exhibit4c.htm


     

    
      

      

    

    Exhibit
4(c)

    


    


    This REPLACEMENT
CAPITAL COVENANT, dated March 19, 2009 (this “Replacement Capital
Covenant”), by FPL Group Capital Inc, a Florida corporation (together
with its successors and assigns, the “Corporation”), and FPL Group,
Inc., a Florida corporation (together with its successors and assigns, the
“Guarantor”), in favor
of and for the benefit of each Covered Debtholder (as defined
below).

    


    Recitals

     

    A.           On
the date hereof, the Corporation is issuing $375,000,000 aggregate principal
amount of its Series F Junior Subordinated Debentures due 2069 (including any
such junior subordinated debentures issued after the date hereof that may be
consolidated and form a single series with such junior subordinated debentures
issued on the date hereof, the “Subordinated Debentures”),
which Subordinated Debentures were issued pursuant to, and fully and
unconditionally guaranteed (the “Guarantee”) by the Guarantor
in accordance with, the Indenture (For Unsecured Subordinated Debt Securities),
dated as of September 1, 2006, among the Corporation, the Guarantor, and The
Bank of New York Mellon, as trustee, as supplemented by the Officer’s
Certificate (the “Subordinated
Indenture”).

     

    B.           This
Replacement Capital Covenant is the “Replacement Capital Covenant”
referred to in the Prospectus Supplement, dated March 12, 2009, relating to the
Subordinated Debentures.

     

    C.           The
Corporation and the Guarantor, in entering into and disclosing the content of
this Replacement Capital Covenant in the manner provided below, are doing so
with the intent that the covenants provided for in this Replacement Capital
Covenant, including their promise and covenant set forth in Section
2, be enforceable by each Covered Debtholder against the Corporation and
the Guarantor as a promise reasonably inducing action or forbearance and that
the Corporation and the Guarantor 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 and the Guarantor acknowledge that reliance by each Covered
Debtholder on the covenants in this Replacement Capital Covenant is reasonable
and foreseeable by the Corporation and the Guarantor and that, were the
Corporation or the Guarantor to disregard their respective 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 and the Guarantor hereby covenant and agree as follows in favor of
and for the benefit of each Covered Debtholder.

     

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

     

    SECTION
2. Limitations on Redemption,
Defeasance or Purchase of Subordinated Debentures.  The
Corporation and the Guarantor hereby promise and covenant to and for the benefit
of each Covered Debtholder that the Corporation shall not redeem or purchase, or
satisfy, discharge or defease any portion of the principal amount of the
Subordinated Debentures through the deposit of money and/or U.S. government
obligations, as contemplated by Article Seven of the Subordinated Indenture
(such satisfaction, discharge or defeasance herein referred to as “defeasance”), the Guarantor
shall not purchase, and the Corporation and the Guarantor shall cause their
majority-owned Subsidiaries not to purchase, all or any part of the Subordinated
Debentures on or before the Termination Date except to the extent
that:

     

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

     

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

     

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

     

    in
each case, to Persons other than the Parent and/or the Corporation and/or their
Subsidiaries within the applicable Measurement Period (without double counting
proceeds received in any prior Measurement Period); provided that the
limitations in this Section
2 shall not restrict the repayment, redemption or other acquisition of
any Subordinated Debentures that have been previously defeased or purchased in
accordance with this Replacement Capital Covenant; or

     

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

     

    In
the event that the Corporation redeems, purchases or defeases the Subordinated
Debentures and the Parent issues Replacement Capital Securities for purposes of
this Section
2, the Parent shall contribute the net cash proceeds from the issuance of
the Replacement Capital Securities to the extent necessary in order to enable
the Corporation to redeem, purchase or defease the Subordinated Debentures prior
to the applicable redemption, defeasance or purchase date in exchange for a
security or securities from the Corporation that would qualify as Replacement
Capital Securities.  For the avoidance of doubt, in the event that the
Parent issues Replacement Capital Securities for purposes of this Section
2 in connection with the purchase by the Parent of Subordinated
Debentures, the Parent shall not be required to contribute the net cash proceeds
from the issuance of the Replacement Capital Securities to the
Corporation.

     

    SECTION
3. Covered
Debt.  (a)  The Corporation and the Guarantor
represent and warrant that the Initial Covered Debt is Eligible
Debt.

     

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

     

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

     

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

     

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

     

    (iv)           if
the Corporation has no outstanding series of long-term indebtedness for money
borrowed that is Eligible Debt, but the Guarantor has only one outstanding
series of long-term indebtedness for money borrowed that is Eligible Debt, such
series shall become the Covered Debt commencing on the related Redesignation
Date;

     

    (v)           if
the Corporation has no outstanding series of long-term indebtedness for money
borrowed that is Eligible Debt, but the Guarantor has more than one outstanding
series of long-term indebtedness for money borrowed that is Eligible Debt, then
the Corporation shall identify a specific series that has a stated final
maturity date that is at least three years after the date the Corporation is
applying the procedures in this Section 3(b)
and such series shall become the Covered Debt commencing on the related
Redesignation Date;

     

    (vi)           the
series of outstanding long-term indebtedness for money borrowed that is
determined to be the 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

     

    (vii)           in
connection with such identification of a new series of the Covered Debt, notice
shall be given, and a Form 8-K shall be filed, as provided for in Section
3(d) within the time frame provided for in such section.

