Exhibit 4.03


 


REPLACEMENT CAPITAL
COVENANT


 


Replacement Capital Covenant,  dated as of November 1,
2009 (this “Replacement Capital Covenant”), by SCANA Corporation, a South
Carolina 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.            The Corporation
is issuing $150,000,000 aggregate principal amount of its 2009 Series A
7.70% Enhanced Junior Subordinated Notes, dated November 24, 2009
(including any additional Junior Subordinated Notes issued on or after the date
hereof that may be consolidated and form a single series with such Junior
Subordinated Notes issued on the date hereof, the “Notes”) pursuant to the
terms and conditions of the Junior Subordinated Indenture dated as of November 1,
2009 (the “Base Indenture”), between the Corporation, as issuer, and U.S. Bank
National Association, as Trustee (the “Trustee”), as supplemented by a First
Supplemental Indenture dated as of November 1, 2009 (the “First
Supplemental Indenture”), between the Corporation and the Trustee, being
executed and delivered in connection with the issuance of the Notes.


 


B.            This Replacement Capital Covenant is the
“Replacement Capital Covenant” referred to in the Corporation’s Prospectus
Supplement, dated November 17, 2009 (the “Prospectus Supplement”).


 


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, including its
promise and covenant set forth in Section 2, be enforceable by each
Covered Debtholder against the Corporation as a promise reasonably inducing
action or forbearance 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 Notes. The Corporation
hereby promises and covenants to and for the benefit of each Covered Debtholder
that the Corporation shall not redeem or purchase, or satisfy, discharge or
defease any portion of the principal amount of the Notes through the deposit of
money and/or U.S. government obligations pursuant to Article Twelve of the
Base Indenture (such satisfaction, discharge or defeasance herein referred to
as “defeasance”), and that the Corporation shall cause its majority 


 

















 


owned Subsidiaries not to purchase all or any part of the Notes, on or
before the Termination Date except to the extent that:


 


(a)           the
principal amount defeased or the applicable redemption or purchase price does
not exceed the sum of the following amounts:


 


(i)            the Applicable
Percentage of (A) the aggregate amount of the net cash proceeds received
by the Corporation from the sale of Common Stock and Rights to acquire Common
Stock, and (B) the Market Value of any Common Stock that the Corporation
has (1) delivered as consideration for property or assets in an
arm’s-length transaction or (2) issued in connection with the conversion
into or exchange for Common Stock of any convertible or exchangeable
securities, other than, in the case of the preceding clause (2), convertible or
exchangeable securities for which, and to the extent that, the Corporation or
any of its Subsidiaries then receives equity credit from any NRSRO; plus


 


(ii)           the Applicable
Percentage of the aggregate amount of net cash proceeds received by the
Corporation and/or any of its Subsidiaries from the sale of Replacement Capital
Securities (other than the securities set forth in clause (i) above);


 


in each case, to Persons other than the Corporation and/or its
Subsidiaries (for the avoidance of doubt, persons covered by the Corporation’s
dividend reinvestment plan, any direct stock purchase plan and director and
employee benefit plans shall not be deemed the Corporation and/or its
Subsidiaries for purposes of this Section 2) 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 Notes that
have been previously defeased or purchased in accordance with this Replacement
Capital Covenant; or


 


(b)           the
Notes are exchanged for consideration that includes an aggregate principal
amount or liquidation preference (or, in the case of Common Stock, Market
Value) of Replacement Capital Securities equal to 100% prior to the Stepdown
Date, and 50% on or after the Stepdown Date (or, in the case of Common Stock,
50% prior to the Stepdown Date and 25% on or after the Stepdown Date) of the
aggregate principal amount of Notes that are exchanged.


 


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 the related
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 


 


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indebtedness for money
borrowed that is Eligible Debt, then the Corporation shall identify a specific
series that has the latest stated final maturity date as of the date on which
the Corporation is applying the procedures in this Section 3(b) and
such series shall become the Covered Debt commencing on the related
Redesignation Date;


 


(iv)          the series of outstanding long-term indebtedness for money borrowed
that is determined to be the 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 the Covered
Debt, notice shall be given, and a Form 8-K shall be filed, as provided
for in Section 3(d) within the time frame provided for in such
section.


 


(c)           Notwithstanding
any other provisions of this Replacement Capital Covenant, (i) if a series
of Eligible Senior Debt of the Corporation has become the Covered Debt in
accordance with Section 3(b), on the date on which the Corporation issues
a new series of Eligible Subordinated Debt, then immediately upon such issuance
such series shall become the Covered Debt and the applicable series of Eligible
Senior Debt shall cease to be the Covered Debt.


 


(d)           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, in the manner
provided in the indenture or other instrument under which such Initial Covered
Debt was issued, 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 Form 8-K;
(ii) so long as the Corporation is a reporting company under the
Securities Exchange Act, the Corporation will include or cause to be included
in each Form 10-K by the Corporation a description of the covenant set
forth in Section 2 and identify the series of long-term indebtedness for
borrowed money that is Covered Debt as of the date such Form 10-K is filed
with the Commission; (iii) if a series of the Corporation’s long-term
indebtedness for money borrowed (A) becomes Covered Debt or (B) ceases
to be Covered Debt, notice of such occurrence will be given 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 Form 8-K, which must include or incorporate by reference
this Replacement Capital Covenant, and, if reported in a Form 8-K, also in
the next Form 10-Q or Form 10-K, as applicable, of the Corporation; (iv) 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 the
information otherwise required to be included in Securities Exchange Act
filings pursuant to clauses (ii) and (iii) above; and (B) cause
a notice of this Replacement Capital Covenant to be posted on the Bloomberg
screen for the Initial Covered Debt or any successor Bloomberg screen or, if
none, a similar third-party vendor’s screen the Corporation reasonably believes
is appropriate (each an “Investor Screen”) and cause a hyperlink of this
Replacement Capital Covenant to be included on the Investor Screen for each series
of the Covered Debt, in each case to the extent permitted by Bloomberg or such
similar third-party 


 


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vendor, as the case may be;
and (v) promptly upon the request of any Holder of Covered Debt, the Corporation
will provide such Holder with an executed copy of this Replacement Capital
Covenant.


