REPLACEMENT CAPITAL COVENANT
EXHIBIT
4.5
Replacement
Capital Covenant,
dated
as of April 5, 2007 (this “Replacement
Capital Covenant”),
by
Security Capital Assurance Ltd, a Bermuda exempted company (together with its
successors and assigns, the “Company”),
in
favor of and for the benefit of each Covered Debtholder (as defined
below).
RECITALS
A. On
the
date hereof the Company is issuing 250,000 Series A Perpetual Non-Cumulative
Preference Shares, liquidation preference U.S. $1,000 per share (the
“Series
A Preference Shares”).
The
Company may from time to time elect to issue additional Series A Preference
Shares, and all such additional Series A Preference Shares would be deemed
to
form a single series with the 250,000 Series A Preference Shares being issued
on
the date hereof.
B.
The
Series A Preference Shares and this Replacement Capital Covenant are described
in an offering memorandum dated March 29, 2007 (the “Offering
Memorandum”),
which
has been submitted confidentially to a limited number of U.S. institutional
investors and non-U.S. investors in connection with the offering of the Series
A
Preference Shares.
C.
The
Company 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 Company be estopped from disregarding the covenants
in
this Replacement Capital Covenant, in each case to the fullest extent permitted
by applicable law.
D.
The
Company acknowledges that reliance by each Covered Debtholder upon the covenants
in this Replacement Capital Covenant is reasonable and foreseeable by the
Company and that, were the Company 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
Company 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 or Purchase of Series A Preference Shares.
The
Company hereby promises and covenants to and for the benefit of each Covered
Debtholder that, on or before the RCC Termination Date, neither the Company
nor
any of its Subsidiaries shall redeem or purchase all or any part of the Series
A
Preference Shares, except to the extent that (A) the applicable redemption
or
purchase price (exclusive of declared and unpaid dividends thereon) does not
exceed the sum of the following amounts:
| (i) |
the
Applicable Percentage of (a) the aggregate amount of net cash proceeds
received by the Company and its Subsidiaries from the sale of Common
Shares and Qualifying Warrants to Persons other than the Company
and its
Subsidiaries and
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(b)
the Market Value of any Common Shares that the Company and its
Subsidiaries have issued to persons other than the Company and
its
Subsidiaries in connection with the conversion of any convertible
or
exchangeable securities, other than securities for which the Company
or
any of its Subsidiaries has received equity credit from any NRSRO
(as
defined below), in each case since the most recent Measurement
Date
(without double counting proceeds received in any prior Measurement
Period); plus
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| (ii) |
100%
of the aggregate amount of net cash proceeds received by the Company
and
its Subsidiaries since the most recent Measurement Date (without
double
counting proceeds received in any prior Measurement Period) from
the sale
of Mandatorily Convertible Preferred Stock, Debt Exchangeable for
Preferred Equity and Debt Exchangeable for Common Equity to Persons
other
than the Company and its Subsidiaries;
plus
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| (iii) |
100%
of the aggregate amount of net cash proceeds received by the Company
and
its Subsidiaries since the most recent Measurement Date (without
double
counting proceeds received in any prior Measurement Period) from
the sale
of any other Qualifying Capital Securities to Persons other than
the
Company and its Subsidiaries,
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or
(B)
the Series A Preference Shares are exchanged for (i) at least an equal aggregate
principal amount or liquidation preference of Qualifying Capital Securities
(including Preference Shares with terms substantially identical to the Series
A
Preference Shares pursuant to the registered exchange offer described in the
Offering Memorandum) or (ii) consideration that includes Common Shares with
a
Market Value equal to at least 75% of the aggregate liquidation preference
of
the Series A Preference Shares that are exchanged.
SECTION
3. Covered
Debt.
(a) The
Company represents and warrants that the Initial Covered Debt is Eligible
Debt.
(b) The
Company shall follow the procedures set forth in Section 3(c) for redesignating
the Covered Debt in the event that the Covered Debt then in effect is Eligible
Senior Debt and the Company subsequently issues Eligible Subordinated Debt,
in
which case the Company shall redesignate such newly-issued Eligible Subordinated
Debt as the Covered Debt. In addition, the Company shall follow the procedures
set forth in Section 3(c) for redesignating the Covered Debt on (i) the date
that is two years prior to the final maturity date of the Covered Debt then
in
effect or (ii) the applicable redemption or purchase date in the event the
Company elects to redeem, or the Company or a Subsidiary of the Company elects
to purchase, such Covered Debt in whole or in part with the consequence that
after giving effect to such redemption or purchase, the outstanding principal
amount of such Covered Debt is less than $100,000,000.
(c) During
the 30-calendar-day period immediately preceding any Redesignation Date with
respect to the Covered Debt then in effect, the Company 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:
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| (i) |
the
Company shall identify each series of its then outstanding long-term
indebtedness for money borrowed that is Eligible
Debt;
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| (ii) |
if
only one series of the Company’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;
and
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| (iii) |
if
the Company has more than one outstanding series of long-term indebtedness
for money borrowed that is Eligible Debt, the series that has the
latest
occurring final maturity date shall become the Covered Debt on the
related
Redesignation Date.
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The
series of outstanding long-term indebtedness for money borrowed that is
determined to be Covered Debt pursuant to clause (c)(ii) or (c)(iii) 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(c).
In
connection with the identification of any new series of Covered Debt, the
Company shall give the notices and/or make the filings or website postings
provided for in Section 3(d) within the time frame provided for in such
section.
(d) Notice.