     

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

     

    (d) In
order to give effect to the intent of the Corporation and the Guarantor
described in Recital C,
the Corporation and the Guarantor covenant that (i) simultaneously with the
execution of this Replacement Capital Covenant, or as soon as practicable after
the date hereof, (A) notice shall be given to the Holders of the Initial Covered
Debt, in the manner provided in the indenture or other instrument under which
such Initial Covered Debt was issued, of this Replacement Capital Covenant and
the rights granted to such Holders hereunder and (B) the Guarantor shall
file a copy of this Replacement Capital Covenant with the
Commission  as an exhibit to a Form 8-K; (ii) so long as the Parent is
a reporting company under the Securities Exchange Act (or the Corporation if it
becomes a reporting company under the Securities Exchange Act), the Parent or
the Corporation, as applicable, will include or cause to be included in each
Form 10-K filed with the Commission by the Parent or the Corporation, as
applicable, a description of the covenant set forth in Section 2
and identify the series of long-term indebtedness for borrowed money that is the
Covered Debt as of the date such Form 10-K is filed with the Commission; (iii)
if a series of the Guarantor’s or the Corporation’s long-term indebtedness for
money borrowed (1) becomes the Covered Debt or (2) ceases to be the
Covered Debt, notice of such occurrence will be given within 30 days to the
holders of such long-term indebtedness for money borrowed in the manner provided
for in the indenture or other instrument under which such long-term indebtedness
for money borrowed was issued and the Parent or the Corporation, as applicable,
shall report such change in a Form 8-K, which must include or incorporate by
reference this Replacement Capital Covenant, and, if reported in a
Form 8-K, also in the next Form 10-Q or Form 10-K, as applicable, of the
Parent or the Corporation, as applicable; (iv) upon succession of any new entity
as the Corporation or the Guarantor hereunder as a result of a merger,
consolidation, amalgamation, statutory share exchange, sale, conveyance, lease
or transfer of all or substantially all of the assets or other business
combination of the Corporation or the Guarantor as it existed prior thereto,
notice of such occurrence shall be given within 30 days to the holders of
the Covered Debt in the manner provided for in the indenture or other instrument
under which such long-term indebtedness for money borrowed was issued, and the
Parent (or the Corporation if it becomes a reporting company under the
Securities Exchange Act), shall report such change in a Form 8-K, which must
include or incorporate by reference this Replacement Capital Covenant, and, if
reported in a Form 8-K, also in the next Form 10-Q or Form 10-K, as applicable,
of the Parent or the Corporation, as applicable; (v) if, and only if,
neither the Parent nor the Corporation is a reporting company under the
Securities Exchange Act, the Corporation will (A) post on its website (or the
Parent’s website if the Corporation does not maintain a website at that time)
(in each case, or on any other similar electronic platform generally available
to the public) the information otherwise required to be included in Securities
Exchange Act filings pursuant to clauses (ii), (iii) and (iv) above; and
(B) cause a notice of this Replacement Capital Covenant to be posted on the
Bloomberg screen for the Initial Covered Debt or any successor Bloomberg screen
or, if none, a similar third-party vendor’s screen the Corporation reasonably
believes is appropriate (each an “Investor Screen”) and cause a
hyperlink of this Replacement Capital Covenant to be included on the Investor
Screen for each series of the Covered Debt, in each case to the extent permitted
by Bloomberg or such similar third-party vendor, as the case may be; and
(vi) promptly upon the request of any Holder of the Covered Debt, such
Holder will be provided with a conformed copy of this Replacement Capital
Covenant.

     

    SECTION
4. Termination and
Amendment.  (a)  The obligations of the Corporation
and the Guarantor pursuant to this Replacement Capital Covenant shall remain in
full force and effect until the earliest date (the “Termination Date”) to occur of
(i) March 1, 2039, or if earlier, the date on which the Subordinated Debentures
are otherwise paid, redeemed, defeased or purchased in full (in compliance with
the terms of Section
2 of this Replacement Capital Covenant), (ii) the date, if any, on
which the Holders of at least a majority of the outstanding principal amount of
the then-effective Covered Debt consent or agree in writing to the termination
of the obligations of the Corporation and the Guarantor hereunder,
(iii) the date on which neither the Corporation nor the Guarantor has any
Eligible Senior Debt or Eligible Subordinated Debt (in each case without giving
effect to the rating requirement in clause (ii) of the definition of each such
term) and (iv) the date on which the Subordinated Debentures are accelerated as
a result of an event of default under the Subordinated
Indenture.  From and after the Termination Date, the obligations of
the Corporation and the Guarantor pursuant to this Replacement Capital Covenant
shall be of no further force and effect with respect to the Holders, or
otherwise.

