EX-4.2



 



Execution
Version



 

 


Replacement Capital Covenant



by



MetLife, Inc.



dated as of December 12, 2007



 

 


 









 





     Replacement Capital Covenant, dated as of December 12, 2007 (this “Replacement
Capital Covenant”), by MetLife, Inc., a Delaware corporation (together with its successors and
assigns, the “Corporation”), in favor of and for the benefit of each Covered Debtholder (as defined
below).



RECITALS




     (A) On the date hereof, the Corporation is issuing $700,000,000 aggregate principal amount of
its 7.875 % Fixed-to-Floating Rate Exchangeable Surplus Trust Securities (the “X-SURPS”)
automatically exchangeable in specified circumstances into 7.875 % Fixed-to-Floating Rate Junior
Subordinated Debentures due 2067 (the “Junior Subordinated Debentures”). In this Replacement
Capital Covenant, the term “Securities” refers to the X-SURPS prior to an Exchange and the Junior
Subordinated Debentures thereafter.



     (B) This Replacement Capital Covenant is the “Replacement Capital Covenant” referred to in the
Offering Circular, dated December 5, 2007, relating to the Securities (the “Offering Circular”).



     (C) The Corporation is entering into and disclosing the content of this Replacement Capital
Covenant in the manner provided below with the intent that the covenants provided for in this
Replacement Capital Covenant be enforceable by each Covered Debtholder and that the Corporation be
estopped from disregarding the covenants in this Replacement Capital Covenant, in each case to the
fullest extent permitted by applicable law.



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



     Now, Therefore, the Corporation hereby covenants and agrees as follows in favor of
and for the benefit of each Covered Debtholder.



     1. Definitions. Capitalized terms used in this Replacement Capital Covenant
(including the Recitals) have the respective meanings set forth in Schedule I hereto.



     2. Limitations on Repayment, Redemption and Purchase of Junior Subordinated
Debentures. The Corporation hereby promises and covenants to and for the benefit of each
Covered Debtholder that the Corporation shall not repay, redeem or purchase (for the avoidance of
doubt, any reference in this Replacement Capital Covenant to any repayment of the Corporation’s
securities will be deemed to include a reference to defeasance of the Corporation’s obligations
under the securities), and will cause its Subsidiaries not to repay, redeem or purchase and shall
not permit to be repaid, redeemed or repurchased, as applicable, the Securities on or before
December 15, 2057, except to the extent that the principal amount repaid or the applicable
redemption, repayment or purchase price does not exceed the Applicable Percentage of the aggregate
amount of net cash proceeds received by the Corporation and its Subsidiaries since the most recent
Measurement Date (without double counting proceeds received



 









 




in any prior Measurement Period) from the sale of Common Stock, rights to acquire Common
Stock, Mandatorily Convertible Preferred Stock, Debt Exchangeable for Common Equity, Debt
Exchangeable for Preferred Equity and Qualifying Capital Securities (collectively, “Replacement
Capital Securities”).




     3. Covered Debt.



     (a) The Corporation represents and warrants that the Initial Covered Debt is Eligible Debt.



     (b) On or during the 30-day period immediately preceding any Redesignation Date with respect
to the Covered Debt then in effect, the Corporation shall identify the series of Eligible Debt that
will become the Covered Debt on and after such Redesignation Date in accordance with the following
procedures:




     (i) the Corporation shall identify each series of its then outstanding long-term
indebtedness for money borrowed that is Eligible Debt;




     (ii) if only one series of the Corporation’s then outstanding long-term indebtedness
for money borrowed is Eligible Debt, such series shall become the Covered Debt commencing on
the related Redesignation Date;




     (iii) if the Corporation has more than one outstanding series of long-term indebtedness
for money borrowed that is Eligible Debt, then the Corporation shall identify the series
that has the latest stated final maturity date as of the date the Corporation is applying
the procedures in this Section 3(b) and such series shall become the Covered Debt on the
related Redesignation Date;




     (iv) the series of outstanding long-term indebtedness for money borrowed that is
determined to be Covered Debt pursuant to this Section 3(b) shall be the Covered Debt for
purposes of this Replacement Capital Covenant for the period commencing on the related
Redesignation Date and continuing to but not including the Redesignation Date as of which a
new series of outstanding long-term indebtedness is next determined to be the Covered Debt
pursuant to the procedures set forth in this Section 3(b); and




     (v) in connection with such identification of a new series of Covered Debt, the
Corporation shall, as provided for in Section 3(c), give a notice and file with the
Commission a current report on Form 8-K including or incorporating by reference this
Replacement Capital Covenant as an exhibit within the time frame provided for in such
section.



     (c) In order to give effect to the intent of the Corporation described in Recital C, the
Corporation covenants that (i) simultaneously with the execution of this Replacement Capital
Covenant or as soon as practicable after the date hereof, it shall (A) give notice to the holders
of the Initial Covered Debt, in the manner provided in the indenture relating to the Initial
Covered Debt, of this Replacement Capital Covenant and the rights granted to such holders hereunder
and (B) file a copy of this Replacement Capital Covenant with the Commission as an exhibit to a
current report on Form 8-K (or any successor form) under the Exchange Act; (ii) so long as the
Corporation is a



3









 




reporting company under the Exchange Act, the Corporation will include in each annual report
filed with the Commission on Form 10-K (or any successor form) under the Exchange Act a description
of the covenant set forth in Section 2 and identify the series of long-term indebtedness for
borrowed money that is Covered Debt as of the date such annual report on Form 10-K (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 pursuant
to the procedures set forth in Section 3(b), the Corporation shall give notice of such occurrence
within 30 days to the holders of such long-term indebtedness for money borrowed in the manner
provided for in the indenture, fiscal agency agreement or other instrument under which such
long-term indebtedness for money borrowed was issued and report such change in a current report on
Form 8-K (or any successor form) including or incorporating 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) if, and only if, the
Corporation ceases to be a reporting company under the Exchange Act, the Corporation shall post on
its website (or other similar electronic platform generally available to the public) the
information otherwise required to be included in Exchange Act filings pursuant to clauses (ii) and
(iii) of this Section 3(c) and cause a notice of the execution of the Replacement Capital Covenant
to be posted on the Bloomberg screen for the 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 to a definitive copy 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 (v)
promptly upon request by any holder of Covered Debt, the Corporation shall provide such holder with
a conformed copy of this Replacement Capital Covenant.




