Exhibit 4.2
REPLACEMENT CAPITAL COVENANT, dated as of December 21, 2006 (this
"REPLACEMENT CAPITAL COVENANT"), by MetLife, Inc., 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 $1,250,000,000
aggregate principal amount of its 6.40% Fixed-to-Floating Rate Junior
Subordinated Debentures due 2066 (including any such junior subordinated
debentures issued after the date hereof that may be consolidated and form a
single series with such Junior Subordinated Debentures issued on the date
hereof, the "JUNIOR SUBORDINATED DEBENTURES").
(B) This Replacement Capital Covenant is the "Replacement Capital
Covenant" referred to in the Prospectus Supplement, dated December 14, 2006,
relating to the Junior Subordinated Debentures (together with the Prospectus,
dated April 27, 2005 attached thereto, the "PROSPECTUS SUPPLEMENT").
(C) The Corporation is entering into and disclosing the content of this
Replacement Capital Covenant in the manner provided below with the intent that
the covenants provided for in this Replacement Capital Covenant be enforceable
by each Covered Debtholder and that the Corporation be estopped from
disregarding the covenants in this Replacement Capital Covenant, in each case to
the fullest extent permitted by applicable law.
(D) The Corporation acknowledges that reliance by each Covered Debtholder
upon the covenants in this Replacement Capital Covenant is reasonable and
foreseeable by the Corporation and that, were the Corporation to disregard its
covenants in this Replacement Capital Covenant, each Covered Debtholder would
have sustained an injury as a result of its reliance on such covenants.
NOW, THEREFORE, the Corporation hereby covenants and agrees as follows in
favor of and for the benefit of each Covered Debtholder.
SECTION 1. Definitions. Capitalized terms used in this Replacement
Capital Covenant (including the Recitals) have the respective meanings set
forth in Schedule I hereto.
SECTION 2. Limitations on Repayment, Redemption and Purchase of
Junior Subordinated Debentures. The Corporation hereby promises and
covenants to and for the benefit of each Covered Debtholder that the
Corporation shall not repay, redeem or purchase (for the avoidance of
doubt, any reference in this Replacement Capital Covenant to any repayment
of the Corporation's securities will be deemed to include a reference to
defeasance of the Corporation's obligations under the securities), and
will cause its Subsidiaries not to, repay, redeem or purchase, as
applicable, all or any part of the Junior Subordinated Debentures on or
before December 15, 2056, except to the extent that the principal amount
repaid or the applicable redemption, repayment or purchase price does not
exceed the sum of the following amounts:
(a) the Applicable Percentage of the aggregate amount of net cash
proceeds received by the Corporation and its Subsidiaries since the most
recent Measurement Date (without double counting proceeds received in any
prior Measurement Period) from the sale of Common Stock and rights to
acquire Common Stock to Persons other than the Corporation and its
Subsidiaries; plus
(b) the Applicable Percentage of the aggregate amount of net cash
proceeds received by the Corporation 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 Equity and Qualifying Capital
Securities to Persons other than the Corporation and its Subsidiaries.
SECTION 3. Covered Debt. (a) The Corporation represents and warrants
that the Initial Covered Debt is Eligible Debt.
(b) On or during the 30-day period immediately preceding any
Redesignation Date with respect to the Covered Debt then in effect, the
Corporation shall identify the series of Eligible Debt that will become
the Covered Debt on and after such Redesignation Date in accordance with
the following procedures:
(i) the Corporation shall identify each series of its then
outstanding long-term indebtedness for money borrowed that is
Eligible Debt;
(ii) if only one series of the Corporation's then outstanding
long-term indebtedness for money borrowed is Eligible Debt, such
series shall become the Covered Debt commencing on the related
Redesignation Date;
(iii) if the Corporation has more than one outstanding series
of long-term indebtedness for money borrowed that is Eligible Debt,
then the Corporation shall identify the series that has the latest
stated final maturity date as of the date the Corporation is
applying the procedures in this Section 3(b) and such series shall
become the Covered Debt on the related Redesignation Date;
(iv) the series of outstanding long-term indebtedness for
money borrowed that is determined to be Covered Debt pursuant to
this Section 3(b) 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
(v) in connection with such identification of a new series of
Covered Debt, the Corporation shall, as provided for in Section
3(c), give a notice and file with the Commission a current report on
Form 8-K including or incorporating by reference this Replacement
Capital Covenant as an exhibit within the time frame provided for in
such section.