     

    (b) This
Replacement Capital Covenant may be amended or supplemented from time to time by
a written instrument signed only by the Corporation and the Guarantor after
obtaining the consent of the Holders of at least a majority of the outstanding
principal amount of the then-effective Covered Debt; provided that this
Replacement Capital Covenant may be amended or supplemented from time to time by
a written instrument signed by the Corporation and the Guarantor (and without
the consent of the Holders) if any of the following apply: (i) such amendment or
supplement eliminates Common Stock, Rights to acquire Common Stock, Common
Equity Units and/or Mandatorily Convertible Preferred Stock as Replacement
Capital Securities, if, in the case of this clause, after the date of this
Replacement Capital Covenant, an accounting standard or interpretive guidance of
an existing accounting standard, issued by an organization or regulator that has
responsibility for establishing or interpreting accounting standards in the
United States or other appropriate jurisdiction, as applicable, followed by the
Corporation or the Guarantor becomes effective or applicable to the Corporation
or the Guarantor such that there is more than an insubstantial risk that the
failure to eliminate Common Stock, Rights to acquire Common Stock, Common Equity
Units and/or Mandatorily Convertible Preferred Stock as Replacement Capital
Securities would result in a reduction in the Corporation’s or the Guarantor’s
earnings per share as calculated in accordance with generally accepted
accounting principles (“EPS”), or the Corporation or
the Guarantor otherwise have been advised in writing by a nationally recognized
independent accounting firm that there is more than an insubstantial risk that
the failure to eliminate such securities as Replacement Capital Securities would
result in a reduction of the Corporation’s or the Guarantor’s EPS; (ii) the sole
effect of such amendment or supplement is either (A) to impose additional
restrictions on the ability of (1) the Corporation to redeem, purchase or
defease Subordinated Debentures or (2) the Guarantor or any majority-owned
Subsidiary of either the Corporation or the Guarantor to purchase Subordinated
Debentures, or (B) to impose additional restrictions on, or to eliminate certain
of, the types of securities qualifying as Replacement Capital Securities (other
than securities which are covered by clause (i) above) and in each case an
officer of the Corporation has delivered to the Holders of the then-effective
Covered Debt in the manner provided for in the indenture or other instrument
under which such Covered Debt was issued a written certificate to that effect;
(iii) such amendment or supplement extends the date specified in Section
4(a)(i), the Stepdown Date or both; or (iv) such amendment or supplement
is not adverse to the rights of the Holders of the then-effective Covered Debt
and an officer of the Corporation has delivered to the Holders of the
then-effective Covered Debt in the manner provided for in the indenture or other
instrument under which such Covered Debt was issued a written certificate
stating that, in his or her determination, such amendment or supplement is not
adverse to the rights of the Holders of the then-effective Covered
Debt.  For the avoidance of doubt, an amendment or supplement that
adds new types of Replacement Capital Securities or modifies the requirements of
the Replacement Capital Securities described herein would not be adverse to the
rights of the Holders of the Covered Debt if, following such amendment or
supplement, this Replacement Capital Covenant would satisfy the definition of
Explicit Replacement Covenant.

     

    (c) For
purposes of Section
4(a) and Section
4(b), the Holders whose consent or agreement is required to terminate,
amend or supplement this Replacement Capital Covenant or the obligations of the
Corporation and the Guarantor hereunder shall be the Holders of the
then-effective Covered Debt as of a record date established by the Corporation
that is not more than 30 days prior to the date on which the Corporation and the
Guarantor propose 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 the Guarantor (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 and the
Guarantor that any Person who is a Covered Debtholder shall retain its status as
a Covered Debtholder for so long as the series of long-term indebtedness for
borrowed money owned by such Person is the Covered Debt and, if such Person
initiates a claim or proceeding to enforce its rights under this Replacement
Capital Covenant after the Corporation or the Guarantor 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 the 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 the Covered
Debt).  The Corporation and the Guarantor agree that, if at any time
the Covered Debt is held by a trust (for example, where the Covered Debt is part
of an issuance of trust preferred securities), a holder of the securities issued
by such trust may enforce (including by instituting legal proceedings) this
Replacement Capital Covenant directly against the Corporation as though such
holder owned the Covered Debt directly, and the holders of such trust securities
shall be deemed Holders of the Covered Debt for purposes of this Replacement
Capital Covenant for so long as the indebtedness held by such trust remains the
Covered Debt hereunder. Other than the Covered Debtholders as provided in the
two previous sentences, no other Person shall have any rights under this
Replacement Capital Covenant or be deemed a third party beneficiary of this
Replacement Capital Covenant.  In particular, no holder of the
Subordinated Debentures is a third party beneficiary of this Replacement Capital
Covenant, it being understood that such holders may have rights under the
Subordinated Indenture.

     

    (c) All
demands, notices, requests and other communications to the Corporation or the
Guarantor 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 or the Guarantor, on the day so delivered (or, if such day is
not a Business Day, the next succeeding Business Day) or (ii) if delivered
by registered post or certified mail, return receipt requested, or sent to the
Corporation or the Guarantor by a national or international courier service, on
the date of receipt by the Corporation or the Guarantor (or, if such date of
receipt is not a Business Day, the next succeeding Business Day), and in each
case to the Corporation or the Guarantor at their respective addresses set forth
below, or at such other address as may thereafter be listed as the principal
executive offices of the Guarantor, the Corporation or its Parent (if the
address of the Corporation is not listed) in the then most recently filed Form
10-K or Form 10-Q of the Parent, Guarantor or Corporation, as applicable, or as
may thereafter be posted on the Corporation’s or the Guarantor’s website (or the
Parent’s website if the Corporation and the Guarantor do not maintain a website
at that time) as the address for notices under this Replacement Capital
Covenant:

     

    FPL
Group Capital Inc

    Attention:  Treasurer

    700
Universe Boulevard

    Juno
Beach, Florida 33408

    


    FPL
Group, Inc.