     4. Termination, Amendment and Waiver. 



     (a) The obligations of the Corporation pursuant to this Replacement Capital Covenant shall
remain in full force and effect until the earliest (the “Termination Date”) to occur of (i)
December 15, 2057, or, if earlier, the date on which the Securities are otherwise repaid, redeemed
or purchased in full in compliance with this Replacement Capital Covenant, (ii) the date, if any,
on which the holders of a majority in principal amount of the then-effective series of Covered Debt
consent or agree in writing to the termination of this Replacement Capital Covenant and the
Corporation’s obligations hereunder, (iii) the date on which the Corporation ceases to have any
series of outstanding Eligible Senior Debt or Eligible Subordinated Debt (in each case, without
giving effect to the rating requirement in clause (b) of the definition of each such term) (iv) the
date on which a JSD Event of Default under the Junior Subordinated Indenture resulting in an
acceleration of the Junior Subordinated Debentures occurs, and (v) a Change of Control Event. 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 with
the consent of the holders of at least a majority in principal amount of the then-effective series
of Covered Debt. The Corporation may, acting alone and without the consent of such holders, amend
or supplement this Replacement Capital Covenant if (i) the effect of such amendment or supplement
is solely to impose additional restrictions on the types of securities



4









 




qualifying as Replacement Capital Securities, and an officer of the Corporation has delivered
to such holders in the manner provided for in the indenture, fiscal agency agreement or other
instrument with respect to such Covered Debt a written certificate to that effect, (ii) such
amendment or supplement is not adverse to such holders and one of the Corporation’s officers has
delivered to such holders in the manner provided for in the indenture, fiscal agency agreement or
other instrument with respect to such holders a written certificate stating that, in his or her
determination, such amendment or supplement is not adverse to such Covered Debtholders, or (iii)
such amendment or supplement eliminates Common Stock, rights to acquire Common Stock, Debt
Exchangeable for Common Equity and/or Mandatorily Convertible Preferred Stock as Replacement
Capital Securities if, 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 failure to eliminate
Common Stock, rights to acquire Common Stock, rights to acquire Common Stock, Debt Exchangeable for
Common Stock and/or Mandatorily Convertible Preferred Stock as a Replacement Capital Security 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.




     (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.



     5. Miscellaneous.



     (a) This Replacement Capital Covenant shall be governed by and construed in accordance with
the laws of the State of New York.



     (b) This Replacement Capital Covenant shall be binding upon the Corporation and its successors
and assigns and shall inure to the benefit of the Covered Debtholders as they exist from time to
time (it being understood and agreed by the Corporation that any Person who is a Covered Debtholder
at the time such Person acquires, holds or sells Covered Debt shall retain its status as a Covered
Debtholder for so long as the series of long-term indebtedness for borrowed money owned by such
Person is Covered Debt and, if such Person initiates a claim or proceeding to enforce its rights
under this Replacement Capital Covenant after the Corporation has violated its covenants in Section
2 and before the series of long-term indebtedness for money borrowed held by such Person is no
longer Covered Debt, such Person’s rights under this Replacement Capital Covenant shall not
terminate prior to a Termination Date solely by reason of such series of long-term indebtedness for
money borrowed no longer being Covered Debt).



     (c) All demands, notices, requests and other communications to the Corporation under this
Replacement Capital Covenant shall be deemed to have been duly given and made if in writing and (i)
if served by personal delivery upon the Corporation, on the day so delivered (or, if such day is
not a Business Day, the next succeeding Business Day), (ii) if delivered by registered post or
certified mail, return receipt requested, or sent to the Corporation by a national or international



5









 




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:





MetLife, Inc.

One MetLife Plaza

Long Island City, NY 11101



     (d) If the Corporation is obligated to sell Replacement Capital Securities and apply the net
proceeds to payments of principal of or interest on any outstanding securities in addition to the
Securities, then on any date and for any period the amount of net proceeds received by the
Corporation from those sales and available for such payments shall be applied to the Securities and
those other securities having the same scheduled repayment date or scheduled redemption date as the
Securities pro rata in accordance with their respective outstanding principal amounts and none of
such net proceeds shall be applied to any other securities having a later scheduled repayment date
or scheduled redemption date until the principal of and all accrued and unpaid interest on the
Securities has been paid in full.



6









 





     In Witness Whereof, the Corporation has caused this Replacement Capital
Covenant to be executed by its duly authorized officer, as of the day and year first above
written.



	 	 	 	 	 
	 	Metlife, Inc. 
 	 
	 	By:  	/s/
Eric T. Steigerwalt	 
	 	Name:  	Eric T. Steigerwalt 	 
	 	Title:  	Senior Vice President and Treasurer 	 
	 



Replacement Capital Covenant









 





Schedule I 




Definitions




     “Alternative Payment Mechanism” means, with respect to any securities or combination of
securities (together in this definition, “such securities”), provisions in the related transaction
documents requiring the Corporation to issue (or use APM Commercially Reasonable Efforts to issue)
one or more types of APM Qualifying Securities raising eligible proceeds at least equal to the
deferred Distributions on such securities and apply the proceeds to pay unpaid Distributions on
such securities, commencing on the earlier of (x) the first Distribution Date after commencement of
a deferral period on which the Corporation pays current Distributions on such securities and (y)
the fifth anniversary of the commencement of such deferral period, and that:



     (a) define “eligible proceeds” to mean, for purposes of such Alternative Payment Mechanism,
the net proceeds (after underwriters’ or placement agents’ fees, commissions or discounts and other
expenses relating to the issuance or sale of the relevant securities, where applicable, and
including the fair market value of property received by the Corporation or any of its Subsidiaries
as consideration for such securities) that the Corporation has received during the 180 days prior
to the related Distribution Date from the issuance of APM Qualifying Securities, up to the
Preferred Cap (as defined in paragraph (f) below) in the case of APM Qualifying Securities that are
Qualifying Non-Cumulative Perpetual Preferred Stock and 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, unless (if the Corporation elects to so provide in the terms of
such securities) an Applicable Governmental Authority directs otherwise or an event of default has
occurred that results in the acceleration of such securities;



     (c) include a Repurchase Restriction that applies if deferral of Distributions continues for
more than one year;



     (d) notwithstanding the foregoing provision, if an Applicable Governmental Authority
disapproves the issuer’s sale of APM Qualifying Securities, may (if the Corporation elects to so
provide in the terms of such securities) permit the Corporation to pay deferred Distributions from
any source without a breach of its obligations under the transaction documents;



