Exhibit 10.1
 
 
Replacement Capital Covenant, dated as of September 27, 2006 (this “Replacement
Capital Covenant”), by Nelnet, Inc., a Delaware corporation (together with its
successors and assigns, the “Corporation”), in favor of and for the benefit of
each Covered Debtholder (as defined below).
 
Recitals
 
A. On the date hereof, the Corporation is issuing $200,000,000 aggregate
principal amount of its 7.400% Fixed-to-Floating Capital Efficient Notes (the
“CENts”).
 
B. This Replacement Capital Covenant is the “Replacement Capital Covenant”
referred to in the Prospectus Supplement, dated September 22, 2006, relating to
the CENts (together with the Prospectus, dated May 12, 2005 attached thereto,
the “Prospectus Supplement”).
 
C. The Corporation is entering into and disclosing the content of this
Replacement Capital Covenant in the manner provided below with the intent that
the covenants provided for in this Replacement Capital Covenant be enforceable
by each Covered Debtholder and that the Corporation be estopped from
disregarding the covenants in this Replacement Capital Covenant, in each case to
the fullest extent permitted by applicable law.
 
D. The Corporation acknowledges that reliance by each Covered Debtholder upon
the covenants in this Replacement Capital Covenant is reasonable and foreseeable
by the Corporation and that, were the Corporation to disregard its covenants in
this Replacement Capital Covenant, each Covered Debtholder would have sustained
an injury as a result of its reliance on such covenants.
 
NOW, THEREFORE, the Corporation hereby covenants and agrees as follows in favor
of and for the benefit of each Covered Debtholder.
 
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 and Repurchase of CENts. The Corporation
hereby promises and covenants to and for the benefit of each Covered Debtholder
that the Corporation shall not repay, redeem or repurchase all or any part of
the CENts on or before September 15, 2051 except to the extent that the
principal amount repaid or the applicable redemption or repurchase price does
not exceed the sum of the following amounts:
 
(i)  the Applicable Percentage of the aggregate amount of net cash proceeds
received by the Corporation and its Subsidiaries since the most recent
Measurement Date from the sale of Common Stock and rights to acquire Common
Stock (including Common Stock and rights to acquire Common Stock issued pursuant
to the Corporation’s reinvestment plan or employee benefit plans) to Persons
other than the Corporation and its Subsidiaries; plus
 
(ii)  100% of the aggregate amount of net cash proceeds received by the
Corporation and its Subsidiaries since the most recent Measurement Date from the
sale of
 

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Mandatorily Convertible Preferred Stock and Debt Exchangeable for Equity to
Persons other than the Corporation and its Subsidiaries; plus
 
(iii)  100% of the aggregate amount of net cash proceeds received by the
Corporation and its Subsidiaries since the most recent Measurement Date from the
sale of Qualifying Capital Securities to Persons other than the Corporation and
its Subsidiaries.
 
SECTION 3.  Covered Debt. (a) The Corporation represents and warrants that the
Initial Covered Debt is Eligible Debt.
 
(b)  On or during the 30-day period immediately preceding any Redesignation Date
with respect to the Covered Debt then in effect, the Corporation shall identify
the series of Eligible Debt that will become the Covered Debt on and after such
Redesignation Date in accordance with the following procedures:
 
(i)  the Corporation shall identify each series of its then outstanding
long-term indebtedness for money borrowed that is Eligible Debt;
 
(ii)  if only one series of the Corporation’s then outstanding long-term
indebtedness for money borrowed is Eligible Debt, such series shall become the
Covered Debt commencing on the related Redesignation Date;
 
(iii)  if the Corporation has more than one outstanding series of long-term
indebtedness for money borrowed that is Eligible Debt, then the Corporation
shall identify the series that has the latest occurring final maturity date as
of the date the Corporation is applying the procedures in this Section 3(b) and
such series shall become the Covered Debt on the next Redesignation Date;
 
