectus Supplement”), relating to, among
other securities, the Securities.
D. 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.
E. 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 Repayment, Redemption and Purchase of Securities. The Corporation
hereby promises and covenants to and for the benefit of each Covered Debtholder that the
Corporation shall not repay, redeem or purchase, nor shall any Subsidiary of the Corporation
(including the Trust) purchase, any of the Securities prior to the Termination Date except to the
extent that (a) 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 purchase 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 from the sale of Common Stock and rights to acquire
Common Stock (including Common Stock or rights to acquire Common Stock issued pursuant to
the Corporation’s dividend reinvestment plan or employee benefit plans), Debt Exchangeable
for Common Equity, Debt Exchangeable for Preferred Equity, Mandatorily Convertible Preferred
Stock or REIT Preferred Securities and Qualifying Capital Securities to Persons other
than the Corporation and its Subsidiaries; plus
(ii) the Applicable Percentage of the Market Value of any Common Stock that the
Corporation or its Subsidiaries have (x) delivered to Persons other than the Corporation and
its Subsidiaries as consideration for property or assets in an arm’s-length transaction or
(y) issued to Persons other than the Corporation and its Subsidiaries in connection with the
conversion or exchange of any convertible or exchangeable securities, other than securities
for which the Corporation or any of its Subsidiaries has received equity credit from any
NRSRO;
in each case within the applicable Measurement Period (without double counting proceeds received in
any prior Measurement Period); provided, however, that the provisions of this Section 2 shall not
apply to (i) the purchase of the Securities or any portion thereof by Subsidiaries of the
Corporation in connection with the distribution thereof or market-making or other secondary-market
activities or (ii) any distribution of the JSDs to holders of the Capital Securities upon a
dissolution of the Trust. For purposes of this Replacement Capital Covenant, the term “repay”
includes the defeasance by the Corporation of the JSDs as well as the satisfaction and discharge of
its obligations under the Indenture with respect to the JSDs.
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 and its Depository Institution
Subsidiaries’ 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
related Redesignation Date;
(iv) if the Corporation has no outstanding series of long-term indebtedness for money
borrowed that is Eligible Debt, and its Largest Depository Institution Subsidiary 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;
(v) if the Corporation has no outstanding series of long-term indebtedness for money
borrowed that is Eligible Debt, but its Largest Depository Institution Subsidiary 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 related Redesignation Date;
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(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, as provided for in Section 3(c), give a notice and file with the
Commission a current report on Form 8-K including or incorporating by reference this
Replacement Capital Covenant as an exhibit 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 (x) 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
and (y) file a copy of this Replacement Capital Covenant with the Commission as an exhibit to a
Form 8-K under the Securities Exchange Act; (ii) so long as the Corporation is a reporting company
under the Securities Exchange Act, the Corporation shall 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 one of its Depository Institution Subsidiary’s long-term indebtedness for money
borrowed (1) becomes Covered Debt or (2) ceases to be Covered Debt, the Corporation shall 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 a
current report on Form 8-K including or incorporating by reference this Replacement Capital
Covenant, and 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, the Corporation shall (1) 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 (2), to the extent permitted by Bloomberg and any other similar
third-party vendor that makes available to the marketplace information with respect to securities
that are Covered Debt by posting such information on an electronically accessible screen (each an
“Investor Screen”), cause a notation to be included on each such Investor Screen identifying the
relevant series of indebtedness of the Corporation or a Subsidiary that is Covered Debt from time
to time as Covered Debt for purposes of this Replacement Capital Covenant and cause a hyperlink to
a definitive copy of this Replacement Capital Covenant to be included on each such Investor Screen
for each series of Covered Debt (but only so long as such series is Covered Debt); and (v) promptly
upon request by any Holder of Covered Debt, the Corporation shall provide such Holder with an
executed copy of this Replacement Capital Covenant.
(d) The Corporation agrees that, if at any time the Covered Debt is held by a trust (for
example, where the Covered Debt is part of an issuance of trust preferred securities), a holder of
the securities issued by such trust may enforce (including by instituting legal proceedings) this
Replacement Capital Covenant directly against the Corporation as though such holder owned Covered
Debt directly, and such trust securities shall be deemed to be “Covered Debt” for purposes of this
Replacement Capital Covenant for so long as the indebtedness held by such trust remains Covered
Debt hereunder.
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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) the date, if any, on which the Holders of a majority in
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,
(ii) the date on which neither the Corporation nor any of its Depository Institution Subsidiaries
has any series of outstanding Eligible Senior Debt or Eligible Subordinated Debt (in each case
without giving effect to the rating requirement in clause (b) of the definition of each such term),
(iii) January 31, 2048 or, if earlier, when all of the JSDs have been paid, redeemed or purchased
in full in compliance with this Replacement Capital Covenant, and (iv) the occurrence of an event
of default that results in the acceleration of the JSDs. 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 in
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 (i) such amendment or supplement eliminates Common Stock, Debt Exchangeable for
Common Stock, rights to acquire Common Stock, and/or Mandatorily Convertible Preferred Stock as a
Replacement Capital Security, if after the date of this Replacement Capital Covenant, the
Corporation has been advised in writing by a nationally recognized independent accounting firm or
an accounting standard or interpretive guidance of an existing accounting standard issued by an
organization or regulator that has responsibility for establishing or interpreting accounting
standards in the United States becomes effective such that there is more than an insubstantial risk
that failure to eliminate Common Stock, Debt Exchangeable for Common Stock, rights to acquire
Common Stock and/or Mandatorily Convertible Preferred Stock as a Replacement Capital Security would
result in a reduction in the Corporation’s earnings per share as calculated in accordance with
generally accepted accounting principles in the United States, (ii) such amendment or supplement is
not adverse to the Holders of the then-effective 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 the then-effective series of Covered Debt, or (iii) the
effect of such amendment or supplement is solely to impose additional restrictions on, or eliminate
certain of, the types of securities qualifying as Replacement Capital Securities (other than the
securities covered by clause (i) above), 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
to that effect. For this purpose, an amendment or supplement that adds new types of securities
qualifying as Replacement Capital Securities or modifies the requirements of securities qualifying
as Replacement Capital Securities will not be deemed materially adverse to the Holders of the
then-effective series of Covered Debt if, following such amendment or supplement, the Replacement
Capital Covenant would satisfy clause (ii) of the definition of Qualifying Replacement Capital
Covenant.
