Recitals
Exhibit 4.2
Replacement Capital Covenant, dated as of May 11, 2007 (this “Replacement Capital Covenant”),
by Wisconsin Energy Corporation, a Wisconsin 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 $500,000,000 aggregate principal amount of
its 2007 Series A Junior Subordinated Notes due 2067 (including any such junior subordinated notes
issued after the date hereof that may be consolidated and form a single series with such junior
subordinated notes issued on the date hereof, the “Subordinated Notes”).
B. This Replacement Capital Covenant is the “Replacement Capital Covenant” referred to in the
Prospectus Supplement, dated May 8, 2007, relating to the Subordinated Notes which supplements the
Corporation’s Prospectus, dated May 7, 2007 (together, the “Prospectus”).
C. The Corporation, in entering into and disclosing the content of this Replacement Capital
Covenant in the manner provided below, is doing so with the intent that the covenants provided for
in this Replacement Capital Covenant be enforceable by each Covered Debtholder and 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 meanings set forth in Schedule I hereto.
SECTION 2. Limitations on Redemption, Defeasance or Purchase of Subordinated Notes. The
Corporation hereby promises and covenants to and for the benefit of each Covered Debtholder that
the Corporation shall not redeem, purchase or defease or discharge any portion of the principal
amount of the Subordinated Notes through the deposit of money and/or U.S. Government Obligations as
contemplated by Section 8.02 of the Indenture (herein referred to as “defeasance”), and shall cause
its Subsidiaries not to purchase, all or any part of the Subordinated Notes on or before the
Termination Date except to the extent that the principal amount repaid or defeased or the
applicable redemption or purchase price does not exceed the sum of the following amounts raised
through the issuance of Replacement Capital Securities:
(a) the Applicable Percentage of (i) the aggregate amount of the net cash proceeds the
Corporation and its Subsidiaries have received from the sale of Common Stock and Rights to
acquire Common Stock, and (ii) the Market Value of any Common Stock that has been issued in
connection with the conversion into or exchange for Common Stock of any convertible or
exchangeable securities, other than, in the case of (ii), securities for which the
Corporation or any of its Subsidiaries has received equity credit from any NRSRO;
plus
(b) the aggregate amount of net cash proceeds received by the Corporation and its
Subsidiaries from the sale of Replacement Capital Securities (other than the securities set
forth in clause (a) above);
in each case, to Persons other than the Corporation and its Subsidiaries within the applicable
Measurement Period (without double counting proceeds received in any prior Measurement Period);
provided that the limitations in this Section 2 shall not restrict the repayment, redemption or
other acquisition of any Subordinated Notes that have been previously defeased or purchased in
accordance with this Replacement Capital Covenant.
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 clause (ii) or (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(b); and
(v) in connection with such identification of a new series of Covered Debt (including
pursuant to the paragraph below), the Corporation shall, as provided in Section 3(c), give a
notice and file with the Commission a current report on Form 8-K under the Securities
Exchange Act including or incorporating by reference this Replacement Capital Covenant as an
exhibit within the time frame provided for in such section.
Notwithstanding any other provisions of this Replacement Capital Covenant, if a series of
Eligible Senior Debt of the Corporation has become the Covered Debt in accordance with this Section
3(b), on the date on which the Corporation issues a new series of Eligible Subordinated Debt, then
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immediately upon such issuance such new series of Eligible Subordinated Debt shall become the
Covered Debt and the applicable series of Eligible Senior Debt shall cease to be the Covered Debt.
(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 (A) notice shall be given to the Holders
of the Initial Covered Debt and the trustee under the indenture establishing such debt, in the
manner provided in the indenture or similar instrument relating to the Initial Covered Debt, of
this Replacement Capital Covenant and the rights granted to such Holders hereunder and (B) the
Corporation shall file a copy of this Replacement Capital Covenant with the Commission as an
exhibit to a Current Report on Form 8-K (or any successor form) under the Securities Exchange Act;
(ii) so long as the Corporation is a reporting company under the Securities Exchange Act, the
Corporation shall include in each Annual Report on Form 10-K (or any successor form) filed with the
Commission under the Securities Exchange Act a description of the covenant set forth in Section 2
and identify the series of long-term indebtedness for borrowed money that is Covered Debt as of the
date such Form 10-K (or any successor form) 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, notice shall be given 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 or other
instrument under which such long-term indebtedness for money borrowed was issued, and the
Corporation shall report such change in a Current Report on Form 8-K (or any successor form), which
must include or incorporate by reference this Replacement Capital Covenant, and in the
Corporation’s next Quarterly Report on Form 10-Q (or any successor form) or Annual Report on Form
10-K (or any successor form), as applicable; (iv) upon succession of any new entity as the
Corporation hereunder as a result of a merger, consolidation, binding share exchange, sale, lease
or transfer of all or substantially all of the assets or other business combination of the
Corporation as it existed prior thereto, notice of such occurrence shall be given within 30 days to
the holders of the Covered Debt in the manner provided for in the indenture or other instrument
under which such long-term indebtedness for money borrowed was issued and the Corporation shall
report such change in a Current Report on Form 8-K (or any successor form), which must include or
incorporate by reference this Replacement Capital Covenant, and in the Corporation’s next Quarterly