 


SECTION 4. Termination
and Amendment.


 


(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) (x) January 30, 2035 or (y) if the maturity
date of the Notes shall be extended in accordance with the First Supplemental
Indenture, the date which is 30 years prior to the maturity date, as extended, or if earlier, the date on
which the 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 at least a
majority of the outstanding principal amount of the then effective Covered Debt
consent or agree in writing to the termination of the obligations of the
Corporation hereunder, (iii) the date on which the Corporation ceases to
have any Eligible Senior Debt or Eligible Subordinated Debt (in each case
without giving effect to the rating requirement in clause (ii) of the
definition of each such term), or (iv) the date on which the Notes are
accelerated as a result of a default thereunder. From and after the Termination
Date, the obligations of the Corporation pursuant to this Replacement Capital
Covenant shall be of no further force and effect with respect to the Holders,
or otherwise.


 


(b)           This Replacement
Capital Covenant may be amended or supplemented from time to time by a written
instrument signed only by the Corporation after obtaining the consent of the
Holders of at least a majority of the outstanding principal amount of the
then-effective Covered Debt; provided that this Replacement Capital Covenant may
be amended or supplemented from time to time by a written instrument signed by
the Corporation (and without the consent of the Holders) if any of the
following apply: (i) such amendment or supplement eliminates Common Stock,
Rights to acquire Common Stock, Common Equity Units 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, or the Corporation has been otherwise advised in writing by a
nationally recognized independent accounting firm that, there is more than an
insubstantial risk that failure to eliminate Common Stock, Rights to acquire
Common Stock, Common Equity Units 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 or International Financial
Reporting Standards (“IFRS”) if then applicable to the Corporation; (ii) the
sole effect of such amendment or supplement is either (A) to impose
additional restrictions on the ability of (1) the Corporation to redeem,
purchase or defease Notes or (2) any majority-owned Subsidiary of the
Corporation to purchase Notes, or (B) 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 in each case an officer of the Corporation has delivered
to the Holders of the then-effective Covered Debt in the manner provided for in
the indenture or other instrument under which such Covered Debt was issued 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
Holders of the then-effective Covered Debt and 


 


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an officer of the Corporation
has delivered to the Holders of the then-effective Covered Debt in the manner
provided for in the indenture or other instrument under which such Covered Debt
was issued a written certificate stating that, in his or her determination,
such amendment or supplement is not adverse to the rights of the Holders of the
then-effective Covered Debt. For the avoidance of doubt, an amendment or
supplement that adds new types of Replacement Capital Securities or modifies
the requirements of the Replacement Capital Securities described herein would
not be adverse to the rights of the Holders of the Covered Debt if, following
such amendment or supplement, this Replacement Capital Covenant would satisfy
the definition of Explicit Replacement Covenant.


 


(c)           For purposes of
Sections 4(a) and 4(b), the Holders whose consent or agreement is required
to terminate, amend or supplement this Replacement Capital Covenant or the
obligations of the Corporation hereunder 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 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 the Covered
Debt for purposes of this Replacement Capital Covenant for so long as the
indebtedness held by such trust remains the 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 Notes is a third party beneficiary of this
Replacement Capital Covenant, it being understood that such holders may have
rights under the Base Indenture.


 


(c)           The Corporation
acknowledges that reliance by each Covered Debtholder upon the covenants in
this Replacement Capital Covenant is reasonable and foreseeable by the
Corporation and that, were the Corporation to disregard its covenants in this
Replacement Capital Covenant, each Covered Debtholder would have sustained an
injury as a result of its reliance on such covenants.


 


(d)           All demands,
notices, requests and other communications to the Corporation 


 


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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) or (ii) if delivered by registered post or certified mail, return
receipt requested, or sent to the Corporation by a national or international
courier service, on the date of receipt by the Corporation (or, if such date of
receipt is not a Business Day, the next succeeding Business Day), or (iii) if
sent by telecopier, on the day telecopied, or if not a Business Day, the next
succeeding Business Day, provided that the telecopy is promptly confirmed by
telephone confirmation thereof, and in each case to the Corporation at the
address set forth below, or at such other address as the Corporation may
thereafter post on its website as the address for notices under this
Replacement Capital Covenant:


 


SCANA Corporation


Attention:  Treasurer — C101


220 Operation Way


Cayce, SC  29033-3701


Facsimile No: (803) 933-7037


Telephone No: (803) 217-7838


 


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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.


