Replacement Capital Covenant, dated April 5, 2007


    EXHIBIT
      4.5

    
 

    REPLACEMENT
      CAPITAL COVENANT

     

    Replacement
      Capital Covenant,
      dated
      as of April 5, 2007 (this “Replacement
      Capital Covenant”),
      by
      Security Capital Assurance Ltd, a Bermuda exempted company (together with its
      successors and assigns, the “Company”),
      in
      favor of and for the benefit of each Covered Debtholder (as defined
      below).

     

    RECITALS

     

    A.  On
      the
      date hereof the Company is issuing 250,000 Series A Perpetual Non-Cumulative
      Preference Shares, liquidation preference U.S. $1,000 per share (the
“Series
      A Preference Shares”).
      The
      Company may from time to time elect to issue additional Series A Preference
      Shares, and all such additional Series A Preference Shares would be deemed
      to
      form a single series with the 250,000 Series A Preference Shares being issued
      on
      the date hereof.

     

    B. 
       The
      Series A Preference Shares and this Replacement Capital Covenant are described
      in an offering memorandum dated March 29, 2007 (the “Offering
      Memorandum”),
      which
      has been submitted confidentially to a limited number of U.S. institutional
      investors and non-U.S. investors in connection with the offering of the Series
      A
      Preference Shares.

     

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

     

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

     

    NOW,
      THEREFORE, the
      Company hereby covenants and agrees as follows in favor of and for the benefit
      of each Covered Debtholder.

     

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

     

    SECTION
      2.  Limitations
      on Redemption or Purchase of Series A Preference Shares.
      The
      Company hereby promises and covenants to and for the benefit of each Covered
      Debtholder that, on or before the RCC Termination Date, neither the Company
      nor
      any of its Subsidiaries shall redeem or purchase all or any part of the Series
      A
      Preference Shares, except to the extent that (A) the applicable redemption
      or
      purchase price (exclusive of declared and unpaid dividends thereon) does not
      exceed the sum of the following amounts:

     

    
      	(i)  	
              the
                Applicable Percentage of (a) the aggregate amount of net cash proceeds
                received by the Company and its Subsidiaries from the sale of Common
                Shares and Qualifying Warrants to Persons other than the Company
                and its
                Subsidiaries and 

            


    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 	
                (b)
                  the Market Value of any Common Shares that the Company and its
                  Subsidiaries have issued to persons other than the Company and
                  its
                  Subsidiaries in connection with the conversion of any convertible
                  or
                  exchangeable securities, other than securities for which the Company
                  or
                  any of its Subsidiaries has received equity credit from any NRSRO
                  (as
                  defined below), in each case since the most recent Measurement
                  Date
                  (without double counting proceeds received in any prior Measurement
                  Period); plus

              


      

       

    

    
      	(ii)  	
              100%
                of the aggregate amount of net cash proceeds received by the Company
                and
                its Subsidiaries since the most recent Measurement Date (without
                double
                counting proceeds received in any prior Measurement Period) from
                the sale
                of Mandatorily Convertible Preferred Stock, Debt Exchangeable for
                Preferred Equity and Debt Exchangeable for Common Equity to Persons
                other
                than the Company and its Subsidiaries;
                plus

            


    

     

    
      	(iii)  	
              100%
                of the aggregate amount of net cash proceeds received by the Company
                and
                its Subsidiaries since the most recent Measurement Date (without
                double
                counting proceeds received in any prior Measurement Period) from
                the sale
                of any other Qualifying Capital Securities to Persons other than
                the
                Company and its Subsidiaries,

            


    

     

    or
      (B)
      the Series A Preference Shares are exchanged for (i) at least an equal aggregate
      principal amount or liquidation preference of Qualifying Capital Securities
      (including Preference Shares with terms substantially identical to the Series
      A
      Preference Shares pursuant to the registered exchange offer described in the
      Offering Memorandum) or (ii) consideration that includes Common Shares with
      a
      Market Value equal to at least 75% of the aggregate liquidation preference
      of
      the Series A Preference Shares that are exchanged.

     

    SECTION
      3.  Covered
      Debt.

     

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

     

    (b)  The
      Company shall follow the procedures set forth in Section 3(c) for redesignating
      the Covered Debt in the event that the Covered Debt then in effect is Eligible
      Senior Debt and the Company subsequently issues Eligible Subordinated Debt,
      in
      which case the Company shall redesignate such newly-issued Eligible Subordinated
      Debt as the Covered Debt. In addition, the Company shall follow the procedures
      set forth in Section 3(c) for redesignating the Covered Debt on (i) the date
      that is two years prior to the final maturity date of the Covered Debt then
      in
      effect or (ii) the applicable redemption or purchase date in the event the
      Company elects to redeem, or the Company or a Subsidiary of the Company elects
      to purchase, such Covered Debt in whole or in part with the consequence that
      after giving effect to such redemption or purchase, the outstanding principal
      amount of such Covered Debt is less than $100,000,000.

     

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

     

     

    
      
        
        

      

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

            


    

     

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

            


    

     

    
      	(iii)  	
              if
                the Company has more than one outstanding series of long-term indebtedness
                for money borrowed that is Eligible Debt, the series that has the
                latest
                occurring final maturity date shall become the Covered Debt on the
                related
                Redesignation Date.

            


    

     

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

     

    In
      connection with the identification of any new series of Covered Debt, the
      Company shall give the notices and/or make the filings or website postings
      provided for in Section 3(d) within the time frame provided for in such
      section.

     

    (d)  Notice.
      In
      order to give effect to the intent of the Company described in Recital C, the
      Company covenants that:

     

    
      	(i)  	
              simultaneously
                with the execution of this Replacement Capital Covenant or as soon
                as
                practicable after the date hereof, it shall give notice to the Holder(s)
                of the Initial Covered Debt, in the manner provided in the indenture,
                fiscal agency agreement or other instrument relating to the Initial
                Covered Debt, of this Replacement Capital Covenant and the rights
                granted
                to such Holder(s) hereunder and (A) if the Initial Covered Debt
                includes securities issued in the United States, file a copy of this
                Replacement Capital Covenant with the U.S. Securities and Exchange
                Commission (the “Commission”)
                as an exhibit to a Current Report on Form 8-K under the Exchange
                Act or
                (B) if the Initial Covered Debt was predominately offered outside
                of the
                United States, (I) post a copy of this Replacement Capital Covenant
                on the
                Company’s website (currently: www.scafg.com), (II) as promptly as
                practicable, cause a notice of the execution of this Replacement
                Capital
                Covenant to be posted on the Bloomberg screen for the Initial Covered
                Debt
                or any successor Bloomberg screen or similar vendor’s screen the Company
                reasonably believes is appropriate (each an “Investor
                Screen”)
                and (III) cause a hyperlink to the execution copy of this Replacement
                Capital Covenant to be included on the Investor Screen for the Initial
                Covered Debt;