2
(c) Notice. In order to give effect to the intent of the Corporation
described in Recital C, the Corporation covenants that (i) simultaneously
with the execution of this Replacement Capital Covenant or as soon as
practicable after the date hereof, it shall (A) give notice to the Holders
of the Initial Covered Debt, in the manner provided in the indenture
relating to the Initial Covered Debt, of this Replacement Capital Covenant
and the rights granted to such Holders hereunder and (B) file a copy of
this Replacement Capital Covenant with the Commission as an exhibit to a
current report on Form 8-K under the Exchange Act; (ii) so long as the
Corporation is a reporting company under the Exchange Act, the Corporation
will 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 annual report on Form 10-K is
filed with the Commission; (iii) if a series of the Corporation's
long-term indebtedness for money borrowed (A) becomes Covered Debt or (B)
ceases to be Covered Debt pursuant to the procedures set forth in Section
3(b), the Corporation shall give notice of such occurrence within 30 days
to the holders of such long-term indebtedness for money borrowed in the
manner provided for in the indenture, fiscal agency agreement or other
instrument under which such long-term indebtedness for money borrowed was
issued and report such change in a current report on Form 8-K including or
incorporating by reference this Replacement Capital Covenant, and in the
Corporation's next quarterly report on Form 10-Q or annual report on Form
10-K, as applicable; (iv) if, and only if, the Corporation ceases to be a
reporting company under the Exchange Act, the Corporation shall post on
its website the information otherwise required to be included in Exchange
Act filings pursuant to clauses (ii) and (iii) of this Section 3(c); and
(v) promptly upon request by any Holder of Covered Debt, the Corporation
shall provide such Holder with a conformed copy of this Replacement
Capital Covenant.
SECTION 4. Termination, Amendment and Waiver. (a) The obligations of
the Corporation pursuant to this Replacement Capital Covenant shall remain
in full force and effect until the earliest (the "TERMINATION DATE") to
occur of (i) December 15, 2056, or, if earlier, the date on which the
Junior Subordinated Debentures are otherwise repaid, redeemed or purchased
in full, (ii) the date, if any, on which the Holders of a majority in
principal amount of the then-effective series of Covered Debt consent or
agree in writing to the termination of this Replacement Capital Covenant
and the obligations of the Corporation hereunder, (iii) the date on which
the Corporation ceases to have any series of outstanding Eligible Senior
Debt or Eligible Subordinated Debt (in each case, without giving effect to
the rating requirement in clause (b) of the definition of each such term)
and (iv) the date on which an event of default under the Subordinated
Indenture resulting in an acceleration of the Junior Subordinated
Debentures occurs. From and after the Termination Date, the obligations of
the Corporation pursuant to this Replacement Capital Covenant shall be of
no further force and effect.
(b) This Replacement Capital Covenant may be amended or supplemented
from time to time by a written instrument signed by the Corporation with
the consent of the Holders of at least a majority in principal amount of
the then-effective series of Covered Debt, provided that this Replacement
Capital Covenant may be amended or supplemented from time to time by a
written instrument signed only by the Corporation (and without the consent
of any Holder of the then-effective series of Covered Debt) if (i) the
effect of such amendment or
3
supplement is solely to impose additional restrictions on the types of
securities qualifying as Replacement Capital Securities, and an officer of
the Corporation has delivered to the Holders of the then-effective series
of Covered Debt in the manner provided for in the indenture, fiscal agency
agreement or other instrument with respect to such Covered Debt a written
certificate to that effect, (ii) such amendment or supplement is not
adverse to the Covered Debtholders and an officer of the Corporation has
delivered to the Holders of the then-effective series of Covered Debt in
the manner provided for in the indenture, fiscal agency agreement or other
instrument with respect to such Covered Debt a written certificate stating
that, in his or her determination, such amendment or supplement is not
adverse to such Covered Debtholders, or (iii) such amendment or supplement
eliminates Common Stock and/or Mandatorily Convertible Preferred Stock as
Replacement Capital Securities if, in the case of this clause (iii), the
Corporation 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 Corporation's
earnings per share as calculated for financial reporting purposes.
(c) For purposes of Sections 4(a) and 4(b), the Holders whose
consent or agreement is required to terminate, amend or supplement the
obligations of the Corporation under this Replacement Capital Covenant
shall be the Holders of the then-effective Covered Debt as of a record
date established by the Corporation that is not more than 30 days prior to
the date on which the Corporation proposes that such termination,
amendment or supplement becomes effective.
SECTION 5. Miscellaneous. (a) THIS REPLACEMENT CAPITAL COVENANT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) This Replacement Capital Covenant shall be binding upon the
Corporation and its successors and assigns and shall inure to the benefit
of the Covered Debtholders as they exist from time to time (it being
understood and agreed by the Corporation that any Person who is a Covered
Debtholder at the time such Person acquires, holds or sells Covered Debt
shall retain its status as a Covered Debtholder for so long as the series
of long-term indebtedness for borrowed money owned by such Person is
Covered Debt and, if such Person initiates a claim or proceeding to
enforce its rights under this Replacement Capital Covenant after the
Corporation has violated its covenants in Section 2 and before the series
of long-term indebtedness for money borrowed held by such Person is no
longer Covered Debt, such Person's rights under this Replacement Capital
Covenant shall not terminate prior to a Termination Date solely by reason
of such series of long-term indebtedness for money borrowed no longer
being Covered Debt).