(iv)  the series of outstanding long-term indebtedness for money borrowed that
is determined to be Covered Debt pursuant to clause (ii), (iii), (iv) or (v)
above shall be the Covered Debt for purposes of this Replacement Capital
Covenant for the period commencing on the related Redesignation Date and
continuing to but not including the Redesignation Date as of which a new series
of outstanding long-term indebtedness is next determined to be the Covered Debt
pursuant to the procedures set forth in this Section 3(b); and
 
(v)  in connection with such identification of a new series of Covered Debt, the
Corporation shall give the notice provided for in Section 3(c) within the time
frame provided for in such section.
 
(c)  Notice. In order to give effect to the intent of the Corporation described
in Recital C, the Corporation covenants that (i) simultaneously with the
execution of this Replacement Capital Covenant or as soon as practicable after
the date hereof, it shall (A) give notice to the Holders of the Initial Covered
Debt, in the manner provided in the indenture relating to the Initial Covered
Debt, of this Replacement Capital Covenant and the rights granted to such
Holders hereunder and (B) file a copy of this Replacement Capital Covenant with
the Commission as an Exhibit to a Form 8-K under the Securities Exchange Act;
(ii) so long as the
 

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Corporation is a reporting company under the Securities Exchange Act, the
Corporation will include in each annual report filed with the Commission on Form
10-K under the Securities Exchange Act a description of the covenant set forth
in Section 2 and identify the series of long-term indebtedness for borrowed
money that is Covered Debt as of the date such Form 10-K is filed with the
Commission; (iii) if a series of the Corporation’s long-term indebtedness for
money borrowed (1) becomes Covered Debt or (2) ceases to be Covered Debt, give
notice of such occurrence within 30 days to the holders of such long-term
indebtedness for money borrowed in the manner provided for in the indenture,
fiscal agency agreement or other instrument under which such long-term
indebtedness for money borrowed was issued and report such change in the
Corporation’s next quarterly report on Form 10-Q or annual report on Form 10-K,
as applicable; (iv) if, and only if, the Corporation ceases to be a reporting
company under the Securities Exchange Act, post on its website the information
otherwise required to be included in Securities Exchange Act filings pursuant to
clauses (ii) and (iii) of this Section 3(c); and (v) 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
Corporation pursuant to this Replacement Capital Covenant shall remain in full
force and effect until the earliest date (the “Termination Date”) to occur of
(i) September 15, 2051, (ii) the date, if any, on which the Holders of a
majority by principal amount of the then effective series of Covered Debt
consent or agree in writing to the termination of this Replacement Capital
Covenant and the obligations of the Corporation hereunder and (iii) the date on
which the Corporation ceases to have any series of outstanding Eligible Senior
Debt or Eligible Subordinated Debt (in each case without giving effect to the
rating requirement in clause (ii) of the definition of each such term). From and
after the Termination Date, the obligations of the Corporation pursuant to this
Replacement Capital Covenant shall be of no further force and effect.
 
(b)  This Replacement Capital Covenant may be amended or supplemented from time
to time by a written instrument signed by the Corporation with the consent of
the Holders of at least a majority 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 Corporation (and without the consent of the Holders 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 ability of the Corporation to
repay, redeem or repurchase CENts in any circumstance or (ii) such amendment or
supplement is not adverse to the holders of the then effective series of Covered
Debt and an officer of the Corporation has delivered to the Holders of the then
effective series of Covered Debt in the manner provided for in the indenture,
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 Holders of any series of Covered Debt.
 
(c)  For purposes of Sections 4(a) and 4(b), the Holders whose consent or
agreement is required to terminate, amend or supplement the obligations of the
Corporation under this Replacement Capital Covenant shall be the Holders of the
then effective Covered Debt as of a record date established by the Corporation
that is not more than 30 days prior to the date
 

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on which the Corporation proposes that such termination, amendment or supplement
becomes effective.
 