            


    

     

    
      	(ii)  	
              it
                shall, if a series of the Company’s long-term indebtedness for money
                borrowed that includes securities issued in the United States (1)
                becomes
                Covered Debt or (2) ceases to be Covered Debt, (A) give notice of
                such
                occurrence within 30 

            


    

    
       

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

       

      
        	  	
                calendar
                  days to the holders of such long-term indebtedness for money borrowed
                  in
                  the manner provided for in the indenture, fiscal agency agreement
                  or other
                  instrument under which such long-term indebtedness for money borrowed
                  was
                  issued and (B) if and so long as it is a reporting company under
                  the
                  Exchange Act, report such change by filing a Current Report on
                  Form 8-K
                  under the Exchange Act containing a description of the covenant
                  set forth
                  in Section 2 and identifying the series of long-term indebtedness
                  for
                  borrowed money that is Covered Debt as of the date of such filing
                  and
                  including or incorporating by reference a copy of this Replacement
                  Capital
                  Covenant as an exhibit;

              


      

       

    

    
      	(iii)  	
              it
                shall, if a series of the Company’s long-term indebtedness for money
                borrowed that was predominately offered outside of the United States
                (1)
                becomes Covered Debt or (2) ceases to be Covered Debt, (A) give
                notice of such occurrence within 30 calendar days to the holders
                of such
                long-term indebtedness for money borrowed in the manner provided
                for in
                the indenture, fiscal agency agreement or other instrument under
                which
                such long-term indebtedness for money borrowed was issued, (C) as
                promptly
                as practicable, post a notice of such change on the Company’s website, (D)
                as promptly as practicable, cause a notice of such occurrence to
                be posted
                on the Investor Screen for the then-effective series of Covered Debt
                and
                (E) cause a hyperlink to the execution copy of this Replacement Capital
                Covenant to be included on the Investor Screen for such Covered
                Debt;

            


    

     

    
      	(iv)  	
              to
                the extent that the Company has posted information pursuant to clause
                (i)(B) or clause (iii), at least once annually, it shall verify that
                the
                postings required in such clauses are functional and accessible and,
                if
                necessary, cause such functionality and accessibility to be
                restored;

            


    

     

    
      	(v)  	
              if
                and so long as it is a reporting company under the Exchange Act,
                the
                Company shall include in each annual report filed with the Commission
                on
                Form 10-K under the Exchange Act a description of the covenant set
                forth
                in Section 2 and identify the series of long-term indebtedness for
                borrowed money that is Covered Debt as of the date such Form 10-K
                is filed
                with the Commission;

            


    

     

    
      	(vi)  	
              if
                and so long as it is not a reporting company under the Exchange Act,
                the
                Company shall (A) post on its website the information required by
                clauses
                (d)(ii) and (d)(v) and (B) cause a notice of any occurrence described
                under clauses (d)(i)(A) and (d)(ii)(B) to be posted on the Investor
                Screen
                for the then-effective series of Covered Debt;
                and

            


    

     

    
      	(vii)  	
              promptly
                upon request by any Holder of Covered Debt, provide such Holder with
                an
                executed copy of this Replacement Capital
                Covenant.

            


    

     

    SECTION
      4.  Termination,
      Amendment and Waiver.

     

    (a)  The
      obligations of the Company pursuant to this Replacement Capital Covenant shall
      remain in full force and effect until the earliest date (the “Termination
      Date”)
      to
      occur of:

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	(i)  	
              September
                30, 2047, subject to extension as provided in Section
                4(b)(iii);

            


    

     

    
      	(ii)  	
              the
                date, if any, on which the Holder(s) of a majority by principal amount
                of
                the then-effective series of Covered Debt consent or agree in writing
                to
                the termination of this Replacement Capital Covenant and the obligations
                of the Company hereunder;

            


    

     

    
      	(iii)  	
              the
                date on which the Company does not have any series of outstanding
                Eligible
                Subordinated Debt or Eligible Senior Debt (in each case without giving
                effect to the rating requirement in clause (b) of the definition
                of each
                such term); and

            


    

     

    
      	(iv)  	
              the
                date on which the Company does not have any outstanding Series A
                Preference Shares.

            


    

     

    From
      and
      after the Termination Date, the obligations of the Company pursuant to this
      Replacement Capital Covenant shall be of no further force and
      effect.

     

    (b)  This
      Replacement Capital Covenant may be amended or supplemented from time to time
      by
      a written instrument signed by the Company with the consent of the Holder(s)
      of
      a majority by principal amount of the then-effective series of Covered Debt,
      provided
      that
      this
      Replacement Capital Covenant may be amended or supplemented from time to time
      by
      a written instrument signed only by the Company (and without the consent of
      the
      Holder(s) of the then-effective series of Covered Debt) if:

     

    
      	(i)  	
              the
                effect of such amendment or supplement is solely to impose additional
                restrictions on the types of securities qualifying as Replacement
                Capital
                Securities, and an officer of the Company has delivered to the Holders
                of
                the then-effective series of Covered Debt in the manner provided
                for in
                the indenture, fiscal agency agreement or other instrument with respect
                to
                such Covered Debt a written certificate to that effect;
                

            


    

     

    
      	(ii)  	
              the
                effect of such amendment or supplement is solely to eliminate Common
                Shares, Mandatorily Convertible Preference Shares or Debt Exchangeable
                for
                Common Equity as a security or securities covered by Sections 2(i)
                and
                (ii), provided
                that the Company has been advised in writing by a nationally recognized
                independent accounting firm that there is more than an insubstantial
                risk
                that the failure to do so would result in a reduction in the Company’s
                earnings per share as calculated for financial reporting
                purposes;

            


    

     

    
      	(iii)  	
              the
                effect of such amendment or supplement is solely to impose additional
                restrictions on the ability of the Company to redeem or purchase
                Series A
                Preference Shares in any circumstance, including extending the termination
                date specified in Section 4(a)(i), the dates specified in the definition
                of Applicable Percentage and the dates specified in the definition
                of
                Qualifying Capital Securities; or

            


    

     

    
      	(iv)  	
              such
                amendment or supplement is not adverse to the Holder(s) of the
                then-effective series of Covered Debt and an officer of the Company
                has
                delivered to 

            


    

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    
       

      
        	 	
                the
                  Holder(s) of the then effective series of Covered Debt in the manner
                  provided for in the indenture, fiscal agency agreement or other
                  instrument
                  with respect to such Covered Debt a written certificate stating
                  that, in
                  his or her determination, such amendment or supplement is not adverse
                  to
                  the Holder(s) of the then-effective series of Covered
                  Debt.