In
order to give effect to the intent of the Company described in Recital C, the
Company covenants that:
| (i) |
simultaneously
with the execution of this Replacement Capital Covenant or as soon
as
practicable after the date hereof, it shall give notice to the Holder(s)
of the Initial Covered Debt, in the manner provided in the indenture,
fiscal agency agreement or other instrument relating to the Initial
Covered Debt, of this Replacement Capital Covenant and the rights
granted
to such Holder(s) hereunder and (A) if the Initial Covered Debt
includes securities issued in the United States, file a copy of this
Replacement Capital Covenant with the U.S. Securities and Exchange
Commission (the “Commission”)
as an exhibit to a Current Report on Form 8-K under the Exchange
Act or
(B) if the Initial Covered Debt was predominately offered outside
of the
United States, (I) post a copy of this Replacement Capital Covenant
on the
Company’s website (currently: xxx.xxxxx.xxx), (II) as promptly as
practicable, cause a notice of the execution of this Replacement
Capital
Covenant to be posted on the Bloomberg screen for the Initial Covered
Debt
or any successor Bloomberg screen or similar vendor’s screen the Company
reasonably believes is appropriate (each an “Investor
Screen”)
and (III) cause a hyperlink to the execution copy of this Replacement
Capital Covenant to be included on the Investor Screen for the Initial
Covered Debt;
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| (ii) |
it
shall, if a series of the Company’s long-term indebtedness for money
borrowed that includes securities issued in the United States (1)
becomes
Covered Debt or (2) ceases to be Covered Debt, (A) give notice of
such
occurrence within 30
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calendar
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 (B) if and so long as it is a reporting company under
the
Exchange Act, report such change by filing a Current Report on
Form 8-K
under the Exchange Act containing a description of the covenant
set forth
in Section 2 and identifying the series of long-term indebtedness
for
borrowed money that is Covered Debt as of the date of such filing
and
including or incorporating by reference a copy of this Replacement
Capital
Covenant as an exhibit;
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| (iii) |
it
shall, if a series of the Company’s long-term indebtedness for money
borrowed that was predominately offered outside of the United States
(1)
becomes Covered Debt or (2) ceases to be Covered Debt, (A) give
notice of such occurrence within 30 calendar 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, (C) as
promptly
as practicable, post a notice of such change on the Company’s website, (D)
as promptly as practicable, cause a notice of such occurrence to
be posted
on the Investor Screen for the then-effective series of Covered Debt
and
(E) cause a hyperlink to the execution copy of this Replacement Capital
Covenant to be included on the Investor Screen for such Covered
Debt;
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| (iv) |
to
the extent that the Company has posted information pursuant to clause
(i)(B) or clause (iii), at least once annually, it shall verify that
the
postings required in such clauses are functional and accessible and,
if
necessary, cause such functionality and accessibility to be
restored;
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| (v) |
if
and so long as it is a reporting company under the Exchange Act,
the
Company shall include in each annual report filed with the Commission
on
Form 10-K under the 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;
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| (vi) |
if
and so long as it is not a reporting company under the Exchange Act,
the
Company shall (A) post on its website the information required by
clauses
(d)(ii) and (d)(v) and (B) cause a notice of any occurrence described
under clauses (d)(i)(A) and (d)(ii)(B) to be posted on the Investor
Screen
for the then-effective series of Covered Debt;
and
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| (vii) |
promptly
upon request by any Holder of Covered Debt, provide such Holder with
an
executed copy of this Replacement Capital
Covenant.
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SECTION
4. Termination,
Amendment and Waiver.
(a) The
obligations of the Company pursuant to this Replacement Capital Covenant shall
remain in full force and effect until the earliest date (the “Termination
Date”)
to
occur of:
-4-
| (i) |
September
30, 2047, subject to extension as provided in Section
4(b)(iii);
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| (ii) |
the
date, if any, on which the Holder(s) of a majority by principal amount
of
the then-effective series of Covered Debt consent or agree in writing
to
the termination of this Replacement Capital Covenant and the obligations
of the Company hereunder;
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| (iii) |
the
date on which the Company does not have any series of outstanding
Eligible
Subordinated Debt or Eligible Senior Debt (in each case without giving
effect to the rating requirement in clause (b) of the definition
of each
such term); and
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| (iv) |
the
date on which the Company does not have any outstanding Series A
Preference Shares.
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From
and
after the Termination Date, the obligations of the Company 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 Company with the consent of the Holder(s)
of
a majority by principal amount of the then-effective series of Covered Debt,
provided
that
this
Replacement Capital Covenant may be amended or supplemented from time to time
by
a written instrument signed only by the Company (and without the consent of
the
Holder(s) of the then-effective series of Covered Debt) if:
| (i) |
the
effect of such amendment or supplement is solely to impose additional
restrictions on the types of securities qualifying as Replacement
Capital
Securities, and an officer of the Company 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;
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| (ii) |
the
effect of such amendment or supplement is solely to eliminate Common
Shares, Mandatorily Convertible Preference Shares or Debt Exchangeable
for
Common Equity as a security or securities covered by Sections 2(i)
and
(ii), provided
that the Company has been advised in writing by a nationally recognized
independent accounting firm that there is more than an insubstantial
risk
that the failure to do so would result in a reduction in the Company’s
earnings per share as calculated for financial reporting
purposes;
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| (iii) |
the
effect of such amendment or supplement is solely to impose additional
restrictions on the ability of the Company to redeem or purchase
Series A
Preference Shares in any circumstance, including extending the termination
date specified in Section 4(a)(i), the dates specified in the definition
of Applicable Percentage and the dates specified in the definition
of
Qualifying Capital Securities; or
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| (iv) |
such
amendment or supplement is not adverse to the Holder(s) of the
then-effective series of Covered Debt and an officer of the Company
has
delivered to
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the
Holder(s) 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 Holder(s) of the then-effective series of Covered
Debt.