    Attention:  Treasurer

    700
Universe Boulevard

    Juno
Beach, Florida 33408


    
      
         


      

      
         


        
          

        

      

      
         


      

    


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

     

    
      
        	
                FPL
      GROUP CAPITAL INC

                 

                 

              
	
                By:

              	
                      /s/
      Kathy A. Beilhart

              
	 
      	
                Name:

              	
                Kathy
      A. Beilhart

              
	 
      	
                Title:

              	
                Assistant
      Treasurer

              


      

    

    


    


    
      
        	
                FPL
      GROUP, INC.

                 

                 

              
	
                By:

              	
                      /s/
      Kathy A. Beilhart

              
	 
      	
                Name:

              	
                Kathy
      A. Beilhart

              
	 
      	
                Title:

              	
                Assistant
      Treasurer

              


      

    

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
I

    Definitions

     

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

     

    (a)           define
“eligible proceeds” to
mean, for purposes of such Alternative Payment Mechanism, the net proceeds
(after underwriters’ or placement agents’ fees, commissions or discounts and
other expenses relating to the issuance or sale of the relevant securities,
where applicable, and including the fair market value of property received by
the issuer or its Subsidiaries as consideration for such securities) that such
issuer has received during the 180 days prior to the related Distribution Date
from the issuance of APM Qualifying Securities to Persons other than the Parent
and/or the Corporation and/or their Subsidiaries, up to the Preferred Cap (as
defined in (e) below) in the case of APM Qualifying Securities that are
Qualifying Preferred Stock or Mandatorily Convertible Preferred
Stock;

     

    (b)           permit
such issuer to pay current Distributions on any Distribution Date out of any
source of funds but (x) require such issuer to pay deferred Distributions
only out of eligible proceeds and (y) prohibit such issuer from paying
deferred Distributions out of any source of funds other than eligible
proceeds;

     

    (c)           if
deferral of Distributions continues for more than one year (or such shorter
period as may be provided for in the terms of such securities), require such
issuer or any of its Subsidiaries not to redeem or purchase any securities that
rank pari passu with or junior to any APM Qualifying Securities that such issuer
has issued to settle deferred Distributions in respect to that deferral period
until at least one year after all deferred Distributions have been paid (a
“Purchase
Restriction”), other than the following (none of which shall be
restricted or prohibited by a Purchase Restriction):

     

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

     

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

     

    (d)           limit
the obligation of such issuer to issue (or use Commercially Reasonable Efforts
to issue) APM Qualifying Securities that are Common Stock or Qualifying Warrants
to settle deferred Distributions pursuant to the Alternative Payment Mechanism
either (i) during the first five years of any deferral period or (ii) before an
anniversary of the commencement of any deferral period that is not earlier than
the fifth such anniversary and not later than the ninth such anniversary (as
designated in the terms of such Qualifying Capital Securities) with respect to
deferred Distributions attributable to the first five years of such deferral
period, either:

     

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

     

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

     

    (e)           limit
the right of such issuer to issue (or use Commercially Reasonable Efforts to
issue) APM Qualifying Securities that are Qualifying Preferred Stock or
Mandatorily Convertible Preferred Stock, to an amount from the issuance of such
Qualifying Preferred Stock and then-still outstanding Mandatorily Convertible
Preferred Stock pursuant to the related Alternative Payment Mechanism
(including, in the case of Qualifying Preferred Stock, at any point in time from
all prior issuances thereof pursuant to such Alternative Payment Mechanism)
equal to 25% of the initial liquidation or principal amount of the Qualifying
Capital Securities that are the subject of the related Alternative Payment
Mechanism (the “Preferred
Cap”);

     

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

     

    (g)           permit
such issuer, at its option, to provide that if such issuer is involved in a
merger, consolidation, amalgamation, statutory share exchange, conveyance, lease
or other transfer of all or substantially all of the assets to any other person
or a similar transaction (a “business
combination”) where immediately after the consummation of the business
combination more than 50% of the surviving or resulting entity’s voting
securities is owned by the equityholders of the other party to the business
combination, or the entity to whom all or substantially all of such issuer’s
assets are conveyed, leased or otherwise transferred, then clauses (a), (b) and
(c) above will not apply to any deferral period that is terminated on the next
Distribution Date following the date of consummation of the business
combination;

     

    
      	 	
              provided (and
      it being understood) that:

            


    

     

    (h)           the
Alternative Payment Mechanism may at the discretion of such issuer include a
share cap limiting the issuance of APM Qualifying Securities consisting of
Common Stock, Qualifying Warrants and Mandatorily Convertible Preferred Stock,
in each case to a maximum issuance cap to be set at the discretion of such
issuer (a “Share Cap”);
provided that
such Share Cap will be subject to such issuer’s agreement to use Commercially
Reasonable Efforts to increase the Share Cap when reached and (i) only to
the extent it can do so and simultaneously satisfy its future fixed or
contingent obligations under other securities and derivative instruments that
provide for settlement or payment in Common Stock or (ii) if such issuer
cannot increase the Share Cap as contemplated in the preceding clause, by
requesting its board of directors to adopt a resolution for shareholder vote at
the next occurring annual shareholders meeting to increase the number of shares
of such issuer’s authorized Common Stock or preferred stock for purposes of
satisfying its obligations to pay deferred Distributions;

     

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

     

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

     

    (k)           if
such issuer has outstanding more than one class or series of securities under
which it is obligated to sell a type of APM Qualifying Securities and apply some
part of the proceeds to the payment of deferred Distributions, then on any date
and for any period the amount of net proceeds received by such issuer from those
sales and available for payment of deferred Distributions on such securities
shall be applied to such securities on a pro rata basis up to the Common Cap,
the Preferred Cap and the Share Cap (if any), as applicable, in proportion to
the total amounts that are due on such securities.