SECTION 5.  Miscellaneous. (a) This Replacement Capital Covenant shall be
governed by and construed in accordance with the laws of the State of New York.
 
(b)  This Replacement Capital Covenant shall be binding upon the Corporation and
its successors and assigns and shall inure to the benefit of the Covered
Debtholders as they exist from time to time (it being understood and agreed by
the Corporation that any Person who is a Covered Debtholder at the time such
Person acquires, holds or sells Covered Debt shall retain its status as a
Covered Debtholder for so long as the series of long-term indebtedness for
borrowed money owned by such Person is Covered Debt and, if such Person
initiates a claim or proceeding to enforce its rights under this Replacement
Capital Covenant after the Corporation has violated its covenants in Section 2
and before the series of long-term indebtedness for money borrowed held by such
Person is no longer Covered Debt, such Person’s rights under this Replacement
Capital Covenant shall not terminate by reason of such series of long-term
indebtedness for money borrowed no longer being Covered Debt).
 
(c)  All demands, notices, requests and other communications to the Corporation
under this Replacement Capital Covenant shall be deemed to have been duly given
and made if in writing and (i) if served by personal delivery upon the
Corporation, on the day so delivered (or, if such day is not a Business Day, the
next succeeding Business Day), (ii) if delivered by registered post or certified
mail, return receipt requested, or sent to the Corporation by a national or
international courier service, on the date of receipt by the Corporation (or, if
such date of receipt is not a Business Day, the next succeeding Business Day),
or (iii) if sent by telecopier, on the day telecopied, or if not a Business Day,
the next succeeding Business Day, provided that the telecopy is promptly
confirmed by telephone confirmation thereof, and in each case to the Corporation
at the address set forth below, or at such other address as the Corporation may
thereafter notify to Covered Debtholders or post on its website as the address
for notices under this Replacement Capital Covenant:
 

Nelnet, Inc.
121 South 13th Street, Suite 201
Lincoln, Nebraska 68508
Attention: Terry J. Heimes, Chief Financial Officer

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

Nelnet, Inc.
 
By: 
        Name:
        Title:

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Schedule I

 
Definitions

“Applicable Percentage” means one divided by (a) 75% with respect to any
repayment, redemption or repurchase on or prior to September 15, 2011, (b) 50%
with respect to any repayment, redemption or repurchase after September 15, 2011
and on or prior to September 15, 2031 and (c) 25% with respect to any repayment,
redemption or repurchase after September 15, 2031 and prior to September 15,
2051.
 
“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 are authorized or required
by law or executive order to remain closed or, on or after September 29, 2011, a
day that is not a London business day. A “London business day” is any day on
which dealings in deposits in U.S. dollars are transacted in the London
interbank market.
 
“CENts” has the meaning specified in Recital A.
 
“Commission” means the United States Securities and Exchange Commission.
 
“Common Stock” means common stock of the Corporation (including treasury shares
of common stock and shares of common stock sold pursuant to the Corporation’s
dividend reinvestment plan and employee benefit plans).
 
“Corporation” has the meaning specified in the introduction to this instrument.
 
“Covered Debt” means (a) at the date of this Replacement Capital Covenant and
continuing to but not including the first Redesignation Date, the Initial
Covered Debt and (b) thereafter, commencing with each Redesignation Date and
continuing to but not including the next succeeding Redesignation Date, the
Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such
period.
 
“Covered Debtholder” means each Person (whether a Holder or a beneficial owner
holding through a participant in a clearing agency) that buys, holds or sells
long-term indebtedness for money borrowed of the Corporation during the period
that such long-term indebtedness for money borrowed is Covered Debt.
 