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(c) For
purposes of Sections 4(a) and 4(b), the Holder(s) whose consent or agreement
is
required to terminate, amend or supplement the obligations of the Company under
this Replacement Capital Covenant shall be the Holder(s) of the then-effective
series of Covered Debt as of a record date established by the Company that
is
not more than 30 calendar days prior to the date on which the Company proposes
that such termination, amendment or supplement becomes effective.
SECTION
5. Miscellaneous.
(a) This
Replacement Capital Covenant shall be governed by, and construed in accordance
with, the laws of the State of New York.
(b) This
Replacement Capital Covenant shall be binding upon the Company 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 Company
that any Person who is a Covered Debtholder at the time such Person initiates
a
claim or proceeding to enforce such Person’s rights under this Replacement
Capital Covenant after the Company 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 until the
termination of such claim or proceeding). Except as specifically provided
herein, this Replacement Capital Covenant shall have no other beneficiaries,
and
no Persons other than a Holder of Covered Debt is entitled to rely on this
Replacement Capital Covenant.
(c) All
demands, notices, requests and other communications to the Company 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 Company, on the day so delivered
(or,
if such day is not a Business Day, the next succeeding Business
Day);
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| (ii) |
if
delivered by registered post or certified mail, return receipt requested,
or sent to the Company by a national or international courier service,
on
the date of receipt by the Company (or, if such date of receipt is
not a
Business Day, the next succeeding Business Day);
or
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| (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,
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-6-
and
in
each case to the Company at the address set forth below, or at such other
address as the Company may thereafter notify to Covered Debtholders or post
on
its website as the address for notices under this Replacement Capital
Covenant:
0
Xxxxxxxxxx Xxxx
Xxxxxxxx
XX 00
Xxxxxxx
Xxxxxxxxx:
Facsimile
No:
IN
WITNESS WHEREOF,
the
Company has caused this Replacement Capital Covenant to be executed by its
duly
authorized officer, as of the day and year first above written.
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By:
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/s/
Xxxxxx X. Xxxxxx
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Name:
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Xxxxxx
X. Xxxxxx
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Title:
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Senior
Vice President and Chief Risk Officer
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-7-
Schedule
1
DEFINITIONS
“Alternative
Payment Mechanism”
means,
with respect to any securities or combination of securities (together in this
definition, “such securities”), provisions in the related transaction documents
requiring the Company 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 securities and apply the
proceeds to pay unpaid Distributions on such securities, commencing on the
earlier of (x) the first Distribution Date after commencement of a deferral
period on which the Company pays current Distributions on such securities and
(y) the fifth anniversary of the commencement of such deferral period, and
that:
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(a)
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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 Company or any of its
Subsidiaries as consideration for such securities) that the Company
has
received during the 180 days prior to the related Distribution Date
from
the issuance of APM Qualifying Securities, up to the Preferred Cap
(as
defined in paragraph (f) below) in the case of APM Qualifying Securities
that are Qualifying Non-Cumulative Perpetual Preferred Stock or
Mandatorily Convertible Preferred
Stock;
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(b)
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permit
the Company to pay current Distributions on any Distribution Date
out of
any source of funds but prohibit the Company from paying deferred
Distributions out of any source of funds other than eligible
proceeds;
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(c)
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if
deferral of Distributions continues for more than one year (or such
shorter period as provided for in the terms of such securities),
require
the Company not to repay, redeem or purchase any APM Qualifying Securities
of the Company or any securities of the Company that on a bankruptcy
or
liquidation of the Company rank pari
passu
or
junior to such APM Qualifying Securities until at least one year
after all
deferred Distributions have been
paid;
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(d)
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may
include a provision that, notwithstanding the Common Cap (as defined
in
paragraph (f) below) and the Preferred Cap, for purposes of paying
deferred Distributions, limits the ability of the Company to sell
Common
Shares, Qualifying Warrants, or Mandatorily Convertible Preferred
Stock
above an aggregate cap specified in the transaction documents (a
“Share
Cap”),
subject to the Company’s agreement to use commercially reasonable efforts
to increase the Share Cap amount (i) only to the extent that it can
do so
and simultaneously satisfy its future fixed or contingent obligations
under other securities and derivative instruments that provide for
settlement or payment in Common Shares or (ii) if the Company cannot
increase the Share Cap amount as contemplated in the preceding clause,
by
requesting its Board of Directors to adopt a resolution for
shareholder
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vote
at the next occurring annual shareholders meeting to increase the
number
of shares of the Company’s authorized Common Shares for purposes of
satisfying the Company’s obligations to pay deferred
Distributions;
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(e)
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permit
the Company, at its option, to provide that if the Company is involved
in
a merger, consolidation, amalgamation or conveyance, transfer or
lease of
assets substantially as an entirety to any other person (a “business
combination”)
where immediately after the consummation of the business combination
more
than 50% of the voting stock of the surviving entity of the business
combination, or the person to whom all or substantially all of the
Company’s assets are conveyed, transferred or leased, is owned by the
shareholders of the other party to the business combination, then
clauses
(a), (b) and (c) above will not apply to any deferral period that
is