Report on Form 10-Q (or any successor form) or Annual Report on Form 10-K (or any successor form),
as applicable; (v) if, and only if, the Corporation ceases to be a reporting company under the
Securities Exchange Act, the Corporation will (A) post on its website (or any other similar
electronic platform generally available to the public) the information otherwise required to be
included in Securities Exchange Act filings pursuant to clauses (ii) and (iii) of this Section 3(c)
and (B) 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 and each similar
third-party vendor’s screen the Corporation reasonably believes is appropriate (each an “Investor
Screen”) and cause a hyperlink of the execution of this Replacement Capital Covenant to be included
on the Investor Screen for each series of Covered Debt, in each case to the extent permitted by
Bloomberg or such similar third-party vendor, as the case may be; and (vi) promptly upon request by
any Holder of Covered Debt, such Holder will be provided 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 date
(the “Termination Date”) to occur of (i) May 15, 2037, or if earlier, the date on which the
Subordinated Notes are otherwise paid, redeemed, defeased or purchased in full (in compliance with
the terms of Section 2 of this Replacement Capital Covenant), (ii) the date, if any, on which the
Holders of a majority by principal amount of the then-effective series of Covered Debt consent or
agree in writing to
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the termination of this Replacement Capital Covenant and the obligations of the Corporation
hereunder, (iii) the date on which the Corporation has no series of then outstanding long-term
indebtedness for money borrowed that is 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 the Subordinated Notes are accelerated as a result of an event of
default under the Indenture and the Securities Resolution. 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 the Holders of the then-effective series of
Covered Debt) if any of the following apply (it being understood that any such amendment or
supplement may fall into one or more of the following): (i) such amendment or supplement
eliminates Common Stock, Rights to acquire Common Stock, Debt Exchangeable for Common Equity and/or
Mandatorily Convertible Preferred Stock as Replacement Capital Securities, if, in the case of this
clause, after the date of this Replacement Capital Covenant, an accounting standard or interpretive
guidance of an existing accounting standard issued by an organization or regulator that has
responsibility for establishing or interpreting accounting standards in the United States becomes
effective such that there is more than an insubstantial risk that the failure to eliminate Common
Stock, Rights to acquire Common Stock, Debt Exchangeable for Common Equity and/or Mandatorily
Convertible Preferred Stock as Replacement Capital Securities would result in a reduction in the
Corporation’s earnings per share as calculated in accordance with generally accepted accounting
principles in the United States (“EPS”), or the Corporation otherwise has been advised in writing
by a nationally recognized independent accounting firm that there is more than an insubstantial
risk that the failure to eliminate such securities as Replacement Capital Securities would result
in a reduction of the Corporation’s EPS, (ii) the effect of such amendment or supplement is solely
to impose additional restrictions on the ability of the Corporation or its Subsidiaries to redeem,
defease or purchase the Subordinated Notes or to impose additional restrictions on, or to eliminate
certain of, the types of securities qualifying as Replacement Capital Securities (other than
securities which are covered by clause (i) above) and an officer of the Corporation has delivered
to the Holders of the then-effective series of Covered Debt in the manner provided for in the
indenture or other instrument with respect to such Covered Debt a written certificate to that
effect, (iii) such amendment or supplement extends the date specified in Section 4(a)(i), the
Stepdown Date or both, or (iv) such amendment or supplement is not adverse to the rights of the
Covered Debtholders hereunder 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 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 Covered Debtholders.
(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.
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(b) This Replacement Capital Covenant shall be binding upon the Corporation and its successors
and assigns and shall inure to the benefit of the Covered Debtholders as they exist from
time-to-time (it being understood and agreed by the Corporation that any Person who is a Covered
Debtholder at the time such Person acquires, holds or sells Covered Debt shall retain its status as
a Covered Debtholder for so long as the series of long-term indebtedness for borrowed money owned
by such Person is Covered Debt and, if such Person initiates a claim or proceeding to enforce its
rights under this Replacement Capital Covenant after the Corporation has violated its covenants in
Section 2 and before the series of long-term indebtedness for money borrowed held by such Person is
no longer Covered Debt, such Person’s rights under this Replacement Capital Covenant shall not
terminate by reason of such series of long-term indebtedness for money borrowed no longer being
Covered Debt). The Corporation agrees that, if at any time the Covered Debt is held by a trust
(for example, where the Covered Debt is part of an issuance of trust preferred securities), a
holder of the securities issued by such trust may enforce (including by instituting legal
proceedings) this Replacement Capital Covenant directly against the Corporation as though such
holder owned the Covered Debt directly, and the holders of such trust securities shall be deemed
Holders of Covered Debt for purposes of this Replacement Capital Covenant for so long as the
indebtedness held by such trust remains Covered Debt hereunder. Other than the Covered Debtholders
as provided in the two previous sentences, no other Person shall have any rights under this
Replacement Capital Covenant or be deemed a third party beneficiary of this Replacement Capital
Covenant. In particular, no holder of the Subordinated Notes is a third party beneficiary of this
Replacement Capital Covenant, it being understood that such holders may have rights under the
Indenture and the Securities Resolution.