     

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

     

    (a)           Common
Stock;

     

    (b)           Qualifying
Warrants;

     

    (c)           Qualifying
Preferred Stock; and

     

    (d)           Mandatorily
Convertible Preferred Stock

     

    provided (and it
being understood) that:

     

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

     

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

     

    (B)           the
Guarantor and the Corporation may, without the consent of the holders of the
Qualifying Capital Securities, amend the definition of APM Qualifying Securities
to eliminate Common Stock or Qualifying Warrants (but not both) from the
definition if, after the issue date, an accounting standard or interpretive
guidance relating to an existing accounting standard issued by an organization
or regulator that has responsibility for establishing or interpreting accounting
standards followed by the Corporation or the Guarantor becomes effective or
applicable to the Parent or the Corporation such that there is more than an
insubstantial risk that the failure to eliminate Common Stock or Qualifying
Warrants from the definition of APM Qualifying Securities would result in a
reduction in the Parent’s or the Corporation’s EPS.

     

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

     

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

     

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

     

    “Applicable Percentage”
means:

     

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

     

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

     

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

     

    “Bankruptcy Claim Limitation
Provision” means, with respect to any Qualifying Capital Securities that
have an Alternative Payment Mechanism or a Mandatory Trigger Provision,
provisions that, upon any liquidation, dissolution, winding up or reorganization
or in connection with any insolvency, receivership or proceeding under any
bankruptcy law with respect to the issuer, limit the claim of the holders of
such Qualifying Capital Securities to Distributions that accumulate during (i)
any deferral period, in the case of Qualifying Capital Securities that have an
Alternative Payment Mechanism or (ii) any period in which the issuer fails to
satisfy one or more financial tests set forth in the terms of such securities or
related transaction agreements, in the case of Qualifying Capital Securities
having a Mandatory Trigger Provision, to:

     

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

     

    (b)           in
the case of any other Qualifying Capital Securities, an amount not in excess of
the sum of (i) the amount of accumulated and unpaid Distributions (including
compounded amounts) that relate to the earliest two years of the portion of the
deferral period for which Distributions have not been paid and (ii) an amount
equal to the excess, if any, of the Preferred Cap over the aggregate amount of
net proceeds from the sale of Qualifying Preferred Stock or Mandatorily
Convertible Preferred Stock that the issuer has applied to pay such
Distributions pursuant to the Alternative Payment Mechanism or the Mandatory
Trigger Provision, provided that the
holders of such Qualifying Capital Securities are deemed to agree that, to the
extent the claim for deferred Distributions exceeds the amount set forth in
subclause (i), the amount they receive in respect of such excess shall not
exceed the amount they would have received had the claim for such excess ranked
pari passu with the interests of the holders, if any, of Qualifying Preferred
Stock or Mandatorily Convertible Preferred Stock.

     

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

     

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

     

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

     

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

     

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

     

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

     

    (a)
gives the holders (i) a beneficial interest in a fixed income security of the
Corporation or the Parent (including a debt security, a trust preferred security
of a subsidiary trust or preferred stock) that has a maturity no greater than
six years and (ii) a beneficial interest in a stock purchase
contract;

     

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

     

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

     

    “Common Stock” means (i) any
equity securities of the Corporation or its Parent, as applicable (including
equity securities held as treasury shares and equity securities, if any, sold
pursuant to a dividend reinvestment plan, any direct stock purchase plan or
director or employee benefit plan) that have no preference in the payment of
dividends or amounts payable upon the liquidation, dissolution or winding up of
the Corporation or its Parent, as applicable (including any security that tracks
the performance of, or relates to the results of, a business, unit or division
of the Corporation or its Parent, as applicable), and (ii) any other securities
that have no preference in the payment of dividends or amounts payable upon the
liquidation, dissolution or winding up of the Corporation or its Parent, as
applicable, and are issued in exchange for securities described in (i) above in
connection with a merger, consolidation, binding share exchange, business
combination, recapitalization or other similar event.

     

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

     

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

     

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

     

    “Debt
Exchangeable for Equity” means Common Equity Units or Debt Exchangeable
for Preferred Equity.