     (e) if an Applicable Governmental Authority does not disapprove the Corporation’s issuance and
sale of APM Qualifying Securities but disapproves the use of the proceeds thereof to pay deferred
Distributions, may (if the Corporation elects to so provide in the terms of such securities) permit
the Corporation to use such proceeds for other purposes and to continue to defer Distributions
without a breach of its obligations under the transaction documents; and



     (f) limit the obligation of the Corporation to issue (or use APM Commercially Reasonable
Efforts to issue) APM Qualifying Securities up to:



S-1









 






     (i) in the case of APM Qualifying Securities that are Common Stock or Qualifying
Warrants, an amount from the issuance thereof pursuant to the Alternative Payment Mechanism
(including at any point in time from all prior issuances thereof pursuant to the Alternative
Payment Mechanism) with respect to deferred Distributions attributable to the first five
years of any deferral period equal to (a) 2% of the product of the average of the current
stock market prices of the Common Stock on the ten consecutive trading days ending on the
fourth trading day immediately preceding the date of issuance multiplied by the total number
of issued and outstanding shares of Common Stock as of the date of the Corporation’s most
recent publicly available consolidated financial statements or (b) to a number of shares of
Common Stock and shares purchasable upon exercise of Qualifying Warrants, in the aggregate,
not in excess of 2% of the outstanding number of shares of Common Stock (the “Common Cap”),
provided (and it being understood) that the Common Cap shall cease to apply to such deferral
period by a date (as specified in the related transaction documents) which shall be not
later than the ninth anniversary of the commencement of such deferral period;




     (ii) in the case of APM Qualifying Securities that are Qualifying Non-Cumulative
Perpetual Preferred Stock or Mandatorily Convertible Preferred Stock, an amount from the
issuance thereof pursuant to the related Alternative Payment Mechanism (including at any
point in time from all prior issuances thereof pursuant to such Alternative Payment
Mechanism) equal to 25% of the initial principal or stated amount of the securities that are
the subject of the related Alternative Payment Mechanism (the “Preferred Cap”);




     (iii) in the case of Qualifying Capital Securities other than Qualifying Non-Cumulative
Perpetual Preferred Stock, include a Bankruptcy Claim Limitation Provision;



     (g) may include a provision that limits the Corporation’s ability to sell its Common Stock,
Qualifying Warrants or Mandatorily Convertible Preferred Stock above an aggregate cap specified in
the transaction documents (a “Share Cap”), subject to the Corporation’s agreement to use
commercially reasonable efforts to increase the Share Cap amount (i) only to the extent that it can
do so and simultaneously satisfy its future fixed or contingent obligations under other securities
and derivative instruments that provide for settlement or payment in Common Stock or (ii) if the
Corporation cannot increase the Share Cap amount as contemplated in clause (i) above, by requesting
the Corporation’s board of directors to adopt a resolution for a stockholder vote at the next
occurring annual stockholders’ meeting to increase the number of authorized Common Stock for
purposes of satisfying the issuer’s obligations to pay deferred Distributions; and



     (h) permit the Corporation, at its option, to provide that if it is involved in an
amalgamation, 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 surviving or resulting entity’s voting shares are owned by the stockholders of the
other party to the Business Combination, then clauses (a) through (c) of this definition will not
apply to any deferral period that is terminated on the next Distribution Date following the date of
consummation of the Business Combination;



S-2









 




provided (and it being understood) that:





     (A) the Corporation shall not be obligated to issue (or use APM Commercially Reasonable
Efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has
occurred and is continuing;




     (B) if, due to a Market Disruption Event or otherwise, the Corporation is able to raise
and apply some, but not all, of the eligible proceeds necessary to pay all deferred
Distributions on any Distribution Date, the Corporation will apply any available eligible
proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in
chronological order subject to the Common Cap, the Share Cap and the Preferred Cap, as
applicable; and




     (C) if the Corporation has outstanding more than one class or series of securities
under which it is obligated to sell a type of APM Qualifying Securities and apply some part
of the proceeds to the payment of deferred Distributions, then on any 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 Share Cap and the Preferred Cap, as
applicable, in proportion to the total amounts that are due on such securities, or on such
other basis as an Applicable Governmental Authority may approve.



     “APM
Commercially Reasonable Efforts” means commercially reasonable efforts to complete the
offer and sale of APM Qualifying Securities to third parties that are not Subsidiaries of the
Corporation in public offerings or private placements. For the avoidance of doubt, the Corporation
will not be considered to have used APM Commercially Reasonable Efforts if the Corporation
determines to not pursue or complete such sale due to pricing, coupon, dividend rate or dilution
considerations.



     “APM
Qualifying Securities” means, with respect to an Alternative Payment Mechanism or
Mandatory Trigger Provision, one or more of the following (as designated in the transaction
documents for the Qualifying Capital Securities that include an Alternative Payment Mechanism or a
Mandatory Trigger Provision, as applicable):



     (a) Common Stock;



     (b) Qualifying Warrants;



     (c) Qualifying Non-Cumulative Perpetual Preferred Stock; or



     (d) Mandatorily Convertible Preferred Stock;


provided (and it being understood) that:





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



S-3









 






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




     (ii) 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 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 so that there is more than an insubstantial risk that the failure to do so
would result in a reduction in the Corporation’s earnings per share as calculated
for financial reporting purposes; and




     (B) if the APM Qualifying Securities for any Alternative Payment Mechanism or Mandatory
Trigger Provision include Mandatorily Convertible Preferred Stock,




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




     (ii) 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 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 so that there is more than an insubstantial risk that the failure to do so
would result in a reduction in the Corporation’s earnings per share as calculated
for financial reporting purposes.



     “Applicable Governmental Authority” means any regulatory body, administrative agency, or
governmental body having jurisdiction over the Corporation or any Subsidiary thereof, including,
without limitation, any insurance regulatory authority and the Federal Reserve Board.