(c) All demands, notices, requests and other communications to the
Corporation under this Replacement Capital Covenant shall be deemed to
have been duly given and made if in writing and (i) if served by personal
delivery upon the Corporation, on the day so delivered (or, if such day is
not a Business Day, the next succeeding Business Day), (ii) if delivered
by registered post or certified mail, return receipt requested, or sent to
the Corporation by a national or international courier service, on the
date of receipt by the Corporation (or, if such date of receipt is not a
Business Day, the next succeeding Business Day), or (iii) if sent by
telecopier, on the day telecopied, or if not a Business Day, the next
4
succeeding Business Day, provided that the telecopy is promptly confirmed
by telephone confirmation thereof, and in each case to the Corporation at
the address set forth below, or at such other address as the Corporation
may thereafter notify to Covered Debtholders or post on its website as the
address for notices under this Replacement Capital Covenant:
MetLife, Inc.
Xxx XxxXxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
(d) If the Corporation is obligated to sell Replacement Capital
Securities and apply the net proceeds to payments of principal of or
interest on any outstanding securities in addition to the Junior
Subordinated Debentures, then on any date and for any period the amount of
net proceeds received by the Corporation from those sales and available
for such payments shall be applied to the Junior Subordinated Debentures
and those other securities having the same scheduled repayment date or
scheduled redemption date as the Junior Subordinated Debentures pro rata
in accordance with their respective outstanding principal amounts and none
of such net proceeds shall be applied to any other securities having a
later scheduled repayment date or scheduled redemption date until the
principal of and all accrued and unpaid interest on the Junior
Subordinated Debentures has been paid in full.
5
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.
METLIFE, INC.
By:/s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title:Senior Vice President
and Treasurer
[Signature page to the Replacement Capital Covenant]
Schedule I
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
Corporation to issue (or use commercially reasonable efforts to issue) one or
more types of APM Qualifying Securities raising eligible proceeds at least equal
to the deferred Distributions on such 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
Corporation pays current Distributions on such securities and (y) the fifth
anniversary of the commencement of such deferral period, and that:
(a) define "eligible proceeds" to mean, for purposes of such
Alternative Payment Mechanism, the net proceeds (after underwriters' or
placement agents' fees, commissions or discounts and other expenses
relating to the issuance or sale of the relevant securities, where
applicable, and including the fair market value of property received by
the Corporation or any of its Subsidiaries as consideration for such
securities) that the Corporation has received during the 180 days prior to
the related Distribution Date from the issuance of APM Qualifying
Securities, up to the Preferred Cap (as defined in paragraph (f) below) in
the case of APM Qualifying Securities that are Qualifying Non-Cumulative
Perpetual Preferred Stock;
(b) permit the Corporation to pay current Distributions on any
Distribution Date out of any source of funds but (x) require the
Corporation to pay deferred Distributions only out of eligible proceeds
and (y) prohibit the Corporation from paying deferred Distributions out of
any source of funds other than eligible proceeds, unless (if the
Corporation elects to so provide in the terms of such securities) an
Applicable Governmental Authority directs otherwise;
(c) if deferral of Distributions continues for more than one year
(unless the Corporation elects to provide for a shorter period in the
terms of such securities), require the Corporation not to repay, redeem or
purchase any securities of the Corporation that on a bankruptcy or
liquidation of the Corporation rank pari passu with or junior to such
securities until at least one year after all deferred Distributions have
been paid;
(d) notwithstanding the foregoing provision, if an Applicable
Governmental Authority disapproves the issuer's sale of APM Qualifying
Securities, may (if the Corporation elects to so provide in the terms of
such securities) permit the Corporation to pay deferred Distributions from
any source without a breach of its obligations under the transaction
documents;
(e) if an Applicable Governmental Authority does not disapprove the
Corporation's issuance and sale of APM Qualifying Securities but
disapproves the use of the proceeds thereof to pay deferred Distributions,
may (if the Corporation elects to so provide in the terms of such
securities) permit the Corporation to use such proceeds for other purposes
and to continue to defer Distributions without a breach of its obligations
under the transaction documents; and
(f) limit the obligation of the Corporation to issue (or use
commercially reasonable efforts to issue) APM Qualifying Securities up to:
(i) in the case of APM Qualifying Securities that are Common
Stock or rights to purchase Common Stock, an amount from the
issuance thereof pursuant to the Alternative Payment Mechanism
(including at any point in time from all prior issuances thereof
pursuant to the Alternative Payment Mechanism) with respect to
deferred Distributions attributable to the first five years of any
deferral period equal to 2% of the product of the average of the
current stock market prices of the Common Stock on the ten
consecutive trading days ending on the fourth trading day
immediately preceding the date of issuance multiplied by the total
number of issued and outstanding shares of Common Stock as of the
date of the Corporation's most recent publicly available
consolidated financial statements (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 ninth
anniversary of the commencement of such deferral period; and
(ii) in the case of APM Qualifying Securities that are
Qualifying Non-Cumulative Perpetual 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
thereof 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");
(iii) provided (and it being understood) that:
(A) the Corporation shall not be obligated to issue (or
use commercially reasonable efforts to issue) APM Qualifying
Securities for so long as a Market Disruption Event has
occurred and is continuing;
(B) if, due to a Market Disruption Event or otherwise,
the Corporation is able to raise and apply some, but not all,
of the eligible proceeds necessary to pay all deferred
Distributions on any Distribution Date, the Corporation will
apply any available eligible proceeds to pay accrued and
unpaid Distributions on the applicable Distribution Date in
chronological order subject to the Common Cap and Preferred
Cap, as applicable; and
(C) if the Corporation has outstanding more than one
class or series of securities under which it is obligated to
sell a type of APM Qualifying Securities and apply some part
of the proceeds to the payment of deferred Distributions, then
on any
2
date and for any period the amount of net proceeds received by
the Corporation from those sales and available for payment of
deferred Distributions on such securities shall be applied to
such securities on a pro rata basis in proportion to the total
amounts that are due on such securities, or on such other
basis as an Applicable Governmental Authority may approve.