“Debt Exchangeable for Equity” means a security (or combination of securities)
that:
 
(i) gives the holder a beneficial interest in (a) debt securities of the
Corporation that are Non-Cumulative and that are the most junior subordinated
debt of the Corporation (or rank pari passu with the most junior subordinated
debt of the Corporation) and (b) a fractional interest in a stock purchase
contract;
 
(ii) includes a remarketing feature pursuant to which the subordinated debt of
the Corporation is remarketed to new investors commencing within five years from
the date of issuance of the security or earlier in the event of an early
 

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settlement event based on one or more financial tests set forth in the terms of
such securities or related transaction agreements;
 
(iii) provides for the proceeds raised in the remarketing to be used to purchase
Qualifying Non-Cumulative Preferred Stock;
 
(iv) includes a replacement capital covenant substantially similar to this
Replacement Capital Covenant, provided that such replacement capital covenant
will apply to such security (or combination of securities) and to the Qualifying
Non-Cumulative Preferred Stock and will not include Debt Exchangeable for Equity
in the definition of Qualifying Capital Securities”; and
 
(v) after the issuance of such Qualifying Non-Cumulative Preferred Stock,
provides the holder of the security with a beneficial interest in such
Qualifying Non-Cumulative Preferred Stock.
 
“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 a Distribution Date for such securities to but
not including the next succeeding Distribution Date for such securities.
 
“Distributions” means, as to a security or combination of securities, dividends,
interest payments or other income distributions to the holders thereof that are
not Subsidiaries of the Corporation.
 
“Eligible Debt” means, at any time, Eligible Subordinated Debt or, if no
Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.
 
“Eligible Senior Debt” means, at any time in respect of any issuer, each series
of outstanding 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 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.
 

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“Eligible Subordinated Debt” means, at any time in respect of any issuer, each
series of the issuer’s then-outstanding 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.
 
“Holder” means, as to the Covered Debt then in effect, each holder of such
Covered Debt as reflected on the securities register maintained by or on behalf
of the Corporation with respect to such Covered Debt.
 
“Indenture” means the Indenture, dated as of September 27, 2006, between the
Corporation and Deutsche Bank Trust Company Americas, as Trustee, as
supplemented by the supplemental indenture dated as of September 27, 2006.
 
“Initial Covered Debt” means the Corporation’s 5.125% Senior Notes due 2010.
 
“Intent-Based Replacement Disclosure” means, as to any security or combination
of securities, that the Corporation 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
Corporation under the Securities Exchange Act prior to or contemporaneously with
the issuance of such securities, that the Corporation will  redeem or repurchase
such securities only with the proceeds of specified replacement capital
securities that have terms and provisions at the time of redemption or
repurchase that are as or more equity-like than the securities then being
redeemed or repurchased, raised within 180 days prior to the applicable
redemption or repurchase date.
 
“Mandatorily Convertible Preferred Stock” means cumulative preferred stock with
(a) no prepayment obligation on the part of the issuer thereof, whether at the
election of the holders or otherwise, and (b) a requirement that the preferred
stock convert into Common Stock of the Corporation within three years from the
date of its issuance at a conversion ratio within a range established at the
time of issuance of the preferred stock.
 