     

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

     

    (a)           gives
the holder a beneficial interest in (i) subordinated debt securities of the
Corporation or the Parent (in this definition, the “issuer”), permitting the
issuer to defer Distributions in whole or in part on such securities for one or
more Distribution Periods of up to at least seven years without any remedies
other than Permitted Remedies and that are the most junior subordinated debt of
the issuer (or rank pari passu with the most junior subordinated debt of the
issuer) (in this definition, “subordinated debt”) and (ii) a
fractional interest in a stock purchase contract for a share or shares of
Qualifying Preferred Stock of the Corporation or the Parent that ranks pari
passu with or junior to all other preferred stock of the Corporation or the
Parent, as applicable (in this definition, “preferred
stock”);

     

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

     

    (c)           includes
a remarketing feature pursuant to which the subordinated debt of the Corporation
or the Parent is remarketed to new investors commencing not later than the first
Distribution Date that is at least five years after the date of issuance of such
securities or earlier in the event of an early settlement event based on: (i)
the dissolution of the issuer of such securities or (ii) one or more financial
tests set forth in the terms of the instrument governing such
securities;

     

    (d)           provides
for the proceeds raised in the remarketing of the subordinated debt to be used
to purchase preferred stock of the Corporation or the Parent under the stock
purchase contracts and, if there has not been a successful remarketing by the
first Distribution Date that is six years after the date of issuance of such
securities, provides that the stock purchase contracts will be settled by the
Corporation or the Parent exercising its remedies as a secured party with
respect to its subordinated debt or other collateral directly or indirectly
pledged by the holders of such securities;

     

    (e)           is
subject to an Explicit Replacement Covenant that will apply to such securities
and preferred stock of the Corporation or the Parent, as applicable, and will
not include Debt Exchangeable for Equity as a Replacement Capital Security;
and

     

    (f)           if
applicable, after the issuance of such preferred stock of the Corporation or the
Parent, provides the holders of such securities with a beneficial interest in
such preferred stock of the Corporation or the Parent, as
applicable.

     

    “Defeasance” has the meaning
specified in Section
2.

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Explicit Replacement Covenant”
means, as to any security or combination of securities, (i) a covenant
substantially similar to this Replacement Capital Covenant or (ii) a replacement
capital covenant that the Board of Directors, acting in good faith and in its
reasonable discretion and reasonably construing the definitions and other terms
of this Replacement Capital Covenant, has determined operates to the effect that
the issuer will redeem, defease or purchase such securities, and any Parent or
Subsidiaries of the issuer will purchase such securities, only if and to the
extent that the applicable percentage of the amount raised within the 180-day
period preceding the applicable redemption, defeasance or purchase date by
issuing specified replacement capital securities having terms and provisions at
the time of redemption, defeasance or purchase that are as much or more
equity-like than the securities then being redeemed, defeased or purchased, is
at least equal to the principal amount of the securities being defeased or the
applicable redemption or purchase price, provided that the
board of directors of the issuer has determined that such covenant is binding on
the issuer for the benefit of one or more series of the long-term indebtedness
for money borrowed of the issuer (or an affiliate of the issuer, if the covenant
so provides) to the same extent as this Replacement Capital Covenant is binding
on the Corporation for the benefit of the Holders of the Initial Covered
Debt.

     

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

     

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

     

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

     

    “Guarantee” has the meaning
specified in Recital
A.

     

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

     

    “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.

     

    “Initial Covered Debt” means
the 5 7/8% Preferred Trust Securities issued on March 15, 2004 by FPL Group
Capital Trust I (CUSIP No. 30257V 207).

     

    “Intent-Based Replacement
Disclosure” means, as to any security or combination of securities
issued, directly or indirectly, that the issuer has publicly stated its
intention, either in the prospectus or other offering or purchase document under
which such security or combination of securities were initially offered for sale
or in filings with the Commission made by the issuer or an affiliate under the
Securities Exchange Act prior to or contemporaneously with the issuance of such
securities, that the issuer will redeem, purchase or defease or its Parent or
Subsidiaries will purchase, such securities only with the applicable percentage
of the amounts raised within the 180-day period preceding the applicable
redemption, purchase or defeasance date from the issuance of specified
replacement capital securities that have terms and provisions at the time of
redemption, defeasance or purchase that are as much or more equity like than the
securities then being redeemed, defeased or purchased.

     

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

     

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

     