terminated on the next interest payment date following the date of
consummation of the business combination;
and
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(f)
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limit
the obligation of the Company to issue (or use commercially reasonable
efforts to issue) APM Qualifying Securities up
to:
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(i)
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in
the case of APM Qualifying Securities that are Common Shares
or Qualifying
Warrants, an aggregate amount of all Common Shares issued or
issuable upon
the exercise of such Qualifying Warrants pursuant to the Alternative
Payment Mechanism with respect to deferred Distributions during
the first
five years of any deferral period equal to 2% of the total number
of
issued and outstanding shares of the Common Shares of the Company
as of
the date of the Company’s most recently publicly available consolidated
financial statements as of the date of such issuance (the “Common
Cap”),
provided
(and it being understood) that the Common Cap shall cease to
apply to such
deferral period by a date (as specified in the related transaction
documents) which shall be not later than the fifth anniversary
of the
commencement of such deferral period;
and
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(ii)
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in
the case of APM Qualifying Securities that are Qualifying
Non-Cumulative
Perpetual Preferred Stock or Mandatorily Convertible Preferred
Stock, an
amount from the issuance thereof pursuant to the related
Alternative
Payment Mechanism (including at any point in time from all
prior issuances
of Qualifying Non-Cumulative Perpetual Preferred Stock and
still-outstanding Mandatorily Convertible Preferred Stock
pursuant to such
Alternative Payment Mechanism) equal to 25% of the initial
principal or
stated amount of the securities that are the subject of the
related
Alternative Payment Mechanism (the “Preferred
Cap”);
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provided
(and it
being understood) that:
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(a)
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the
Company 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)
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if,
due to a Market Disruption Event or otherwise, the Company
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 Company 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, the Preferred Cap and the Share
Cap (if any),
as applicable; and if the Company 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 Company from those sales
and available for
payment of deferred Distributions on such securities shall
be applied to
such securities on a pro rata basis in proportion to the total amounts
that are due on such securities.
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provided
(and it
being understood) that:
“APM
Qualifying Securities”
means:
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(a)
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Common
Shares;
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(b)
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Qualifying
Warrants;
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(c)
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Qualifying
Non-Cumulative Perpetual Preferred Stock;
or
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(d)
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Mandatorily
Convertible Preferred Stock.
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“Applicable
Percentage”
means:
1 divided by (i) 75% with respect to any repayment, redemption or purchase
prior
to September 30, 2017, (ii) 50% with respect to any repayment, redemption or
purchase on or after September 30, 2017 and prior to September 30, 2037 and
(iii) 25% with respect to any repayment, redemption or purchase on or after
September 30, 2037 (for example, prior to September 30, 2017, the Applicable
Percentage in the case of such securities will be 133.33%).
“Bankruptcy
Claim Limitation Provision”
means,
with respect to any Qualifying Capital Securities that have a Mandatory Trigger
Provision or a No Payment 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 (other than non-cumulative
perpetual Preference Shares) to Distributions that accumulate during (A) 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, or (B) any deferral
period, in the case of securities that have a No Payment Provision,
to:
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(a)
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in
the case of Qualifying Capital Securities with respect to which the
APM
Qualifying Securities do not include Qualifying Non-Cumulative Perpetual
Preferred Stock or Mandatorily Convertible Preferred Stock, 25% of
the
stated or principal amount of such Qualifying Capital Securities
then
outstanding; and
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(b)
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in
the case of any other Qualified Capital Securities, an amount not
in
excess of the sum of (x) two years of accumulated and unpaid Distributions
(including compound amounts thereon) 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 Non-Cumulative Perpetual Preferred
Stock that the issuer has applied to pay such Distributions pursuant
to
the Mandatory Trigger Provision or No Payment 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 had the claim for such
excess
ranked pari passu with the interests of the holders, if any, of Qualifying
Non-Cumulative Perpetual Preferred Stock.
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“Business
Day”
means
each day other than (a) a Saturday or Sunday or (b) a day on which banking
institutions in The City of New York or Bermuda are authorized or required
by
law or executive order to remain closed.
“Commission”
means
the United States Securities and Exchange Commission.
“Common
Shares”
means
the Common Shares of the Company (including treasury shares), Common Shares
issued pursuant to any dividend reinvestment plan or employee benefit plan
of
the Company, a security ranking
upon the liquidation, dissolution or winding up of the Company junior to the
Qualifying Non-Cumulative Perpetual Preferred Stock and pari
passu with
the
Common Shares of the Company, that
tracks the performance of, or relates to the results of, a business, unit or
division of the Company, and any securities issued in exchange therefor in
connection with a merger, consolidation, binding share exchange, business
combination, recapitalization or other similar event.
“Company”
has
the
meaning specified in the introduction to this instrument.
“Covered
Debt”
means
(a) at the date of this Replacement Capital Covenant and continuing to but
not
including the first Redesignation Date, the Initial Covered Debt and (b)
thereafter, commencing with each Redesignation Date and continuing to but not
including the next succeeding Redesignation Date, the Eligible Debt identified
pursuant to Section 3(b) as the Covered Debt for such period.