(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.
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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 (provided that, in the event the Corporation sells, conveys, transfers or otherwise
disposes of all or substantially all its assets to any person and (i) such person assumes all the
obligations of the Corporation under the indenture governing the then applicable Covered Debt and
the Indenture, (ii) such person assumes all the obligations of the Corporation under the
Replacement Capital Covenant and (iii) the Corporation is released from its obligations under the
indenture governing the then applicable Covered Debt and the Indenture, the Corporation shall be
released from all its obligations hereunder) 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 or holds 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 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:
M&T Bank Corporation
Xxx X & X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Xxx X & X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
(d) Each reference in this Replacement Capital Covenant to a Commission form includes any
successor form that may be adopted by the Commission.
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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.
| M&T Bank corporation |
||||
| By: | /s/ Xxxx XxxXxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Group Vice President | |||
Schedule 1
Definitions
“Alternative Payment Mechanism” means, with respect to any Qualifying Capital Securities,
provisions in the related transaction documents permitting the Corporation, in its sole discretion,
or in response to a directive or order from the Federal Reserve, to defer or skip in whole or in
part payment of Distributions on such Qualifying Capital Securities for one or more consecutive
Distribution Periods up to ten years and requiring the Corporation to issue (or use Commercially
Reasonable Efforts to issue) one or more types of APM Qualifying Securities raising eligible
proceeds at least equal to the deferred Distributions on such Qualifying Capital Securities and
apply the proceeds to pay unpaid Distributions on such Qualifying Capital Securities, commencing on
the earlier of (x) the first Distribution Date after commencement of a deferral period on which the
Corporation pays current Distributions on such Qualifying Capital Securities and (y) the fifth
anniversary of the commencement of such deferral period, and that:
(a) define “eligible proceeds” to mean, for purposes of such Alternative Payment
Mechanism, the net proceeds (after underwriters’ or placement agents’ fees, commissions or
discounts and other expenses relating to the issuance or sale of the relevant securities,
where applicable, and including the fair market value of property received by the
Corporation or any of its Subsidiaries as consideration for such APM Qualifying Securities)
that the Corporation has received during the 180 days prior to the related Distribution
Date from the issuance of APM Qualifying Securities, up to the Preferred Cap in the case of
APM Qualifying Securities that are Qualifying Preferred Stock or Mandatorily Convertible
Preferred Stock;
(b) permit the Corporation to pay current Distributions on any Distribution Date out
of any source of funds but (x) require the Corporation to pay deferred Distributions only
out of eligible proceeds and (y) prohibit the Corporation from paying deferred
Distributions out of any source of funds other than eligible proceeds;
(c) if deferral of Distributions continues for more than one year, require the
Corporation and its Subsidiaries not to redeem or repurchase any of its securities ranking
junior to or pari passu with any APM Qualifying Securities the proceeds of which were used
to settle deferred interest during the relevant deferral period until at least one year
after all deferred Distributions have been paid (a “Repurchase Restriction”);
(d) notwithstanding clause (b) of this definition, if the Federal Reserve disapproves
the Corporation’s sale of APM Qualifying Securities or the use of the proceeds thereof to
pay deferred Distributions, may (if the Corporation elects to so provide in the terms of
such Qualifying Capital Securities) permit the Corporation to pay deferred Distributions
from any source or, if the Federal Reserve does not disapprove the Corporation’s issuance
and sale of APM Qualifying Securities but disapproves the use of the proceeds thereof to
pay deferred Distributions, may (if the Corporation elects to so provide in the terms of
such Qualifying Capital Securities) permit the Corporation to use such proceeds for other
purposes and to continue to defer Distributions, without a breach of its obligations under
the transaction documents;
(e) may include a provision that, for purposes of paying deferred interest, limits the
ability of the Corporation to sell shares of Common Stock above a Maximum Share Number;
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(f) limit the obligation of the Corporation to issue (or use Commercially Reasonable
Efforts to issue) APM Qualifying Securities that are Common Stock and Qualifying Warrants
to settle deferred Distributions pursuant to the Alternative Payment Mechanism either (A)
during the first five years of any deferral period or (B) before an anniversary of the
commencement of any deferral period that is not earlier than the fifth such anniversary and
not later than the ninth such anniversary (as designated in the terms of such Qualifying
Capital Securities) with respect to deferred Distributions attributable to the first five
years of such deferral period, either:
(i) to an aggregate amount of such securities, the net proceeds from the
issuance of which is equal to 2% of the product of the average of the Market Value
of the Common Stock on the ten consecutive trading days ending on the fourth
trading day immediately preceding the date of issuance multiplied by the total
number of issued and outstanding shares of Common Stock as of the date of the
Corporation’s most recent publicly available consolidated financial statements; or
(ii) to a number of shares of Common Stock and shares purchasable upon
exercise of Qualifying Warrants, in the aggregate, not in excess of 2% of the
outstanding number of shares of Common Stock as of the date of the Corporation’s
most recent publicly available consolidated financial statements (the “Common
Cap”);
(g) limit the right of the Corporation to issue APM Qualifying Securities that are
Qualifying Preferred Stock and Mandatorily Convertible Preferred Stock to settle deferred
Distributions pursuant to the Alternative Payment Mechanism to an aggregate amount of
Qualifying Preferred Stock and still-outstanding Mandatorily Convertible Preferred Stock,
the net proceeds from the issuance of which with respect to all deferral periods is equal
to 25% of the liquidation or principal amount of such Qualifying Capital Securities (the
“Preferred Cap”);
(h) in the case of Qualifying Capital Securities other than non-cumulative perpetual
preferred stock, include a Bankruptcy Claim Limitation Provision; and
(i) permit the Corporation, at its option, to provide that if it is involved in a
merger, consolidation, amalgamation, binding share exchange or conveyance, transfer or
lease of assets substantially as an entirety to any other person or a similar transaction
(a “Business Combination”) where immediately after the consummation of the Business
Combination more than 50% of the surviving or resulting entity’s voting stock is owned by
the shareholders of the other party to the Business Combination, then clauses (a) through
(c) of this definition will not apply to any deferral period that is terminated on the next
Distribution Date following the date of consummation of the Business Combination (or if
later, at any time within 90 days following the date of consummation of the Business
Combination);
provided (and it being understood) that:
(a) the Corporation shall not be obligated to issue (or use Commercially Reasonable
Efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has
occurred and is continuing;
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(b) if, due to a Market Disruption Event or otherwise, the Corporation is able to
raise and apply some, but not all, of the eligible proceeds necessary to pay all deferred
Distributions on any Distribution Date, the Corporation will apply any available eligible
proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in
chronological order subject to the Common Cap, Maximum Share Number and Preferred Cap, as
applicable; and
(c) if the Corporation has outstanding more than one class or series of securities
under which it is obligated to sell a type of APM Qualifying Securities and apply some part
of the proceeds to the payment of deferred Distributions, then on any date and for any
period the amount of net proceeds received by the Corporation from those sales and
available for payment of deferred Distributions on such securities shall be applied to such
securities on a pro rata basis up to the Common Cap, Maximum Share Number and the Preferred
Cap, as applicable, in proportion to the total amounts that are due on such securities, or
on such other basis as the Federal Reserve may approve.