"APM QUALIFYING SECURITIES" means, with respect to an Alternative Payment
Mechanism, one or more of the following (as designated in the transaction
documents for the Qualifying Capital Securities that include an Alternative
Payment Mechanism or Debt Exchangeable for Equity):
(a) Common Stock;
(b) rights to purchase Common Stock; or
(c) Qualifying Non-Cumulative Perpetual Preferred Stock;
provided (and it being understood) that if the APM Qualifying Securities for any
Alternative Payment Mechanism include both Common Stock and rights to purchase
Common Stock, such Alternative Payment Mechanism may permit, but need not
require, the Corporation to issue rights to purchase Common Stock.
"APPLICABLE GOVERNMENTAL AUTHORITY" means any regulatory body,
administrative agency, or governmental body having jurisdiction over the
Corporation or any Subsidiary thereof, including, without limitation, any
insurance regulatory authority and the Federal Reserve Board.
"APPLICABLE PERCENTAGE" means:
(a) in the case of any Common Stock or rights to acquire Common Stock,
100 divided by (i) 75% with respect to any repayment, redemption or purchase
prior to December 15, 2036, (ii) 50% with respect to any repayment,
redemption or purchase on or after December 15, 2036 and prior to December
15, 2046 and (iii) 25% with respect to any repayment, redemption or purchase
on or after December 15, 2046 (for example, prior to December 15, 2036, the
Applicable Percentage in the case of such securities will be 133.33%);
(b) in the case of any Mandatorily Convertible Preferred Stock or Debt
Exchangeable for Equity, 75 divided by (i) 75% with respect to any
repayment, redemption or purchase prior to December 15, 2036, (ii) 50% with
respect to any repayment, redemption or purchase on or after December 15,
2036 and prior to December 15, 2046 and (iii) 25% with respect to any
repayment, redemption or purchase on or after December 15, 2046 (for
example, on or after December 15, 2036 and prior to December 15, 2046, the
Applicable Percentage in the case of such securities will be 150%);
(c) in the case of any Qualifying Capital Securities described in
clause (a) of the definition of that term, 75 divided by (i) 75% with
respect to any repayment, redemption or purchase prior to December 15, 2036,
(ii) 50% with respect to any repayment, redemption or purchase on or after
December 15, 2036 and prior to December 15, 2046 and (iii) 25% with
3
respect to any repayment, redemption or purchase on or after December 15,
2046 (for example, after December 15, 2046, the Applicable Percentage in the
case of such securities will be 300%);
(d) in the case of any Qualifying Capital Securities described in
clause (b) of the definition of that term, 50 divided by (i) 50% with
respect to any repayment, redemption or purchase on or after December 15,
2036 and prior to December 15, 2046, and (ii) 25% with respect to any
repayment, redemption or purchase on or after December 15, 2046 (for
example, after December 15, 2046, the Applicable Percentage in the case of
such securities will be 200%); and
(e) in the case of any Qualifying Capital Securities described in
clause (c) of the definition of that term, 100%.
"BUSINESS DAY" means each day other than (a) a Saturday or Sunday or (b) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, and, on or after December
15, 2036, a day that is not a London business day. A "LONDON BUSINESS DAY" is
any day on which dealings in deposits in U.S. dollars are transacted in the
London interbank market.
"COMMISSION" means the United States Securities and Exchange Commission.
"COMMON STOCK" means common stock of the Corporation and rights to acquire
common stock issued pursuant to any dividend reinvestment plan and employee
benefit plans of the Corporation (including treasury shares of common stock).
"CORPORATION" has the meaning specified in the introduction to this
instrument.
"COVERED DEBT" means (a) at the date of this Replacement Capital Covenant
and continuing to but not including the first Redesignation Date, the Initial
Covered Debt and (b) thereafter, commencing with each Redesignation Date and
continuing to but not including the next succeeding Redesignation Date, the
Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such
period.