(c) All demands, notices, requests and other communications to the Corporation under this
Replacement Capital Covenant shall be deemed to have been duly given and made if in writing and (i)
if served by personal delivery upon the Corporation, on the day so delivered (or, if such day is
not a Business Day, the next succeeding Business Day), (ii) if delivered by registered post or
certified mail, return receipt requested, or sent to the Corporation by a national or international
courier service, on the date of receipt by the Corporation (or, if such date of receipt is not a
Business Day, the next succeeding Business Day), or (iii) if sent by telecopier, on the day
telecopied, or if not a Business Day, the next succeeding Business Day, provided that the telecopy
is promptly confirmed by telephone confirmation thereof, and in each case to the Corporation at the
address set forth below, or at such other address as the Corporation may thereafter notify to
Covered Debtholders or post on its website as the address for notices under this Replacement
Capital Covenant:
Wisconsin Energy Corporation
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant to
be executed by a duly authorized officer, as of the day and year first above written.
| WISCONSIN ENERGY CORPORATION |
||||
| By: | /s/ Xxxxxxx Xxxx | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Vice President and Treasurer | |||
Definitions
“Alternative Payment Mechanism” means, with respect to any Qualifying Capital Securities,
provisions in the related transaction documents that require the issuer, in its discretion, to
issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying
Securities raising eligible proceeds at least equal to the deferred Distributions on such
Qualifying Capital Securities and apply the proceeds to pay unpaid Distributions on such Qualifying
Capital Securities, commencing on the earlier of (x) the first Distribution Date after commencement
of a deferral period on which the Corporation pays current Distributions on such Qualifying Capital
Securities and (y) the fifth anniversary of the commencement of such deferral period, and that:
(a) define “eligible proceeds” to mean, for purposes of such Alternative Payment Mechanism,
the net proceeds (after underwriters’ or placement agents’ fees, commissions or discounts and other
expenses relating to the issuance or sale, 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 to Persons other than the Corporation and its
Subsidiaries, up to the Preferred Cap (as defined in (d) below) in the case of APM Qualifying
Securities that are Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock;
(b) permit the Corporation to pay current Distributions on any Distribution Date out of any
source of funds but (x) require the Corporation to pay deferred Distributions only out of eligible
proceeds and (y) prohibit the Corporation from paying deferred Distributions out of any source of
funds other than eligible proceeds;
(c) if deferral of Distributions continues for more than one year (or such shorter period as
may be provided for in the terms of such securities), require the Corporation not to redeem or
purchase any APM Qualifying Securities or any securities that rank pari passu with or junior to any
APM Qualifying Securities that the Corporation has issued to settle deferred Distributions in
respect to that deferral period until at least one year after all deferred Distributions have been
paid (a “Repurchase Restriction”);
(d) limit the obligation of the Corporation to issue (or use commercially reasonable efforts
to issue) APM Qualifying Securities up to:
(A) in the case of APM Qualifying Securities that are Common Stock or
Qualifying Warrants, either (i) during the first five years of any deferral period
or (ii) with respect to deferred Distributions attributable to the first five
years of any deferral period (provided that such limitation shall not apply after
the ninth anniversary of the commencement of any deferral period), to a number of
shares of Common Stock and rights to purchase a number of shares of Common Stock,
in the aggregate, not in excess of 2% of the outstanding number of shares of
Common Stock, in each case as of the date of the Corporation’s most recent
publicly available consolidated financial statements at the time of such issuance
(the “Common Cap”); and
(B) in the case of APM Qualifying Securities that are Qualifying Preferred
Stock or Mandatorily Convertible Preferred Stock, an amount from the issuance of
such Qualifying Preferred Stock and then-still outstanding Mandatorily Convertible
Preferred Stock pursuant to the related Alternative Payment Mechanism (including,
in
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the case of Qualifying Preferred Stock, at any point in time from all prior
issuances thereof pursuant to such Alternative Payment Mechanism) equal to 25% of
the initial liquidation or principal amount of the Qualifying Capital Securities
that are the subject of the related Alternative Payment Mechanism (the “Preferred
Cap”);
(e) in the case of Qualifying Capital Securities other than Qualifying Preferred Stock,
include a Bankruptcy Claim Limitation Provision; and
(f) permit the Corporation, at its option, to provide that if the Corporation is involved in a
merger, consolidation, amalgamation, binding share exchange or conveyance, transfer or lease of
assets substantially as an entirety to any other person or a similar transaction (a “business
combination”) where immediately after the consummation of the business combination more than 50% of
the voting stock of the surviving entity of the business combination, or the entity to whom all or
substantially all of the Corporation’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 Distribution Date following
the date of consummation of the business combination;
provided (and it being understood) that:
(a) the Alternative Payment Mechanism may at the discretion of the Corporation include a share
cap limiting the issuance of APM Qualifying Securities consisting of Common Stock, Qualifying
Warrants and Mandatorily Convertible Preferred Stock, in each case to a maximum issuance cap to be
set at the discretion of the Corporation (a “Share Cap”); provided that such Share Cap will be
subject to the Corporation’s agreement to use commercially reasonable efforts to increase the Share
Cap when reached and (i) only to the extent it can do so and simultaneously satisfy their future
fixed or contingent obligations under other securities and derivative instruments that provide for
settlement or payment in shares of Common Stock or (ii) if the Corporation cannot increase the
Share Cap as contemplated in the preceding clause, by requesting its Board of Directors to adopt a
resolution for shareholder vote at the next occurring annual shareholders meeting to increase the
number of shares of the Corporation’s authorized Common Stock for purposes of satisfying their
obligations to pay deferred distributions;
(b) 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;
(c) 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, the Preferred Cap, and the Share Cap (if any), as applicable; and
(d) if the Corporation has outstanding more than one class or series of securities under which
it is obligated to sell a type of APM Qualifying Securities and apply some part of the proceeds to
the payment of deferred Distributions, then on any date and for any period the amount of net
proceeds received by the Corporation from those sales and available for payment of deferred
Distributions on such securities shall be applied to such securities on a pro rata basis up to the
Common Cap, the
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Preferred Cap and the Share Cap (if any), as applicable, in proportion to the total amounts
that are due on such securities.