“APM Qualifying Securities” means, with respect to an Alternative Payment Mechanism, any Debt
Exchangeable for Preferred Equity or any Mandatory Trigger Provision, one or more of the following
(as designated in the transaction documents for any Qualifying Capital Securities that include an
Alternative Payment Mechanism or a Mandatory Trigger Provision or for any Debt Exchangeable for
Preferred Equity, as applicable):
| (a) | Common Stock; | ||
| (b) | Qualifying Warrants; | ||
| (c) | Mandatorily Convertible Preferred Stock; or | ||
| (d) | Qualifying Preferred Stock; |
provided (and it being understood) that (i) if the APM Qualifying Securities for any Alternative
Payment Mechanism or Mandatory Trigger Provision or for any Debt Exchangeable for Preferred Equity
include both Common Stock and Qualifying Warrants, such Alternative Payment Mechanism, Mandatory
Trigger Provision or Debt Exchangeable for Preferred Equity may permit, but need not require, the
Corporation to issue Qualifying Warrants and (ii) such Alternative Payment Mechanism, Mandatory
Trigger Provision or Debt Exchangeable for Preferred Equity may permit, but need not require, the
Corporation to issue Mandatorily Convertible Preferred Stock.
“Applicable Percentage” means:
(i) with respect to Common Stock and rights to acquire Common Stock (including Common
Stock or rights to acquire Common Stock issued pursuant to the Corporation’s dividend
reinvestment plan or employee benefit plans), 133.33% prior to January 31, 2018, 200% on or
after January 31, 2018 and prior to January 31, 2038, and 400% on or after January 31,
2038;
(ii) with respect to Debt Exchangeable for Common Equity, Debt Exchangeable for
Preferred Equity, Mandatorily Convertible Preferred Stock, REIT Preferred Securities and
Qualifying Capital Securities described under clause (i) of the
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definition of that term, 100% prior to January 31, 2018, 150% on or after January 31,
2018 and prior to January 31, 2038 and 300% on or after January 31, 2038;
(iii) with respect to Qualifying Capital Securities described under clause (ii) of the
definition of that term, 100% prior to the January 31, 2038, and 200% on or after January
31, 2038; and
(iv) with respect to Qualifying Capital Securities described under clause (iii) of the
definition of that term, 100%.
“Appropriate Federal Banking Agency” means, as to a Depository Institution Subsidiary, the
Federal bank regulatory agency or authority that is the “appropriate Federal banking agency”
(within the meaning of 12 U.S.C. § 1813(q)) with respect to such Depository Institution Subsidiary.
“Bankruptcy Claim Limitation Provision” means, with respect to any Qualifying Capital
Securities that have an Alternative Payment Mechanism or a Mandatory Trigger Provision, provisions
that, upon any liquidation, dissolution, winding up or reorganization or in connection with any
insolvency, receivership or proceeding under any bankruptcy law with respect to the issuer, limit
the claim of the holders of such securities to Distributions that accumulate during (A) any
deferral period, in the case of securities that have an Alternative Payment Mechanism or (B) any
period in which the issuer fails to satisfy one or more financial tests set forth in the terms of
such securities or related transaction agreements, in the case of securities that have a Mandatory
Trigger Provision, to:
(i) in the case of Qualifying Capital Securities that have an Alternative Payment
Mechanism or Mandatory Trigger Provision with respect to which the APM Qualifying
Securities do not include Qualifying Preferred Stock or Mandatorily Convertible Preferred
Stock, 25% of the stated or principal amount of such Qualifying Capital Securities then
outstanding; and
(ii) in the case of any other Qualifying Capital Securities, an amount not in excess
of the sum of (x) the first two years of accumulated and unpaid Distributions and (y) an
amount equal to the excess, if any, of the Preferred Cap over the aggregate amount of net
proceeds from the sale of Qualifying Preferred Stock and Mandatorily Convertible Preferred
Stock that is still outstanding that the issuer has applied to pay such Distributions
pursuant to the Alternative Payment Mechanism or the Mandatory Trigger Provision; provided
that the holders of such Qualifying Capital Securities are deemed to agree that, to the
extent the remaining claim exceeds the amount set forth in clause (x), the amount they
receive in respect of such excess shall not exceed the amount they would have received if
the claim for such excess ranked pari passu with the interests of the holders, if any, of
Qualifying Preferred Stock.
“Business Day” means each day other than (a) a Saturday or Sunday, or (b) a day on which
banking institutions in the City of Buffalo, New York or The City of New York are authorized or
required by law or executive order to be closed.
“Capital Securities” has the meaning specified in Recital B.