"COVERED DEBTHOLDER" means each Person (whether a Holder or a beneficial
owner holding through a participant in a clearing agency) that buys, holds or
sells long-term indebtedness for money borrowed of the Corporation 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 (together in this definition, "such securities") that:
(a) gives the holder a beneficial interest in (i) subordinated debt
securities of the Corporation that include a provision requiring the
Corporation 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 two years after initial issuance of such
securities and that are the most junior subordinated debt of the Corporation
(or rank pari passu with the most junior subordinated
4
debt of the Corporation) (in this definition, "subordinated debt" of the
Corporation) and (ii) a fractional interest in a stock purchase contract for
a share of non-cumulative perpetual preferred stock of the Corporation that
ranks pari passu with or junior to all other preferred stock of the
Corporation (in this definition, "preferred stock" of the Corporation);
(b) provides that the investors directly or indirectly grant to the
Corporation a security interest in such subordinated debt securities and
their proceeds (including any substitute collateral permitted under the
transaction documents) to secure the investors' direct or indirect
obligation to purchase preferred stock of the Corporation pursuant to such
stock purchase contracts;
(c) includes a remarketing feature pursuant to which the subordinated
debt of the Corporation 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 capital ratios of the Corporation as anticipated by
any Applicable Governmental Authority or (ii) one or more financial tests
set forth in the terms of such securities or the forward purchase contract
or similar agreement;
(d) provides for the proceeds raised in the remarketing to be used to
purchase preferred stock of the Corporation under the stock purchase
contracts and, if there has not been a successful remarketing by the first
Distribution Date that is six years after the date of issuance of such
securities, provides that the stock purchase contracts will be settled by
the Corporation foreclosing on its subordinated debt securities or other
collateral directly or indirectly pledged by investors in the Debt
Exchangeable for Equity;
(e) includes a replacement capital covenant substantially similar to
this Replacement Capital Covenant that will apply to such securities and to
the preferred stock of the Corporation, and will not include Debt
Exchangeable for Equity as a replacement capital security; and
(f) after the issuance of such preferred stock of the Corporation,
provides the holders of such securities with a beneficial interest in such
preferred stock of the Corporation.
"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 Corporation.
"ELIGIBLE DEBT" means, at any time, Eligible Subordinated Debt or, if no
Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.
5
"ELIGIBLE SENIOR DEBT" means, at any time in respect of any issuer, each
series of outstanding long-term indebtedness for money borrowed of such issuer
that (a) upon a bankruptcy, liquidation, dissolution or winding-up of the
issuer, ranks most senior among the issuer's then outstanding classes of
indebtedness for money borrowed, (b) is then assigned a rating by at least one
NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if
on such date the issuer has outstanding senior long-term indebtedness for money
borrowed that satisfies the requirements of clauses (a), (c) and (d) that is
then assigned a rating by at least one NRSRO), (c) has an outstanding principal
amount of not less than $100,000,000, and (d) was issued through or with the
assistance of a commercial or investment banking firm or firms acting as
underwriters, initial purchasers or placement or distribution agents. For
purposes of this definition as applied to securities with a CUSIP number, each
issuance of long-term indebtedness for money borrowed that has (or, if such
indebtedness is held by a trust or other intermediate entity established
directly or indirectly by the issuer, the securities of such intermediate entity
that have) a separate CUSIP number shall be deemed to be a series of the
issuer's long-term indebtedness for money borrowed that is separate from each
other series of such indebtedness.
"ELIGIBLE SUBORDINATED DEBT" means, at any time in respect of any issuer,
each series of the issuer's then outstanding long-term indebtedness for money
borrowed that (a) upon a bankruptcy, liquidation, dissolution or winding-up of
the issuer, ranks subordinate to the issuer's then outstanding series of
indebtedness for money borrowed that ranks most senior, (b) is then assigned a
rating by at least one NRSRO (provided that this clause (b) shall apply on a
Redesignation Date only if on such date the issuer has outstanding subordinated
long-term 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 securities register maintained by or on behalf
of the Corporation with respect to such Covered Debt.
"INITIAL COVERED DEBT" means the Corporation's 5.70% Senior Notes due
2035.
"INTENT-BASED REPLACEMENT DISCLOSURE" means, as to any security or
combination of securities (together in this definition, "securities"), that the
Corporation 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 Corporation under the Exchange Act
prior to or contemporaneously with the issuance of such securities, that the
6
Corporation, to the extent the securities provide the Corporation with equity
credit, will repay, redeem or purchase such securities only with the proceeds of
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, raised within 180 days
prior to the applicable repayments, redemption or purchase date.
"JUNIOR SUBORDINATED DEBENTURES" has the meaning specified in Recital A.
"MANDATORILY CONVERTIBLE PREFERRED STOCK" means cumulative preferred stock
with (a) no prepayment obligation on the part of the issuer thereof, whether at
the election of the holders or otherwise, and (b) a requirement that such
cumulative preferred stock convert into common stock within three years from the
date of its issuance at a conversion ratio within a range established at the
time of issuance of such cumulative preferred stock.