“Covered
Debtholder”
means
each Person (whether a Holder or a beneficial owner holding through a
participant in a clearing agency) that buys, holds or sells long-term
indebtedness for money borrowed of the Company 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:
|
(a)
|
gives
the holder a beneficial interest in (i) debt securities of the
Company
that
are not redeemable prior to settlement of the stock purchase contract
referred to in subclause (ii)
hereof
and (ii) an interest in a stock purchase contract for a Common Share
of
|
-4-
the
Company that will be settled in three years or less, with the number of Common
Shares purchasable pursuant to such stock purchase contract to be within
a range
established at the time of issuance of such debt securities;
|
(b)
|
provides
that the investors directly or indirectly grant to the Company
a security
interest in such debt securities and their proceeds (including
any
substitute collateral permitted under the transaction documents)
to secure
the investors’ direct or indirect obligation to purchase Common Shares of
the Company pursuant to such stock purchase
contracts;
|
|
(c)
|
includes
a remarketing feature pursuant to which the debt securities of
the Company
are remarketed to new investors commencing not later than 30 days
prior to
the settlement date of the purchase
contract;
|
|
(d)
|
provides
for the proceeds raised in the remarketing to be used to purchase
Common
Shares of the Company under the stock purchase contracts and, if
there has
not been a successful remarketing by the settlement date of the
purchase
contract, provides that the stock purchase contracts will be settled
by
the Company foreclosing on its debt securities or other collateral
directly or indirectly pledged by investors 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:
|
(a)
|
gives
the holder a beneficial interest in (i) subordinated debt securities
of
the Company that include a provision requiring the Company to issue
(or
use commercially reasonable efforts to issue) one or more types
of APM
Qualifying Securities raising proceeds at least equal to the deferred
Distributions on such subordinated debt securities commencing not
later
than the second anniversary of the commencement of such deferral
period
and that are the most junior subordinated debt of the Company (or
rank
pari
passu with
the Most Junior Subordinated Debt Securities of the Company) (in
this
definition, “subordinated debt” of the Company) and (ii) an interest in a
stock purchase contract for a share of non-cumulative perpetual
preferred
stock of the Company that ranks pari
passu with
or junior to all other Preference Shares of the Company (in this
definition, “preferred stock” of the
Company);
|
|
(b)
|
provides
that the investors directly or indirectly grant to the Company
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 preferred stock of the Company pursuant to such stock
purchase
contracts;
|
|
(c)
|
includes
a remarketing feature pursuant to which the subordinated debt of
the
Company 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 securities or earlier in the event of an early settlement event
based
on: (i) the dissolution of the
|
-5-
issuer
of
such debt exchangeable for preferred equity or (ii) one or more financial
tests
set forth in the terms of the instrument governing such debt exchangeable
for
preferred equity;
|
(d)
|
provides
for the proceeds raised in the remarketing to be used to purchase
Preference Shares of the Company 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
Company
foreclosing on its subordinated debt securities or other collateral
directly or indirectly pledged by investors in the Debt Exchangeable
for
Preferred Equity;
|
|
(e)
|
includes
a replacement capital covenant substantially similar to this Replacement
Capital Covenant or an Other Qualifying Capital Replacement Covenant
that
will apply to such securities and to the preferred stock of the
Company,
and will not include Debt Exchangeable for Preferred Equity or
Debt
Exchangeable for Common Equity as a Replacement Capital Security;
and
|
|
(f)
|
if
applicable, after the issuance of such preferred stock of the Company,
provides the holders of such securities with a beneficial interest
in such
preferred stock of the Company.
|
“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 the later of the issue date and a Distribution Date for such
securities to but excluding 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 Company.
“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 indebtedness for money
borrowed, (b) is then assigned a rating by at least one NRSRO (provided
that
this clause (b) shall apply on a Redesignation Date only if on such date
the
issuer has outstanding senior long-term indebtedness for money borrowed that
satisfies the requirements of clauses (a), (c) and (d) that is then assigned
a
rating by at least one NRSRO), (c) has an outstanding principal amount of
not
less than $100,000,000, and (d) was issued through or with the assistance
of a
commercial or investment banking firm or firms acting as underwriters, initial
purchasers or placement or distribution agents. For purposes of this definition
as applied to securities with a CUSIP number, each issuance of long-term
indebtedness for
-6-
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 indebtedness for money
borrowed that ranks most senior, (b) is then assigned a rating by at least
one
NRSRO (provided
that
this clause (b) shall apply on a Redesignation Date only if on such date
the
issuer has outstanding subordinated long-term indebtedness for money borrowed
that satisfies the requirements in clauses (a), (c) and (d) that is then
assigned a rating by at least one NRSRO), (c) has an outstanding principal
amount of not less than $100,000,000, and (d) was issued through or with
the
assistance of a commercial or investment banking firm or firms acting as
underwriters, initial purchasers or placement or distribution agents. For
purposes of this definition as applied to securities with a CUSIP number,
each
issuance of long-term indebtedness for money borrowed that has (or, if such
indebtedness is held by a trust or other intermediate entity established
directly or indirectly by the issuer, the securities of such intermediate
entity
that have) a separate CUSIP number shall be deemed to be a series of the
issuer’s long-term indebtedness for money borrowed that is separate from each
other series of such indebtedness.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Holder”
means,
as to the Covered Debt then in effect, each holder of such Covered Debt as
reflected on the register maintained by or on behalf of the Company with
respect
to such Covered Debt.
“Initial
Covered Debt”
means
the first issue of Eligible Debt that the Company so designates as Initial
Covered Debt.
“Intent-Based
Replacement Disclosure”
means,
as to any security or combination of securities (together in this definition,
“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
Exchange Act prior to or contemporaneously with the issuance of such securities,
that the issuer, to the extent the securities provide the issuer with equity
credit, will repay, redeem or purchase such securities only with replacement
capital securities that have terms and provisions at the time of repayment,
redemption or purchase that are as or more equity-like than the securities
then
being repaid, redeemed or purchased, or the proceeds of such replacement
capital
securities raised within 180 days prior to the applicable repayment, redemption
or purchase date.