 


	
   

  	
  SCANA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


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Schedule I


 


Definitions


 


“Alternative
Payment Mechanism” means, with respect to any Qualifying Capital
Securities, provisions in the related transaction documents that permit the
issuer, in its sole discretion, to defer Distributions in whole or in part on
such Qualifying Capital Securities for one or more consecutive Distribution
Periods of up to ten years and that require the issuer thereof to issue (or use
Commercially Reasonable Efforts to issue), in its sole discretion, one or more
types of APM Qualifying Securities raising “eligible proceeds” (as defined in (a) below)
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 such issuer
pays current Distributions on such Qualifying Capital Securities and (y) the
fifth anniversary of the commencement of such deferral period, and that:


 


(a)           define “eligible
proceeds” to mean, for purposes of such Alternative Payment Mechanism, the net
proceeds (after underwriters’ or placement agents’ fees, commissions or
discounts and other expenses relating to the issuance or sale of the relevant
securities, where applicable, and including the fair market value of property
received by the issuer or its Subsidiaries as consideration for such
securities) that such issuer 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/or its Subsidiaries, up to the Preferred
Cap (as defined in (e) below) in the case of APM Qualifying Securities
that are Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock;


 


(b)           permit such
issuer to pay current Distributions on any Distribution Date out of any source
of funds but (x) require such issuer to pay deferred Distributions only
out of eligible proceeds and (y) prohibit such issuer 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 such issuer or any of
its Subsidiaries not to redeem or purchase any securities that rank pari passu
with or junior to any APM Qualifying Securities that such issuer 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 “Purchase
Restriction”), other than the following (none of which shall be restricted or
prohibited by a Purchase Restriction):


 


(i)           purchases,
redemptions or other acquisitions of shares of Common Stock in connection with
any employment or compensatory contract, compensation or benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors
or consultants; or


 


(ii)          purchases
or other acquisitions of shares of Common Stock pursuant to a contractually
binding requirement to buy shares of Common Stock entered into prior to the
beginning of the related deferral period, including under a contractually
binding stock repurchase plan;


 


(d)           limit the
obligation of such issuer to issue (or use Commercially Reasonable Efforts to
issue) APM Qualifying Securities that are Common Stock or Qualifying Warrants
to 


 


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settle deferred
Distributions pursuant to the Alternative Payment Mechanism either (i) during
the first five years of any deferral period or (ii) before an anniversary
of the commencement of any deferral period that is not earlier than the fifth
such anniversary and not later than the ninth such anniversary (as designated
in the terms of such Qualifying Capital Securities) with respect to deferred
Distributions attributable to the first five years of such deferral period,
either:


 


(A)          to an
aggregate amount of such securities, the net proceeds from the issuance of
which is equal to 2% of the product of the average of the current Market Value
of the Common Stock on the ten consecutive trading days ending on the fourth
trading day immediately preceding the date of issuance multiplied by the total
number of issued and outstanding shares of Common Stock as of the date of the
Corporation’s most recent publicly available consolidated financial statements;
or


 


(B)           to a
number of shares of Common Stock and shares issuable upon exercise of
Qualifying Warrants, in the aggregate, not in excess of 2% of the outstanding
number of shares of Common Stock as of the date of the Corporation’s most
recent publicly available consolidated financial statements (the “Common Cap”);


 


(e)           limit the right
of such issuer to issue (or use Commercially Reasonable Efforts to issue) APM
Qualifying Securities that are Qualifying Preferred Stock or Mandatorily
Convertible Preferred Stock, to 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 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”);


 


(f)            in the case of
Qualifying Capital Securities include a Bankruptcy Claim Limitation Provision;
and


 


(g)           permit such issuer,
at its option, to provide that if such issuer is involved in a merger,
consolidation, amalgamation, statutory share exchange, conveyance, lease or
other transfer of all or substantially all of the assets to any other person or
a similar transaction (a “business combination”) where immediately after the
consummation of the business combination more than 50% of the surviving or
resulting entity’s voting securities is owned by the equity holders of the
other party to the business combination, or the entity to whom all or
substantially all of such issuer’s assets are conveyed, leased or otherwise
transferred, 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:


 


(h)           the Alternative
Payment Mechanism may at the discretion of such issuer 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 such issuer (a “Share
Cap”); provided that such Share Cap will be subject to such issuer’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 its
future fixed or contingent obligations under other securities and derivative
instruments 


 


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that provide for settlement
or payment in Common Stock or (ii) if such issuer 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 such issuer’s
authorized Common Stock or preferred stock for purposes of satisfying its
obligations to pay deferred Distributions;


 


(i)            such
issuer 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;


 


(j)            if,
due to a Market Disruption Event or otherwise, such 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, such issuer will apply
an amount equal to 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


 


(k)           if such issuer
has outstanding more than one class or series of securities under which it is
obligated to sell a type of APM Qualifying Securities and 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 such 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, the
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 any 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 (and it being understood) that:


 


(i)            if the APM
Qualifying Securities for any Alternative Payment Mechanism or Mandatory
Trigger Provision includes both Common Stock and Qualifying Warrants,


 


(A)          such
Alternative Payment Mechanism or Mandatory Trigger Provision may permit, but
need not require, the Corporation to issue Qualifying Warrants; and


 


(B)           the
Corporation may, without the consent of the holders of the Qualifying Capital
Securities, amend the definition of APM Qualifying Securities to eliminate
Common Stock or Qualifying Warrants (but not both) from the definition if,
after the issue date, an accounting standard or 


 


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interpretive guidance relating to an existing
accounting standard issued by an organization or regulator that has
responsibility for establishing or interpreting accounting standards followed
by the Corporation becomes effective or applicable to the Corporation such
that, or the Corporation has been otherwise advised in writing by a nationally
recognized independent accounting firm that, there is more than an
insubstantial risk that the failure to eliminate Common Stock or Qualifying
Warrants from the definition of APM Qualifying Securities would result in a
reduction in the Corporation’s EPS.