              


      

       

    

    (c)  For
      purposes of Sections 4(a) and 4(b), the Holder(s) whose consent or agreement
      is
      required to terminate, amend or supplement the obligations of the Company under
      this Replacement Capital Covenant shall be the Holder(s) of the then-effective
      series of Covered Debt as of a record date established by the Company that
      is
      not more than 30 calendar days prior to the date on which the Company proposes
      that such termination, amendment or supplement becomes effective.

     

    SECTION
      5.  Miscellaneous.

     

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

     

    (b)  This
      Replacement Capital Covenant shall be binding upon the Company and its
      successors and assigns and shall inure to the benefit of the Covered Debtholders
      as they exist from time-to-time (it being understood and agreed by the Company
      that any Person who is a Covered Debtholder at the time such Person initiates
      a
      claim or proceeding to enforce such Person’s rights under this Replacement
      Capital Covenant after the Company has violated its covenants in Section 2
      and
      before the series of long-term indebtedness for money borrowed held by such
      Person is no longer Covered Debt, such Person’s rights under this Replacement
      Capital Covenant shall not terminate by reason of such series of long-term
      indebtedness for money borrowed no longer being Covered Debt until the
      termination of such claim or proceeding). Except as specifically provided
      herein, this Replacement Capital Covenant shall have no other beneficiaries,
      and
      no Persons other than a Holder of Covered Debt is entitled to rely on this
      Replacement Capital Covenant.

     

    (c)  All
      demands, notices, requests and other communications to the Company under this
      Replacement Capital Covenant shall be deemed to have been duly given and made
      if
      in writing and:

     

    
      	(i)  	
              if
                served by personal delivery upon the Company, on the day so delivered
                (or,
                if such day is not a Business Day, the next succeeding Business
                Day);

            


    

     

    
      	(ii)  	
              if
                delivered by registered post or certified mail, return receipt requested,
                or sent to the Company by a national or international courier service,
                on
                the date of receipt by the Company (or, if such date of receipt is
                not a
                Business Day, the next succeeding Business Day);
                or

            


    

     

    
      	(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,

            


    

     

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    and
      in
      each case to the Company at the address set forth below, or at such other
      address as the Company may thereafter notify to Covered Debtholders or post
      on
      its website as the address for notices under this Replacement Capital
      Covenant:

     

    Security
      Capital Assurance Ltd

    1
      Bermudiana Road

    Hamilton
      HM 11

    Bermuda

    Attention:                         
      

    Facsimile
      No: 

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Replacement Capital Covenant to be executed by its
      duly
      authorized officer, as of the day and year first above written.

     

    

      
        	
                Security
                  Capital Assurance Ltd

              	 
	 	 
	
                By:

              	
                 /s/
                  Thomas W. Currie

              	 
	 	
                Name:

              	
                Thomas
                  W. Currie

              	 
	 	
                Title:
                  

              	
                Senior
                  Vice President and Chief Risk Officer

              	 


      

    

     

    

      
        
          
            


          

          
          

        

        
          -7-

          
            

          

        

        
          
          

          
          

        

      

    

    Schedule
      1

     

    DEFINITIONS

     

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

     

    
      	 	
              (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 Company or any of its
                Subsidiaries as consideration for such securities) that the Company
                has
                received during the 180 days prior to the related Distribution Date
                from
                the issuance of APM Qualifying Securities, up to the Preferred Cap
                (as
                defined in paragraph (f) below) in the case of APM Qualifying Securities
                that are Qualifying Non-Cumulative Perpetual Preferred Stock or
                Mandatorily Convertible Preferred
                Stock;

            


    

     

    
      	 	
              (b)

            	
              permit
                the Company to pay current Distributions on any Distribution Date
                out of
                any source of funds but prohibit the Company from paying deferred
                Distributions out of any source of funds other than eligible
                proceeds;

            


    

     

    
      	 	
              (c)

            	
              if
                deferral of Distributions continues for more than one year (or such
                shorter period as provided for in the terms of such securities),
                require
                the Company not to repay, redeem or purchase any APM Qualifying Securities
                of the Company or any securities of the Company that on a bankruptcy
                or
                liquidation of the Company rank pari
                passu
                or
                junior to such APM Qualifying Securities until at least one year
                after all
                deferred Distributions have been
                paid;

            


    

     

    
      	 	
              (d)

            	
              may
                include a provision that, notwithstanding the Common Cap (as defined
                in
                paragraph (f) below) and the Preferred Cap, for purposes of paying
                deferred Distributions, limits the ability of the Company to sell
                Common
                Shares, Qualifying Warrants, or Mandatorily Convertible Preferred
                Stock
                above an aggregate cap specified in the transaction documents (a
                “Share
                Cap”),
                subject to the Company’s agreement to use commercially reasonable efforts
                to increase the Share Cap amount (i) only to the extent that it can
                do so
                and simultaneously satisfy its future fixed or contingent obligations
                under other securities and derivative instruments that provide for
                settlement or payment in Common Shares or (ii) if the Company cannot
                increase the Share Cap amount as contemplated in the preceding clause,
                by
                requesting its Board of Directors to adopt a resolution for
                shareholder

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        	 	
                 

              	
                vote
                  at the next occurring annual shareholders meeting to increase the
                  number
                  of shares of the Company’s authorized Common Shares for purposes of
                  satisfying the Company’s obligations to pay deferred
                  Distributions;

              


      

       

    

    
      	 	
              (e)

            	
              permit
                the Company, at its option, to provide that if the Company is involved
                in
                a merger, consolidation, amalgamation or conveyance, transfer or
                lease of
                assets substantially as an entirety to any other person (a “business
                combination”)
                where immediately after the consummation of the business combination
                more
                than 50% of the voting stock of the surviving entity of the business
                combination, or the person to whom all or substantially all of the
                Company’s assets are conveyed, transferred or leased, is owned by the
                shareholders of the other party to the business combination, then
                clauses
                (a), (b) and (c) above will not apply to any deferral period that
                is
                terminated on the next interest payment date following the date of
                consummation of the business combination;
                and

            


    

     

    
      	 	
              (f)

            	
              limit
                the obligation of the Company to issue (or use commercially reasonable
                efforts to issue) APM Qualifying Securities up
                to:

            


    

    
      
         

        
          	 	
                  (i)