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“Commercially Reasonable Efforts” means, for purposes of selling APM Qualifying Securities,
commercially reasonable efforts to complete the offer and sale of APM Qualifying Securities to
third parties that are not Subsidiaries of the Corporation in public offerings or private
placements. The Corporation shall not be considered to have made Commercially Reasonable Efforts
to effect a sale of APM Qualifying Securities if it determines not to pursue or complete such sale
due to pricing, coupon, dividend rate or dilution considerations.
“Commission” means the United States Securities and Exchange Commission.
“Common Cap” has the meaning specified in clause (f) of the definition of Alternative Payment
Mechanism.
“Common Stock” means common stock of the Corporation (including common stock issued 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 or holds long-term indebtedness for money borrowed of
the Corporation or its Depository Institution Subsidiary during the period that such long-term
indebtedness for money borrowed is Covered Debt.
“Debt Exchangeable for Common Equity” means a security or combination of securities (together
in this definition, “such securities”) that:
(i) gives the holder a beneficial interest in (a) a fractional interest in a stock
purchase contract for a share of Common Stock that will be settled in three years or less,
with the number of shares of Common Stock purchasable pursuant to such stock purchase
contract to be within a range established at the time of issuance of such subordinated debt
securities, subject to customary anti-dilution adjustments and (b) subordinated debt
securities of the Corporation that are non-callable prior to the settlement date of the
stock purchase contract;
(ii) provides that the holders directly or indirectly grant the Corporation a security
interest in such subordinated debt securities and their proceeds (including any substitute
collateral permitted under the transaction documents) to secure the holders’ direct or
indirect obligation to purchase Common Stock pursuant to such stock purchase contracts;
(iii) includes a remarketing feature pursuant to which the subordinated debt
securities are remarketed to new investors commencing not later than the last distribution
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date that is at least one month prior to the settlement date of the stock purchase
contract; and
(iv) provides for the proceeds raised in the remarketing to be used to purchase Common
Stock under the stock purchase contracts and, if there has not been a successful
remarketing of the subordinated debt securities by the settlement date of the stock
purchase contract, provides that the stock purchase contracts will be settled by the
Corporation exercising its remedies as a secured party with respect to the subordinated
debt securities or other collateral directly or indirectly pledged by holders in the Debt
Exchangeable for Common Equity.
“Debt Exchangeable for Preferred Equity” means a security or combination of securities
(together in this definition, “such securities”) that:
(i) gives the holder a beneficial interest in (a) subordinated debt securities of the
Corporation or one of its Subsidiaries (in this definition, the “Issuer”) permitting the
Issuer to defer Distributions in whole or in part on such subordinated debt securities for
one or more Distribution Periods up to at least seven years without any remedies other than
Permitted Remedies and that are the most junior subordinated debt of the Issuer (or rank
pari passu with the most junior subordinated debt of the Issuer) and (b) an interest in a
stock purchase contract that obligates the holder to acquire a beneficial interest in
Qualifying Preferred Stock;
(ii) provides that the holders directly or indirectly grant to the Issuer a security
interest in such subordinated debt securities and their proceeds (including any substitute
collateral permitted under the transaction documents) to secure the investors’ direct or
indirect obligation to purchase Qualifying Preferred Stock pursuant to such stock purchase
contracts;
(iii) includes a remarketing feature pursuant to which the subordinated debt of the
Issuer is remarketed to new investors commencing not later than the first Distribution Date
that is at least five years after the date of issuance of such securities 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 Preferred Equity;
(iv) provides for the proceeds raised in the remarketing to be used to purchase
Qualifying Preferred Stock under the stock purchase contracts and, if there has not been a
successful remarketing by the first Distribution Date that is six years after the date of
issuance of such securities, provides that the stock purchase contracts will be settled by
the Corporation exercising its rights as a secured creditor with respect to the
subordinated debt securities or other collateral directly or indirectly pledged by
investors in the Debt Exchangeable for Preferred Equity;
(v) includes a Qualifying Replacement Capital Covenant that will apply to such
securities and to any Qualifying Preferred Stock issued pursuant to the stock purchase
contracts; provided that such Qualifying Replacement Capital Covenant will not include Debt
Exchangeable for Common Equity or Debt Exchangeable for Preferred Equity as “Replacement
Capital Securities”; and
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(vi) after the issuance of such Qualifying Preferred Stock, provides the holder with a
beneficial interest in such Qualifying Preferred Stock.
“Depository Institution Subsidiary” means any Subsidiary of the Corporation that is a
depository institution within the meaning of 12 C.F.R. § 204.2(m).
“Distribution Date” means, as to any Qualifying Capital Securities or Debt Exchangeable for
Preferred Equity, the dates on which Distributions on such securities are scheduled to be made.
“Distribution Period” means, as to any Qualifying Capital 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 any Qualifying Capital Securities or Debt Exchangeable for
Preferred Equity, dividends, interest 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
unsecured 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 unsecured 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, (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, and (e) if issued by a
Depository Institution Subsidiary, is fully and unconditionally guaranteed by the Corporation on
(I) a subordinated basis or (II) if on the relevant Redesignation Date there is no outstanding debt
of a Depository Institution Subsidiary meeting the other requirements set forth above and
guaranteed by the Corporation on a subordinated basis but there is outstanding debt of a Depository
Institution Subsidiary meeting such requirements and guaranteed on a senior basis, a senior basis.
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 unsecured 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 unsecured indebtedness for money borrowed that ranks most senior and
ranks senior to the JSDs, (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 indebtedness for money borrowed that satisfies the
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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, (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, and (e) if issued by a
Depository Institution Subsidiary, is fully and unconditionally guaranteed by the Corporation on
(I) a subordinated basis or (II) if on the relevant Redesignation Date there is no outstanding debt
of a Depository Institution Subsidiary meeting the other requirements set forth above and
guaranteed by the Corporation on a subordinated basis but there is outstanding debt of a Depository
Institution Subsidiary meeting such requirements and guaranteed on a senior basis, a senior basis.
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, and any regional
Federal Reserve Bank in which the Corporation owns stock or their successor as the Corporation’s
primary federal banking regulator, or the staff thereof.
“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 January 31, 2008, between the
Corporation and The Bank of New York, as Trustee, as supplemented by the Supplemental Indenture.