 


(ii)           if the APM
Qualifying Securities for any Alternative Payment Mechanism or Mandatory
Trigger Provision includes Mandatorily Convertible Preferred Stock and Common
Stock and/or Qualifying Preferred Stock,


 


(A)          such Alternative Payment Mechanism or Mandatory Trigger Provision may
permit, but need not require, the Corporation to issue Mandatorily Convertible
Preferred Stock; and


 


(B)           the Corporation may, without the consent of the holders of the
Qualifying Capital Securities, amend the definition of APM Qualifying Securities
to eliminate Mandatorily Convertible Preferred Stock from the definition if,
after the issue date, an accounting standard or interpretive guidance relating
to an existing accounting standard issued by an organization or regulator that
has responsibility for establishing or interpreting accounting standards
followed by the Corporation becomes effective or applicable to the Corporation
such that, or the Corporation has been otherwise advised in writing by a
nationally recognized independent accounting firm that, there is more than an
insubstantial risk that the failure to eliminate Mandatorily Convertible
Preferred Stock from the definition of APM Qualifying Securities would result
in a reduction in the Corporation’s EPS.


 


“Applicable Percentage” means:


 


(a)           with respect to
Common Stock, Rights to acquire Common Stock and Mandatorily Convertible
Preferred Stock, 200% prior to the Stepdown Date and 400% on or after the
Stepdown Date;


 


(b)           (i) with
respect to Qualifying Capital Securities described in clause (a) of the
definition of that term, 100% prior to the Stepdown Date and 200% on or after
the Stepdown Date, and (ii) with respect to Qualifying Capital Securities
described in clause (b) of the definition of that term, 100%; and


 


(c)           with
respect to Debt Exchangeable for Equity, 150% prior to the Stepdown Date and
300% on or after the Stepdown 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 


 


11

















 


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 Qualifying Capital
Securities then outstanding; and


 


(ii)           in the case of
any other Qualifying Capital Securities, an amount not in excess of the sum of (x) the
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 Qualifying Capital Securities are deemed to agree that, to the
extent the claim for deferred Distributions exceeds the amount set 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.


 


“Base Indenture” has the meaning specified in Recital A.


 


“Board of Directors” means the Board of Directors of the
Corporation or a duly constituted committee thereof.


 


“Business combination” has the meaning given such term in the
definition of Alternative Payment Mechanism.


 


“Business Day” means each day other than (i) a Saturday
or Sunday or (ii) a day on which banking institutions in The City of New York or the
Federal Reserve System are authorized or obligated by law, regulation or executive order to
close.


 


“Commercially
Reasonable Efforts” means, for purposes of selling APM Qualifying
Securities, commercially reasonable efforts to complete the offer and sale of
APM Qualifying Securities to third parties that are not the Corporation or any
of its Subsidiaries in public offerings or private placements. The issuer of
APM Qualifying Securities shall not be considered to have made Commercially
Reasonable Efforts to effect a sale of APM Qualifying Securities if it
determines not to pursue or complete such sale due to pricing, coupon, dividend
rate or dilution considerations.


 


“Commission” means the United States Securities and
Exchange Commission.


 


“Common Cap” has the meaning specified in the definition
of Alternative Payment Mechanism.


 


“Common Equity Units” means a security or combination of securities
that:


 


(a)           gives
the holders (i) a beneficial interest in a fixed income security of the 


 


12

















 


Corporation (including a debt security, a trust preferred security of a
subsidiary trust or preferred stock) and (ii) a beneficial interest in a
stock purchase contract;


 


(b)           includes a
remarketing feature pursuant to which the fixed income security is required to
be remarketed to new investors within four years from the date of issuance of
the security; and


 


(c)           provides for the
proceeds raised in the remarketing to be used to purchase Common Stock pursuant
to the stock purchase contract for a determinable number of shares or within a
range established at the time of issuance of the Common Equity Units, in each
case subject to customary anti-dilution or similar adjustments.


 


“Common Stock” means (i) any equity securities of the
Corporation (including equity securities held as treasury shares and equity
securities, if any, sold pursuant to a dividend reinvestment plan, any direct
stock purchase plan or director or employee benefit plan) that have no
preference in the payment of dividends or amounts payable upon the liquidation,
dissolution or winding up of the Corporation (including any security that
tracks the performance of, or relates to the results of, a business, unit or division
of the Corporation), and (ii) any other 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 for
securities described in (i) above 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 (i) at the date of this Replacement Capital Covenant and
continuing to but not including the first Redesignation Date, the Initial
Covered Debt, and (ii) thereafter, commencing with each Redesignation Date
and continuing to but not including the next succeeding Redesignation Date, the
Eligible Debt identified pursuant to Section 3(b) as the Covered Debt
for such period.


 


“Covered Debtholder” means each Person (whether a Holder or a
beneficial owner holding through a participant in a clearing agency) that buys,
holds or sells long-term indebtedness for money borrowed of the Corporation
during the period that such long-term indebtedness for money borrowed is the
Covered Debt, provided that a Person who has sold all its right, title and
interest in the Covered Debt shall cease to be a Covered Debtholder at the time
of such sale if, at such time, the Corporation has not breached or repudiated,
or threatened to breach or repudiate, its obligations hereunder.