                	
                  in
                    the case of APM Qualifying Securities that are Common Shares
                    or Qualifying
                    Warrants, an aggregate amount of all Common Shares issued or
                    issuable upon
                    the exercise of such Qualifying Warrants pursuant to the Alternative
                    Payment Mechanism with respect to deferred Distributions during
                    the first
                    five years of any deferral period equal to 2% of the total number
                    of
                    issued and outstanding shares of the Common Shares of the Company
                    as of
                    the date of the Company’s most recently publicly available consolidated
                    financial statements as of the date of such issuance (the “Common
                    Cap”),
                    provided
                    (and it being understood) that the Common Cap shall cease to
                    apply to such
                    deferral period by a date (as specified in the related transaction
                    documents) which shall be not later than the fifth anniversary
                    of the
                    commencement of such deferral period;
                    and

                


        

        
          
             

            
              	 	
                      (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
                        of Qualifying Non-Cumulative Perpetual Preferred Stock and
                        still-outstanding Mandatorily Convertible Preferred Stock
                        pursuant to such
                        Alternative Payment Mechanism) equal to 25% of the initial
                        principal or
                        stated amount of the securities that are the subject of the
                        related
                        Alternative Payment Mechanism (the “Preferred
                        Cap”);

                    


            

            
               

              provided
                (and it
                being understood) that:

               

            

          

        

      

      
        
          
            	 	
                    (a)

                  	
                    the
                      Company shall not be obligated to issue (or use commercially
                      reasonable
                      efforts to issue) APM Qualifying Securities for so long as
                      a Market
                      Disruption Event has occurred and is
                      continuing;

                  


          

          
            
               

               

              
                
                  
                  

                

                
                  -2-

                  
                    

                  

                

                
                  
                  

                

              

               

              
                	 	
                        (b)

                      	
                        if,
                          due to a Market Disruption Event or otherwise, the Company
                          is able to
                          raise and apply some, but not all, of the eligible proceeds
                          necessary to
                          pay all deferred Distributions on any Distribution Date,
                          the Company will
                          apply any available eligible proceeds to pay accrued and
                          unpaid
                          Distributions on the applicable Distribution Date in chronological
                          order
                          subject to the Common Cap, the Preferred Cap and the Share
                          Cap (if any),
                          as applicable; and if the Company has outstanding more
                          than one class or
                          series of securities under which it is obligated to sell
                          a type of APM
                          Qualifying Securities and apply some part of the proceeds
                          to the payment
                          of deferred Distributions, then on any date and for any
                          period the amount
                          of net proceeds received by the Company from those sales
                          and available for
                          payment of deferred Distributions on such securities shall
                          be applied to
                          such securities on a pro rata basis in proportion to the total amounts
                          that are due on such securities.

                      


              

               

            

          

        

      

    

    provided
      (and it
      being understood) that:

     

    “APM
      Qualifying Securities”
      means:

     

    
      	 	
              (a)

            	
              Common
                Shares;

            


    

     

    
      	 	
              (b)

            	
              Qualifying
                Warrants;

            


    

     

    
      	 	
              (c)

            	
              Qualifying
                Non-Cumulative Perpetual Preferred Stock;
                or

            


    

     

    
      	 	
              (d)

            	
              Mandatorily
                Convertible Preferred Stock.

            


    

     

    “Applicable
      Percentage”
means:
      1 divided by (i) 75% with respect to any repayment, redemption or purchase
      prior
      to September 30, 2017, (ii) 50% with respect to any repayment, redemption or
      purchase on or after September 30, 2017 and prior to September 30, 2037 and
      (iii) 25% with respect to any repayment, redemption or purchase on or after
      September 30, 2037 (for example, prior to September 30, 2017, the Applicable
      Percentage in the case of such securities will be 133.33%). 

     

    “Bankruptcy
      Claim Limitation Provision”
means,
      with respect to any Qualifying Capital Securities that have a Mandatory Trigger
      Provision or a No Payment Provision, provisions that, upon any liquidation,
      dissolution, winding up or reorganization or in connection with any insolvency,
      receivership or proceeding under any bankruptcy law with respect to the issuer,
      limit the claim of the holders of such securities (other than non-cumulative
      perpetual Preference Shares) to Distributions that accumulate during (A) any
      period in which the issuer fails to satisfy one or more financial tests set
      forth in the terms of such securities or related transaction agreements, in
      the
      case of securities that have a Mandatory Trigger Provision, or (B) any deferral
      period, in the case of securities that have a No Payment Provision,
      to:

     

    
      	 	
              (a)

            	
              in
                the case of Qualifying Capital Securities with respect to which the
                APM
                Qualifying Securities do not include Qualifying Non-Cumulative Perpetual
                Preferred Stock or Mandatorily Convertible Preferred Stock, 25% of
                the
                stated or principal amount of such Qualifying Capital Securities
                then
                outstanding; and

            


    

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              in
                the case of any other Qualified Capital Securities, an amount not
                in
                excess of the sum of (x) two years of accumulated and unpaid Distributions
                (including compound amounts thereon) and (y) an amount equal to the
                excess, if any, of the Preferred Cap over the aggregate amount of
                net
                proceeds from the sale of Qualifying Non-Cumulative Perpetual Preferred
                Stock that the issuer has applied to pay such Distributions pursuant
                to
                the Mandatory Trigger Provision or No Payment Provision; provided
                that the holders of such Qualifying Capital Securities are deemed
                to agree
                that, to the extent the remaining claim exceeds the amount set forth
                in
                clause (x), the amount they receive in respect of such excess shall
                not
                exceed the amount they would have received had the claim for such
                excess
                ranked pari passu with the interests of the holders, if any, of Qualifying
                Non-Cumulative Perpetual Preferred Stock.


            


    

     

    “Business
      Day”
means
      each day other than (a) a Saturday or Sunday or (b) a day on which banking
      institutions in The City of New York or Bermuda are authorized or required
      by
      law or executive order to remain closed. 

     

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

     

    “Common
      Shares”
means
      the Common Shares of the Company (including treasury shares), Common Shares
      issued pursuant to any dividend reinvestment plan or employee benefit plan
      of
      the Company, a security ranking
      upon the liquidation, dissolution or winding up of the Company junior to the
      Qualifying Non-Cumulative Perpetual Preferred Stock and pari
      passu with
      the
      Common Shares of the Company, that
      tracks the performance of, or relates to the results of, a business, unit or
      division of the Company, and any securities issued in exchange therefor in
      connection with a merger, consolidation, binding share exchange, business
      combination, recapitalization or other similar event.

     

    “Company”
has
      the
      meaning specified in the introduction to this instrument.