“APM Qualifying Securities” means, with respect to an Alternative Payment Mechanism, any Debt
Exchangeable for Preferred Equity or any Mandatory Trigger Provision, one or more of the following
(as designated in the transaction documents for any Qualifying Capital Securities that include an
Alternative Payment Mechanism or a Mandatory Trigger Provision or for any Debt Exchangeable for
Preferred Equity):
(a) Common Stock;
(b) Qualifying Warrants;
(c) Qualifying Preferred Stock; and
(d) Mandatorily Convertible Preferred Stock
provided that if the APM Qualifying Securities for any Alternative Payment Mechanism, any Debt
Exchangeable for Preferred Equity or any Mandatory Trigger Provision include both Common Stock and
Qualifying Warrants, such Alternative Payment Mechanism, Debt Exchangeable for Preferred Equity or
Mandatory Trigger Provision may permit, but need not require, the Corporation to issue Qualifying
Warrants.
“Applicable Percentage” means 200% with respect to any redemption, purchase or defeasance of
Subordinated Notes prior to the Termination Date.
“Bankruptcy Claim Limitation Provision” means, with respect to any Qualifying Capital
Securities that have an Alternative Payment Mechanism or a Mandatory Trigger Provision, provisions
that, upon any liquidation, dissolution, winding up or reorganization or in connection with any
insolvency, receivership or proceeding under any bankruptcy law with respect to the issuer, limit
the claim of the holders of such Qualifying Capital Securities to Distributions that accumulate
during (a) any deferral period, in the case of Qualifying Capital Securities that have an
Alternative Payment Mechanism or (b) any period in which the issuer fails to satisfy one or more
financial tests set forth in the terms of such securities or related transaction agreements, in the
case of Qualifying Capital Securities having a Mandatory Trigger Provision, to:
(i) in the case of Qualifying Capital Securities having an Alternative Payment
Mechanism or Mandatory Trigger Provision with respect to which the APM Qualifying Securities
do not include Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock, 25% of
the stated or principal amount of such securities then outstanding; and
(ii) in the case of any other Qualifying Capital Securities, an amount not in excess of
the sum of (x) the amount of accumulated and unpaid Distributions (including compounded
amounts) that relate to the earliest two years of the portion of the deferral period for
which Distributions have not been paid and (y) an amount equal to the excess, if any, of the
Preferred Cap over the aggregate amount of net proceeds from the sale of Qualifying
Preferred Stock or Mandatorily Convertible Preferred Stock that the issuer has applied to
pay such Distributions pursuant to the Alternative Payment Mechanism or the Mandatory
Trigger Provision, provided that the holders of such securities are deemed to agree that, to
the extent the remaining claim exceeds the amount set
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forth in subclause (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 Preferred Stock or Mandatorily
Convertible Preferred Stock.
“Business Day” means each day other than (a) a Saturday or Sunday, (b) a day on which banking
institutions in The City of New York are authorized or required by law to remain closed or (c) a
day on which the Federal Reserve Bank of New York is not open, and, on or after May 15, 2017, 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 Cap” has the meaning specified in the definition of Alternative Payment Mechanism.
“Common Stock” means any equity securities of the Corporation (including equity securities
held as treasury shares and equity securities sold pursuant to any dividend reinvestment plan or
employee benefit plans) that have no preference in the payment of dividends or amounts payable upon
the liquidation, dissolution or winding up of the Corporation (including a security that tracks the
performance of, or relates to the results of, a business, unit or division of the Corporation), and
any securities that have no preference in the payment of dividends or amounts payable upon the
liquidation, dissolution or winding up of the Corporation and are issued in exchange therefor in
connection with a merger, consolidation, binding share exchange, business combination,
recapitalization or other similar event.
