Recitals
Exhibit 99.1
Replacement Capital Covenant, dated as of March 27, 2006 (this “Replacement Capital
Covenant”), by U.S. Bancorp, 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
A. On the date hereof, the Corporation is issuing 40,000 shares of its “Series B
Non-Cumulative Perpetual Preferred Stock”, or “the Shares”, having a liquidation preference of
$25,000 per Share.
B. This Replacement Capital Covenant is the “Replacement Capital Covenant” referred to in the
Prospectus Supplement, dated March 22, 2006, relating to the Shares.
C. The Corporation, in entering into this Replacement Capital Covenant and disclosing the
content of this Replacement Capital Covenant in the manner provided below, is doing so with the
intent that the covenants provided for in this Replacement Capital Covenant be enforceable by each
Covered Debtholder and the Corporation be estopped from disregarding the covenants in this
Replacement Capital Covenant, in each case to the fullest extent permitted by applicable law.
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 or
any Subsidiary of the Corporation will redeem or repurchase Shares only (a) to the extent that the
total redemption or repurchase price therefor is equal to or less than the sum of (i) the
Applicable Percentage of the aggregate net cash proceeds received by the Corporation or its
Subsidiaries during the 180 days prior to the applicable redemption or repurchase date from the
issuance and sale of Common Stock plus (ii) the Applicable Percentage of the aggregate net cash
proceeds received by the Corporation or its Subsidiaries during the 180 days prior to the
applicable redemption or repurchase date from the issuance and sale of Replacement Capital
Securities other than Common Stock and (b) if the Corporation has obtained the prior approval of
the Federal Reserve if such approval is then required under the Federal Reserve’s risk-based
capital guidelines applicable to bank holding companies.
SECTION 3. Covered Debt. (a) The Corporation represents and warrants that the Initial
Covered Debt is Eligible Debt.
(b) (i) During the period commencing on the earlier of (x) the date two years and 30 days
prior to the final maturity date for the then effective Covered Debt and (y) the date on which the
Corporation gives notice of redemption of the then effective Covered Debt if such redemption is in
whole or in part and, after giving effect to such redemption, the outstanding
principal of such
Covered Debt would be less than $100,000,000, or (ii) if earlier than the date specified in clauses
(x) and (y) of this Section 3(b)(i), on the date on which the Corporation or a Subsidiary of the
Corporation repurchases the then effective Covered Debt in whole or in part and, after giving
effect to such repurchase, the outstanding principal amount of such Covered Debt would be less than
$100,000,000, the Corporation shall identify the series of Eligible Debt that will become the
Covered Debt on the related Redesignation Date in accordance with the following procedures:
(A) the Corporation shall identify each series of its then outstanding long-term
indebtedness for money borrowed that is Eligible Debt;
(B) 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;
(C) 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
upcoming Redesignation Date;
(D) if the Corporation has no outstanding series of long-term indebtedness for money
borrowed that is Eligible Debt, but U.S. Bank is a Subsidiary of the Corporation and U.S.
Bank 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;
(E) if the Corporation has no outstanding series of long-term indebtedness for money
borrowed that is Eligible Debt, but U.S. Bank is a Subsidiary of the Corporation and U.S.
Bank 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 upcoming
Redesignation Date;
(F) the series of outstanding long-term indebtedness for money borrowed that is
determined to be Covered Debt pursuant to clause (B), (C), (D) or (E) 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
(G) 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.
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(c) Notice. The Corporation covenants that (a) simultaneously with the execution of this
Replacement Capital Covenant or as soon as practicable after the date hereof, it will 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; (b) 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; (c) if a series of the Corporation’s or U.S. Bank’s long-term
indebtedness for money borrowed (1) becomes Covered Debt or (2) ceases to be Covered Debt, the
Corporation will 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; (d) if, and only if, the Corporation ceases to be a reporting company
under the Securities Exchange Act, the Corporation will post on its website the information
otherwise required to be included in Securities Exchange Act filings pursuant to clauses (b) and
(c) above; and (e) promptly upon request by any Holder of Covered Debt, the Corporation will
provide such Holder with an executed copy of this Replacement Capital Covenant.
SECTION 4. Term. (a) The covenants of the Corporation pursuant to this Replacement Capital
Covenant shall remain in full force and effect until the earlier date (the “Termination Date”) to
occur of (1) the date, if any, on which the Holders of at least 51% by principal amount of the then
effective Covered Debt consent or agree in writing to the elimination of such covenants as
covenants in favor of such Holders and (2) the date on which neither the Corporation nor U.S. Bank
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 with respect to such Holders,
or otherwise.