“Mandatorily
Convertible Preferred Stock”
means
Preference Shares 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 such Preference Shares convert into Common Shares within
three
years from the date of its issuance at a conversion ratio within a range
established at the time of issuance of such Preference Shares.
-7-
“Mandatory
Trigger Provision”
means,
as to any security or combination of securities (together in this definition,
“securities”), provisions in the terms thereof or of the related transaction
agreements that (a) require or, at its option in the case of non-cumulative
perpetual Preference Shares, permit 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 no more than two years of a failure
to
satisfy one or more financial tests set forth in the terms of such securities
or
related transaction agreements, in an 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 in
either case require the application of the net proceeds of such sale to pay
such
unpaid Distributions, provided
that:
(1) if the APM Qualifying Securities issued and sold are Qualifying
Non-Cumulative Perpetual Preferred Stock or Mandatorily Convertible Preferred
Stock, the amount of the net proceeds of Qualifying Non-Cumulative Perpetual
Preferred Stock and Mandatorily Convertible Preferred Stock applied, together
with the net proceeds of all prior issuances of Qualifying Non-Cumulative
Preferred Stock and any still-outstanding Mandatorily Convertible Preferred
Stock applied during the current and all prior deferral periods, to pay such
Distributions pursuant to such provision may not exceed 25% of the initial
liquidation or principal amount of such securities and (2) if the APM Qualifying
Securities issued and sold are Common Shares or Qualifying Warrants and if
the
Mandatory Trigger provision does not require such issuance and sale within
one
year of such failure, the number of Common Shares issued or issuable upon
the
exercise of such Qualifying Warrants plus the number of Common Shares previously
issued or issuable upon the exercise of previously issued Qualifying Warrants
may not exceed 2% of the total number of issued and outstanding shares of
the
Company’s Common Shares as of the date of the Company’s most recent publicly
available consolidated financial statements as of the date of such issuance,
provided
(and it
being understood) that: (1) the Company 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 and (2) if, due
to a
Market Disruption Event or otherwise, the Company 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 Company will apply any available
eligible proceeds to pay accrued and unpaid Distributions on the applicable
Distribution Date in chronological order subject to the Share Cap (if any);
and
if the Company 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 Company from
those
sales and available for payment of deferred Distributions on such securities
shall be applied to such securities on a pro rata basis in proportion to
the
total amounts that are due on such securities, (b) prohibit the issuer from
purchasing any APM Qualifying Securities or any of the Company’s securities that
on the Company’s bankruptcy or liquidation rank pari passu or junior to such APM
qualifying securities prior to the date that is six months after the issuer
applies the net proceeds of the sales described in clause (a) to pay such
unpaid
Distributions, and (c) include a Bankruptcy Claim Limitation Provision. No
remedy other than Permitted Remedies may arise by the terms of such securities
or related transaction agreements in favor of the holders of such securities
as
a result of the issuer’s failure to pay Distributions because of the Mandatory
Trigger Provision or as a result of the issuer’s exercise of its right under an
Optional Deferral Provision until Distributions have been deferred for one
or
more Distribution Periods that total together at least ten years.
-8-
“Market
Disruption Events”
means
the occurrence or existence of any of the following events or sets of
circumstances:
|
(a)
|
trading
in securities generally, or shares of our securities specifically,
on the
New York Stock Exchange or any other national securities exchange,
or in
the over-the-counter market on which any APM Qualifying Securities
or
Qualifying Capital Securities, as the case may be, are then listed
or
traded shall have been suspended or the settlement of such trading
generally shall have been materially disrupted or minimum prices
such that
trading shall have been materially disrupted shall have been established
on any such exchange or market by the Commission, the relevant
exchange or
by any other regulatory body or governmental agency having
jurisdiction;
|
|
(b)
|
the
Company would be required to obtain the consent or approval of
its
stockholders or a regulatory body (including, without limitation,
any
securities exchange) or governmental authority to issue or sell
APM
Qualifying Securities pursuant to the alternative payment mechanism
or to
issue Qualifying Capital Securities pursuant to the Company’s repayment
obligations in respect thereof, as the case may be, and that consent
or
approval has not yet been obtained notwithstanding the Company’s
commercially reasonable efforts to obtain that consent or
approval;
|
|
(c)
|
a
banking moratorium shall have been declared by the federal or state
authorities of the United States such that market trading in the
APM
Qualifying Securities or the Qualifying Capital Securities, as
applicable,
has been disrupted or ceased; a material disruption shall have
occurred in
commercial banking or securities settlement or clearance services
in the
United States such that market trading in the APM Qualifying Securities
or
the Qualifying Capital Securities, as applicable, has been disrupted
or
ceased;
|
|
(d)
|
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 such that market trading in the APM Qualifying
Securities or the Qualifying Capital Securities, as applicable,
has been
disrupted or ceased;
|
|
(e)
|
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, or the
effect of
international conditions on the financial markets in the United
States
shall be such that trading in any of the APM Qualifying Securities
or
Qualifying Capital Securities, as the case may be, has been materially
disrupted;
|
|
(f)
|
an
event occurs and is continuing as a result of which the offering
document
for the offer and sale of APM Qualifying Securities or Qualifying
Capital
Securities, as the case may be, would, in the Company’s reasonable
judgment, contain an
|
-9-
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
such time, in the Company’s reasonable judgment, is not otherwise required by
law and would have a material adverse effect on our business or (b) the
disclosure relates to a previously undisclosed proposed or pending material
business transaction, provided
that
no
single suspension period described in this bullet shall exceed 90 consecutive
days and multiple suspension periods described in this bullet shall not exceed
an aggregate of 180 days in any 360-day period; or
|
(g)
|
the
Company reasonably believes that the offering document for the
offer and
the sale of APM Qualifying Securities or Qualifying Capital Securities,
as
the case may be, would not be in compliance with a rule or regulation
of
the Commission (for reasons other than those described in the immediately
preceding bullet) and the Company determines that it is unable
to comply
with such rule or regulation or such compliance is unduly burdensome,
provided
that
no single suspension period described in this bullet shall exceed
90
consecutive days and multiple suspension periods described in this
bullet
shall not exceed an aggregate of 180 days in any 360-day
period.