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“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 preferred stock permit, the
issuer of such securities to make payment of Distributions on such securities
only pursuant to the issuance and sale of Common Stock or rights to purchase
Common Stock up to a maximum of 2% of the Corporation’s market capitalization or
Qualifying Non-Cumulative Preferred Stock of the Corporation, within two years
of a failure by the Corporation 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
(i) the amount of Qualifying Non-Cumulative Preferred Stock the net proceeds of
which the issuer may apply to pay such Distributions pursuant to such provision
may not exceed 25% of the liquidation or principal amount of such securities,
and (ii) if the Mandatory Trigger Provision requires such issuance and sale
within one year of such failure and the securities include an Optional Deferral
Provision, such Mandatory Trigger Provision need not limit the issuance of
Common Stock or rights to purchase Common Stock to a maximum of 2% of the
Corporation’s market capitalization, (B) prohibit the Corporation from
repurchasing any of its Common Stock prior to the date six months after the
issuer applies the net proceeds of the sales described in clause (A) to pay such
unpaid Distributions in full and (C) upon any liquidation, dissolution, winding
up, reorganization or in connection with any insolvency, receivership or
proceeding under any bankruptcy law with respect to the Corporation, limit the
claim of the holders of such securities (other than Non-Cumulative perpetual
preferred stock) for Distributions that accumulate during a period in which the
Corporation fails to satisfy one or more financial tests set forth in the terms
of such securities or related transaction agreements to (x) 25% of the principal
amount of such securities then outstanding in the case of securities not
permitting the issuance and sale pursuant to the provisions described in clause
(A) above of securities other than Common Stock or rights to acquire Common
Stock or (y) two years of accumulated and unpaid Distributions (including
compounded amounts thereon) in all other cases. No remedy other than Permitted
Remedies will arise by the terms of such securities or related transaction
agreements in favor of the holders of such securities as a result of the
issuer’s failure to pay Distributions because of the Mandatory Trigger Provision
or as a result of the issuer’s exercise of its right under an Optional Deferral
Provision until Distributions have been deferred for one or more Distribution
Periods that total together at least ten years.
 
“Market Disruption Events” means one or more events or circumstances
substantially similar to those listed as “Market Disruption Events” in the
Supplemental Indenture.
 
“Measurement Date” means, with respect to any repayment, redemption or
repurchase of CENts, the later of (a) the date 180 days prior to delivery of
notice of such repayment or redemption or the date of such repurchase and (b) to
the extent the CENts
 

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remain outstanding after September 15, 2036, the most recent date, if any, on
which a notice of repayment or redemption was delivered in respect of, or on
which the Corporation repurchased, any CENts.
 
“Non-Cumulative” means, with respect to any securities, that the issuer may
elect not to make any number of periodic Distributions or interest payments
without any remedy arising under the terms of the securities or related
agreements in favor of the holders, other than one or more Permitted Remedies.
Securities that include either (i) provisions requiring the Corporation to issue
Non-Cumulative perpetual preferred stock and Common Stock or rights to purchase
Common Stock and apply the proceeds to pay unpaid Distributions on terms
substantially similar to the terms of the alternative payment mechanism
described in Section 2.1(j) of the Supplemental Indenture or (ii) a Mandatory
Trigger Provision shall also be deemed to be “Non-Cumulative” for all purposes
of this Replacement Capital Covenant other than the definition of “Qualifying
Non-Cumulative Preferred Stock”.
 
“NRSRO” means a nationally recognized statistical rating organization within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act.
 
“Optional Deferral Provision” means, as to any securities, a provision in the
terms thereof or of the related transaction agreements to the following effect:
 
(a) 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 5 years or, if an event substantially similar to a
Market Disruption Event is continuing, ten years, without any remedy other than
Permitted Remedies and the obligation described in clause (b) below; and
 
(b) if the issuer of such securities has exhausted its right to defer
Distributions and no event substantially similar to a Market Disruption Event is
continuing, the issuer will be obligated to issue rights to purchase common
stock and/or Non-Cumulative perpetual preferred stock in an amount such that the
net proceeds of such sale equal or exceed the amount of unpaid Distributions on
such securities (including without limitation all deferred and accumulated
amounts) and to apply the net proceeds of such sale to pay such unpaid
Distributions in full.
 
“Permitted Remedies” means, with respect to any securities, one or more of the
following remedies:
 
(a) rights in favor of the holders of such securities permitting such holders to
elect one or more directors of the issuer (including any such rights required by
the listing requirements of any stock or securities exchange on which such
securities may be listed or traded), and
 
(b) complete or partial prohibitions on the issuer paying Distributions on or
repurchasing common stock or other securities that rank pari passu with or
 

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junior as to Distributions to such securities for so long as Distributions on
such securities, including unpaid Distributions, remain unpaid.
 
“Person” means any individual, corporation, partnership, joint venture, trust,
limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
 
“Prospectus Supplement” has the meaning specified in Recital C.
 