“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 Debt Exchangeable for Common Equity or Debt Exchangeable
for Preferred Equity.
“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) a fractional interest in a stock purchase
contract for a share of Common Stock that will be settled in three years or less, with the number
of shares of common stock purchasable pursuant to such stock purchase contract to be within a range
established at the time of issuance of such securities and (ii) debt securities of the Corporation
that are not redeemable at the option of the issuer or the holder thereof prior to the settlement
of the stock purchase contracts;
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(b) provides that the investors directly or indirectly grant to the Corporation 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 Stock pursuant to such stock purchase contracts;
(c) includes a remarketing feature pursuant to which the debt securities of the Corporation
are remarketed to new investors commencing not later than the settlement date of the purchase
contract; and
(d) provides for the proceeds raised in the remarketing to be used to purchase Common Stock
under the stock purchase contracts and, if there has not been a successful remarketing by the
settlement date of the purchase contract, provides that the stock purchase contracts will be
settled by the Corporation exercising its remedies as a secured party with respect to 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
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 the second anniversary of the commencement of such deferral period and that are the most
junior subordinated debt of the Corporation (or rank pari passu with the most junior subordinated
debt of the Corporation) (in this definition, “subordinated debt”) and (ii) a fractional interest
in a stock purchase contract for a share of Qualifying Preferred Stock of the Corporation that
ranks pari passu with or junior to all other preferred stock of the Corporation, as applicable (in
this definition, “preferred stock”);
(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 dissolution of the 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 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
exercising its remedies as a secured party with respect to its subordinated debt securities or
other collateral directly or indirectly pledged by investors in the Debt Exchangeable for Preferred
Equity;
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(e) is subject to a Qualifying Replacement Capital Covenant that will apply to such securities
and preferred stock of the Corporation, and will not include Debt Exchangeable for Equity as a
Replacement Capital Security; and
(f) if applicable, 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 issuance date and the most recent Distribution Date for such
securities to but not including the next succeeding Distribution Date for such securities.
“Distributions” means, as to a security or combination of securities, dividends, interest
payments or other income distributions to the holders thereof that are not Subsidiaries of the
Corporation.
“Eligible Debt” means, at any time, indebtedness, other than the Subordinated Notes, that is
Eligible Subordinated Debt or, if no Eligible Subordinated Debt is then outstanding, Eligible
Senior Debt.
“Eligible Senior Debt” means, at any time in respect of any issuer, each series of outstanding
unsecured long-term indebtedness for money borrowed of such issuer that (a) upon a bankruptcy,
liquidation, dissolution or winding up of the issuer, ranks most senior among the issuer’s then
outstanding classes of unsecured indebtedness for money borrowed, (b) is then assigned a rating by
at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on
such date the issuer has outstanding senior long-term indebtedness for money borrowed that
satisfies the requirements of clauses (a), (c) and (d) that is then assigned a rating by at least
one NRSRO), (c) has an outstanding principal amount of not less than $100,000,000, 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 unsecured long-term indebtedness for money borrowed that (a) upon a
bankruptcy, liquidation, dissolution or winding up of the issuer, ranks senior to the Subordinated
Notes and subordinate to the issuer’s then outstanding series of unsecured 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
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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.
“Holder” means, as to the Covered Debt then in effect, each holder of such Covered Debt as
reflected on the securities register maintained by or on behalf of the Corporation with respect to
such Covered Debt.
“Indenture” means the Indenture, dated as of March 15, 1999, between the Corporation and The
Bank of New York Trust Company, N.A. (as successor to JPMorgan Trust Company, National Association)
(successor to Bank One Trust Company, N.A.) (successor to The First National Bank of Chicago), as
trustee.
“Initial Covered Debt” means the Corporation’s 6.20% Senior Notes due April 1, 2033 (CUSIP
976657 AG 1).
“Intent-Based Replacement Disclosure” means, as to any security or combination of securities,
that the issuer has publicly stated its intention, either in the prospectus or other offering
document under which such securities were initially offered for sale or in filings with the
Commission made by the issuer under the Securities Exchange Act prior to or contemporaneously with
the issuance of such securities, that the issuer, to the extent the securities provide the issuer
with equity credit, will redeem, purchase or defease such securities only with the proceeds of
replacement capital securities that have terms and provisions at the time of redemption, purchase
or defeasance that are as much or more equity-like than the securities then being redeemed,
purchased or defeased, raised within 180 days of the applicable redemption or purchase date.
“Mandatorily Convertible Preferred Stock” means preferred stock with (a) no prepayment
obligation on the part of the issuer thereof, whether at the election of the holders or otherwise,
and (b) a requirement that the preferred stock convert into Common Stock within three years from
the date of its issuance at a conversion ratio within a range established at the time of issuance
of the preferred stock.