     

    “Covered
      Debt”
means
      (a) at the date of this Replacement Capital Covenant and continuing to but
      not
      including the first Redesignation Date, the Initial Covered Debt and (b)
      thereafter, commencing with each Redesignation Date and continuing to but not
      including the next succeeding Redesignation Date, the Eligible Debt identified
      pursuant to Section 3(b) as the Covered Debt for such period.

     

    “Covered
      Debtholder”
means
      each Person (whether a Holder or a beneficial owner holding through a
      participant in a clearing agency) that buys, holds or sells long-term
      indebtedness for money borrowed of the Company during the period that such
      long-term indebtedness for money borrowed is Covered Debt.

     

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

    

      
        	 	
                (a)

              	
                gives
                  the holder a beneficial interest in (i) debt securities of the
                  Company
                  that
                  are not redeemable prior to settlement of the stock purchase contract
                  referred to in subclause (ii)
                  hereof
                  and (ii) an interest in a stock purchase contract for a Common Share
                  of

              


      

       


      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      


      the
        Company that will be settled in three years or less, with the number of Common
        Shares purchasable pursuant to such stock purchase contract to be within
        a range
        established at the time of issuance of such debt securities;

       

      
        	 	
                (b)

              	
                provides
                  that the investors directly or indirectly grant to the Company
                  a security
                  interest in such debt securities and their proceeds (including
                  any
                  substitute collateral permitted under the transaction documents)
                  to secure
                  the investors’ direct or indirect obligation to purchase Common Shares of
                  the Company pursuant to such stock purchase
                  contracts;

              


      

       

      
        	 	
                (c)

              	
                includes
                  a remarketing feature pursuant to which the debt securities of
                  the Company
                  are remarketed to new investors commencing not later than 30 days
                  prior to
                  the settlement date of the purchase
                  contract;

              


      

       

      
        	 	
                (d)

              	
                provides
                  for the proceeds raised in the remarketing to be used to purchase
                  Common
                  Shares of the Company under the stock purchase contracts and, if
                  there has
                  not been a successful remarketing by the settlement date of the
                  purchase
                  contract, provides that the stock purchase contracts will be settled
                  by
                  the Company foreclosing on its debt securities or other collateral
                  directly or indirectly pledged by investors in the Debt Exchangeable
                  for
                  Common Equity.

              


      

       

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

       

      
        	 	
                (a)

              	
                gives
                  the holder a beneficial interest in (i) subordinated debt securities
                  of
                  the Company that include a provision requiring the Company to issue
                  (or
                  use commercially reasonable efforts to issue) one or more types
                  of APM
                  Qualifying Securities raising proceeds at least equal to the deferred
                  Distributions on such subordinated debt securities commencing not
                  later
                  than the second anniversary of the commencement of such deferral
                  period
                  and that are the most junior subordinated debt of the Company (or
                  rank
                  pari
                  passu with
                  the Most Junior Subordinated Debt Securities of the Company) (in
                  this
                  definition, “subordinated debt” of the Company) and (ii) an interest in a
                  stock purchase contract for a share of non-cumulative perpetual
                  preferred
                  stock of the Company that ranks pari
                  passu with
                  or junior to all other Preference Shares of the Company (in this
                  definition, “preferred stock” of the
                  Company);

              


      

       

      
        	 	
                (b)

              	
                provides
                  that the investors directly or indirectly grant to the Company
                  a security
                  interest in such subordinated debt securities and their proceeds
                  (including any substitute collateral permitted under the transaction
                  documents) to secure the investors’ direct or indirect obligation to
                  purchase preferred stock of the Company pursuant to such stock
                  purchase
                  contracts;

              


      

       

      
        	 	
                (c)

              	
                includes
                  a remarketing feature pursuant to which the subordinated debt of
                  the
                  Company is remarketed to new investors commencing not later than
                  the first
                  Distribution Date that is at least five years after the date of
                  issuance
                  of securities or earlier in the event of an early settlement event
                  based
                  on: (i) the dissolution of the

              


      

       


      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      


      issuer
        of
        such debt exchangeable for preferred equity or (ii) one or more financial
        tests
        set forth in the terms of the instrument governing such debt exchangeable
        for
        preferred equity;

       

      
        	 	
                (d)

              	
                provides
                  for the proceeds raised in the remarketing to be used to purchase
                  Preference Shares of the Company under the stock purchase contracts
                  and,
                  if there has not been a successful remarketing by the first Distribution
                  Date that is six years after the date of issuance of such securities,
                  provides that the stock purchase contracts will be settled by the
                  Company
                  foreclosing on its subordinated debt securities or other collateral
                  directly or indirectly pledged by investors in the Debt Exchangeable
                  for
                  Preferred Equity;

              


      

       

      
        	 	
                (e)

              	
                includes
                  a replacement capital covenant substantially similar to this Replacement
                  Capital Covenant or an Other Qualifying Capital Replacement Covenant
                  that
                  will apply to such securities and to the preferred stock of the
                  Company,
                  and will not include Debt Exchangeable for Preferred Equity or
                  Debt
                  Exchangeable for Common Equity as a Replacement Capital Security;
                  and

              


      

       

      
        	 	
                (f)

              	
                if
                  applicable, after the issuance of such preferred stock of the Company,
                  provides the holders of such securities with a beneficial interest
                  in such
                  preferred stock of the Company.

              


      

       

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

       

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

       

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

       

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

       

      “Eligible
        Senior Debt”
means,
        at any time in respect of any issuer, each series of outstanding unsecured
        long-term indebtedness for money borrowed of such issuer that (a) upon a
        bankruptcy, liquidation, dissolution or winding-up of the issuer, ranks most
        senior among the issuer’s then outstanding classes of indebtedness for money
        borrowed, (b) is then assigned a rating by at least one NRSRO (provided
        that
        this clause (b) shall apply on a Redesignation Date only if on such date
        the
        issuer has outstanding senior long-term indebtedness for money borrowed that
        satisfies the requirements of clauses (a), (c) and (d) that is then assigned
        a
        rating by at least one NRSRO), (c) has an outstanding principal amount of
        not
        less than $100,000,000, and (d) was issued through or with the assistance
        of a
        commercial or investment banking firm or firms acting as underwriters, initial
        purchasers or placement or distribution agents. For purposes of this definition
        as applied to securities with a CUSIP number, each issuance of long-term
        indebtedness for

       


      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      


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

       

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

       

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

       

      “Holder”
means,
        as to the Covered Debt then in effect, each holder of such Covered Debt as
        reflected on the register maintained by or on behalf of the Company with
        respect
        to such Covered Debt.