     “Applicable Percentage” means:



     (a) in the case of any Common Stock or Qualifying Warrants, (i) 133.33% with respect to any
repayment, redemption or purchase prior to December 15, 2037, (ii) 200% with respect to any
repayment, redemption or purchase on or after December 15, 2037 and prior to December 15, 2047 and
(iii) 400% with respect to any repayment, redemption or purchase on or after December 15, 2047;



     (b) in the case of any Mandatorily Convertible Preferred Stock, Debt Exchangeable for Common
Equity or Debt Exchangeable for Preferred Equity, (i) 100% with respect to any repayment,
redemption or purchase prior to December 15, 2037, (ii) 150% with respect to any repayment,
redemption or purchase on or after December 15, 2037 and prior to December 15, 2047



S-4









 




and (iii) 300% with respect to any repayment, redemption or purchase on or after December 15,
2047;




     (c) in the case of any Qualifying Capital Securities described in clause (a) of the definition
of that term, (i) 100% with respect to any repayment, redemption or purchase prior to December 15,
2037, (ii) 150% with respect to any repayment, redemption or purchase on or after December 15, 2037
and prior to December 15, 2047 and (iii) 300% with respect to any repayment, redemption or purchase
on or after December 15, 2047;



     (d) in the case of any Qualifying Capital Securities described in clause (b) of the definition
of that term, (i) 100% with respect to any repayment, redemption or purchase on or after December
15, 2037 and prior to December 15, 2047 and (ii) 200% with respect to any repayment, redemption or
purchase on or after December 15, 2047; and



     (e) in the case of any Qualifying Capital Securities described in clause (c) of the definition
of that term, 100%.



     “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 or the
Corporation, limit the claim of the holders of such securities to Distributions that accumulate
during (i) any deferral period, in the case of securities that have an Alternative Payment
Mechanism or (ii) any period in which the Corporation fails to satisfy one or more financial tests
set forth in the terms of such securities or related transaction agreements, in the case of
securities that have a Mandatory Trigger Provision, to:



     (a) in the case of Qualifying Capital Securities that have an Alternative Payment Mechanism or
Mandatory Trigger Provision with respect to which the APM Qualifying Securities do not include
Qualifying Non-Cumulative Perpetual Preferred Stock or Mandatorily Convertible Preferred Stock, 25%
of the stated or principal amount of such Qualifying Capital Securities then outstanding; and



     (b) in the case of any other Qualifying Capital Securities, an amount not in excess of the sum
of (x) the earliest two years of accumulated and unpaid Distributions (including compounded amounts
thereon) and (y) an amount equal to the excess, if any, of the Preferred Cap over the aggregate
amount of net proceeds from the sale of Qualifying Non-Cumulative Perpetual Preferred Stock and
Mandatorily Convertible Preferred Stock that are still outstanding 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 clause
(x), the amount they receive in respect of such excess shall not exceed the amount they would have
received had the claim for such excess ranked pari passu with the interests of the holders, if any,
of Qualifying Non-Cumulative Perpetual Preferred Stock.



     “Below
Investment Grade Rating Event” means the Corporation’s senior unsecured credit rating
from each of the Rating Agencies is below Investment Grade on any date from the date of the public
notice of an arrangement that could result in a Change of Control until the end of



S-5









 




the 60-day period following public notice of the occurrence of a Change of Control (which
period shall be extended so long as the senior unsecured credit rating of the Corporation is under
publicly announced consideration for possible downgrade by any of the Rating Agencies); provided
that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in
rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus
shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change
of Control Event hereunder) if the Rating Agencies making the reduction in rating to which this
definition would otherwise apply do not announce or publicly confirm or inform the Corporation in
writing at its request that the reduction was the result, in whole or in part, of any event or
circumstance comprised of or arising as a result of, or in respect of, the applicable Change of
Control (whether or not the applicable Change of Control shall have occurred at the time of the
Below Investment Grade Rating Event).




     “Business
Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking
institutions in New York, New York are authorized or required by law or executive order to remain
closed, or on or after December 15, 2037, a day which is not a London banking day.



     “Change
of Control” means the occurrence of any of the following:



     (a) the consummation of any direct or indirect sale, transfer, conveyance or other disposition
(other than by way of amalgamation, merger, consolidation or scheme of arrangement), in one or a
series of related transactions, of all or substantially all of the properties or assets of the
Corporation and those of its Subsidiaries, taken as a whole, to any “person” (as that term is used
in Section 13(d)(3) of the Exchange Act), other than the issuer or another wholly-owned Subsidiary
of the Corporation;



     (b) the consummation of any transaction (including, without limitation, any amalgamation,
merger, consolidation or scheme of arrangement) the result of which is that any “person” (as that
term is used in Section 13(d)(3) of the Exchange Act), other than the Corporation or another
wholly-owned Subsidiary of the Corporation, becomes the beneficial owner, directly or indirectly,
of more than or equal to 50% of the Voting Shares of the Corporation, measured by voting power
rather than number of shares; or



     (c) the first day on which a majority of the members of the Corporation’s board of directors
are not Continuing Directors.



     Notwithstanding the foregoing, a transaction effected to create a holding company for the
Corporation will not be deemed to involve a change of control if (1) pursuant to such transaction
the Corporation becomes a wholly-owned Subsidiary of such holding company and (2) the holders of
the Voting Shares of such holding company immediately following such transaction are the same as
the holders of the Voting Shares of the Corporation immediately prior to such transaction.



     “Change
of Control Event” means the occurrence of a Change of Control and a Below Investment
Grade Rating Event.



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



S-6









 





     “Common
Stock” means common stock of the Corporation and rights to acquire common stock issued
pursuant to any dividend reinvestment plan and employee benefit plans of the Corporation (including
treasury shares of common stock).



     “Continuing
Director” means, as of any date of determination, any member of the Corporation’s
board of directors who:



     (a) was a member of such board of directors on the first date that any of the Securities were
issued; or



     (b) was nominated for election or elected to the Corporation’s board of directors with the
approval of a majority of the Continuing Directors who were members of the Corporation’s board at
the time of such nomination or election.



     “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 the Corporation’s long-term
indebtedness for money borrowed during the period that such long-term indebtedness for money
borrowed is Covered Debt.



     “Debt
Exchangeable for Common Equity” means a security or combination of securities (together
in this definition, “such securities”) that:



     (a) gives the holder a beneficial interest in (x) a fractional interest in a stock purchase
contract for 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 subordinated debt securities, subject to customary anti-dilution
adjustments and (y) subordinated debt securities of the Corporation or any of its Subsidiaries that
are non-callable prior to the settlement date of the stock purchase contracts;



     (b) provides that the holders directly or indirectly grant 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 holders’ direct or indirect obligation to
purchase shares of Common Stock pursuant to such stock purchase contracts;



     (c) includes a remarketing feature pursuant to which the subordinated debt securities are
remarketed to new investors commencing not later than the last Distribution Date that is at least
one month prior to the settlement date of the stock purchase contract; and



     (d) provides for the proceeds raised in the remarketing to be used to purchase shares of
Common Stock under the stock purchase contracts and, if there has not been a successful