“Initial Covered Debt” means the Corporation’s Floating Rate Junior Subordinated Debentures
due July 15, 2029 underlying the Floating Rate Non-Cumulative Subordinated Capital Trust Enhanced
Securities issued by Allfirst Financial Inc., which have CUSIP No. 00000XXX0.
“Intent-Based Replacement Disclosure” means, as to any Qualifying Preferred Stock or
Qualifying Capital 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 or any Subsidiary of the
issuer will redeem or purchase such securities only with the proceeds of replacement capital
securities that have terms and provisions at the time of redemption or purchase that are as or more
equity-like than the securities then being redeemed or purchased, raised within 180 days prior to
the applicable redemption or purchase date. Notwithstanding the use of the term “Intent-Based
Replacement Disclosure” in the definitions of “Qualifying Capital Securities” and “Qualifying
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.
“JSDs” has the meaning specified in Recital A.
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“Largest Depository Institution Subsidiary” means, from time to time, the Depository
Institution Subsidiary of the Corporation with the greatest total assets that also has outstanding
at least one series of Eligible Subordinated Debt; provided, however, that if no Depository
Institution Subsidiary of the Corporation has outstanding a series of Eligible Subordinated Debt,
this term shall mean the Depository Institution Subsidiary of the Corporation with the greatest
total assets that also has outstanding at least one series of Eligible Senior Debt.
“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 at a conversion ratio within a range
established at the time of issuance of the preferred stock, subject to customary anti-dilution
adjustments.
“Mandatory Trigger Provision” means, as to any Qualifying Capital Securities, provisions in
the terms thereof or of the related transaction agreements that:
(a) require the issuer of such securities to make payment of Distributions on such
securities only pursuant to the issue and sale of APM Qualifying Securities within two
years of a failure of the issuer 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 to the amount of unpaid Distributions on such
securities (including without limitation all deferred and accumulated amounts) and require
the application of the net proceeds of such sale to pay such unpaid Distributions, provided
that (i) if the Mandatory Trigger Provision does not require the issuance and sale within
one year of such failure, the amount of Common Stock and/or Qualifying Warrants the net
proceeds of which the issuer must apply to pay such Distributions pursuant to such
provision may not exceed the Common Cap and (ii) the amount of Qualifying Preferred Stock
and still outstanding Mandatorily Convertible Preferred Stock the net proceeds of which the
issuer may apply to pay such Distributions pursuant to such provision may not exceed the
Preferred Cap;
(b) if the provisions described in clause (a) do not require such issuance and sale
within one year of such failure, include a Repurchase Restriction;
(c) include a Bankruptcy Claim Limitation Provision; and
(d) prohibit the issuer of such securities from redeeming or purchasing any of its
securities ranking upon the liquidation, dissolution or winding up of the Corporation
junior to or pari passu with any APM Qualifying Securities the proceeds of which were used
to settle deferred interest during the relevant deferral period prior to the date six
months after the issuer applies the net proceeds of the sales described in clause (a) above
to pay such deferred Distributions in full;
provided (and it being understood) that:
(i) the issuer will not be obligated to issue (or use Commercially Reasonable Efforts
to issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred
and is continuing;
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(ii) if, due to a Market Disruption Event or otherwise, the issuer is able to raise
and apply some, but not all, of the eligible proceeds necessary to pay all deferred
Distributions on any Distribution Date, the issuer will apply any available eligible
proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in
chronological order subject to the Common Cap and Preferred Cap, as applicable; and
(iii) if the issuer has outstanding more than one class or series of securities under
which it is obligated to sell a type of APM Qualifying Securities and applies some part of
the proceeds to the payment of deferred Distributions, then on any date and for any period
the amount of net proceeds received by the issuer from those sales and available for
payment of deferred Distributions on such securities shall be applied to such securities on
a pro rata basis up to the Common Cap and the Preferred Cap, as applicable, in proportion
to the total amounts that are due on such securities.
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 Qualifying Capital Securities as a result of
the issuer’s failure to pay Distributions because of the Mandatory Trigger Provision until
Distributions have been deferred for one or more Distribution Periods that total together at least
ten years.
“Market Disruption Event” means the occurrence or existence of any of the following events or
sets of circumstances:
(a) the Corporation would be required to obtain the consent or approval of its
shareholders or a regulatory body (including, without limitation, any securities exchange)
or governmental authority to issue or sell APM Qualifying Securities and such consent or
approval has not yet been obtained notwithstanding the Corporation’s commercially
reasonable efforts to obtain such consent or approval or the Federal Reserve instructs the
Corporation not to sell or offer for sale APM Qualifying Securities or not to use the
proceeds of such a sale to pay deferred Distributions under an Alternative Payment
Mechanism at such time;
(b) trading in securities generally (or in the Corporation’s Common Stock or preferred
stock specifically) on the New York Stock Exchange or any other national securities
exchange or over-the-counter market on which the Common Stock and/or the Corporation’s
preferred stock is then listed or traded shall have been suspended or the settlement of
such trading generally shall have been materially disrupted or minimum prices shall have
been established on any such exchange or market by the Commission, by the relevant exchange
or by any other regulatory body or governmental body having jurisdiction, and the
establishment of such minimum prices materially disrupts or otherwise has a material
adverse effect on trading in, or the issuance and sale of, APM Qualifying Securities;
(c) a banking moratorium shall have been declared by the federal or state authorities
of the United States and such moratorium materially disrupts or otherwise has a material
adverse effect on trading in, or the issuance and sale of, the APM Qualifying Securities;
(d) a material disruption shall have occurred in commercial banking or securities
settlement or clearance services in the United States and such disruption
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materially disrupts or otherwise has a material adverse effect on trading in, or the
issuance and sale of, the APM Qualifying Securities;
(e) the United States shall have become engaged in hostilities, there shall have been
an escalation in hostilities involving the United States, there shall have been a
declaration of a national emergency or war by the United States or there shall have
occurred any other national or international calamity or crisis and such event materially
disrupts or otherwise has a material adverse effect on trading in, or the issuance and sale
of, the APM Qualifying Securities;
(f) there shall have occurred such a material adverse change in general domestic or
international economic, political or financial conditions, including without limitation as
a result of terrorist activities, and such change materially disrupts or otherwise has a
material adverse effect on trading in, or the issuance and sale of, the APM Qualifying
Securities;
(g) an event occurs and is continuing as a result of which the offering document for
such offer and sale of APM Qualifying Securities would, in the reasonable judgment of the
Corporation, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not
misleading and either (i) the disclosure of that event at such time, in the reasonable
judgment of the Corporation, is not otherwise required by law and would have a material
adverse effect on the business of the Corporation or (ii) the disclosure relates to a
previously undisclosed proposed or pending material business transaction, the disclosure of
which would impede the ability of the Corporation to consummate such transaction, provided
that no single suspension period contemplated by this paragraph (g) shall exceed 90
consecutive days and multiple suspension periods contemplated by this paragraph (g) shall
not exceed an aggregate of 180 days in any 360-day period; or
(h) the Corporation reasonably believes, for reasons other than those referred to in
paragraph (g) above, that the offering document for such offer and sale of APM Qualifying
Securities would not be in compliance with a rule or regulation of the Commission and the
Corporation is unable to comply with such rule or regulation or such compliance is unduly
burdensome, provided that no single suspension period contemplated by this paragraph (h)
shall exceed 90 consecutive days and multiple suspension periods contemplated by this
paragraph (h) shall not exceed an aggregate of 180 days in any 360-day period.