    “Mandatory Trigger Provision”
means, as to any security or combination of securities, provisions in the terms
thereof or in the related transaction agreements that (A) require, or at its
option in the case of perpetual Non-Cumulative Preferred Stock permit, the
issuer of such security or combination of securities to make payment of
Distributions on such securities within two years after a failure to satisfy one
or more financial tests set forth in the terms of such securities or related
transaction agreements only if payment of such Distributions during that
two-year period is made in connection with the issuance and sale of APM
Qualifying Securities (for the avoidance of doubt, payment of such Distributions
with cash from any source other than APM Qualifying Securities is not permitted
during such two-year period immediately following the failure of the issuer to
satisfy such financial test(s)), such payment to be in an amount not exceeding
the amount of the net proceeds of such sale at least equal to the amount of
unpaid Distributions on such securities (including without limitation all
deferred and accumulated amounts) and in either case requires the application of
the net proceeds of such sale to pay such unpaid Distributions; provided that
(i) such Mandatory Trigger Provision shall limit the issuance and sale of
Common Stock and Qualifying Warrants the proceeds of which may be applied to pay
such Distributions pursuant to such provision to the Common Cap, unless the
Mandatory Trigger Provision requires such issuance and sale within one year of
such failure, and (ii) the amount of Qualifying Preferred Stock and still
outstanding Mandatorily Convertible Preferred Stock the net proceeds of which
the issuer may apply to pay such Distributions pursuant to such provision may
not exceed the Preferred Cap, (B) in the case of securities other than perpetual
Non-Cumulative Preferred Stock, prohibit the issuer from purchasing any APM
Qualifying Securities, or any securities that rank pari passu with or junior to
APM Qualifying Securities, the proceeds of which were used to settle deferred
interest during the relevant deferral period, prior to the date six months after
the issuer applies the net proceeds of the sales described in clause (A) to pay
such unpaid Distributions in full, (C) in the case of securities other than
perpetual Non-Cumulative Preferred Stock, include a Bankruptcy Claim Limitation
Provision and (D) if deferral of Distributions continues for more than one year
(or such shorter period as may be provided for in the terms of such securities),
prohibit the issuer of such securities from redeeming or purchasing any of its
securities ranking upon the liquidation, dissolution or winding up of the issuer
junior to or pari passu with any APM Qualifying Securities the proceeds of which
were used to settle deferred Distributions during the relevant deferral period
until at least one year after all deferred Distributions have been
paid.  For purposes of this definition of Mandatory Trigger Provision,
(i) the issuer will not be obligated to issue (or use Commercially Reasonable
Efforts to issue) any such APM Qualifying Securities for so long as a Market
Disruption Event has occurred and is continuing; (ii) if, due to a Market
Disruption Event or otherwise, the issuer is able to raise and apply some, but
not all, of the eligible proceeds necessary to pay all deferred Distributions on
any Distribution Date, the issuer will apply an amount equal to any available
eligible proceeds to pay accrued and unpaid Distributions on the applicable
Distribution Date in chronological order subject to the Common Cap, the
Preferred Cap and the Share Cap (if any), as applicable; and (iii) if the issuer
has outstanding more than one class or series of securities under which it is
obligated to sell a type of any such APM Qualifying Securities and applies some
part of the proceeds to the payment of deferred Distributions, then on any date
and for any period the amount of net proceeds received by the issuer from those
sales and available for payment of deferred Distributions on such securities
shall be applied to such securities on a pro rata basis up to the
Common Cap, the Preferred Cap and the Share Cap (if any), as applicable, in
proportion to the total amounts of deferred Distributions that are due on such
securities.  No remedy other than Permitted Remedies will arise by the
terms of such securities or related transaction agreements in favor of the
holders of such securities as a result of the issuer’s failure to pay
Distributions because of the Mandatory Trigger Provision or as a result of the
issuer’s exercise of its right under an Optional Deferral Provision until
Distributions have been deferred for one or more Distribution Periods that total
together at least ten years.

     

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

     

    (i)           trading
in securities generally, or in the securities of the issuer (or any affiliate of
the issuer that may issue securities in settlement of an Alternative Payment
Mechanism) specifically, on The New York Stock Exchange or any other national
securities exchange or over-the-counter market on which such securities are then
listed or traded shall have been suspended or the settlement of such trading
generally shall have been materially disrupted or minimum prices shall have been
established on any such exchange or market by the Commission, by the relevant
exchange or by any other regulatory body or governmental body having
jurisdiction, and the establishment of such minimum prices materially disrupts
or otherwise has a material adverse effect on trading in, or the issuance and
sale of, such securities;

     

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

     

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

     

    (iv)           a
material disruption shall have occurred in commercial banking or securities
settlement or clearance services in the United States and such disruption
materially disrupts or otherwise has a material adverse effect on trading in, or
the issuance and sale of, APM Qualifying Securities;

     

    (v)           the
United States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States, there shall have been a
declaration of a national emergency or war by the United States or there shall
have occurred any other national or international calamity or crisis and such
event materially disrupts or otherwise has a material adverse effect on trading
in, or the issuance and sale of, APM Qualifying Securities;

     

    (vi)           there
shall have occurred such a material adverse change in general domestic or
international economic, political or financial conditions, including without
limitation as a result of terrorist activities, and such change materially
disrupts or otherwise has a material adverse effect on trading in, or the
issuance and sale of, APM Qualifying Securities;

     

    (vii)           an
event occurs and is continuing as a result of which the offering document for
the offer and sale of the APM Qualifying Securities or Qualifying Capital
Securities would, in the reasonable judgment of the issuer (or an affiliate as
specified in clause (i) of this defined term), contain an untrue statement of a
material fact or omit to state a material fact required to be stated in that
offering document or necessary to make the statements in that offering document
not misleading and either (A) the disclosure of that event at such time, in the
reasonable judgment of the issuer (or an affiliate as specified in said clause
(i)), would have a material adverse effect on the business of the issuer (or an
affiliate as specified in said clause (i)) or (B) the disclosure relates to
a previously undisclosed proposed or pending material business transaction, the
disclosure of which would impede the ability of the issuer or any affiliate to
consummate that transaction, provided that no
single suspension period contemplated by this paragraph (vii) shall exceed
90 consecutive days and multiple suspension periods contemplated by this
clause (vii) shall not exceed an aggregate of 180 days in any 360-day period;
or

     

    (viii)
the issuer (or an affiliate as specified in clause (i) of this defined term)
reasonably believes, for reasons other than those referred to in paragraph (vii)
above, that the offering document for such offer and sale of APM Qualifying
Securities would not be in compliance with a rule or regulation of the
Commission and the issuer (or an affiliate as specified in said clause (i))
is unable to comply with such rule or regulation or such compliance is unduly
burdensome, provided that no
single suspension period contemplated by this clause (viii) shall exceed 90
consecutive days and multiple suspension periods contemplated by this clause
(viii) shall not exceed an aggregate of 180 days in any 360-day
period.