"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 preferred stock, 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 if
the APM Qualifying Securities issued and sold are Qualifying Non-Cumulative
Perpetual Preferred Stock, the amount of the net proceeds of Qualifying
Non-Cumulative Perpetual Preferred Stock which the issuer may apply to pay such
Distributions pursuant to such provision may not exceed 25% of the initial
liquidation or principal amount of such securities, (b) if the APM Qualifying
Securities are Common Stock or rights to acquire Common Stock, prohibit the
issuer from repurchasing any Common Stock 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, (c) if the APM Qualifying Securities are
warrants to purchase Common Stock, prohibit the issuer from issuing such
warrants and using the proceeds therefrom to pay unpaid Distributions if the
total number of shares of the issuer's Common Stock underlying all warrants
issued as APM Qualifying Securities during the life of the security would be in
excess of 15% of the total number of the issuer's issued and outstanding shares
of Common Stock as of the date of any proposed issuance of warrants as APM
Qualifying Securities, and (d) upon any liquidation, dissolution, winding up,
reorganization or in connection with any insolvency, receivership or proceeding
under any bankruptcy law with respect to the Corporation, limit the claim of the
holders of such securities (other than non-cumulative perpetual preferred stock)
to Distributions that accumulate during a period in which the Corporation fails
to satisfy one or more financial tests set forth in the terms of such securities
or related transaction agreements to (x) 25% of the principal amount of such
securities then outstanding in the case of securities not permitting the
issuance and sale pursuant to the provisions described in clause (a) above of
securities other than Common Stock or rights to acquire Common Stock or (y) two
years of accumulated and unpaid Distributions (including compounded amounts
thereon) in all other cases. No remedy other than Permitted Remedies may arise
by the terms of such securities or related transaction agreements in favor of
the holders of
7
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.
"MARKET DISRUPTION EVENTS" means the occurrence or existence of any of the
following events or sets of circumstances:
(a) trading in securities generally on any national securities exchange
or over-the-counter market on which the Common Stock and/or the
Corporation's preferred stock is then listed or traded is suspended or the
settlement of such trading generally is materially disrupted or minimum
prices are established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
body having jurisdiction and the establishment of such minimum prices
materially disrupts or otherwise has a material adverse effect on trading
in, and the issuance and sale of, the Corporation's Common Stock and/or the
Corporation's preferred stock;
(b) the Corporation was required to obtain the consent or approval of
its stockholders, a regulatory body or governmental authority to issue or
sell APM Qualifying Securities and, after using commercially reasonable
efforts to obtain such consent or approval, the Corporation fails to obtain
such consent or approval;
(c) a material disruption or banking moratorium occurs or has been
declared in commercial banking or securities settlement or clearance
services in the United States;
(d) 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 is such, as to make it, in the Corporation's judgment, impracticable
to proceed with the issuance of APM Qualifying Securities;
(e) an event occurs and is continuing as a result of which the offering
document for the offer and sale of APM Qualifying Securities would, in the
reasonable judgment of the Corporation, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading and either (i)
the disclosure of that event at such time, in the judgment of the
Corporation, would have a material adverse effect on the business of the
Corporation or (ii) the disclosure relates to a previously undisclosed
proposed or pending material business transaction, and the Corporation has a
bona fide reason for keeping the same confidential or its disclosure would
impede the ability of the Corporation to consummate such transaction,
provided that no single suspension period contemplated by this paragraph (e)
may exceed 90 consecutive days and multiple suspension periods contemplated
by this paragraph (e) may not exceed an aggregate of 180 days in any 360-day
period; or
(f) the Corporation reasonably believes that the offering document for
the offer and sale of APM Qualifying Securities would not be in compliance
with a rule or regulation of the Commission (for reasons other than those
referred to in paragraph (e) above) and the
8
Corporation is unable to comply with such rule or regulation or such
compliance is impracticable, provided that no single suspension period
contemplated by this paragraph (f) may exceed 90 consecutive days and
multiple suspension periods contemplated by this paragraph (f) may not
exceed an aggregate of 180 days in any 360-day period.
The definition of "Market Disruption Event" as used in any securities or
combination of securities that constitute APM Qualifying Securities may include
less than all of the paragraphs outlined above, as determined by the Corporation
at the time of issuance of such securities, and in the case of clauses (a), (b),
(c) and (d), as applicable to a circumstance where the Corporation would
otherwise endeavor to issue preferred stock, shall be limited to circumstances
affecting markets where the Corporation's preferred stock trades or where a
listing for its trading is being sought.
"MEASUREMENT DATE" means (a) with respect to any repayment, redemption or
purchase of Junior Subordinated Debentures on or prior to December 15, 2036, the
date that is 180 days; and (b) with respect to any repayment, redemption or
purchase of junior subordinated debentures after the scheduled redemption date,
the date that is 90 days, in each case prior to delivery of notice of such
repayment or redemption or prior to the date of such repayment, redemption or
purchase.
"MEASUREMENT PERIOD" means the period from a Measurement Date to the
related notice date or purchase date. Measurement Periods cannot run
concurrently.