S-7









 




remarketing by the settlement date of the stock purchase contract, provides that the stock
purchase contracts will be settled by the Corporation exercising its remedies as a secured party
with respect to the subordinated debt securities or other collateral directly or indirectly pledged
by holders 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 or one of its Subsidiaries (in this definition, the “issuer”) that include a provision
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) and (ii) an interest in a stock purchase contract that
obligates the holder to acquire a beneficial interest in Qualifying Non-Cumulative Perpetual
Preferred Stock;



     (b) provides that the holders 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 Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to such stock
purchase contracts;



     (c) includes a remarketing feature pursuant to which the subordinated debt of the issuer 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) one or more financial tests set forth in the terms of the instrument
governing the terms of such Debt Exchangeable for Preferred Equity or (ii) the dissolution of the
issuer of such Debt Exchangeable for Preferred Equity;



     (d) provides for the proceeds raised in the remarketing to be used to purchase Qualifying
Non-Cumulative Perpetual Preferred Stock 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 rights as a secured creditor with respect to the subordinated debt
securities or other collateral directly or indirectly pledged by investors in the Debt Exchangeable
for Preferred Equity;



     (e) includes a Qualifying Replacement Capital Covenant that will apply to such securities and
to any Qualifying Non-Cumulative Perpetual Preferred Stock issued pursuant to the stock purchase
contracts; provided that such Qualifying Replacement Capital Covenant may not include Debt
Exchangeable for Common Equity or Debt Exchangeable for Preferred Equity as a replacement security;
and



     (f) after the issuance of such Qualifying Non-Cumulative Perpetual Preferred Stock, provides
the holder with a beneficial interest in such Qualifying Non-Cumulative Perpetual Preferred Stock.



S-8









 




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



     “Distribution
Period” means, as to any securities or combination of securities, each period
from and including the later of the issue date and a Distribution Date for such securities to but
excluding the next succeeding Distribution Date for such securities.



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



     “Eligible
Debt” means, at any time, Eligible Subordinated Debt or, if no Eligible Subordinated
Debt is then outstanding, Eligible Senior Debt.



     “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 Securities 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),



S-9









 





     (c) has an outstanding principal amount of not less than $100,000,000, and



     (d) was issued through or with the assistance of a commercial or investment banking firm or
firms acting as underwriters, initial purchasers or placement or distribution agents.



     For purposes of this definition as applied to securities with a CUSIP number, each issuance of
long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or
other intermediate entity established directly or indirectly by the issuer, the securities of such
intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the
issuer’s long-term indebtedness for money borrowed that is separate from each other series of such
indebtedness.



     “Exchange” means either an exchange made upon the Corporation’s election to cause the
outstanding X-SURPS to be exchanged, in whole but not in part, for a like amount of Junior
Subordinated Indentures, or an exchange of the outstanding X-SURPS, in whole but not in part, for a
like amount of Junior Subordinated Indentures, made automatically under certain circumstances.



     “Exchange
Act” means the Securities Exchange Act of 1934, as amended.



     “Initial
Covered Debt” means the Corporation’s 5.70% Senior Notes due 2035.



     “Intent-Based
Replacement Disclosure” means, as to any security or combination of securities
(together in this definition, “securities”), that the issuer has publicly stated its intention,
either in the prospectus or other offering document under which such securities were initially
offered for sale or in filings with the Commission made by the issuer under the Exchange Act prior
to or contemporaneously with the issuance of such securities, that the issuer and any subsidiary,
to the extent the securities provide the issuer with rating agency equity credit, will repay,
redeem, purchase or defease such securities only with the proceeds of replacement capital
securities that have terms and provisions at the time of repayment, redemption, purchase or
defeasance that are as or more equity-like than the securities then being repaid, redeemed,
purchased or defeased raised within 180 days prior to the applicable repayments, redemption,
purchase or defeasance date.



     “Investment
Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating categories of Moody’s) and BBB- or better by Standard & Poor’s (or its equivalent
under any successor rating categories of Standard & Poor’s) (or, in each case, if such rating
agency ceases to publish a senior unsecured credit rating for the Corporation for reasons outside
of the Corporation’s control, the equivalent investment grade credit rating from any Rating Agency
selected by the Corporation as a replacement Rating Agency).



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



     “Junior
Subordinated Debentures” has the meaning specified in the Recitals.



     “Junior
Subordinated Indenture” means the indenture, dated June 21, 2005, between the
Corporation and The Bank of New York Trust Company, N.A. (as successor to J.P. Morgan Trust
Company, National Association), as subordinated indenture trustee, as supplemented by the
Supplemental Indenture.



S-10









 




     “JSD
Event of Default” means,



     (a) the failure to pay interest on the Junior Subordinated Debentures (including compounded
interest) in full, whether due to an optional deferral or interest, during a trigger period or
otherwise, after the conclusion of a period of ten consecutive years following the commencement of
any deferral of interest period or on the final maturity date of the Junior Subordinated
Debentures;



     (b) default in the payment of the principal of, and premium, if any, on the Junior
Subordinated Debentures when due; or



     (c) certain events of bankruptcy, insolvency, or receivership with respect to the Corporation,
whether voluntary or not.



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



     “Mandatory
Trigger Provision” means, as to any Qualifying Capital Securities, provisions in
the terms thereof or of the related transaction agreements that:



     (a) if the issuer of such securities fails to satisfy one or more financial tests set forth in
the terms of such securities or related transaction agreements, for so long as such failure
continues:




     (x) permit such issuer to make payment of Distributions on such securities only
pursuant to the issue and sale of APM Qualifying Securities and




     (y) in the case of any such securities other than Qualifying Non-Cumulative Perpetual
Preferred Stock, require such issuer to issue and sell APM Qualifying Securities (or use APM
Commercially Reasonable Efforts to issue and sell)


within two years of such failure, in an amount such that the net proceeds of such sale are at least
equal to the amount of unpaid Distributions on such securities (including all deferred and
accumulated amounts), provided that (i) such Mandatory Trigger Provision shall limit the issuance
and sale of Common Stock and/or Qualifying Warrants the net proceeds of which must be applied to
pay such Distributions pursuant to such provision to the Common Cap unless such Mandatory Trigger
Provision requires such issuance and sale within one year of such failure and (ii) the amount of
Qualifying Non-Cumulative Perpetual Preferred Stock and still-outstanding Mandatorily Convertible
Preferred Stock issued pursuant to the Mandatory Trigger Provision the net proceeds of which the
issuer may apply to pay such Distributions pursuant to such provision may not exceed the Preferred
Cap;