The definition of “Market Disruption Event” as used in any Replacement Capital Securities may
include less than all of the paragraphs outlined above, as determined by the Corporation at the
time of issuance of such securities, and in the case of clauses (a), (b), (c) and (d), as
applicable to a circumstance where the Corporation would otherwise endeavor to issue preferred
stock, shall be limited to circumstances affecting markets where the Corporation’s preferred stock
trades or where a listing for its trading is being sought.
“Market Value” means, on any date, the closing sale price per share of Common Stock (or if no
closing sale price is reported, the average of the bid and ask prices or, if more than one in
either case, the average of the average bid and the average ask prices) on that date as reported in
composite transactions by the New York Stock Exchange or, if the Common Stock is not then listed on
the New York Stock Exchange, as reported by the principal U.S. securities
I-11
exchange on which the Common Stock is traded or quoted; if the Common Stock is not either
listed or quoted on any U.S. securities exchange on the relevant date, the market price will be the
average of the mid-point of the bid and ask prices for the Common Stock on the relevant date
submitted by at least three nationally recognized independent investment banking firms selected for
this purpose by the Board of Directors of the Corporation or a committee thereof.
“Maximum Share Number” means, with respect to any Qualifying Capital Securities, a limit on
the total number of shares of Common Stock that may be issued by the Corporation pursuant to the
Alternative Payment Mechanism with respect to such Qualifying Capital Securities or on the total
number of shares of Common Stock underlying all Qualifying Warrants that may be issued by the
Corporation pursuant to such Alternative Payment Mechanism, provided that the product of such
Maximum Share Number and the Market Value of the Common Stock as of the date of issuance of such
Qualifying Capital Securities shall not represent a lower proportion of the aggregate principal or
liquidation amount, as applicable, of such Qualifying Capital Securities than the product of the
Maximum Share Number applicable to the JSDs multiplied by the Market Value of the Common Stock as
of the date of issuance of such JSDs represents of the aggregate principal amount of such JSDs.
“Measurement Date” means, with respect to any repayment, redemption or purchase of the
Securities, the date that is 180 days prior to delivery of notice of such repayment or redemption
or the date of such purchase.
“Measurement Period” means, with respect to any date on which notice of repayment or
redemption is delivered with respect to the Securities or on which the Corporation repurchases, or
any Subsidiary purchases, any Securities, the period beginning on the Measurement Date with respect
to such notice or purchase date and ending on such notice or purchase date, as the case may be.
Measurement Periods cannot run concurrently.
“Non-Cumulative” means, with respect to any Qualifying Capital Securities, that the issuer 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.
“No Payment Provision” means a provision or provisions in the transaction documents for
securities (referred to in this definition as “such securities”) that include the following:
(a) an Alternative Payment Mechanism; and
(b) an Optional Deferral Provision modified and supplemented from the general
definition of that term to provide that the issuer of such securities may, in its sole
discretion, or (if the issuer elects to so provide in the terms of such securities) shall
in response to a directive or order from, or memorandum of understanding with, the Federal
Reserve, 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 a Market Disruption Event
has occurred and is continuing, ten years, without any remedy other than Permitted Remedies
and the obligations (and limitations on obligations) described in the definition of
“Alternative Payment Mechanism” applying.
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“NRSRO” means a nationally recognized statistical rating organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act.
“Optional Deferral Provision” means, as to any Qualifying Capital Securities, a provision in
the terms thereof or of the related transaction agreements to the effect that:
(a) (i) the issuer of such Qualifying Capital Securities may, in its sole discretion,
or shall in response to a directive or order from, or memorandum of understanding with, the
Federal Reserve, 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 a Market Disruption
Event is continuing, ten years, without any remedy other than Permitted Remedies and (ii)
such securities are subject to an Alternative Payment Mechanism (provided that such
Alternative Payment Mechanism need not apply during the first five years of any deferral
period and need not include a Common Cap, Preferred Cap, Bankruptcy Claims Limitation
Provision or Repurchase Restriction); or
(b) the issuer of such Qualifying Capital Securities may, in its sole discretion, or
shall in response to a directive or order from, or memorandum of understanding with, the
Federal Reserve, defer or skip in whole or in part payment of Distributions on such
securities for one or more consecutive Distribution Periods of up to at least ten years
without any remedy other than Permitted Remedies.
“Permitted Remedies” means, with respect to any security or combination of 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 or its subsidiaries paying
Distributions on or repurchasing common stock or other securities that rank pari passu 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.
“Preferred Cap” has the meaning specified in clause (g) of the definition of Alternative
Payment Mechanism.
“Prospectus Supplement” has the meaning specified in Recital C.