"NO PAYMENT PROVISION" means a provision or provisions in the transaction
documents for securities (referred to in this definition as "such securities")
that include the following:
(a) an Alternative Payment Mechanism; and
(b) an Optional Deferral Provision modified and supplemented from
the general definition of that term to provide that:
(i) the issuer of such securities may, in its sole discretion,
or (if the Corporation elects to so provide in the terms of such
securities) shall in response to a directive or order from any
Applicable Governmental Authority 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
(ii) if the Corporation becomes subject to a bankruptcy,
insolvency, receivership or similar proceeding prior to the
redemption or repayment of such securities, the holders of such
securities will have no claim to any deferred and unpaid
Distributions exceeding (x) if the APM Qualifying Securities include
only Common Stock or rights to acquire Common Stock and do not
include Qualifying Non-Cumulative Perpetual Preferred Stock, 25% of
the principal or stated amount of such securities then outstanding
and (y) if the
9
APM Qualifying Securities include Qualifying Non-Cumulative
Perpetual Preferred Stock, two years of Distributions on such
securities; provided, however, that if the APM Qualifying Securities
include Qualifying Non-Cumulative Perpetual Preferred Stock and,
accordingly, clause (y) applies, holders of such securities may have
an additional preferred equity claim in respect of deferred and
unpaid distributions which are in excess of two years of
Distributions that is senior to the Corporation's Common Stock and
is or would be pari passu with any Qualifying Non-Cumulative
Preferred Stock up to the amount equal to their pro rata shares of
any unused portion of the Preferred Cap (as defined in the
definition of "Alternative Payment Mechanism").
"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.
"NRSRO" means a nationally recognized statistical rating organization
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act.
"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.
"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 repurchasing Common Stock or other securities that rank pari
passu with or junior as to Distributions to such securities for so long as
Distributions on such securities, including unpaid Distributions, remain unpaid.
10
"PERSON" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"PROSPECTUS SUPPLEMENT" has the meaning specified in Recital B.
"QUALIFYING CAPITAL SECURITIES" means securities (other than Common Stock,
rights to acquire Common Stock, Mandatorily Convertible Preferred Stock and Debt
Exchangeable for Equity) that, in the determination of the Corporation's Board
of Directors reasonably construing the definitions and other terms of this
Replacement Capital Covenant, meet one of the following criteria:
(a) in connection with any repayment, redemption or purchase of Junior
Subordinated Debentures on or prior to December 15, 2036:
(i) securities issued by the Corporation or its Subsidiaries
that (A) rank pari passu with or junior to the Junior Subordinated
Debentures upon the liquidation, dissolution or winding up of the
Corporation, (B) have no maturity or a maturity of at least 60 years
and (C) either (x) are subject to a replacement capital covenant
substantially similar to this Replacement Capital Covenant and have
either a No Payment Provision or are Non-Cumulative or (y) have a
Mandatory Trigger Provision and are subject to Intent-Based
Replacement Disclosure and have either an Optional Deferral
Provision or a No Payment Provision; or
(ii) preferred stock issued by the Corporation or its
Subsidiaries that (A) is Non-Cumulative, (B) has no prepayment
obligation on the part of the issuer thereof, whether at the
election of the holders or otherwise, (C) has no maturity or a
maturity of at least 60 years and (D) either (x) is subject to a
replacement capital covenant substantially similar to this
Replacement Capital Covenant or (y) has a Mandatory Trigger
Provision and is subject to Intent-Based Replacement Disclosure; or
(iii) securities issued by the Corporation or its Subsidiaries
that (A) rank pari passu or junior to other preferred stock of the
issuer, (B) have no maturity or a maturity of at least 40 years, (C)
are subject to a replacement capital covenant substantially similar
to this Replacement Capital Covenant, (D) have an Optional Deferral
Provision and (E) have a Mandatory Trigger Provision; or
(b) in connection with any repayment, redemption or purchase of Junior
Subordinated Debentures at any time after December 15, 2036 but on or prior
to December 15, 2046:
(i) all securities described under clause (a) of this
definition;
(ii) securities issued by the Corporation or its Subsidiaries
that (A) rank pari passu with or junior to the Junior Subordinated
Debentures upon a liquidation, dissolution or winding up of the
Corporation, (B) have no maturity or a maturity of at least 60
years, (C) are subject to a replacement capital
11
covenant substantially similar to this Replacement Capital Covenant and (D)
have an Optional Deferral Provision;
(iii) securities issued by the Corporation or its Subsidiaries
that (A) rank pari passu with or junior to the Junior Subordinated
Debentures upon a liquidation, dissolution or winding up of the
Corporation, (B) are Non-Cumulative or have a No Payment Provision
and (C) (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 Corporation or its Subsidiaries
that (A) rank pari passu with or junior to the Junior Subordinated
Debentures upon a liquidation, dissolution or winding up of the
Corporation, (B) are Non-Cumulative or have a No Payment Provision,
(C) have no maturity or a maturity of at least 40 years and (D) are
subject to a replacement capital covenant substantially similar to