“Mandatory Trigger Provision” means, as to any Qualifying Capital 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 Qualifying Capital 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 of the issuer to satisfy one or more financial tests set forth in the terms
of such Qualifying Capital 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
Qualifying Capital 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 (i) such Mandatory Trigger Provision shall limit the issuance and sale
of Common Stock and Qualifying Warrants the proceeds of which may be applied to pay such
Distributions pursuant to such provision to the Common Cap, unless the Mandatory Trigger Provision
requires such issuance and sale within one year of such failure, and (ii) the amount of Qualifying
Preferred Stock or Mandatorily Convertible Preferred Stock the net proceeds of which the issuer may
apply to pay such Distributions pursuant to such provision may not exceed the Preferred Cap;
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(b) other than in the case of non-cumulative preferred stock, prohibit the issuer from
repurchasing any APM Qualifying Securities or any securities that are pari passu with or junior to
its APM Qualifying Securities, the proceeds of which were used to pay deferred Distributions since
such failure before the date six months after the issuer applies the net proceeds of the sales
described in clause (a) to pay such unpaid Distributions in full;
(c) other than in the case of non-cumulative perpetual preferred stock, include a Bankruptcy
Claim Limitation Provision; and
(d) if deferral of Distributions continues for more than one year (or such shorter period as
may be provided for in the terms of such securities), require the Corporation not to redeem or
purchase any APM Qualifying Securities or any securities that rank pari passu with or junior to any
APM Qualifying Securities that the Corporation has issued to settle deferred Distributions in
respect to that deferral period until at least one year after all deferred Distributions have been
paid;
provided (and it being understood) that:
(a) the issuer will not be obligated to issue (or use commercially reasonable efforts to
issue) any such 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 issuer is able to raise and apply
some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any
Distribution Date, the issuer will apply any available eligible proceeds to pay accrued and unpaid
Distributions on the applicable Distribution Date in chronological order subject to the Common Cap
and Preferred Cap, as applicable; and
(c) if the issuer has outstanding more than one class or series of securities under which it
is obligated to sell a type of any such APM Qualifying Securities and applies some part of the
proceeds to the payment of deferred Distributions, then on any date and for any period the amount
of net proceeds received by the issuer from those sales and available for payment of deferred
Distributions on such securities shall be applied to such securities on a pro rata basis up to the
Common Cap and the Preferred Cap, as applicable, in proportion to the total amounts that are due on
such securities.
No remedy other than Permitted Remedies will arise by the terms of such securities or related
transaction agreements in favor of the holders of such securities as a result of the issuer’s
failure to pay Distributions because of the Mandatory Trigger Provision until Distributions have
been deferred for one or more Distribution Periods that total together at least ten years.
“Market Disruption Events” means the occurrence or existence of any of the following events or
sets of circumstances:
(a) the Corporation would be required to obtain the consent or approval of its shareholders or
a regulatory body (including, without limitation, any securities exchange) or governmental
authority to issue or sell APM Qualifying Securities and such consent or approval has not yet been
obtained notwithstanding the Corporation’s commercially reasonable efforts to obtain such consent
or approval or a regulatory authority instructs the Corporation not to sell or offer for sale APM
Qualifying Securities at such time;
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(b) trading in securities generally (or in the Common Stock or the preferred stock of the
Corporation) on the New York Stock Exchange or any other national securities exchange or
over-the-counter market on which the Common Stock and/or the Corporation’s preferred stock is then
listed or traded shall have been suspended or the settlement of such trading generally shall have
been materially disrupted or minimum prices shall have been established on any such exchange or
market by the Commission, by the relevant exchange or by any other regulatory body or governmental
body having jurisdiction, and the establishment of such minimum prices materially disrupts or
otherwise has a material adverse effect on trading in, or the issuance and sale of, Common Stock
and/or such preferred stock;
(c) a banking moratorium shall have been declared by the federal or state authorities of the
United States and such moratorium materially disrupts or otherwise has a material adverse effect on
trading in, or the issuance and sale of, the APM Qualifying Securities;
(d) a material disruption shall have occurred in commercial banking or securities settlement
or clearance services in the United States and such disruption materially disrupts or otherwise has
a material adverse effect on trading in, or the issuance and sale of, the APM Qualifying
Securities;
(e) the United States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States, there shall have been a declaration of a
national emergency or war by the United States or there shall have occurred any other national or
international calamity or crisis and such event materially disrupts or otherwise has a material
adverse effect on trading in, or the issuance and sale of, the APM Qualifying Securities;
(f) there shall have occurred such a material adverse change in general domestic or
international economic, political or financial conditions, including without limitation as a result
of terrorist activities, and such change materially disrupts or otherwise has a material adverse
effect on trading in, or the issuance and sale of, the APM Qualifying Securities;
(g) an event occurs and is continuing as a result of which the offering document for such
offer and sale of APM Qualifying Securities would, in the reasonable judgment of the Corporation,
contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and either (a) the
disclosure of that event at such time, in the reasonable judgment of the Corporation, is not
otherwise required by law and would have a material adverse effect on the business of the
Corporation or (b) the disclosure relates to a previously undisclosed proposed or pending material
business transaction, the disclosure of which would impede the ability of the Corporation to
consummate such transaction, provided that no single suspension period contemplated by this
paragraph (g) shall exceed 90 consecutive days and multiple suspension periods contemplated by this
paragraph (g) shall not exceed an aggregate of 180 days in any 360-day period; or
(h) the Corporation reasonably believes, for reasons other than those referred to in paragraph
(g) above, that the offering document for such offer and sale of APM Qualifying Securities would
not be in compliance with a rule or regulation of the Commission and the Corporation is unable to
comply with such rule or regulation or such compliance is unduly burdensome, provided that no
single suspension period contemplated by this paragraph (h) shall exceed 90 consecutive days and
multiple suspension periods contemplated by this paragraph (h) shall not exceed an aggregate of 180
days in any 360-day period.