 


“Debt Exchangeable for Equity” means Common Equity Units or Debt Exchangeable
for Preferred 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 (in this definition, the “issuer”), permitting
the issuer to defer Distributions in whole or in part on such securities for
one or more Distribution Periods of up to at least seven years without any
remedies other than Permitted Remedies and that are the most junior
subordinated debt of the issuer (or rank pari
passu with the most junior subordinated debt of the issuer) (in this
definition, “subordinated debt”) and (ii) a fractional interest in a stock
purchase contract for a share or shares of Qualifying Preferred Stock of the
Corporation that ranks pari 


 


13

















 


passu with or junior to all  other preferred stock of the Corporation (in
this definition, “preferred stock”);


 


(b)           provides that the holders directly or indirectly grant to the
Corporation a security interest in such subordinated debt and their proceeds
(including any substitute collateral permitted under the transaction documents)
to secure the holders’ 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 such securities or earlier in the event of an early settlement event based
on: (i) the dissolution of the issuer of such securities or (ii) one
or more financial tests set forth in the terms of the instrument governing such
securities;


 


(d)           provides for the proceeds raised in the remarketing of the subordinated
debt 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 or other collateral directly or indirectly pledged by the holders of such
securities;


 


(e)           is subject to an Explicit Replacement 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.


 


“Defeasance” has the meaning specified in Section 2.


 


“Distribution Date” means, as to any security or combination of
securities, the dates on which periodic Distributions on such securities are
scheduled to be made.


 


“Distribution Period” means, as to any security or combination of
securities, each period from and including a Distribution Date (or from and
including the date of issuance with respect to the period prior to the initial
Distribution Date) for such securities to but not including the next succeeding
Distribution Date for such securities.


 


“Distributions” means, as to a security or combination of securities, dividends,
interest payments or other income distributions to the holders thereof that are
not Subsidiaries of the Corporation.


 


“Eligible Debt” means, at any time, Eligible Subordinated Debt or, if no Eligible
Subordinated Debt is then outstanding, Eligible Senior Debt. The Notes shall
not be considered “Eligible Debt” for purposes of this Replacement Capital
Covenant.


 


“Eligible Proceeds” has the meaning specified in the definition of Alternative Payment
Mechanism.


 


“Eligible Senior 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 (i) upon a bankruptcy, liquidation, dissolution or
winding up of the issuer, ranks most senior among the 


 


14

















 


issuer’s then outstanding
classes of unsecured indebtedness for money borrowed, (ii) is then
assigned a rating by at least one NRSRO (provided that this clause (ii) shall
apply on a Redesignation Date only if on such date the issuer has outstanding
senior long-term indebtedness for money borrowed that satisfies the
requirements of clauses (i), (iii) and (iv) that is then assigned a
rating by at least one NRSRO), (iii) has an outstanding principal amount
of not less than $100,000,000, and (iv) was issued through or with the
assistance of a commercial or investment banking firm or firms acting as
underwriters, initial purchasers or placement or distribution agents. For
purposes of this definition as applied to securities with a CUSIP number, each
issuance of long-term indebtedness for money borrowed that has (or, if such
indebtedness is held by a trust or other intermediate entity established
directly or indirectly by the issuer, the securities of such intermediate
entity 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 (i) upon a bankruptcy, liquidation, dissolution or
winding up of the issuer, ranks senior to the Notes and subordinate to the
issuer’s then outstanding series of unsecured indebtedness for money borrowed
that ranks most senior, (ii) is then assigned a rating by at least one
NRSRO (provided that this clause (ii) shall apply on a Redesignation Date
only if on such date the issuer has outstanding subordinated long-term
indebtedness for money borrowed that satisfies the requirements of clauses (i),
(iii) and (iv) that is then assigned a rating by at least one NRSRO),
(iii) has an outstanding principal amount of not less than $100,000,000,
and (iv) was issued through or with the assistance of a commercial or
investment banking firm or firms acting as underwriters, initial purchasers or
placement or distribution agents. For purposes of this definition as applied to
securities with a CUSIP number, each issuance of long-term indebtedness for
money borrowed that has (or, if such indebtedness is held by a trust or other
intermediate entity established directly or indirectly by the issuer, the
securities of such intermediate entity have) a separate CUSIP number shall be
deemed to be a series of the issuer’s long-term indebtedness for money borrowed
that is separate from each other series of such indebtedness.


 


“EPS” means
earnings per share as calculated in accordance with generally accepted
accounting principles in the United States or IFRS, if then applicable to the
Corporation.


 


“Explicit Replacement Covenant” means, as to any security or combination of securities,
(i) a covenant substantially similar to this Replacement Capital Covenant
or (ii) a replacement capital covenant that the Board of Directors, acting
in good faith and in its reasonable discretion and reasonably construing the
definitions and other terms of this Replacement Capital Covenant, has
determined operates to the effect that the issuer will redeem, defease or
purchase such securities, and any Subsidiaries of the issuer will purchase such
securities, only if and to the extent that the applicable percentage of the
amount raised within the 180-day period preceding the applicable redemption,
defeasance or purchase date by issuing specified replacement capital securities
having 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, is at least equal to the principal amount of the
securities being defeased or the applicable redemption or purchase price,
provided that the board of directors of the issuer has determined that such
covenant is binding on the issuer for the benefit of one or more series of the
long-term 


 


15
















 


indebtedness for money
borrowed of the issuer (or an affiliate of the issuer, if the covenant so
provides) to the same extent as this Replacement Capital Covenant is binding on
the Corporation for the benefit of the Holders of the Initial Covered Debt.