this Replacement Capital Covenant;
(v) securities issued by the Corporation or its Subsidiaries
that (A) rank pari passu with or junior to the Junior Subordinated
Debentures upon a liquidation, dissolution or winding up of the
Corporation, (B) have an Optional Deferral Provision, (C) have a
Mandatory Trigger Provision and (D) have no maturity or a maturity
of at least 60 years;
(vi) cumulative preferred stock issued by the Corporation or
its Subsidiaries that (A) has no prepayment obligation on the part
of the issuer thereof, whether at the election of the holders or
otherwise, and (B) (x) has no maturity or a maturity of at least 60
years and (y) is subject to a replacement capital covenant
substantially similar to this Replacement Capital Covenant; or
(vii) other securities issued by the Corporation or its
Subsidiaries that (A) rank upon a liquidation, dissolution or
winding-up of the Corporation either (x) pari passu with or junior
to the Junior Subordinated Debentures or (y) pari passu with the
claims of the Corporation's trade creditors and junior to all of the
Corporation's long-term indebtedness for money borrowed (other than
the Corporation's long-term indebtedness for money borrowed from
time to time outstanding that by its terms ranks pari passu with
such securities on a liquidation, dissolution or winding-up of the
Corporation), (B) have an Optional Deferral Provision or a No
Payment Provision and (C) have a Mandatory Trigger Provision and (D)
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
(c) in connection with any repayment, redemption or purchase of Junior
Subordinated Debentures at any time after December 15, 2046:
(i) securities described under clause (b) of this definition;
12
(ii) preferred stock issued by the Corporation that (A) (x)
has no maturity or a maturity of at least 50 years and (y) is
subject to Intent-Based Replacement Disclosure and (B) is
Non-Cumulative;
(iii) securities issued by the Corporation or its Subsidiaries
that (A) rank pari passu with or junior to the Junior Subordinated
Debentures upon a liquidation, dissolution or winding up of the
Corporation, (B) either (x) have no maturity or a maturity of at
least 60 years and are subject to Intent-Based Replacement
Disclosure or (y) have no maturity or a maturity at least 30 years
and are subject to a replacement capital covenant substantially
similar to this Replacement Capital Covenant and (C) are
Non-Cumulative;
(iv) securities issued by the Corporation or its Subsidiaries
that (A) rank pari passu with or junior to the Junior Subordinated
Debentures upon a liquidation, dissolution or winding up of the
Corporation, (B) have an Optional Deferral Provision, (C) have a
Mandatory Trigger Provision and (D) (x) have no maturity or a
maturity at least 30 years and (y) are subject to Intent-Based
Replacement Disclosure; or
(v) cumulative preferred stock issued by the Corporation or
its Subsidiaries that either (A) (x) has no maturity or a maturity
of at least 60 years and (y) are subject to Intent-Based Replacement
Disclosure or (B) has a maturity of at least 40 years and is subject
to a replacement capital covenant substantially similar to this
Replacement Capital Covenant.
"QUALIFYING NON-CUMULATIVE PERPETUAL PREFERRED STOCK" means non-cumulative
preferred shares of the Corporation that rank pari passu with or junior to all
other preferred shares of the Corporation, are perpetual and (a) are subject to
a replacement capital covenant substantially similar to this Replacement Capital
Covenant or (b) are subject to both (i) mandatory suspension of dividends in the
event the Corporation breaches certain financial metrics specified within the
offering documents, and (ii) Intent-Based Replacement Disclosure. Additionally,
in both (a) and (b) the transaction documents shall provide for no remedies as a
consequence of non-payment of Distributions other than Permitted Remedies.
"REDESIGNATION DATE" means, as to the Covered Debt in effect at any time,
the earliest of (a) the date that is two years prior to the final maturity date
of such Covered Debt, (b) if the Corporation elects to redeem or repay, or the
Corporation or a Subsidiary of the Corporation elects to purchase, such Covered
Debt either in whole or in part with the consequence that after giving effect to
such 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 Corporation issues long-term indebtedness for money
borrowed that is Eligible Subordinated Debt.
"REPLACEMENT CAPITAL COVENANT" has the meaning specified in the
introduction to this instrument.
13
"REPLACEMENT CAPITAL SECURITIES" means,
(a) Common Stock and rights to acquire Common Stock (including Common
Stock and rights to acquire Common Stock issued pursuant to any reinvestment
plan and employee benefit plans of the Corporation);
(b) Mandatorily Convertible Preferred Stock;
(c) Debt Exchangeable for Equity; and
(d) Qualifying Capital Securities.
"SUBORDINATED INDENTURE" means the indenture, dated June 21, 2005, between
the Corporation and The Bank of New York Trust Company, N.A. (as successor to
X.X. Xxxxxx Trust Company, National Association), as subordinated indenture
trustee, as supplemented by the Supplemental Indenture.
"SUBSIDIARY" means, at any time, any Person the shares of stock or other
ownership interests of which having ordinary voting power to elect a majority of
the board of directors or other managers of such Person are at the time owned,
or the management or policies of which are otherwise at the time controlled,
directly or indirectly through one or more intermediaries (including other
Subsidiaries) or both, by another Person.
"SUPPLEMENTAL INDENTURE" means the Third Supplemental Indenture, dated as
of December 21, 2006, between the Corporation and The Bank of New York Trust
Company, N.A., as trustee.
"TERMINATION DATE" has the meaning specified in Section 4(a).
14