     

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

     

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

     

    “Measurement Period” means,
with respect to any redemption, purchase or defeasance of Subordinated
Debentures, the period (i) beginning on the date that is 180 days prior to the
date of delivery of notice of such redemption (such date of delivery, the “notice date”) or the date of
such purchase or defeasance and (ii) ending on such notice date or the date of
such purchase or defeasance.  Measurement Periods cannot run
concurrently.

     

    “Most Junior Subordinated Debt”
means debt securities of the Corporation or the Parent, as applicable, that rank
upon the issuer’s liquidation, dissolution or winding-up junior to all of the
issuer’s other long-term indebtedness for money borrowed (other than the
issuer’s long-term indebtedness for money borrowed from time to time outstanding
that by its terms ranks pari passu with such securities) and pari passu with the
claims of the issuer’s trade creditors.  As of the date hereof, the
term “Most Junior Subordinated Debt” shall include the Subordinated Debentures
and the Guarantee, as applicable, with respect to the Corporation or the
Guarantor.

     

    “Non-Cumulative” means, with
respect to any securities, that the issuer thereof may elect not to make any
number of periodic Distributions without any remedy arising under the terms of
the securities or related transaction agreements in favor of the holders of such
securities as a result of such issuer’s failure to pay Distributions, other than
one or more Permitted Remedies.  Securities that include an
Alternative Payment Mechanism shall also be deemed to be Non-Cumulative for all
purposes of this Replacement Capital Covenant except in the definition of
“Non-Cumulative Preferred
Stock.”

     

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

     

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

     

    “Officer’s Certificate” means
the Officer’s Certificate, dated March 19, 2009, with respect to the
Subordinated Debentures in accordance with the Subordinated
Indenture.

     

    “Optional Deferral Provision”
means, as to any security or combination of securities, a provision in the terms
thereof or of the related transaction agreements, to the effect that the
issuer thereof may, in its sole discretion, defer in whole or in part payment of
Distributions on such securities for one or more consecutive Distribution
Periods of up to ten years without any remedy other than Permitted Remedies as a
result of such issuer’s failure to pay Distributions.

     

    “Parent” means (i) the
Guarantor, (ii) any successor guarantor of the Subordinated Debentures or (iii)
any direct or indirect parent company of the Guarantor or such successor
guarantor.

     

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

     

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

     

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

     

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

     

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

     

    (a)           in
connection with any redemption, defeasance or purchase of Subordinated
Debentures prior to the Stepdown Date:

     

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

     

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

     

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

     

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

     

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

     

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

     

    (vii)               securities
issued by the Corporation, the Parent or any of their Subsidiaries that (A)
either (1) have no maturity or a maturity of at least 35 years and are subject
to Intent-Based Replacement Disclosure or (2) have no maturity or a
maturity of at least 25 years and are subject to an Explicit Replacement
Covenant, (B) have an Optional Deferral Provision and (C) have a Mandatory
Trigger Provision; or

     

    (viii)               any
other preferred stock issued by the Corporation or the Parent that (A) has no
prepayment obligation on the part of the issuer thereof, whether at the election
of the holders or otherwise, (B) has no maturity or a maturity of at least
55 years and (C) is subject to an Explicit Replacement Covenant;
or

     

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

     

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

     

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

     

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

     

    (iv)               securities
issued by the Corporation, the Parent or any of their Subsidiaries that (A)
either (1) have no maturity or a maturity of at least 35 years and are subject
to Intent-Based Replacement Disclosure or (2) have no maturity or a
maturity of at least 25 years and are subject to an Explicit Replacement
Covenant and (B) are Non-Cumulative;

     

    (v)               securities
issued by the Corporation, the Parent or any of their Subsidiaries that (A) have
no maturity or a maturity of at least 25 years, (B) are subject to
Intent-Based Replacement Disclosure, (C) have an Optional Deferral
Provision and (D) have a Mandatory Trigger Provision; or

     

    (vi)               any
other preferred stock issued by the Corporation or the Parent that (A) has no
prepayment obligation on the part of the issuer thereof, whether at the election
of the holders or otherwise and (B) either (1) has no maturity or a
maturity of at least 55 years and is subject to Intent-Based Replacement
Disclosure or (2) has no maturity or a maturity of at least 35 years and is
subject to an Explicit Replacement Covenant.

     

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

     

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

     

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

     

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

     

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

     

    
      	
               
      

            	
              (a)

            	
              Rights
      to acquire Common Stock;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Debt
      Exchangeable for Equity;

            


    

     

    
      	
               
      

            	
              (c)

            	
              Mandatorily
      Convertible Preferred Stock; and

            


    

     

    
      	
               
      

            	
              (d)

            	
              Qualifying
      Capital Securities.

            


    

     

    “Rights to acquire Common
Stock” includes any right to acquire Common Stock, including any right to
acquire Common Stock pursuant to a stock purchase plan or employee benefit
plan.  Rights to acquire Common Stock shall include Qualifying
Warrants.

     

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

     

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

     

    “Stepdown Date” means March 1,
2019.

     

    “Subordinated Debentures” has
the meaning specified in Recital
A.

     

    “Subordinated Indenture” 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).