“Qualifying Capital Securities” means securities or combinations of securities (other than
securities covered by paragraphs (i) and (ii) of Section 2) that, in the determination of the
Corporation’s Board of Directors, acting in its reasonable discretion and reasonably construing the
definitions and other terms of this Replacement Capital Covenant, meet one of the following
criteria:
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(i) in connection with any repayment, redemption or purchase of Securities prior to
January 31, 2018:
(A) securities issued by the Corporation or its Subsidiaries that (1) rank
pari passu with or junior to the JSDs upon the liquidation, dissolution or winding
up of the Corporation, (2) have no maturity or a maturity of at least 60 years and
(3) either:
(x) (I) have a No Payment Provision or are Non-Cumulative and (II)
are subject to a Qualifying Replacement Capital Covenant, or
(y) have an Optional Deferral Provision and a Mandatory Trigger
Provision and are subject to Intent-Based Replacement Disclosure;
(B) securities issued by the Corporation or its Subsidiaries that (1) rank
pari passu with or junior to the JSDs upon the liquidation, dissolution or winding
up of the Corporation, (2) have no maturity or a maturity of at least 40 years and
are subject to a Qualifying Replacement Capital Covenant and (3) have an Optional
Deferral Provision and a Mandatory Trigger Provision; or
(C) Qualifying Preferred Stock; or
(ii) in connection with any repayment, redemption or purchase of Securities at any
time on or after January 31, 2018 but prior to January 31, 2038:
(A) securities described under clause (i) of this definition;
(B) securities issued by the Corporation or its Subsidiaries that (1) rank
pari passu with or junior to the JSDs upon a liquidation, dissolution or winding up
of the Corporation, (2) have no maturity or a maturity of at least 60 years and (3)
either:
(x) are subject to a Qualifying Replacement Capital Covenant and
have an Optional Deferral Provision, or
(y) (I) are subject to Intent-Based Replacement Disclosure and (II)
have a No Payment Provision or are Non-Cumulative;
(C) securities issued by the Corporation or its Subsidiaries that (1) rank
pari passu with or junior to the JSDs upon a liquidation, dissolution or winding up
of the Corporation, (2) have no maturity or a maturity of at least 40 years and (3)
either:
(x) (I) have a No Payment Provision or are Non-Cumulative and (II)
are subject to a Qualifying Replacement Capital Covenant, or
(y) have an Optional Deferral Provision and a Mandatory Trigger
Provision and are subject to Intent-Based Replacement Disclosure;
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(D) securities issued by the Corporation or its Subsidiaries that (1) rank
pari passu with or junior to the JSDs upon a liquidation, dissolution or winding-up
of the Corporation, (2) have no maturity or a maturity of at least 25 years and are
subject to a Qualifying Replacement Capital Covenant and (3) have an Optional
Deferral Provision and a Mandatory Trigger Provision; or
(E) securities issued by the Corporation or its Subsidiaries that rank (i)
senior to the JSDs and securities that rank pari passu with the JSDs but (ii)
junior to all other debt securities of the Corporation (other than (x) the JSDs and
securities that rank pari passu with the JSDs and (y) securities that rank pari
passu with such Qualifying Capital Securities) upon its liquidation, dissolution or
winding-up, and (2) either:
(x) have no maturity or a maturity of at least 60 years and either
(I) are (a) Non-Cumulative or subject to a No Payment Provision and (b)
subject to a Qualifying Replacement Capital Covenant or (II) have a
Mandatory Trigger Provision and an Optional Deferral Provision and are
subject to Intent-Based Replacement Disclosure, or
(y) have no maturity or a maturity of at least 40 years, are subject
to a Qualifying Replacement Capital Covenant and have a Mandatory Trigger
Provision and an Optional Deferral Provision;
(F) 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, (2) has no maturity or a maturity of at least 60 years
and (3) is subject to a Qualifying Replacement Capital Covenant; or
(iii) in connection with any repayment, redemption or purchase of Securities at any
time on or after January 31, 2038:
(A) securities described under clause (ii) of this definition;
(B) securities issued by the Corporation or its Subsidiaries that (1) rank
pari passu with or junior to the JSDs upon a liquidation, dissolution or winding up
of the Corporation, (2) either:
(x) have no maturity or a maturity of at least 60 years and are
subject to Intent-Based Replacement Disclosure, or
(y) (I) have no maturity or a maturity at least 40 years and (II)
are subject to a Qualifying Replacement Capital Covenant; and
(3) have an Optional Deferral Provision;
(C) securities issued by the Corporation or its Subsidiaries that (1) rank
pari passu with or junior to the JSDs upon a liquidation, dissolution or winding up
of the Corporation, (2) have no maturity or a maturity at least 40 years are
subject to Intent-Based Replacement Disclosure and (3) are Non-Cumulative or have a
No Payment Provision;
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(D) securities issued by the Corporation or its Subsidiaries that rank (i)
senior to the JSDs and securities that rank pari passu with the JSDs but (ii)
junior to all other debt securities of the Corporation (other than (x) the JSDs and
securities that rank pari passu with the JSDs and (y) securities that rank pari
passu with such Qualifying Capital Securities) upon its liquidation, dissolution or
winding-up, and (2) either:
(x) have no maturity or a maturity of at least 60 years and either
(i) have an Optional Deferral Provision and are subject to a Qualifying
Replacement Capital Covenant or (ii) (a) are Non-Cumulative or have a No
Payment Provision and (b) are subject to Intent-Based Replacement
Disclosure, or
(y) have no maturity or a maturity of at least 40 years and either
(i) (a) are Non-Cumulative or have a No Payment Provision and (b) are
subject to a Qualifying Replacement Capital Covenant or (ii) are subject
to Intent-Based Replacement Disclosure and have a Mandatory Trigger
Provision and an Optional Deferral Provision; or
(E) preferred stock issued by the Corporation or its Subsidiaries that either
(1) has no maturity or a maturity of at least 60 years and is subject to
Intent-Based Replacement Disclosure or (2) has a maturity of at least 40 years and
is subject to a Qualifying Replacement Capital Covenant.