(b) For purposes of Section 4(a), the Holders whose consent or agreement is required to
terminate the covenants in 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 to cause the covenants in Section 2 to be
of no further force and effect.
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 without regard to choice of law
principles.
(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 or sells Covered Debt shall retain its
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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) 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.
(d) 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 post on its
website as the address for notices under this Replacement Capital Covenant:
U.S. Bancorp
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasury Department
Facsimile No: (000) 000-0000
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasury Department
Facsimile No: (000) 000-0000
{remainder of page left intentionally blank; signature page follows}
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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.
| U.S. Bancorp |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name Xxxxxxx X. Xxxxxx | ||||
| Title: | Senior Vice President | |||
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SCHEDULE I
DEFINITIONS
“Alternative Payment Mechanism” means, with respect to any securities or combination of
securities referred to in the definition of Replacement Capital Securities, that such securities or
related transaction agreements include a provision to the effect that, if the Corporation has
exhausted its rights to defer Distributions at its option pursuant to an Optional Deferral
Provision or any Mandatory Trigger Provision has become applicable, the Corporation may or shall,
as applicable, unless a Market Disruption Event has occurred and is continuing, (i) issue and sell
shares of its common stock and/or Qualifying Non-Cumulative Preferred Stock in amounts such that
the net proceeds of such sale shall equal or exceed such Distributions and (ii) apply the net
proceeds of such sale to pay Distributions to be paid in full.
“Applicable Percentage” means (i) with respect to proceeds of Common Stock, 133.33%, and with
respect to proceeds of Replacement Capital Securities, 100%.
“Business Day” means each day other than (i) a Saturday or Sunday or (ii) a day on which
banking institutions in the City of New York are authorized or obligated by law, regulation or
executive order to close.
“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 (i) at the date of this Replacement Capital Covenant and continuing to
but not including the first Redesignation Date, the Initial Covered Debt and (ii) 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 U.S. Bank 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) the most junior subordinated debt of the Corporation (or
debt that is pari passu with the most junior subordinated debt of the Corporation), interest on
which may be deferred for five years or more and, commencing with the date two years after the
beginning of an interest deferral period, will be paid pursuant to an Alternative Payment
Mechanism, 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
within five years from the date of issuance of the security or earlier in the event of an early
settlement event based on (a) the capital ratios of the Corporation, (b) the capital ratios of
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the Corporation as anticipated by the Federal Reserve, or (c) the dissolution of the issuer of
such Debt Exchangeable for Equity, (iii) provides for the proceeds raised in the remarketing to be
used to purchase common stock or Qualifying Non-Cumulative Preferred Stock of the Corporation, (iv)
includes an Explicit Replacement Capital Covenant, provided that such Explicit Replacement Capital
Covenant will not include Debt Exchangeable for Equity in the definition of “replacement capital
securities,” and (v) after the issuance of such common stock or preferred stock, provides the
holder of the security with a beneficial interest in such common stock or 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 (i) 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, (ii) is then assigned a rating by at least one NRSRO
(provided that this clause 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 (i), (iii) and (iv) that is then assigned a rating by at least one NRSRO), (iii) has an
outstanding principal amount of not less than $100,000,000, and (iv) 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 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 (i) 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, (ii) is then assigned
a rating by at least one NRSRO (provided that this clause (ii) 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 requirements in clauses (i), (iii) and (iv) that is then assigned a
rating by at least one NRSRO), (iii) has an outstanding principal amount of not
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less than $100,000,000, and (iv) 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 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.
“Explicit Replacement Covenant” means, as to any security or combination of securities, that
the Corporation has made a covenant, substantially similar to the Replacement Capital Covenant, to
the effect that the Corporation will redeem or repurchase such securities only if and to the extent
that the total redemption or repurchase price is equal to or less than the sum of (i) 133.33% of
the aggregate net cash proceeds received by the Corporation or its Subsidiaries during the 180 days
prior to the applicable redemption or repurchase date from the issuance and sale of Common Stock
plus (ii) 100% of the aggregate net cash proceeds received by the Corporation or its Subsidiaries
during the 180 days prior to the applicable redemption or repurchase date from the issuance and
sale of Replacement Capital Securities as defined herein other than Common Stock, but as applied to
such securities instead of to the Shares (as applicable), and that the Corporation has reasonably
determined, after consultation with counsel, that such covenant is binding on the Corporation for
the benefit of one or more series of the Corporation’s or U.S. Bank’s long-term indebtedness for
money borrowed.
“Federal Reserve” means the Board of Governors of the Federal Reserve System and the Federal
Reserve Bank of Minneapolis or any other Federal Reserve Bank that has regulatory authority over
the Corporation.