|
“Market
Value”
means,
on any date, the closing sale price per share of Common Shares (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 Shares are not then listed on the New York Stock
Exchange, as reported by the principal U.S. securities exchange on which
the
Common Shares are traded or quoted; if the Common Shares are 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
Shares on the relevant date submitted by at least three nationally recognized
independent investment banking firms selected by the Company for this
purpose.
“Measurement
Date”
means,
with respect to any redemption or purchase of the Preference Shares,
the
date that is 180 days prior to delivery of notice of such redemption or the
date
of such purchase.
“Measurement
Period”
means,
with respect to any notice date or purchase date, the period (i) beginning
on
the Measurement Date with respect to such notice date or purchase date and
(ii)
ending on such notice date or purchase date. Measurement Periods cannot run
concurrently.
“Most
Junior Subordinated Debt Securities”
mean
debt securities of the Company that rank upon a liquidation, dissolution
or
winding-up of the Company junior to all of the Company’s other long-term
indebtedness for money borrowed (other than the Company’s long-term indebtedness
for money borrowed from time to time outstanding that by its terms ranks
pari
passu with
such
securities) and pari
passu with
the
claims of the Company’s trade creditors.
-10-
“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;
|
|
(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, 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;
and
|
|
(c)
|
a
Bankruptcy Claim Limitation
Provision.
|
“Non-Cumulative”
means,
with respect to any 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. Any securities that include a No Payment Provision shall
also be deemed to be Non-Cumulative for all purposes of this Replacement
Capital
Covenant.
“NRSRO”
means
a
nationally recognized statistical rating organization within the meaning
of Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act.
“Offering
Memorandum”
has
the
meaning specified in Recital B.
“Optional
Deferral Provision”
means,
as to any securities, provisions in the terms thereof or of the related
transaction agreements to the effect of either (a) or (b) below:
|
(a)
|
(i)
the issuer of such securities may, in its sole discretion, defer
in whole
or in part payment of Distributions on such securities for one
or more
consecutive Distribution Periods of up to five years or, if a Market
Disruption Event is continuing, ten years, without any remedy other
than
Permitted Remedies and (ii) 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 or
Preferred Cap); or
|
|
(b)
|
the
issuer of such securities may, in its sole discretion, defer in
whole or
in part payment of Distributions on such securities for one or
more
consecutive Distribution Periods up to ten years, without any remedy
other
than Permitted Remedies.
|
All
Preference Shares of the Company shall be deemed to include an Optional Deferral
Provision.
“Other
Qualifying Capital Replacement Covenant”
means
a
replacement capital covenant, as identified by the Company’s Board of Directors
acting in good faith and in its reasonable discre-
-11-
tion
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 Exchange
Act
and (ii) that restricts the related issuer from redeeming or purchasing
identified securities except from the applicable percentage of the proceeds
of
specified 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.
“Permitted
Remedies”
means,
with respect to any securities, one or more of the following
remedies:
|
(a)
|
rights
in favor of the holders of such securities permitting such holders
to
elect one or more directors of the issuer (including any such rights
required by the listing requirements of any stock or securities
exchange
on which such securities may be listed or traded),
and
|
|
(b)
|
complete
or partial prohibitions preventing the issuer from paying Distributions
on
or purchasing Common Shares 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, Company, partnership, joint venture, trust, limited liability
company or Company, unincorporated organization or government or any agency
or
political subdivision thereof.
“Preference
Shares”
means
preference shares of the Company and any securities issued in exchange therefor
in connection with a merger, consolidation, binding share exchange, business
combination, recapitalization or other similar event.