“Qualifying Preferred Stock” means non-cumulative perpetual preferred stock of the Corporation
that (a) ranks pari passu with or junior to all other preferred stock of the Corporation, and (b)
either (x) is subject to a Qualifying Replacement Capital Covenant or (y) is subject to
Intent-Based Replacement Disclosure and has a provision that provides for mandatory suspension of
Distributions or the payment of Distributions on the applicable Distribution Date from “eligible
proceeds” (as defined in clause (a) of the definition of Alternative Payment Mechanism) upon its
failure to satisfy one or more financial tests set forth therein, and (c) as to which the
transaction documents provide for no remedies as a consequence of non-payment of dividends other
than Permitted Remedies.
“Qualifying Replacement Capital Covenant” means a replacement capital covenant that is
substantially similar to this Replacement Capital Covenant or a replacement capital covenant, as
identified by the Corporation’s Board of Directors acting in its reasonable discretion and
reasonably construing the definitions and other terms of this Replacement Capital Covenant, (i)
entered into by a company that at the time it enters into such replacement capital covenant is a
reporting company under the Securities Exchange Act and (ii) that restricts the related issuer from
redeeming, repaying or purchasing identified securities except to the extent of the applicable
percentage of the net proceeds from the issuance of specified replacement capital securities that
have terms and provisions at the time of redemption, repayment or purchase that are as or more
equity-like than the securities then being redeemed, repaid or purchased within the 180-day period
prior to the applicable redemption, repayment or purchase date.
“Qualifying Warrants” means net share settled warrants to purchase Common Stock that (1) have
an exercise price greater than the current stock market price (as defined below) of the Common
Stock as of the date the Corporation agrees to issue the warrants, and (2) the Corporation is not
entitled to redeem for cash and the holders of which are not entitled to
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require it to repurchase for cash in any circumstances. The Corporation intends that any
Qualifying Warrants issued in accordance with an Alternative Payment Mechanism will have exercise
prices at least 10% above the current stock market price of its Common Stock on the date of
issuance. The “current stock market price” means, with respect to Common Stock on any date, (i)
the closing sale price per share (or if no closing sale price is reported, the average of the bid
and ask prices or, if more than one in either case, the average of the average bid and the average
ask prices) on that date as reported in composite transactions by the New York Stock Exchange or if
Common Stock is not then listed on the New York Stock Exchange, as reported by the principal U.S.
securities exchange on which Common Stock is traded or quoted on the relevant date, (ii) if Common
Stock is not listed on any U.S. securities exchange on the relevant date the last quoted bid price
for Common Stock in the over-the-counter market on the relevant date as reported by the National
Quotation Bureau or similar organization, or (iii) if Common Stock is not so quoted the average of
the mid-point of the last bid and ask prices for Common Stock on the relevant date from each of at
least three nationally recognized independent investment banking firms selected by the Corporation
for this purpose.
“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 repay or redeem, or the Corporation or a Subsidiary of the Corporation elects
to purchase, such Covered Debt either in whole or in part with the consequence that after giving
effect to such repayment, redemption or purchase the outstanding principal amount of such Covered
Debt is less than $100,000,000, the applicable repayment, redemption or purchase date and (c) if
such Covered Debt is not Eligible Subordinated Debt of the Corporation, the date on which the
Corporation issues long-term indebtedness for money borrowed that is Eligible Subordinated Debt.
“REIT Preferred Securities” means non-cumulative perpetual preferred stock of a Subsidiary of
a Depository Institution Subsidiary, which issuer Subsidiary may or may not be a “real estate
investment trust” (“REIT”) within the meaning of Section 856 of the Internal Revenue Code of 1986,
as amended, that is exchangeable for non-cumulative perpetual preferred stock of the Corporation
and satisfies the following requirements:
(a) such non-cumulative perpetual preferred stock of a Subsidiary of the Depository
Institution Subsidiary and the related non-cumulative perpetual preferred stock of the
Corporation for which it may be exchanged qualifies as Tier 1 capital of a Depository
Institution Subsidiary under the risk-based capital guidelines of the Appropriate Federal
Banking Agency and related interpretive guidance of such Agency (for example, in the case
of the Office of the Comptroller of the Currency, Corporate Decision 97-109) (disregarding
any quantitative limits);
(b) such non-cumulative perpetual preferred stock of a Subsidiary of the Depository
Institution Subsidiary must be exchangeable automatically into non-cumulative perpetual
preferred stock of the Corporation in the event that the Appropriate Federal Banking Agency
directs such Depository Institution Subsidiary in writing to make a conversion because such
Depository Institution Subsidiary is (i) undercapitalized under the applicable prompt
corrective action regulations (which, for example, in the case of the Office of the
Comptroller of the Currency and applicable to national banks, are at 12 C.F.R. 6.4(b)),
(ii) placed into conservatorship or receivership, or (iii) expected to become
undercapitalized in the near term;
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(c) if such Subsidiary of the Depository Institution Subsidiary is a REIT, the
transaction documents include provisions that would enable the REIT to stop paying
dividends on its non-cumulative perpetual preferred stock without causing the REIT to fail
to comply with the income distribution and other requirements of the Internal Revenue Code
of 1986, as amended, applicable to REITs;
(d) such non-cumulative perpetual preferred stock of the Corporation issued upon
exchange for the non-cumulative perpetual preferred stock of a Subsidiary of a Depository
Institution Subsidiary issued as part of such transaction ranks pari passu with or junior
to other preferred stock of the Corporation; and
(e) such REIT Preferred Securities and non-cumulative perpetual preferred stock of the
Corporation for which it may be exchanged are subject to a Qualifying Replacement Capital
Covenant.
“Replacement Capital Covenant” has the meaning specified in the introduction to this
instrument.
“Replacement Capital Securities” means Common Stock, rights to acquire Common Stock, Debt
Exchangeable for Common Equity, Debt Exchangeable for Preferred Equity, Mandatorily Convertible
Preferred Stock, REIT Preferred Securities or Qualifying Capital Securities.
“Repurchase Restriction” has the meaning specified in clause (c) of the definition of
“Alternative Payment Mechanism.”
“Securities” has the meaning specified in Recital B.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
“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.
“Supplemental Indenture” means the First Supplemental Indenture, dated as of January 31, 2008,
between the Corporation and The Bank of New York, as Trustee.
“Termination Date” has the meaning specified in Section 4(a).
“Trust” has the meaning specified in Recital A.
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