     (b) 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



S-11









 




interest during the relevant deferral period prior to the date six months after the issuer
applies the net proceeds of the sales described in paragraph (a) above to pay such deferred
distributions in full (subject to the same exceptions as are set forth in paragraphs (a) — (c) of
the definition of Repurchase Restriction);




     (c) if the provisions described in paragraph (a) above do not require such issuance and sale
within one year of such failure, include a Repurchase Restriction that applies if deferral of
Distributions continues for more than one year; and



     (d) include a Bankruptcy Claim Limitation Provision;


provided (and it being understood) that:




     (a) the issuer will not be obligated to issue (or use APM Commercially Reasonable Efforts to
issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is
continuing;



     (b) if, due to a Market Disruption Event or otherwise, the 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 Corporation and its Subsidiaries have outstanding more than one class or series of
securities under which the Company 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 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 Qualifying Capital 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 Event” means the occurrence or existence of any of the following events or
sets of circumstances:



     (a) trading in securities generally on any national securities exchange or over-the-counter
market on which the Common Stock and/or the Corporation’s preferred stock is then listed or traded
is suspended or the settlement of such trading generally is materially disrupted or minimum prices
are established on any such exchange or such market by the Commission, by such exchange or by any
other regulatory authority or governmental authority having jurisdiction and the establishment of
such minimum prices materially disrupts trading in, and the issuance and sale of, Common Stock
and/or the Corporation’s preferred stock;



S-12









 





     (b) the Corporation was required to obtain the consent or approval of its stockholders, a
regulatory body or governmental authority to issue or sell APM Qualifying Securities and, after
using commercially reasonable efforts to obtain such consent or approval, the Corporation fails to
obtain such consent or approval;



     (c) a material disruption shall have occurred in commercial banking or securities settlement
or clearance services in the United States and such disruption materially disrupts trading in, or
the issuance of, APM Qualifying Securities;



     (d) a banking moratorium shall have been declared by the federal or state authorities of the
United States and such moratorium materially disrupts 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, that trading in, or the issuance and sale of, APM Qualifying Securities
shall have been materially disrupted;



     (g) an event occurs and is continuing as a result of which the offering document for the offer
and sale of APM Qualifying Securities would, in the reasonable judgment of the Corporation, contain
an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and either (i) the disclosure of
that event at such time, in the reasonable judgment of the Corporation, would have a material
adverse effect on the business of the Corporation and is not otherwise required by law or (ii) the
disclosure relates to a previously undisclosed proposed or pending material business transaction,
and the Corporation has a bona fide reason for keeping the same confidential or its disclosure
would impede the ability of the Corporation to consummate such transaction, provided that no single
suspension period contemplated by this paragraph (g) may exceed 90 consecutive days and multiple
suspension periods contemplated by this paragraph (g) may not exceed an aggregate of 180 days in
any 360-day period; or



     (h) the Corporation reasonably believes that the offering document for the offer and sale of
APM Qualifying Securities would not be in compliance with a rule or regulation of the Commission
(for reasons other than those referred to in paragraph (g) above) 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) may exceed 90 consecutive days and
multiple suspension periods contemplated by this paragraph (h) may not exceed an aggregate of 180
days in any 360-day period.



     The definition of “Market Disruption Event” as used in any securities or combination of
securities that constitute APM Qualifying Securities may include less than all of the paragraphs



S-13









 




outlined above, as determined by the Corporation at the time of issuance of such securities,
and in the case of clauses (a), (b), (c) and (d), as applicable to a circumstance where the
Corporation would otherwise endeavor to issue preferred stock, shall be limited to circumstances
affecting markets where the Corporation’s preferred stock trades or where a listing for its trading
is being sought.




     “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 for this purpose by the Board
of Directors of the Corporation or a committee thereof.



     “Measurement
Date” means (a) with respect to any repayment, redemption or purchase of the
Securities on or prior to the Scheduled Redemption Date, the date that is 180 days; and (b) with
respect to any repayment, redemption or purchase of the Securities after the Scheduled Redemption
Date, the date that is 90 days, in each case prior to delivery of notice of such repayment or
redemption or prior to the date of such purchase.



     “Measurement
Period” means the period from a Measurement Date to the related notice date or
purchase date. Measurement Periods cannot run concurrently.



     “No
Payment Provision” means a provision or provisions in the transaction documents for
securities (referred to in this definition as “such securities”) that include the following:



     (a) an Alternative Payment Mechanism; and



     (b) an Optional Deferral Provision modified and supplemented from the general definition of
that term to provide that the issuer of such securities may, in its sole discretion, or (if the
Corporation elects to so provide in the terms of such securities) shall in response to a directive
or order from any Applicable Governmental Authority defer in whole or in part payment of
Distributions on such securities for one or more consecutive Distribution Periods of up to five
years or, if a Market Disruption Event has occurred and is continuing, ten years, without any
remedy other than Permitted Remedies and the obligations (and limitations on obligations) described
in the definition of “Alternative Payment Mechanism” applying.



     “Non-Cumulative” means, with respect to any securities, that the issuer may elect not to make
any number of periodic Distributions without any remedy arising under the terms of the securities
or related agreements in favor of the holders, other than one or more Permitted Remedies.



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



S-14









 




     “Offering
Circular” has the meaning specified in the Recitals.



     “Optional
Deferral Provisions” means, as to any securities, provisions in the terms thereof or
of the related transaction agreements to the effect of either (a) or (b) below:



     (a) (i) the issuer of such securities may, in its sole discretion, defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution Periods of up
to five years or, if a Market Disruption Event is continuing, ten years, without any remedy other
than Permitted Remedies and (ii) an Alternative Payment Mechanism (provided that such Alternative
Payment Mechanism need not apply during the first five years of any deferral period and need not
include a Common Cap, Preferred Cap, Bankruptcy Claim Limitation Provision or Repurchase
Restriction); or



     (b) the issuer of such securities may, in its sole discretion, defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution Periods up to
ten years, without any remedy other than Permitted Remedies.



     “Permitted
Remedies” means, with respect to any securities, one or more of the following
remedies:



     (a) rights in favor of the holders of such securities permitting such holders to elect one or
more directors of the issuer (including any such rights required by the listing requirements of any
stock or securities exchange on which such securities may be listed or traded), and



     (b) complete or partial prohibitions preventing the issuer from paying Distributions on or
repurchasing Common Stock or other securities that rank pari passu with or junior as to
Distributions to such securities for so long as Distributions on such securities, including unpaid
Distributions, remain unpaid.