“Qualifying Capital Securities” means securities (other than Common Stock,
rights to acquire Common Stock and securities convertible into Common Stock,
such as Mandatorily Convertible Preferred Stock and Debt Exchangeable for
Equity) that, in the determination of the Corporation’s Board of Directors,
reasonably construing the definitions and other terms of this Replacement
Capital Covenant, meet one of the following criteria:
 
(i) in connection with any redemption or repurchase of CENts on or prior to
September 15, 2011:
 
(A) securities issued by the Corporation or its Subsidiaries that (a) rank pari
passu with or junior to the CENts upon the liquidation, dissolution or
winding-up of the Corporation, (b) have terms that are substantially similar to
the terms of the CENts and guarantees described in this Prospectus Supplement
and the attached prospectus and (c) are subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant or have a
Mandatory Trigger Provision and are subject to Intent-Based Replacement
Disclosure;
 
(B) securities issued by the Corporation or its Subsidiaries that (1) rank pari
passu with or junior to the CENts upon the liquidation, dissolution or winding
up of the Corporation, (2) are Non-Cumulative, (3) have no maturity or a
maturity of at least 55 years and (4) are subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant or have a
Mandatory Trigger Provision and are subject to Intent-Based Replacement
Disclosure; or
 
(C) securities issued by the Corporation or its Subsidiaries that (1) rank pari
passu or junior to other preferred stock of the issuer, (2) have no maturity or
a maturity of at least 40 years, (3) are subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant and (4) have
a Mandatory Trigger Provision; or
 
(ii) in connection with any repayment, redemption or repurchase of CENts after
September 15, 2011 and on or prior to September 15, 2031:
 
(A) all securities described under clause (i) of this definition;
 

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(B) securities issued by the Corporation or its Subsidiaries that (1) rank pari
passu with or junior to the CENts upon a liquidation, dissolution or winding up
of the Corporation, (2) have an Optional Deferral Provision or a Ten-Year
Optional Deferral Provision, (3) have no maturity or a maturity of at least 55
years and (4) are subject to a replacement capital covenant substantially
similar to this Replacement Capital Covenant;
 
(C) securities issued by the Corporation or its Subsidiaries that (1) rank pari
passu with or junior to the CENts upon a liquidation, dissolution or winding up
of the Corporation, (2) are Non-Cumulative and (3) have no maturity or a
maturity of at least 55 years and are subject to Intent-Based Replacement
Disclosure;
 
(D) securities issued by the Corporation or its Subsidiaries that (1) rank pari
passu with or junior to the CENts upon a liquidation, dissolution or winding up
of the Corporation, (2) are Non-Cumulative, (3) have no maturity or a maturity
of at least 40 years and (4) are subject to a replacement capital covenant
substantially similar to this Replacement Capital Covenant or have a Mandatory
Trigger Provision and are subject to Intent-Based Replacement Disclosure;
 
(E) securities issued by the Corporation or its Subsidiaries that (1) would rank
junior to all of the senior and subordinated debt of the Corporation other than
the CENts, (2) have a Mandatory Trigger Provision and (3) have no maturity or a
maturity of at least 55 years and are subject to Intent-Based Replacement
Disclosure;
 
(F) cumulative preferred stock issued by the Corporation or its Subsidiaries
that (A) has no prepayment obligation on the part of the issuer thereof, whether
at the election of the holders or otherwise, and (B) (1) has no maturity or a
maturity of at least 55 years and (2) is subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant; or
 
(G) other securities issued by the Corporation or its Subsidiaries that (A) rank
upon a liquidation, dissolution or winding-up of the Corporation either (1) pari
passu with or junior to the CENts or (2) pari passu with the claims of the
Corporation’s trade creditors and junior to all of the Corporation’s long-term
indebtedness for money borrowed (other than the Corporation’s long-term
indebtedness for money borrowed from time to time outstanding that by its terms
ranks pari passu with such securities on a liquidation, dissolution or
winding-up of the Corporation); and (B) either (x) have no maturity or a
maturity of at least 40 years, are subject to Intent-Based Replacement
Disclosure and have a Mandatory Trigger Provision and or (y) have no maturity or
a maturity of at least 25
 