“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.
“Initial Covered Debt” means 5.875% junior subordinated debentures due 2035, underlying the
5.875% trust preferred securities of USB Capital VII (CUSIP No. 000000000).
Mandatorily Convertible Preferred Stock” means cumulative or non-cumulative preferred stock of
the Corporation that (i) has no maturity, (ii) has no prepayment obligation on the part of the
Corporation, whether at the election of the holders or otherwise, and (iii) includes a requirement
that such preferred stock converts into Common Stock within five years from the date of issuance.
“Mandatory Trigger Provision” means, as to any security or combination of securities, a
provision in the terms thereof or of the related transaction agreements that requires whichever of
the Corporation or a Subsidiary of the Corporation that issued such security or combination of
securities to defer or suspend, as applicable, in whole or in part payment of Distributions on such
securities, except for payments made pursuant to an Alternative Payment Mechanism, if and for so
long as the Corporation fails to satisfy one or more financial tests set forth in the terms of such
securities or related transaction agreements, without any remedy other than Permitted Remedies
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arising 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
(whether or not consecutive) 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) trading in securities generally on the New York Stock Exchange or any other
national securities exchange or over-the-counter market on which the Corporation’s common
stock or preferred stock is then listed or traded shall have been suspended or its
settlement generally shall have been materially disrupted;
(b) the Corporation would be required to obtain the consent or approval of a regulatory
body (including, without limitation, any securities exchange) or governmental authority to
issue shares of the Corporation’s common stock or Qualifying Non-Cumulative Preferred Stock
and the Corporation fails to obtain that consent or approval notwithstanding the
Corporation’s commercially reasonable efforts to obtain that consent or approval (including,
without limitation, the Corporation failing to obtain the approval of the Federal Reserve,
if such approval is required by the Federal Reserve, after having notified the Federal
Reserve Board and sought such approval in accordance with the terms of the indenture for the
Replacement Capital Securities); or
(c) an event occurs and is continuing as a result of which the offering document for
the offer and sale of the Corporation’s common stock or perpetual non-cumulative preferred
stock would, in the Corporation’s reasonable judgment, contain an untrue statement of a
material fact or omit to state a material fact required to be stated in that offering
document or necessary to make the statements in that offering document not misleading and
either (a) the disclosure of that event at the time the event occurs, in the Corporation’s
reasonable judgment, would have a material adverse effect on the Corporation’s business or
(b) the disclosure relates to a previously undisclosed proposed or pending material business
transaction, the disclosure of which would impede the Corporation’s ability to consummate
that transaction, provided that one or more events described in this subsection (c) shall
not constitute a Market Disruption Event with respect to more than one interest payment
date.
“Non-Cumulative” means, as to any security, that the terms of such security provide for
Distributions that are non-cumulative and may be skipped by the issuer for any number of
Distribution Periods without any remedy arising 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, other than Permitted Remedies, either for the life of such securities
or for such period(s) as may be set forth in the terms of such securities or related transaction
agreements.
“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 security or combination of securities, a
provision in the terms thereof or of the related transaction agreements that permits the issuer, in
its sole discretion, to defer in whole or in part payment of Distributions on such securities for
one or more Distribution Periods (whether or not consecutive) that together total at least ten
years without any remedy other than Permitted Remedies arising 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; provided that, if such securities also include a
Mandatory Trigger Provision, such ten years shall be calculated after giving effect to all such
deferral pursuant to both the Mandatory Trigger Provision and the Optional Deferral Provision.
“Permitted Remedies” means, as to any security or combination of securities, any one or more
of (i) rights in favor of the holders thereof permitting such holders to elect one or more
directors of the Corporation or a Subsidiary of the Corporation (including any such rights required
by the listing requirements of any stock or securities exchange on which such securities may be
listed or traded), (ii) prohibitions on the Corporation or a Subsidiary of the Corporation paying
Distributions on or repurchasing Common Stock or other securities that rank junior as to
Distributions to such securities for so long as Distributions on such securities, including
deferred distributions, have not been paid in full or to such lesser extent as may be specified in
the terms of such securities, and (iii) provisions obliging the Corporation to cause such unpaid
Distributions to be paid in full pursuant to an Alternative Payment Mechanism.
“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.
“Qualifying Non-Cumulative Preferred Stock” means preferred stock of the Corporation that (i)
is Non-Cumulative, (ii) ranks pari passu with or junior to the Shares and (iii) either by its terms
or when taken together with any related transaction agreements:
(A) (1) is perpetual or has a mandatory redemption or maturity date that is not less
than 60 years after the date of initial issuance of such securities and (2) has either an
Explicit Replacement Covenant or a Mandatory Trigger Provision, or
(B) (1) has a mandatory redemption or maturity date that is not less than 40 years
after the date of initial issuance of such securities, (2) has an Explicit Replacement
Covenant and (3) includes a Mandatory Trigger Provision.