 


“First Supplemental Indenture” has the meaning specified in Recital A.


 


“Form 8-K” means a Current Report on Form 8-K filed with the Commission under
the Securities Exchange Act, and any successor report.


 


“Form 10-K” means an Annual Report on Form 10-K filed with the Commission
under the Securities Exchange Act, and any successor report.


 


“Form 10-Q” means a Quarterly Report on Form 10-Q filed with the Commission
under the Securities Exchange Act, and any successor report.


 


“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.


 


“IFRS” has
the meaning specified in Section 4(b).


 


“Initial Covered Debt” means the $250,000,000 principal amount
Medium Term Notes issued by the Corporation on March 12, 2008 (CUSIP No. 80589MAB8),
scheduled to mature on April 1, 2020.


 


“Intent-Based Replacement Disclosure” means, as to any security or combination of
securities issued, directly or indirectly, that the issuer has publicly stated
its intention, either in the prospectus or other offering or purchase document
under which such security or combination of securities were initially offered
for sale or in filings with the Commission made by the issuer or an affiliate
under the Securities Exchange Act prior to or contemporaneously with the
issuance of such securities, that the issuer will redeem, purchase or defease
or its Subsidiaries will purchase, such securities only with the Applicable
Percentage of the amounts raised within the 180-day period preceding the
applicable redemption, purchase or defeasance date from the issuance 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.


 


“Investor Screen” has the meaning specified in Section 3(d).


 


“Mandatorily Convertible Preferred Stock” means cumulative preferred stock or
Non-Cumulative Preferred Stock of the Corporation with (a) no prepayment
obligation on the part of the issuer thereof, whether at the election of the
holders or otherwise, and (b) a requirement that the preferred stock
convert into Common Stock of the issuer within three years from the date of its
issuance for a determinable number of shares or within a range established at
the time of issuance of the cumulative preferred stock or the Non-Cumulative
Preferred Stock, subject to customary anti-dilution or similar adjustments.


 


“Mandatory Trigger Provision” means, as to any security or combination of
securities, provisions in the terms thereof or in the related transaction
agreements that (A) require, or at its option in the case of perpetual
Non-Cumulative Preferred Stock permit, the issuer of such security or
combination of securities to make payment of Distributions on such securities
within two years after a failure to satisfy one or more financial tests set
forth in the terms of such securities or related transaction agreements only if
payment of such Distributions during that 


 


16

















 


two-year period is made in
connection with the issuance and sale of APM Qualifying Securities (for the
avoidance of doubt, payment of such Distributions with cash from any source
other than APM Qualifying Securities is not permitted during such two-year
period immediately following the failure of the issuer to satisfy such
financial test(s)), such payment to be in an amount not exceeding the amount of
the net proceeds of such sale at least equal to the amount of unpaid
Distributions on such securities (including without limitation all deferred and
accumulated amounts) and in either case requires 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 and still
outstanding Mandatorily Convertible Preferred Stock the net proceeds of which
the issuer may apply to pay such Distributions pursuant to such provision may
not exceed the Preferred Cap, (B) in the case of securities other than
perpetual Non-Cumulative Preferred Stock, prohibit the issuer from purchasing
any APM Qualifying Securities, or any securities that rank pari passu
with or junior to APM Qualifying Securities, the proceeds of which were used to
settle deferred interest during the relevant deferral period, prior to the date
six months after the issuer applies the net proceeds of the sales described in
clause (A) to pay such unpaid Distributions in full, (C) in the case
of securities other than perpetual Non-Cumulative 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), prohibit the issuer of such securities from
redeeming or purchasing any of its securities ranking upon the liquidation,
dissolution or winding up of the issuer junior to or pari passu
with any APM Qualifying Securities the proceeds of which were used to settle
deferred Distributions during the relevant deferral period until at least one
year after all deferred Distributions have been paid. For purposes of this
definition of Mandatory Trigger Provision, (i) 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; (ii) if, due to a Market Disruption Event or otherwise,
the issuer is able to raise and apply some, but not all, of the eligible
proceeds necessary to pay all  deferred
Distributions on any Distribution Date, the issuer will apply an amount equal
to 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 (iii) 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, the Preferred Cap and the Share Cap (if any), as applicable, in
proportion to the total amounts of deferred Distributions 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 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.


 


17

















 


“Market Disruption Event” means the occurrence or existence of any of
the following events or sets of circumstances:


 


(a)           trading in securities generally, or
in the securities of the issuer (or any affiliate of the issuer that may issue
securities in settlement of an Alternative Payment Mechanism) specifically, on
The New York Stock Exchange or any other national securities exchange or over-the-counter
market on which such securities are 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, such securities;


 


(b)           the issuer (or an affiliate as
specified in clause (a) of this defined term) would be required to obtain
the consent or approval of its shareholders (or the shareholders of an
affiliate as specified in said clause (a)) or a regulatory body (including,
without limitation, any securities exchange) or governmental authority to issue
APM Qualifying Securities or Qualifying Capital Securities and the issuer (or
an affiliate as specified in said clause (a)) fails to obtain that consent or
approval notwithstanding the commercially reasonable efforts of the issuer (or
an affiliate as specified in said clause (a)) to obtain that consent or
approval or a regulatory authority instructs the issuer (or an affiliate as
specified in said clause (a)) not to sell or offer for sale such securities;