     “Person” means any individual, corporation, partnership, joint venture, trust, limited
liability company or corporation, unincorporated organization or government or any agency or
political subdivision thereof.



     “Qualifying
Capital Securities” means securities (other than Common Stock, rights to acquire
Common Stock, Mandatorily Convertible Preferred Stock, Debt Exchangeable for Common Equity and Debt
Exchangeable for Preferred Equity) that, in the determination of the Corporation’s Board of
Directors reasonably construing the definitions and other terms of this Replacement Capital
Covenant, meet one of the following criteria:



     (a) in connection with any repayment, redemption or purchase of Securities on or prior to
December 15, 2037:




     (i) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon the
liquidation, dissolution or winding up of the Corporation, (B) have no maturity or a
maturity of at least 60 years and (C) either (x) are subject to a Qualifying Replacement
Capital Covenant and have either a No Payment Provision or are Non-Cumulative or (y)



S-15









 






have a Mandatory Trigger Provision and are subject to Intent-Based Replacement
Disclosure and have either an Optional Deferral Provision or a No Payment Provision; or




     (ii) preferred stock issued by the Corporation or its Subsidiaries that (A) is
Non-Cumulative, (B) has no prepayment obligation on the part of the issuer thereof, whether
at the election of the holders or otherwise, (C) has no maturity or a maturity of at least
60 years and (D) is subject to Intent-Based Replacement Disclosure; or




     (iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
or junior to other preferred stock of the issuer, (B) have no maturity or a maturity of at
least 40 years, (C) are subject to a Qualifying Replacement Capital Covenant, (D) have an
Optional Deferral Provision and (E) have a Mandatory Trigger Provision; or



     (b) in connection with any repayment, redemption or purchase of Junior Subordinated Debentures
at any time after December 15, 2037 but on or prior to December 15, 2047:




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




     (ii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon a liquidation,
dissolution or winding up of the Corporation, (B) have no maturity or a maturity of at least
60 years, (C) are subject to a Qualifying Replacement Capital Covenant and (D) have an
Optional Deferral Provision;




     (iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon a liquidation,
dissolution or winding up of the Corporation, (B) are Non-Cumulative or have a No Payment
Provision and (C) (x) have no maturity or a maturity of at least 60 years and (y) are
subject to Intent-Based Replacement Disclosure;




     (iv) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon a liquidation,
dissolution or winding up of the Corporation, (B) are Non-Cumulative or have a No Payment
Provision, (C) have no maturity or a maturity of at least 40 years and (D) are subject to a
Qualifying Replacement Capital Covenant;




     (v) securities issued by the Corporation or its Subsidiaries that (a) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon the
Corporation’s liquidation, dissolution or winding up, (b) have an Optional Deferral
Provision, (c) have no maturity or a maturity of at least 40 years (d) are subject to
Intent-Based Replacement Disclosure and (e) have a Mandatory Trigger Provision;




     (vi) securities issued by the Corporation or its Subsidiaries that (a) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with



S-16









 






or junior to the Junior Subordinated Debentures upon the issuance thereof) upon the
Corporation’s liquidation, dissolution or winding up, (b) have an Optional Deferral
Provision, (c) have no maturity or a maturity of at least 25 years (d) have a Qualifying
Replacement Capital Covenant and (e) have a Mandatory Trigger Provision;




     (vii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon a liquidation,
dissolution or winding up of the Corporation, (B) have an Optional Deferral Provision, (C)
have a Mandatory Trigger Provision and (D) have no maturity or a maturity of at least 60
years;




     (viii) cumulative preferred stock issued by the Corporation or its Subsidiaries that
(A) has no prepayment obligation on the part of the issuer thereof, whether at the election
of the holders or otherwise, and (B) (x) has no maturity or a maturity of at least 60 years
and (y) is subject to a Qualifying Replacement Capital Covenant; or




     (ix) other securities issued by the Corporation or its Subsidiaries that (A) rank upon
a liquidation, dissolution or winding-up of the Corporation either (x) pari passu with or
junior to the Junior Subordinated Debentures (or would rank pari passu with or junior to the
Junior Subordinated Debentures upon the issuance thereof) or (y) pari passu with the claims
of the Corporation’s trade creditors and junior to all of the Corporation’s long-term
indebtedness for money borrowed (other than the Corporation’s long-term indebtedness for
money borrowed from time to time outstanding that by its terms ranks pari passu with such
securities on a liquidation, dissolution or winding-up of the Corporation), (B) have an
Optional Deferral Provision or a No Payment Provision and (C) have a Mandatory Trigger
Provision and (D) either (x) have no maturity or a maturity of at least 40 years and
Intent-Based Replacement Disclosure or (y) have no maturity or a maturity of at least 25
years and are subject to a Qualifying Replacement Capital Covenant; or



     (c) in connection with any repayment, redemption or purchase of Junior Subordinated Debentures
at any time after December 15, 2047:




     (i) securities described under clause (b) of this definition;




     (ii) preferred stock issued by the Corporation that (A) (x) has no maturity or a
maturity of at least 50 years and (y) is subject to Intent-Based Replacement Disclosure and
(B) is Non-Cumulative;




     (iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon a liquidation,
dissolution or winding up of the Corporation, (B) either (x) have no maturity or a maturity
of at least 60 years and are subject to Intent-Based Replacement Disclosure or (y) have no
maturity or a maturity at least 30 years and are subject to a Qualifying Replacement Capital
Covenant and (C) are Non-Cumulative;



S-17









 





     (iv) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu
with or junior to the Junior Subordinated Debentures (or would rank pari passu with or
junior to the Junior Subordinated Debentures upon the issuance thereof) upon a liquidation,
dissolution or winding up of the Corporation, (B) have an Optional Deferral Provision, (C)
have a Mandatory Trigger Provision and (D) (x) have no maturity or a maturity at least 30
years and (y) are subject to Intent-Based Replacement Disclosure;




     (v) securities issued by the Corporation or its Subsidiaries that rank senior to the
Junior Subordinated Debentures upon the Corporation’s liquidation, dissolution or winding
up, and (a) have no maturity or a maturity of at least 60 years and either (x) have an
Optional Deferral Provision and are subject to a Qualifying Replacement Capital Covenant or
(y) (i) have either a No Payment Provision or are Non-Cumulative and (ii) are subject to
Intent-Based Replacement Disclosure;




     (vi) securities issued by the Corporation or its Subsidiaries that rank senior to the
Junior Subordinated Debentures upon the Corporation’s liquidation, dissolution or winding
up, and (a) have no maturity or a maturity of at least 40 years and either (x) (i) have
either a No Payment Provision or are Non-Cumulative and (ii) are subject to a Qualifying
Replacement Capital Covenant or (y) have a Mandatory Trigger Provision and an Optional
Deferral Provision and are subject to Intent-Based Replacement Disclosure; or




     (vii) cumulative preferred stock issued by the Corporation or its Subsidiaries that
either (A) (x) has no maturity or a maturity of at least 60 years and (y) are subject to
Intent-Based Replacement Disclosure or (B) has a maturity of at least 40 years and is
subject to a Qualifying Replacement Capital Covenant.