       

      “Initial
        Covered Debt”
means
        the first issue of Eligible Debt that the Company so designates as Initial
        Covered Debt.

       

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

       

      “Mandatorily
        Convertible Preferred Stock”
means
        Preference Shares with (a) no prepayment obligation on the part of the issuer
        thereof, whether at the election of the holders or otherwise, and (b) a
        requirement that such Preference Shares convert into Common Shares within
        three
        years from the date of its issuance at a conversion ratio within a range
        established at the time of issuance of such Preference Shares.

       


      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      


      “Mandatory
        Trigger Provision”
means,
        as to any security or combination of securities (together in this definition,
        “securities”), provisions in the terms thereof or of the related transaction
        agreements that (a) require or, at its option in the case of non-cumulative
        perpetual Preference Shares, permit the issuer of such securities to make
        payment of Distributions on such securities only pursuant to the issue and
        sale
        of APM Qualifying Securities, within no more than two years of a failure
        to
        satisfy one or more financial tests set forth in the terms of such securities
        or
        related transaction agreements, in an amount such that the net proceeds of
        such
        sale are at least equal to the amount of unpaid Distributions on such securities
        (including without limitation all deferred and accumulated amounts) and in
        either case require the application of the net proceeds of such sale to pay
        such
        unpaid Distributions, provided
        that:
        (1) if the APM Qualifying Securities issued and sold are Qualifying
        Non-Cumulative Perpetual Preferred Stock or Mandatorily Convertible Preferred
        Stock, the amount of the net proceeds of Qualifying Non-Cumulative Perpetual
        Preferred Stock and Mandatorily Convertible Preferred Stock applied, together
        with the net proceeds of all prior issuances of Qualifying Non-Cumulative
        Preferred Stock and any still-outstanding Mandatorily Convertible Preferred
        Stock applied during the current and all prior deferral periods, to pay such
        Distributions pursuant to such provision may not exceed 25% of the initial
        liquidation or principal amount of such securities and (2) if the APM Qualifying
        Securities issued and sold are Common Shares or Qualifying Warrants and if
        the
        Mandatory Trigger provision does not require such issuance and sale within
        one
        year of such failure, the number of Common Shares issued or issuable upon
        the
        exercise of such Qualifying Warrants plus the number of Common Shares previously
        issued or issuable upon the exercise of previously issued Qualifying Warrants
        may not exceed 2% of the total number of issued and outstanding shares of
        the
        Company’s Common Shares as of the date of the Company’s most recent publicly
        available consolidated financial statements as of the date of such issuance,
        provided
        (and it
        being understood) that: (1) the Company shall not be obligated to issue (or
        use
        commercially reasonable efforts to issue) APM Qualifying Securities for so
        long
        as a Market Disruption Event has occurred and is continuing and (2) if, due
        to a
        Market Disruption Event or otherwise, the Company is able to raise and apply
        some, but not all, of the eligible proceeds necessary to pay all deferred
        Distributions on any Distribution Date, the Company will apply any available
        eligible proceeds to pay accrued and unpaid Distributions on the applicable
        Distribution Date in chronological order subject to the Share Cap (if any);
        and
        if the Company has outstanding more than one class or series of securities
        under
        which it is obligated to sell a type of APM Qualifying Securities and apply
        some
        part of the proceeds to the payment of deferred Distributions, then on any
        date
        and for any period the amount of net proceeds received by the Company from
        those
        sales and available for payment of deferred Distributions on such securities
        shall be applied to such securities on a pro rata basis in proportion to
        the
        total amounts that are due on such securities, (b) prohibit the issuer from
        purchasing any APM Qualifying Securities or any of the Company’s securities that
        on the Company’s bankruptcy or liquidation rank pari passu or junior to such APM
        qualifying securities prior to the date that is six months after the issuer
        applies the net proceeds of the sales described in clause (a) to pay such
        unpaid
        Distributions, and (c) include a Bankruptcy Claim Limitation Provision. No
        remedy other than Permitted Remedies may arise by the terms of such securities
        or related transaction agreements in favor of the holders of such securities
        as
        a result of the issuer’s failure to pay Distributions because of the Mandatory
        Trigger Provision or as a result of the issuer’s exercise of its right under an
        Optional Deferral Provision until Distributions have been deferred for one
        or
        more Distribution Periods that total together at least ten years.

       


      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      


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

       

      
        	 	
                (a)

              	
                trading
                  in securities generally, or shares of our securities specifically,
                  on the
                  New York Stock Exchange or any other national securities exchange,
                  or in
                  the over-the-counter market on which any APM Qualifying Securities
                  or
                  Qualifying Capital Securities, as the case may be, are then listed
                  or
                  traded shall have been suspended or the settlement of such trading
                  generally shall have been materially disrupted or minimum prices
                  such that
                  trading shall have been materially disrupted shall have been established
                  on any such exchange or market by the Commission, the relevant
                  exchange or
                  by any other regulatory body or governmental agency having
                  jurisdiction;

              


      

       

      
        	 	
                (b)

              	
                the
                  Company would be required to obtain the consent or approval of
                  its
                  stockholders or a regulatory body (including, without limitation,
                  any
                  securities exchange) or governmental authority to issue or sell
                  APM
                  Qualifying Securities pursuant to the alternative payment mechanism
                  or to
                  issue Qualifying Capital Securities pursuant to the Company’s repayment
                  obligations in respect thereof, as the case may be, and that consent
                  or
                  approval has not yet been obtained notwithstanding the Company’s
                  commercially reasonable efforts to obtain that consent or
                  approval;

              


      

       

      
        	 	
                (c)

              	
                a
                  banking moratorium shall have been declared by the federal or state
                  authorities of the United States such that market trading in the
                  APM
                  Qualifying Securities or the Qualifying Capital Securities, as
                  applicable,
                  has been disrupted or ceased; a material disruption shall have
                  occurred in
                  commercial banking or securities settlement or clearance services
                  in the
                  United States such that market trading in the APM Qualifying Securities
                  or
                  the Qualifying Capital Securities, as applicable, has been disrupted
                  or
                  ceased;

              


      

       

      
        	 	
                (d)

              	
                the
                  United States shall have become engaged in hostilities, there shall
                  have
                  been an escalation in hostilities involving the United States,
                  there shall
                  have been a declaration of a national emergency or war by the United
                  States or there shall have occurred any other national or international
                  calamity or crisis such that market trading in the APM Qualifying
                  Securities or the Qualifying Capital Securities, as applicable,
                  has been
                  disrupted or ceased;

              


      

       

      
        	 	
                (e)