 


(c)           a banking moratorium shall have been
declared by the federal or state authorities of the United States and such
moratorium materially disrupts or otherwise has a material adverse effect on trading
in, or the issuance and sale of, 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, 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, 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, APM
Qualifying Securities;


 


(g)           an event occurs and is continuing as
a result of which the offering document for the offer and sale of the APM
Qualifying Securities or Qualifying Capital Securities would, in the reasonable
judgment of the issuer (or an affiliate as specified in clause (a) of this
defined term), contain an untrue statement of a material fact or omit to state
a material fact required to be stated in that offering document or necessary to
make the statements in that offering document not misleading and either (i) the
disclosure of that event at such time, in the reasonable judgment of the issuer
(or an affiliate as specified in said clause (a)), would have a 


 


18

















 


material adverse effect on
the business of the issuer (or an affiliate as specified in said clause (a)) or
(ii) the disclosure relates to a previously undisclosed proposed or
pending material business transaction, the disclosure of which would impede the
ability of the issuer or any affiliate to consummate that transaction, provided
that no single suspension period contemplated by this clause (g) shall
exceed 90 consecutive days and multiple suspension periods contemplated by this
clause (g) shall not exceed an aggregate of 180 days in any 360-day
period; or


 


(h) the
issuer (or an affiliate as specified in clause (a) of this defined term)
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 issuer (or an affiliate as specified in said clause (a)) is unable to
comply with such rule or regulation or such compliance is unduly
burdensome, provided that no single suspension period contemplated by this
clause (h) shall exceed 90 consecutive days and multiple suspension
periods contemplated by this clause (h) shall not exceed an aggregate of
180 days in any 360-day period.


 


The
definition of “Market Disruption Event” or similar words as used in any
securities or combination of securities that constitute Replacement Capital
Securities may include less than all  of
the numbered clauses specified above in this definition, as determined by the
issuer thereof at the time of issuance of such securities and, in the case of
numbered clauses (i), (ii), (iii) and (iv) in this definition, as applicable
to a circumstance where the issuer would otherwise endeavor to issue preferred
stock, shall be limited to circumstances affecting markets in which the
issuer’s preferred stock trades or in which a listing for its trading is being
sought.


 


“Market Value” means, on any date, the closing sale price per share of Common Stock
(or if no closing sale price is reported, the average of the bid and ask prices
or, if more than one in either case, the average of the average bid and the
average ask prices) on that date as reported in composite transactions by The
New York Stock Exchange or, if the Common Stock is not then listed on The New
York Stock Exchange, as reported by the principal U.S. securities 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 Value 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.


 


“Measurement Period” means, with respect to any redemption,
purchase or defeasance of Notes, 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 issuer’s trade creditors. As of the
date hereof, the term “Most Junior Subordinated Debt” shall include the Notes.


 


“Non-Cumulative” means, with respect to any
securities, that the issuer thereof may 


 


19

















 


elect not to make any number
of periodic Distributions without any remedy arising under the terms of the
securities or related transaction agreements in favor of the holders of such
securities as a result of such issuer’s failure to pay Distributions, 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 except in the definition of “Non-Cumulative
Preferred Stock.”


 


“Non-Cumulative Preferred Stock” means
preferred or preference stock which is Non-Cumulative.


 


“Notes” has the meaning specified in Recital A.


 


“NRSRO” means a nationally recognized statistical rating organization within
the meaning of Section 3(a)(62) of the Securities Exchange Act.


 


“Optional Deferral Provision” means, as to any security or combination of
securities, a provision in the terms thereof or of the related transaction
agreements, to the effect that the issuer thereof 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 ten years without any remedy
other than Permitted Remedies as a result of such issuer’s failure to pay
Distributions.


 


“Permitted Remedies” means, as to any security or combination of
securities, any one or more of (i) rights in favor of the holders thereof
permitting such holders to elect one or more directors of the issuer or its
direct or indirect parent company (including any such rights required by the
listing requirements of any stock or securities exchange on which such
securities may be listed or traded), (ii) 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 deferred Distributions, have not been paid in
full or to such lesser extent as may be specified in the terms of such
securities or any related transaction agreements, and (iii) provisions
obligating the issuer to cause such unpaid Distributions to be paid in full
pursuant to an Alternative Payment Mechanism.


 


“Person” means any individual, corporation, partnership, joint venture, trust,
limited liability company or other legal 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 Supplement” has the meaning specified in Recital B.


 


“Purchase Restriction” has the meaning specified in the definition
of Alternative Payment Mechanism.


 


“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 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 the Notes on or 


 


20

















 


prior
to the Stepdown Date:


 


(i)            securities issued by the Corporation
or any of its Subsidiaries that (A) have no maturity or a maturity of at
least 55 years and (B) either (1) are subject to an Explicit
Replacement Covenant and are Non-Cumulative or (2) have a Mandatory
Trigger Provision and an Optional Deferral Provision and are subject to
Intent-Based Replacement Disclosure;


 


(ii)           securities issued
by the Corporation or any of its Subsidiaries that (A) have no maturity or
a maturity of at least 35 years, (B) are subject to an Explicit
Replacement Covenant, (C) have an Optional Deferral Provision and (D) have
a Mandatory Trigger Provision;


 


(iii)          securities issued
by the Corporation or any of its Subsidiaries that (A) have no maturity or
a maturity of at least 55 years, (B) are subject to an Explicit Replacement
Covenant and (C) have an Optional Deferral Provision;