Notwithstanding (and as a qualification to) the foregoing, in the case of each Qualifying Capital
Security that includes a Significant Distribution Rate Step-Up, each reference in this definition
to “Intent-Based Replacement Disclosure” shall instead be deemed to read “a Qualifying Replacement
Capital Covenant.”




     “Qualifying
Non-Cumulative Perpetual Preferred Stock” means non-cumulative preferred shares of
the Corporation that rank pari passu with or junior to all other preferred shares of the
Corporation, are perpetual and (a) are subject to a Qualifying Replacement Capital Covenant or (b)
are subject to both (i) mandatory suspension of dividends in the event the Corporation breaches
certain financial metrics specified within the offering documents, and (ii) Intent-Based
Replacement Disclosure. Additionally, in both (a) and (b) the transaction documents shall provide
for no remedies as a consequence of non-payment of Distributions other than Permitted Remedies.



     “Qualifying
Replacement Capital Covenant” means a replacement capital covenant that is
substantially similar to this Replacement Capital Covenant or a replacement capital covenant, as
identified by the Corporation’s 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, (i) entered into by an issuer that at the time it enters into such replacement capital
covenant is a reporting company under the Exchange Act and (ii) that restricts the related issuer
and its Subsidiaries from redeeming, repaying or purchasing identified securities except to the
extent of the applicable percentage of the net proceeds from the issuance of specified replacement



S-18









 




capital securities that have terms and provisions at the time of redemption, repayment or
purchase that are as or more equity-like than the securities then being redeemed, repaid or
purchased within the 180-day period prior to the applicable redemption, repayment or purchase date,
provided that the term of such replacement capital covenant shall be determined at the time of
issuance of the related Replacement Capital Securities taking into account the other
characteristics of such securities. Notwithstanding the foregoing, the replacement capital
covenant must continue at least until the earlier of (i) 20 years after initial issuance of the
Qualifying Capital Securities relating to such Qualifying Replacement Capital Covenant and (ii)
December 15, 2067.




     “Qualifying
Warrants” means net share settled warrants to purchase Common Stock that (i) have
an exercise price greater than the current Market Value of the Common Stock as of the date the
Corporation agrees to issue the warrants, and (ii) the Corporation is not entitled to redeem for
cash and the holders of which are not entitled to require it to repurchase for cash in any
circumstances. The Corporation will state in the prospectus or other offering 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 Provisions will have exercise prices at least 10% above the
current Market Value of its common stock on the date of issuance.



     “Rating
Agency” means:



     (a) each of Moody’s and Standard & Poor’s; and



     (b) if any of Moody’s or Standard & Poor’s ceases to publish a senior unsecured credit rating
for the Corporation for reasons outside of the Corporation’s control, an NRSRO selected by the
Corporation as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be.



     “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, repay or defease, or the Corporation or a Subsidiary of the
Corporation elects to purchase, such Covered Debt either in whole or in part with the consequence
that after giving effect to such redemption, repayment, purchase or defeasance the outstanding
principal amount of such Covered Debt is less than $100,000,000, the applicable redemption,
repayment, purchase or defeasance 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, Common Stock and rights to acquire Common Stock
(including Common Stock and rights to acquire Common Stock issued pursuant to any reinvestment plan
and employee benefit plans of the Corporation);



     (a) Mandatorily Convertible Preferred Stock;



     (b) Debt Exchangeable for Common Equity;



S-19









 




     (c) Debt Exchangeable for Preferred Equity; and



     (d) Qualifying Capital Securities.



     “Repurchase
Restriction” means, with respect to any Qualifying Capital Securities that include
an Alternative Payment Mechanism or a Mandatory Trigger Provision, provisions that require the
Corporation and its Subsidiaries not to redeem or purchase any of securities of the Corporation
ranking junior to or pari passu with any APM Qualifying Securities the proceeds of which were used
to settle deferred interest during the relevant deferral period until at least one year after all
deferred Distributions have been paid other than the following (none of which shall be restricted
or prohibited by a Repurchase Restriction):



     (a) purchases of such securities by Subsidiaries of the Corporation in connection with the
distribution thereof or market-making or other secondary-market activities;



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



     (c) purchases of shares of Common Stock pursuant to a contractually binding requirement to buy
such shares entered into prior to the beginning of the related deferral period, including under a
contractually binding share repurchase plan.



     “Scheduled
Redemption Date” means December 15, 2037, or if that day is not a Business Day, the
next Business Day.



     “Significant
Distribution Rate Step-Up” means, as to a Qualifying Capital Security, an
increase in the Distribution Rate at a date after initial issuance of such security of more than 25
basis points (or, if the method of calculating Distributions on such Qualifying Capital Security is
changing at the time of such increase (for example, from a fixed rate to a floating rate based upon
a margin above an index or from a floating rate based upon a margin above one index to a floating
rate based upon a margin above a different index), an increase in the margin above the applicable
credit spread in calculating such increased rate as compared to the credit spread used in
calculating the initial Distribution Rate of more than 25 basis points).



     “Subsidiary” means, at any time, any Person the shares of stock or other ownership interests
of which having ordinary voting power to elect a majority of the board of directors or other
managers of such Person are at the time owned, or the management or policies of which are otherwise
at the time controlled, directly or indirectly through one or more intermediaries (including other
Subsidiaries) or both, by another Person.



     “Supplemental
Indenture” means the Fourth Supplemental Indenture, dated as of December 12,
2007, between the Corporation and The Bank of New York Trust Company, N.A., as trustee.



     “Termination
Date” has the meaning specified in Section 4(a).



S-20









 




     “Voting
Shares” as applied to shares of any Person, means shares, interests, participations or
other equivalents in the equity interest (however designated) in such person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of such Person, other
than shares, interests, participations or other equivalents having such power only by reason of the
occurrence of a contingency.



     “X-SURPS” has the meaning specified in the Recitals.




S-21