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The definition of “Market Disruption Event” as used in any Qualifying Capital Securities may
include less than all of the paragraphs outlined above, as determined by the Corporation at the
time of issuance of such securities, and in the case of clauses (a), (b), (c) and (d), as
applicable to a circumstance where the Corporation would otherwise endeavor to issue preferred
stock, shall be limited to circumstances affecting markets where the preferred stock of the
Corporation trades or where a listing for its trading is being sought.
“Market Value” means, on any date, (i) in the case of Common Stock, the closing sale price per
share of Common Stock (or if no closing sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid and the average ask
prices) on that date as reported in composite transactions by the New York Stock Exchange or, if
the Common Stock is not then listed on the New York Stock Exchange, as reported by the principal
U.S. securities exchange on which the Common Stock is traded or quoted; if the Common Stock is not
either listed or quoted on any U.S. securities exchange on the relevant date, the market price will
be the average of the mid-point of the bid and ask prices for the Common Stock on the relevant date
submitted by at least three nationally recognized independent investment banking firms selected by
the Corporation for this purpose and (ii) in the case of Rights to acquire Common Stock, a value
determined by a nationally recognized independent investment banking firm selected by the
Corporation’s Board of Directors (or a duly authorized committee thereof) for this purpose.
“Measurement Period” with respect to any redemption, purchase or defeasance of Subordinated
Notes, means the period (i) beginning on the date that is 180 days prior to the date of delivery of
notice of such redemption (such date of delivery, the “notice date”) or the date of such purchase
or defeasance and (ii) ending on such notice date or the date of such purchase or defeasance.
Measurement Periods cannot run concurrently.
“Most Junior Subordinated Debt” means debt securities of the Corporation that rank upon the
Corporation’s liquidation, dissolution or winding-up junior to all of the Corporation’s other
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) and pari passu with the claims of the Corporation’s trade creditors.
“Non-Cumulative” means, with respect to any securities, that the issuer thereof may
elect not to make any number of periodic Distributions without any remedy arising under the terms
of the securities or related agreements in favor of the holders, other than one or more Permitted
Remedies. Securities that include an Alternative Payment Mechanism 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 Securities Exchange Act.
“Optional Deferral Provision” means, as to any securities, a provision in the terms thereof or
of the related transaction agreements to the effect that either:
(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) such securities are subject to an Alternative Payment Mechanism
(provided that such Alternative Payment Mechanism need not apply during the first five years of any
deferral period
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and need not include a Common Cap, Preferred Cap, Bankruptcy Claim Limitation Provision or
Repurchase Restriction); or
(b) the issuer of such securities may, in its sole discretion, defer or skip in whole or in
part payment of Distributions on such securities for one or more consecutive Distribution Periods
up to at least 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 on the issuer paying Distributions on or
repurchasing Common Stock or other securities that rank pari passu with or junior as to
Distributions to such securities for so long as Distributions on such securities, including
unpaid Distributions, remain unpaid.
“Person” means any individual, corporation, partnership, joint venture, trust, limited
liability company, corporation or other entity, unincorporated organization or government or any
agency or political subdivision thereof.
“Preferred Cap” has the meaning specified in the definition of Alternative Payment Mechanism.