“Redesignation Date” means, as to the then effective Covered Debt, the earliest of (i) the
date that is two years prior to the final maturity date of such Covered Debt, (ii) 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 (iii) if the then
outstanding 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.
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“Replacement Capital Covenant” has the meaning specified in the introduction to this
instrument.
“Replacement Capital Securities” means Common Stock, Mandatorily Convertible Preferred Stock,
Debt Exchangeable for Equity and other securities or combinations of securities, whether in form of
debt or equity of the Corporation or of a Subsidiary of the Corporation, that are of a type that
qualifies as “tier 1 capital” for bank holding companies under the risk-based capital guidelines of
the Federal Reserve applicable to bank holding companies, as amended from time to time and
including any successor capital regulations applicable to bank holding companies, and that, as
reasonably determined in good faith by the Corporation’s Board of Directors:
(i) constitute Qualifying Non-Cumulative Preferred Stock; or
(ii) constitute other securities that (a) on a liquidation, dissolution or winding-up
of the Corporation, rank (or, if no Shares are then outstanding, would have ranked had
Shares then been outstanding) in their direct or indirect claims to the Corporation’s assets
either (x) pari passu with or junior to the Shares or (y) pari passu with the claims of the
Corporation’s trade creditors and junior to all of the Corporation’s indebtedness for money
borrowed, other than the Corporation’s indebtedness for money borrowed from time-to-time
outstanding that by its terms ranks pari passu with such securities on a liquidation or
dissolution of the Corporation; and (b) by their terms or when taken together with any
related transaction agreements, satisfy all the requirements under any one of the following
clauses (1) through (3):
(1) (A) are Non-Cumulative; (B) are either (x) perpetual, with no prepayment
obligation on the part of the issuer thereof, whether at the election of the holders
or otherwise, or (y) have a mandatory redemption or maturity date that is not less
than 60 years after the date of initial issuance of such securities; and (C) include
either an Explicit Replacement Covenant or a Mandatory Trigger Provision;
(2) (A) are either (x) perpetual, with no prepayment obligation on the part of
the issuer thereof, whether at the election of the holders or otherwise, or (y) have
a mandatory redemption or maturity date that is not less than 60 years after the
date of initial issuance of such securities; (B) include a Mandatory Trigger
Provision and an Optional Deferral Provision; (C) include an Alternative Payment
Mechanism; (D) provide by their terms that the Corporation may pay deferred
Distributions upon mandatory deferral or after five consecutive years of optional
deferral only out of the net proceeds received by the Corporation from the sale of
Common Stock and/or Qualifying Non-Cumulative Preferred Stock during the six months
prior to payment of such Distributions; and (E) effectively provide that if the
issuer becomes subject to a bankruptcy, insolvency, receivership or similar
proceeding at a time when Distributions have been deferred and remain unpaid for one
or more Distribution Periods, deferred and unpaid Distributions as of the
commencement of such proceeding that were
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unpaid because of the operation of a Mandatory Trigger Provision shall be
forgiven and cancelled to the extent the amount of such deferred and unpaid
Distributions is in excess of 25% of the original principal or stated amount of the
related securities or combination of securities provides for distributions that are
cumulative; or
(3) (A) have a mandatory redemption or maturity date that is not less than 40
years after the date of initial issuance of such securities; (B) include an Explicit
Replacement Covenant; and (C) satisfy the requirements of clauses (2)(B) through (E)
above.
Additionally, and notwithstanding the foregoing:
(A) any securities or combinations of securities if issued to any Subsidiary of the
Corporation, without the contemporaneous issuance of any security by such Subsidiary to a
Person other than the Corporation or a Subsidiary of the Corporation, shall not qualify as
Replacement Capital Securities (it being understood and agreed for the avoidance of doubt
that persons covered by the Corporation’s dividend reinvestment plan and employee benefit
plans shall not be deemed to be affiliates of the Corporation for this purpose);
(B) the Corporation acknowledges that (i) the Federal Reserve has not approved as a
tier 1 capital instrument, in connection with the issuance of the Shares, any security or
combination of securities having a Mandatory Trigger Provision and (ii) there can be no
assurance that the Federal Reserve at any future date will approve as a tier 1 capital
instrument any security or combination of securities having a Mandatory Trigger Provision;
and
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Shares” has the meaning specified in Recital A.
“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.
“U.S. Bank” means U.S. Bank National Association.
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