              	
                there
                  shall have occurred such a material adverse change in general domestic
                  or
                  international economic, political or financial conditions, including
                  without limitation as a result of terrorist activities, or the
                  effect of
                  international conditions on the financial markets in the United
                  States
                  shall be such that trading in any of the APM Qualifying Securities
                  or
                  Qualifying Capital Securities, as the case may be, has been materially
                  disrupted;

              


      

       

      
        	 	
                (f)

              	
                an
                  event occurs and is continuing as a result of which the offering
                  document
                  for the offer and sale of APM Qualifying Securities or Qualifying
                  Capital
                  Securities, as the case may be, would, in the Company’s reasonable
                  judgment, contain an

              


      

       


      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      


      untrue
        statement of a material fact or omit to state a material fact required to
        be
        stated in that offering document or necessary to make the statements in that
        offering document not misleading and either (a) the disclosure of that event
        at
        such time, in the Company’s reasonable judgment, is not otherwise required by
        law and would have a material adverse effect on our business or (b) the
        disclosure relates to a previously undisclosed proposed or pending material
        business transaction, provided
        that
        no
        single suspension period described in this bullet shall exceed 90 consecutive
        days and multiple suspension periods described in this bullet shall not exceed
        an aggregate of 180 days in any 360-day period; or

       

      
        	 	
                (g)

              	
                the
                  Company reasonably believes that the offering document for the
                  offer and
                  the sale of APM Qualifying Securities or Qualifying Capital Securities,
                  as
                  the case may be, would not be in compliance with a rule or regulation
                  of
                  the Commission (for reasons other than those described in the immediately
                  preceding bullet) and the Company determines that it is unable
                  to comply
                  with such rule or regulation or such compliance is unduly burdensome,
                  provided
                  that
                  no single suspension period described in this bullet shall exceed
                  90
                  consecutive days and multiple suspension periods described in this
                  bullet
                  shall not exceed an aggregate of 180 days in any 360-day
                  period.

              


      

       

      “Market
        Value”
means,
        on any date, the closing sale price per share of Common Shares (or if no
        closing
        sale price is reported, the average of the bid and ask prices or, if more
        than
        one in either case, the average of the average bid and the average ask prices)
        on that date as reported in composite transactions by the New York Stock
        Exchange or, if the Common Shares are not then listed on the New York Stock
        Exchange, as reported by the principal U.S. securities exchange on which
        the
        Common Shares are traded or quoted; if the Common Shares are not either listed
        or quoted on any U.S. securities exchange on the relevant date, the market
        price
        will be the average of the mid-point of the bid and ask prices for the Common
        Shares on the relevant date submitted by at least three nationally recognized
        independent investment banking firms selected by the Company for this
        purpose.

       

      “Measurement
        Date”
        means,
        with respect to any redemption or purchase of the Preference Shares,
        the
        date that is 180 days prior to delivery of notice of such redemption or the
        date
        of such purchase.

       

      “Measurement
        Period”
        means,
        with respect to any notice date or purchase date, the period (i) beginning
        on
        the Measurement Date with respect to such notice date or purchase date and
        (ii)
        ending on such notice date or purchase date. Measurement Periods cannot run
        concurrently.

       

      “Most
        Junior Subordinated Debt Securities”
mean
        debt securities of the Company that rank upon a liquidation, dissolution
        or
        winding-up of the Company junior to all of the Company’s other long-term
        indebtedness for money borrowed (other than the Company’s long-term indebtedness
        for money borrowed from time to time outstanding that by its terms ranks
        pari
        passu with
        such
        securities) and pari
        passu with
        the
        claims of the Company’s trade creditors.

       


      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      


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

       

      
        	 	
                (a)

              	
                an
                  Alternative Payment Mechanism; 

              


      

       

      
        	 	
                (b)

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

              


      

      
         

        
          	 	
                  (c)

                	
                  a
                    Bankruptcy Claim Limitation
                    Provision.

                


        

         

      

      “Non-Cumulative”
means,
        with respect to any securities, that the issuer may elect not to make any
        number
        of periodic Distributions without any remedy arising under the terms of the
        securities or related agreements in favor of the holders, other than one
        or more
        Permitted Remedies. Any securities that include a No Payment Provision shall
        also be deemed to be Non-Cumulative for all purposes of this Replacement
        Capital
        Covenant.

       

      “NRSRO”
means
        a
        nationally recognized statistical rating organization within the meaning
        of Rule
        15c3-1(c)(2)(vi)(F) under the Exchange Act.

       

      “Offering
        Memorandum”
has
        the
        meaning specified in Recital B.

       

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

       

      
        	 	
                (a)

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

              


      

       

      
        	 	
                (b)

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

              


      

       

      All
        Preference Shares of the Company shall be deemed to include an Optional Deferral
        Provision. 

       

      “Other
        Qualifying Capital Replacement Covenant”
means
        a
        replacement capital covenant, as identified by the Company’s Board of Directors
        acting in good faith and in its reasonable discre-

       


      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      


      tion
        and
        reasonably construing the definitions and other terms of this Replacement
        Capital Covenant, (i) entered into by a company that at the time it enters
        into
        such replacement capital covenant is a reporting company under the Exchange
        Act
        and (ii) that restricts the related issuer from redeeming or purchasing
        identified securities except from the applicable percentage of the proceeds
        of
        specified replacement capital securities that have terms and provisions at
        the
        time of redemption or purchase that are as or more equity-like than the
        securities then being redeemed or purchased, raised within 180 days prior
        to the
        applicable redemption or purchase date.

       

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

       

      
        	 	
                (a)

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

              


      

       

      
        	 	
                (b)

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

              


      

       

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

       

      “Preference
        Shares”
means
        preference shares of the Company and any securities issued in exchange therefor
        in connection with a merger, consolidation, binding share exchange, business
        combination, recapitalization or other similar event.