 


(iv)          securities issued by
the Corporation or any of its Subsidiaries that (A) have no maturity or a
maturity of at least 55 years and (B) are subject to Intent-Based
Replacement Disclosure and (C) are Non-Cumulative;


 


(v)           securities issued by the Corporation
or any of its Subsidiaries that (A) have no maturity or a maturity of at
least 55 years, (B) have an Optional Deferral Provision and (C) have
a Mandatory Trigger Provision;


 


(vi)          securities issued by
the Corporation or any of its Subsidiaries that (A) have no maturity or a
maturity of at least 35 years, (B) are subject to an Explicit Replacement
Covenant and (C) are Non-Cumulative;


 


(vii)         securities issued by
the Corporation or any of its Subsidiaries that (A) either (1) have
no maturity or a maturity of at least 35 years and are subject to Intent-Based
Replacement Disclosure or (2) have no maturity or a maturity of at least
25 years and are subject to an Explicit Replacement 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 55 years and (C) is
subject to an Explicit Replacement Covenant; or


 


(b)                               in connection with any redemption, defeasance
or purchase of the Notes after the Stepdown Date:


 


(i)            all securities
described under clause (a) of this definition;


 


(ii)           securities issued by the Corporation
or any of its Subsidiaries that (A) have no maturity or a maturity of at
least 55 years, (B) are subject to Intent-Based Replacement Disclosure and
(C) have an Optional Deferral Provision;


 


(iii)          securities issued
by the Corporation or any of its Subsidiaries that (A) have no maturity or
a maturity of at least 35 years, (B) are subject to an Explicit
Replacement Covenant and (C) have an Optional Deferral Provision;


 


(iv)          securities issued by the Corporation
or any of its Subsidiaries that (A) 


 


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either
(1) have no maturity or a maturity of at least 35 years and are subject to
Intent-Based Replacement Disclosure or (2) have no maturity or a maturity
of at least 25 years and are subject to an Explicit Replacement Covenant and (B) are
Non-Cumulative;


 


(v)           securities issued by the Corporation
or any of 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


 


(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
(1) has no maturity or a maturity of at least 55 years and is subject to
Intent-Based Replacement Disclosure or (2) has no maturity or a maturity
of at least 35 years and is subject to an Explicit Replacement Covenant.


 


“Qualifying Preferred Stock” means Non-Cumulative Preferred Stock of the
Corporation that (i) ranks pari passu with or junior to other preferred
stock of the issuer, (ii) is perpetual with no prepayment obligation on
the part of the issuer thereof, whether at the election of the holders or
otherwise, and (iii) either (A) is subject to an Explicit Replacement
Capital Covenant or (B) is subject to Intent-Based Replacement Disclosure
and has a provision that prohibits the issuer thereof from paying any dividends
thereon upon its failure to satisfy one or more financial tests set forth in
the terms of such securities or related transaction agreements.


 


“Qualifying Warrants” means net share settled warrants to purchase
Common Stock that have an exercise price at the date the issuer agrees to issue
such warrants that is greater than the current Market Value of the issuer’s
Common Stock as of their date of issuance, and do not entitle the issuer to
redeem such warrants for cash and the holders of such warrants are not entitled
to require the issuer to repurchase such warrants for cash in any circumstance;
provided that the issuer states in the prospectus or other offering or purchase
document for any Qualifying Capital Securities that include an Alternative
Payment Mechanism or Mandatory Trigger Provision its intention that any
Qualifying Warrants issued in accordance with such Alternative Payment
Mechanism or Mandatory Trigger Provision will have exercise prices at least 10%
above the current Market Value of the issuer’s Common Stock on the date of
issuance of such Qualifying Warrants.


 


“Redesignation Date” means, as to the then effective Covered Debt,
the earliest of (i) the date that is two years prior to the final maturity
date of such Covered Debt, (ii) if the issuer elects to redeem or defease,
or the Corporation or a majority owned 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, defeasance or purchase the
outstanding principal amount of such Covered Debt is less than $100,000,000,
the applicable redemption, defeasance or purchase date and (iii) if the
then outstanding Covered Debt is not Eligible Subordinated Debt, the date on
which the Corporation issues long-term indebtedness for money borrowed that is
Eligible Subordinated Debt.


 


“Replacement Capital Covenant” has the meaning specified in the introduction
to this instrument.


 


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“Replacement Capital Securities” means (i) Common Stock and/or (ii) securities
that constitute one or more of the following (as determined by the Board of
Directors reasonably construing the definitions and other terms of this Replacement
Capital Covenant):


 


(a)           Rights to acquire Common Stock;


 


(b)           Debt
Exchangeable for Equity


 


(c)           Mandatorily
Convertible Preferred Stock; and


 


(d)           Qualifying
Capital Securities.


 


“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.


 


“Share Cap” has the meaning specified in the definition of Alternative Payment
Mechanism.


 


“Stepdown Date” means the earliest to occur of either (i) the date that is 50
years prior to the maturity date of the Notes, as such maturity date of the
Notes is extended pursuant to the First Supplemental Indenture or (ii) the
date of initial application to the Notes by an NRSRO of a new methodology for
assigning equity credit to the Notes implemented subsequent to the date hereof
that results in a reduction in the equity credit ascribed to the Notes by such
NRSRO on the date of initial issuance of the Notes.


 


“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).


 


“Trustee” has
the meaning specified in Recital A.


 


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