PNC Bank 2008 Annual Report Download - page 45

purchase the Trust Securities, the LLC Preferred Securities or
the PNC Bank Preferred Stock unless such repurchases or
redemptions are made from the proceeds of the issuance of
certain qualified securities and pursuant to the other terms and
conditions set forth in the replacement capital covenant with
respect to the Trust RCC.
We also entered into a replacement capital covenant in
connection with the closing of the Trust II Securities sale (the
“Trust II RCC”) whereby we agreed until March 29, 2017 that
neither we nor our subsidiaries would purchase or redeem the
Trust II Securities, the LLC Preferred Securities or the Series I
Preferred Stock unless such repurchases or redemptions are
made from the proceeds of the issuance of certain qualified
securities and pursuant to the other terms and conditions set
forth in the replacement capital covenant with respect to the
Trust RCC.
As of December 31, 2008, each of the Trust RCC and the
Trust II RCC are for the benefit of holders of our $200 million
of Floating Rate Junior Subordinated Notes issued in June
1998. We filed a copy of each of the Trust RCC and the Trust
II RCC with the SEC as Exhibit 99.1 to PNC’s Form 8-K filed
on December 8, 2006 and as Exhibit 99.1 to PNC’s Form 8-K
filed on March 30, 2007, respectively.
PNC has contractually committed to Trust II and Trust III that
if full dividends are not paid in a dividend period on the Trust
II Securities or the Trust III Securities, as applicable, or the
LLC Preferred Securities held by Trust II or Trust III, as
applicable, PNC will not declare or pay dividends with respect
to, or redeem, purchase or acquire, any of its equity capital
securities during the next succeeding dividend period, other
than: (i) purchases, redemptions or other acquisitions of shares
of capital stock of PNC in connection with any employment
contract, benefit plan or other similar arrangement with or for
the benefit of employees, officers, directors or consultants,
(ii) purchases of shares of common stock of PNC pursuant to a
contractually binding requirement to buy stock existing prior
to the commencement of the extension period, including under
a contractually binding stock repurchase plan, (iii) any
dividend in connection with the implementation of a
shareholders’ rights plan, or the redemption or repurchase of
any rights under any such plan, (iv) as a result of an exchange
or conversion of any class or series of PNC’s capital stock for
any other class or series of PNC’s capital stock, (v) the
purchase of fractional interests in shares of PNC capital stock
pursuant to the conversion or exchange provisions of such
stock or the security being converted or exchanged or (vi) any
stock dividends paid by PNC where the dividend stock is the
same stock as that on which the dividend is being paid.
PNC Bank, N.A. has contractually committed to Trust I that if
full dividends are not paid in a dividend period on the Trust I
Securities, LLC Preferred Securities or any other parity equity
securities issued by the LLC, neither PNC Bank, N.A. nor its
subsidiaries will declare or pay dividends or other
distributions with respect to, or redeem, purchase or acquire or
make a liquidation payment with respect to, any of its equity
capital securities during the next succeeding period (other than
to holders of the LLC Preferred Securities and any parity
equity securities issued by the LLC) except: (i) in the case of
dividends payable to subsidiaries of PNC Bank, N.A., to PNC
Bank, N.A. or another wholly-owned subsidiary of PNC Bank,
N.A. or (ii) in the case of dividends payable to persons that are
not subsidiaries of PNC Bank, N.A., to such persons only if,
(A) in the case of a cash dividend, PNC has first irrevocably
committed to contribute amounts at least equal to such cash
dividend or (B) in the case of in-kind dividends payable by
PNC REIT Corp., PNC has committed to purchase such
in-kind dividend from the applicable PNC REIT Corp. holders
in exchange for a cash payment representing the market value
of such in-kind dividend, and PNC has committed to
contribute such in-kind dividend to PNC Bank, N.A.
PNC Capital Trust E Trust Preferred Securities
In February 2008, PNC Capital Trust E issued $450 million of
7.75% Trust Preferred Securities due March 15, 2068 (the
“Trust E Securities”). PNC Capital Trust E’s only assets are
$450 million of 7.75% Junior Subordinated Notes due
March 15, 2068 and issued by PNC (the “JSNs”). The Trust E
Securities are fully and unconditionally guaranteed by PNC.
We may, at our option, redeem the JSNs at 100% of their
principal amount on or after March 15, 2013.
In connection with the closing of the Trust E Securities sale,
we agreed that, if we have given notice of our election to defer
interest payments on the JSNs or a related deferral period is
continuing, then PNC would be subject during such period to
restrictions on dividends and other provisions protecting the
status of the JSN debenture holder similar to or in some ways
more restrictive than those potentially imposed under the
Exchange Agreements with Trust II and Trust III, as described
above. PNC Capital Trusts C and D have similar protective
provisions with respect to $500 million in principal amount of
junior subordinated debentures. Also, in connection with the
closing of the Trust E Securities sale, we entered into a
replacement capital covenant, a copy of which was attached as
Exhibit 99.1 to PNC’s Form 8-K filed on February 13, 2008
and which is described in Note 14 Capital Securities of
Subsidiary Trusts in Item 8 of this Report.
Acquired Entity Trust Preferred Securities
As a result of the National City acquisition, we assumed
obligations with respect to $2.4 billion in principal amount of
junior subordinated debentures issued by the acquired entity.
As a result of the Mercantile, Yardville and Sterling
acquisitions, we assumed obligations with respect to $158
million in principal amount of junior subordinated debentures
issued by the acquired entities. Under the terms of these
debentures, if there is an event of default under the debentures
or PNC exercises its right to defer payments on the related
trust preferred securities issued by the statutory trusts or there
is a default under PNC’s guarantee of such payment
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