“Qualifying
Capital Securities”
means
securities (other than Common Shares, Qualifying Warrants, Mandatorily
Convertible Preferred Stock, Debt Exchangeable for Preferred Equity and Debt
Exchangeable for Common Equity) that rank pari
passu with
or
junior to the Most Junior Subordinated Debt Securities upon the liquidation,
dissolution or winding up of the Company and, in the determination of the
Company’s Board of Directors reasonably construing the definitions and other
terms of this Replacement Capital Covenant, meet one of the following
criteria:
|
(a)
|
in
connection with any repayment, redemption or purchase of Series
A
Preference Shares prior to September 30,
2017:
|
|
(i)
|
securities
issued by the Company or its Subsidiaries that (A) have no maturity
or a
maturity of at least 60 years and (B) either (x) are subject
to a
replacement capital covenant substantially similar to this Replacement
Capital Covenant or an Other Qualifying Capital Replacement Covenant
and
are Non-Cumulative or (y) have a Mandatory Trigger Provision
and are
subject to Intent-Based Replacement Disclosure and have an Optional
Deferral Provision; or
|
-12-
|
(ii)
|
securities
issued by the Company or its Subsidiaries that (A) have no maturity
or a
maturity of at least 40 years, (B) are subject to a replacement
capital
covenant substantially similar to this Replacement Capital Covenant
or an
Other Qualifying Capital Replacement Covenant, (C) have an Optional
Deferral Provision and (D) have a Mandatory Trigger Provision;
or
|
|
(b)
|
in
connection with any repayment, redemption or purchase of Series
A
Preference Shares at any time on or after September 30, 2017
but prior to
September 30, 2037:
|
|
(i)
|
all
securities described under clause (a) of this
definition;
|
|
(ii)
|
securities
issued by the Company or its Subsidiaries that (A) have no maturity
or a
maturity of at least 60 years, (B) are subject to a replacement
capital
covenant substantially similar to this Replacement Capital Covenant
or an
Other Qualifying Capital Replacement Covenant and (C) have an
Optional
Deferral Provision;
|
|
(iii)
|
securities
issued by the Company or its Subsidiaries that (A) are Non-Cumulative
and
(B) (x) have no maturity or a maturity of at least 60 years and
(y) are
subject to Intent-Based Replacement
Disclosure;
|
|
(iv)
|
securities
issued by the Company or its Subsidiaries that (A) have an Optional
Deferral Provision, (B) have a Mandatory Trigger Provision and
(C) have no maturity or a maturity of at least 60
years;
|
|
(v)
|
securities
issued by the Company or its subsidiaries that (A) are Non Cumulative,
(B)
have no maturity or a maturity of at least 40 years and (C) are
subject to a replacement capital covenant substantially similar
to this
Replacement Capital Covenant or an Other Qualifying Capital Replacement
Covenant; or
|
|
(vi)
|
securities
issued by the Company or its Subsidiaries that (A) have an Optional
Deferral Provision, (B) have a Mandatory Trigger Provision and
(C) either (x) have no maturity or a maturity of at least 40 years
and Intent-Based Replacement Disclosure or (y) have no maturity
or a
maturity of at least 25 years and are subject to a replacement
capital
covenant substantially similar to this Replacement Capital Covenant
or an
Other Qualifying Capital Replacement Covenant;
or
|
|
(c)
|
in
connection with any repayment, redemption or purchase of Series
A
Preference Shares at any time on or after September 30,
2037:
|
|
(i)
|
securities
described under clause (b) of this
definition;
|
-13-
|
(ii)
|
securities
issued by the Company or its Subsidiaries that (A) (x) have no
maturity or
a maturity of at least 60 years and (y) is subject to Intent-Based
Replacement Disclosure and (B) have an Optional Deferral
Provision;
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(iii)
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securities
issued by the Company or its Subsidiaries that (A) have no maturity
or a
maturity of at least 60 years and (B) are
Non-Cumulative;
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(iv)
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securities
issued by the Company or its Subsidiaries that (A) (x) have no
maturity or
a maturity of at least 40 years and (y) are subject to a replacement
capital covenant substantially similar to this Replacement Capital
Covenant or an Other Qualifying Capital Replacement Covenant
and
(B) have an Optional Deferral Provision;
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(v)
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securities
issued by the Company or its Subsidiaries that (A) either (x) have no
maturity or a maturity of at least 40 years and are subject to
Intent-Based Replacement Disclosure or (y) have no maturity or
a maturity
at least 25 years and are subject to a replacement capital covenant
substantially similar to this Replacement Capital Covenant or
an Other
Qualifying Capital Replacement Covenant and (B) are Non-Cumulative;
or
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(vi)
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securities
issued by the Company or its Subsidiaries that (A) have an Optional
Deferral Provision, (B) have a Mandatory Trigger Provision, (C) have
no maturity or a maturity of more than 30 years and (D) are subject
to
Intent-Based Replacement
Disclosure.
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“Qualifying
Non-Cumulative Perpetual Preferred Stock”
means
non-cumulative Preference Shares of the Company that rank pari
passu with
or
junior to all other Preference Shares of the Company, is perpetual and
(a) is subject to a replacement capital covenant substantially similar to
this Replacement Capital Covenant or an Other Qualifying Capital Replacement
Covenant or (b) is subject to both (i) mandatory suspension of dividends in
the event the Company breaches certain financial metrics specified within
the
offering documents, and (ii) Intent-Based Replacement Disclosure. Additionally,
the transaction documents shall provide for no remedies as a consequence
of
non-payment of Distributions other than Permitted Remedies.
“Qualifying
Warrants”
means
any net share settled warrants to purchase the Company’s Common Shares that (1)
have an exercise price greater than the current stock market price, determined
as specified in the instrument governing such warrants, of the Company’s Common
Shares, and (2) the Company is not entitled to redeem for cash and the holders
of which are not entitled to require the Company to purchase for cash in
any
circumstances.
“RCC
Termination Date”
means
September 30, 2047.
“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
Company elects to redeem or repay, or the Company or a Subsidiary of the
Company
elects to purchase, such Covered Debt either in whole or in part with the
consequence that after giving effect to such
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redemption,
repayment or purchase the outstanding principal amount of such Covered Debt
is
less than $100,000,000, the applicable redemption, repayment or purchase
date
and (c) if such Covered Debt is not Eligible Subordinated Debt, the date
on
which the Company issues long-term indebtedness for money borrowed that is
Eligible Subordinated Debt.
“Replacement
Capital Covenant”
has
the
meaning specified in the introduction to this instrument.
“Replacement
Capital Securities”
means:
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(a)
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Common
Shares and Qualifying Warrants;
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(b)
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Mandatorily
Convertible Preferred Stock;
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(c)
|
Debt
Exchangeable for Preferred Equity;
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(d)
|
Debt
Exchangeable for Common Equity; and
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(e)
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Qualifying
Capital Securities.
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“Series
A Preference 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.
“Termination
Date”
has
the
meaning specified in Section 4(a).
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