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years and are subject to a replacement capital covenant substantially similar to
this Replacement Capital Covenant and have a Mandatory Trigger Provision; or
 
(iii) in connection with any repayment, redemption or repurchase of CENts at any
time after September 15, 2031:
 
(A) all securities described under clauses (i) or (ii) of this definition;
 
(B) preferred stock issued by the Corporation that (1) has no maturity or a
maturity of at least 55 years and is subject to Intent-Based Replacement
Disclosure and (2) has an Optional Deferral Provision or a Ten-Year Optional
Deferral Provision;
 
(C) securities issued by the Corporation or its Subsidiaries that (1) rank pari
passu with or junior to the CENts upon a liquidation, dissolution or winding up
of the Corporation, (2) either (A) have no maturity or a maturity of at least 55
years and are subject to Intent-Based Replacement Disclosure or (B) have no
maturity or a maturity of at least 30 years and are subject to a replacement
capital covenant substantially similar to this Replacement Capital Covenant and
(3) have an Optional Deferral Provision or a Ten-Year Optional Deferral
Provision;
 
(D) securities issued by the Corporation or its Subsidiaries that (1) would rank
junior to all of the senior and subordinated debt of the Corporation other than
the CENts, (2) have a Mandatory Trigger Provision and (3) have no maturity or a
maturity of at least 30 years and are subject to Intent-Based Replacement
Disclosure; or
 
(E) cumulative preferred stock issued by the Corporation or its Subsidiaries
that either (1) has no maturity or a maturity of at least 55 years and is
subject to Intent-Based Replacement Disclosure or (2) has a maturity of at least
40 years and is subject to a replacement capital covenant substantially similar
to this Replacement Capital Covenant.
 
“Qualifying Non-Cumulative Preferred Stock” means Non-Cumulative perpetual
preferred stock of the Corporation or its Subsidiaries that ranks pari passu
with or junior to other preferred stock of the issuer, and, for purposes of
clause (a) of the definition of Mandatory Trigger Provision, contains no
remedies other than Permitted Remedies and is either subject to a replacement
capital covenant substantially similar to this Replacement Capital Covenant or
has a Mandatory Trigger Provision and is subject to Intent-Based Replacement
Disclosure.
 
“Redesignation Date” means, as to the Covered Debt in effect at any time, the
earliest of (a) the date that is two years prior to the final maturity date of
such Covered Debt, (b) if the Corporation elects to redeem, or the Corporation
or a Subsidiary of the
 

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Corporation elects to repurchase, such Covered Debt either in whole or in part
with the consequence that after giving effect to such redemption or repurchase
the outstanding principal amount of such Covered Debt is less than $100,000,000,
the applicable redemption or repurchase date and (c) if such Covered Debt is not
Eligible Subordinated Debt, the date on which the Corporation issues long-term
indebtedness for money borrowed that is Eligible Subordinated Debt.
 
“Replacement Capital Covenant” has the meaning specified in the introduction to
this instrument.
 
“Supplemental Indenture” means the Supplemental Indenture, dated as of September
27, 2006, between the Corporation and Deutsche Bank Trust Company Americas, as
Trustee.
 
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“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.
 
“Ten-Year Optional Deferral Provision” means, as to any securities, a provision
in the terms thereof or of the related transaction agreements to the effect that
the issuer of such securities thereof may, in its sole discretion, defer in
whole or in part payment of Distributions on such securities for one or more
consecutive Distribution Periods of up to ten years without any remedy other
than Permitted Remedies.
 
“Termination Date” has the meaning specified in Section 4(a).
 
 
 
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