       

      “Qualifying
        Capital Securities”
means
        securities (other than Common Shares, Qualifying Warrants, Mandatorily
        Convertible Preferred Stock, Debt Exchangeable for Preferred Equity and Debt
        Exchangeable for Common Equity) that rank pari
        passu with
        or
        junior to the Most Junior Subordinated Debt Securities upon the liquidation,
        dissolution or winding up of the Company and, in the determination of the
        Company’s Board of Directors reasonably construing the definitions and other
        terms of this Replacement Capital Covenant, meet one of the following
        criteria:

       

      
        	 	
                (a)

              	
                in
                  connection with any repayment, redemption or purchase of Series
                  A
                  Preference Shares prior to September 30,
                  2017:

              


      

       

      
        
          	 	
                  (i)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) have no maturity
                    or a
                    maturity of at least 60 years and (B) either (x) are subject
                    to a
                    replacement capital covenant substantially similar to this Replacement
                    Capital Covenant or an Other Qualifying Capital Replacement Covenant
                    and
                    are Non-Cumulative or (y) have a Mandatory Trigger Provision
                    and are
                    subject to Intent-Based Replacement Disclosure and have an Optional
                    Deferral Provision; or

                


        

         


        
          
            
            

          

          
            -12-

            
              

            

          

          
            
            

          

        


        
          	 	
                  (ii)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) have no maturity
                    or a
                    maturity of at least 40 years, (B) are subject to a replacement
                    capital
                    covenant substantially similar to this Replacement Capital Covenant
                    or an
                    Other Qualifying Capital Replacement Covenant, (C) have an Optional
                    Deferral Provision and (D) have a Mandatory Trigger Provision;
                    or

                


        

         

        
          	 	
                  (b)

                	
                  in
                    connection with any repayment, redemption or purchase of Series
                    A
                    Preference Shares at any time on or after September 30, 2017
                    but prior to
                    September 30, 2037:

                


        

         

        
          	 	
                  (i)

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

                


        

         

        
          	 	
                  (ii)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) have no maturity
                    or a
                    maturity of at least 60 years, (B) are subject to a replacement
                    capital
                    covenant substantially similar to this Replacement Capital Covenant
                    or an
                    Other Qualifying Capital Replacement Covenant and (C) have an
                    Optional
                    Deferral Provision;

                


        

         

        
          	 	
                  (iii)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) are Non-Cumulative
                    and
                    (B) (x) have no maturity or a maturity of at least 60 years and
                    (y) are
                    subject to Intent-Based Replacement
                    Disclosure;

                


        

         

        
          	 	
                  (iv)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) have an Optional
                    Deferral Provision, (B) have a Mandatory Trigger Provision and
                    (C) have no maturity or a maturity of at least 60
                    years;

                


        

         

        
          	 	
                  (v)

                	
                  securities
                    issued by the Company or its subsidiaries that (A) are Non Cumulative,
                    (B)
                    have no maturity or a maturity of at least 40 years and (C) are
                    subject to a replacement capital covenant substantially similar
                    to this
                    Replacement Capital Covenant or an Other Qualifying Capital Replacement
                    Covenant; or

                


        

         

        
          	 	
                  (vi)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) have an Optional
                    Deferral Provision, (B) have a Mandatory Trigger Provision and
                    (C) either (x) have no maturity or a maturity of at least 40 years
                    and Intent-Based Replacement Disclosure or (y) have no maturity
                    or a
                    maturity of at least 25 years and are subject to a replacement
                    capital
                    covenant substantially similar to this Replacement Capital Covenant
                    or an
                    Other Qualifying Capital Replacement Covenant;
                    or

                


        

         

        
          	 	
                  (c)

                	
                  in
                    connection with any repayment, redemption or purchase of Series
                    A
                    Preference Shares at any time on or after September 30,
                    2037:

                


        

         

        
          	 	
                  (i)

                	
                  securities
                    described under clause (b) of this
                    definition;

                


        

         


        
          
            
            

          

          
            -13-

            
              

            

          

          
            
            

          

        


        
          	 	
                  (ii)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) (x) have no
                    maturity or
                    a maturity of at least 60 years and (y) is subject to Intent-Based
                    Replacement Disclosure and (B) have an Optional Deferral
                    Provision;

                


        

         

        
          	 	
                  (iii)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) have no maturity
                    or a
                    maturity of at least 60 years and (B) are
                    Non-Cumulative;

                


        

         

        
          	 	
                  (iv)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) (x) have no
                    maturity or
                    a maturity of at least 40 years and (y) are subject to a replacement
                    capital covenant substantially similar to this Replacement Capital
                    Covenant or an Other Qualifying Capital Replacement Covenant
                    and
                    (B) have an Optional Deferral Provision;


                


        

         

        
          	 	
                  (v)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) either (x) have no
                    maturity or a maturity of at least 40 years and are subject to
                    Intent-Based Replacement Disclosure or (y) have no maturity or
                    a maturity
                    at least 25 years and are subject to a replacement capital covenant
                    substantially similar to this Replacement Capital Covenant or
                    an Other
                    Qualifying Capital Replacement Covenant and (B) are Non-Cumulative;
                    or

                


        

         

        
          	 	
                  (vi)

                	
                  securities
                    issued by the Company or its Subsidiaries that (A) have an Optional
                    Deferral Provision, (B) have a Mandatory Trigger Provision, (C) have
                    no maturity or a maturity of more than 30 years and (D) are subject
                    to
                    Intent-Based Replacement
                    Disclosure.

                


        

         

      

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

       

      “Qualifying
        Warrants”
means
        any net share settled warrants to purchase the Company’s Common Shares that (1)
        have an exercise price greater than the current stock market price, determined
        as specified in the instrument governing such warrants, of the Company’s Common
        Shares, and (2) the Company is not entitled to redeem for cash and the holders
        of which are not entitled to require the Company to purchase for cash in
        any
        circumstances.

       

      “RCC
        Termination Date”
means
        September 30, 2047.

       

      “Redesignation
        Date”
means,
        as to the Covered Debt in effect at any time, the earliest of (a) the date
        that
        is two years prior to the final maturity date of such Covered Debt, (b) if
        the
        Company elects to redeem or repay, or the Company or a Subsidiary of the
        Company
        elects to purchase, such Covered Debt either in whole or in part with the
        consequence that after giving effect to such

       


      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      


      redemption,
        repayment or purchase the outstanding principal amount of such Covered Debt
        is
        less than $100,000,000, the applicable redemption, repayment or purchase
        date
        and (c) if such Covered Debt is not Eligible Subordinated Debt, the date
        on
        which the Company issues long-term indebtedness for money borrowed that is
        Eligible Subordinated Debt.

       

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

       

      “Replacement
        Capital Securities”
        means:

       

      
        	 	
                (a)

              	
                Common
                  Shares and Qualifying Warrants;

              


      

       

      
        	 	
                (b)

              	
                Mandatorily
                  Convertible Preferred Stock;

              


      

       

      
        	 	
                (c)

              	
                Debt
                  Exchangeable for Preferred Equity;

              


      

       

      
        	 	
                (d)

              	
                Debt
                  Exchangeable for Common Equity; and

              


      

       

      
        	 	
                (e)

              	
                Qualifying
                  Capital Securities.

              


      

       

      “Series
        A Preference Shares”
has
        the
        meaning specified in Recital A. 

       

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

       

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

       

      
        
          
          

        

        
          -15-