“Prospectus” 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 rank
pari passu with or junior to the Most Junior Subordinated Debt of the Corporation upon its
liquidation, dissolution or winding up and, 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 redemption, defeasance or purchase of Subordinated Notes on
or prior to the Stepdown Date:
(i) securities issued by the Corporation or its Subsidiaries that (A) have no
maturity or a maturity of at least 60 years and (B) either (x) are subject to a
Qualifying Replacement Capital Covenant and are Non-Cumulative or (y) have a
Mandatory Trigger Provision and an Optional Deferral Provision and are subject to
Intent-Based Replacement Disclosure; or
(ii) securities issued by the Corporation or its Subsidiaries that (A) have
no maturity or a maturity of at least 40 years, (B) are subject to a Qualifying
Replacement Capital Covenant, (C) have an Optional Deferral Provision and (D) have
a Mandatory Trigger Provision; or
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(iii) securities issued by the Corporation or its Subsidiaries that (A) have
no maturity or a maturity of at least 60 years, (B) are subject to a Qualifying
Replacement Capital Covenant and (C) have an Optional Deferral Provision;
(iv) securities issued by the Corporation or its Subsidiaries that (A) have no
maturity or a maturity of at least 60 years and (B) are subject to Intent-Based
Replacement Disclosure and (C) are Non-Cumulative;
(v) securities issued by the Corporation or its Subsidiaries that (A) have no
maturity or a maturity of at least 60 years, (B) have an Optional Deferral Provision
and (C) have a Mandatory Trigger Provision;
(vi) securities issued by the Corporation or its Subsidiaries that (A) have no
maturity or a maturity of at least 40 years, (B) are subject to a Qualifying
Replacement Capital Covenant and (C) are Non-Cumulative;
(vii) securities issued by the Corporation 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 of at
least 25 years and are subject to a Qualifying Replacement Capital Covenant, (B)
have an Optional Deferral Provision and (C) have a Mandatory Trigger Provision; or
(viii) any other preferred stock issued by the Corporation that (A) has no
prepayment obligation on the part of the issuer thereof, whether at the election of
the holders or otherwise, (B) has no maturity or a maturity of at least 60 years and
(C) is subject to a Qualifying Replacement Capital Covenant; or
(b) in connection with any redemption, defeasance or purchase of the Subordinated Notes
after the Stepdown Date:
(i) all securities described under clause (a) of this definition;
(ii) securities issued by the Corporation or its Subsidiaries that (A) have no
maturity or a maturity of at least 60 years, (B) are subject to Intent-Based
Replacement Disclosure and (C) have an Optional Deferral Provision;
(iii) securities issued by the Corporation or its Subsidiaries that (A) have no
maturity or a maturity of at least 40 years, (B) are subject to a Qualifying
Replacement Capital Covenant and (C) have an Optional Deferral Provision;
(iv) securities issued by the Corporation 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 of at
least 25 years and are subject to a Qualifying Replacement Capital Covenant and (B)
are Non-Cumulative;
(v) securities issued by the Corporation or its Subsidiaries that (A) have no
maturity or a maturity of at least 25 years, (B) are subject to Intent-Based
Replacement Disclosure, (C) have an Optional Deferral Provision and (D) have a
Mandatory Trigger Provision; or
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(vi) any other preferred stock issued by the Corporation that (A) has no
prepayment obligation on the part of the issuer thereof, whether at the election of
the holders or otherwise and (B) either (x) has no maturity or a maturity of at
least 60 years and is subject to Intent-Based Replacement Disclosure or (y) has no
maturity or a maturity of at least 40 years and is subject to a Qualifying
Replacement Capital Covenant.
“Qualifying Preferred Stock” means non-cumulative perpetual preferred stock issued by the
Corporation or its Subsidiaries that (a) ranks pari passu with or junior to all other preferred
stock of the Corporation and contains no remedies other than Permitted Remedies and (b) either (i)
is subject to Intent-Based Replacement Disclosure and has a provision that prohibits the issuer
from paying any dividends thereon upon its failure to satisfy one or more financial tests set forth
therein or (ii) is subject to a Qualifying Replacement Capital Covenant.
“Qualifying Replacement Capital Covenant” means (i) a replacement capital covenant
substantially similar to this Replacement Capital Covenant or (ii) a replacement capital covenant,
as identified by the Board of Directors of the Corporation, acting in good faith and in its
reasonable discretion and reasonably construing the definitions and other terms of this Replacement
Capital Covenant, (a) entered into by an issuer that at the time it enters into such replacement
capital covenant is a reporting company under the Securities Exchange Act and (b) that restricts
the issuer from redeeming, defeasing or purchasing identified securities except to the extent of
the applicable percentage of the net proceeds of specified replacement capital securities that have
terms and provisions at the time of redemption, defeasance or purchase that are as much or more
equity-like than the securities then being redeemed, defeased or purchased, raised within the 180
day period prior to the applicable redemption, defeasance or purchase date.
“Qualifying Warrants” means net share settled warrants to purchase Common Stock that have an
exercise price greater than the current stock market price of the issuer’s Common Stock as of their
date of issuance, that do not entitle the issuer to redeem for cash and the holders of such
warrants are not entitled to require the issuer to repurchase for cash in any circumstance.
“Redesignation Date” means, as to the Covered Debt in effect at any time, the earliest of (a)
the date that is two years prior to the final maturity date of such Covered Debt, (b) if the
Corporation elects to redeem, or the Corporation or a Subsidiary of the Corporation elects to
purchase or purchases, such Covered Debt either 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, the applicable redemption 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.
“Replacement Capital Securities” means
(a) Common Stock and Rights to acquire Common Stock;
(b) Mandatorily Convertible Preferred Stock;
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(c) Debt Exchangeable for Equity; and
(d) Qualifying Capital Securities.
“Repurchase Restriction” has the meaning specified in the definition of Alternative Payment
Mechanism.
“Rights to acquire Common Stock” includes any right to acquire Common Stock, including any
right to acquire Common Stock pursuant to a stock purchase plan or employee benefit plan. Rights
to acquire Common Stock shall include Qualifying Warrants.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Securities Resolution” means Securities Resolution No. 5 under the Indenture, dated as of May
8, 2007.
“Share Cap” has the meaning specified in the definition of Alternative Payment Mechanism.
“Stepdown Date” means May 15, 2017.
“Subordinated Notes” 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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