Document:

Exhibit 4a

 

FIRST SUPPLEMENTAL
INDENTURE, dated as of June 27, 2008 (this “First Supplemental
Indenture”), between CONSTELLATION ENERGY GROUP, INC., a Maryland
corporation (the “Corporation”), and DEUTSCHE BANK TRUST COMPANY
AMERICAS, as trustee (the “Trustee”).

 

W  I  T  N  E  S
S  E  T  H

 

WHEREAS, the Corporation and
the Trustee have duly executed and delivered an Indenture, dated as of July 24,
2006 (the “Indenture”), providing for the authentication, issuance,
delivery and administration of unsecured debt securities to be issued in one or
more series by the Corporation (the “Securities”);

 

WHEREAS, pursuant to the
terms of the Indenture, the Corporation desires to provide for the
establishment of a new series of Securities (the “Debentures”) to be
issued under the Indenture in an unlimited aggregate principal amount, which
may be authenticated and delivered as provided in the Indenture;

 

WHEREAS, the Corporation
desires to amend the provisions of the Indenture to issue the Debentures under
the terms of the Indenture as supplemented hereby;

 

WHEREAS, Section 11.02
of the Indenture provides that with the consent of the holders of not less than
66 2/3% in aggregate principal amount of the Securities of all series
affected by such supplemental indenture (voting as one class) at the time
outstanding, the Corporation, when authorized by a resolution of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental thereto for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or of modifying in any manner the
rights of the holders of the Securities of each such series; provided, however,
that no such supplemental indenture shall (i) extend the fixed maturity of
any Security, or reduce the rate or change the method to be used in
establishing the rate or extend the time of payment of interest thereon, or
reduce the principal amount thereof, or reduce any premium payable upon the
redemption thereof, or reduce the amount of the principal of a Discounted
Security that would be due and payable upon a declaration of acceleration of
the maturity thereof pursuant to Section 7.01, or make the principal
thereof or premium or interest thereon payable in any coin or currency other
than that provided in such Securities, without the consent of the holder of
each Security so affected, or (ii) reduce the aforesaid percentage of
Securities, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Securities of
the series affected then outstanding;

 

WHEREAS, no Securities have
been issued and are Outstanding under the Indenture;

 

WHEREAS, for the purposes
hereinabove recited, and pursuant to due corporate action, the Corporation has
duly determined to execute and deliver to the Trustee this First Supplemental
Indenture; and

 

WHEREAS, all conditions and
requirements necessary to make this First Supplemental Indenture a valid, legal
and binding instrument in accordance with its terms have been done and
performed, and the execution and delivery hereof have been in all respects duly
authorized;

 

 

NOW, THEREFORE, in
consideration of the premises, the Corporation and the Trustee mutually
covenant and agree as follows:

 

SECTION 1.           DEFINITIONS.

 

1.1           All terms contained in this First
Supplemental Indenture shall, except as specifically provided herein or except
as the context may otherwise require, have the meanings given to such terms in
the Indenture.

 

SECTION 2.           TERMS AND CONDITIONS OF THE SECURITIES.

 

There is hereby authorized
the following series of Debentures:

 

2.1           Series A Junior Subordinated Debentures.

 

(a)           A
single series of unsecured junior subordinated notes are hereby authorized and
designated as the “Series A Junior Subordinated Debentures” (the “Series A
Debentures”);

 

(b)           The
Series A Debentures shall be issued by the Corporation in the initial
aggregate principal amount of $450,000,000. 
Additional Series A Debentures, without limitation as to amount,
having the same ranking, interest rate, maturity and other terms as the
Outstanding Series A Debentures (except for the payment of interest
accruing prior to the issue date of the additional Series A Debentures or
except for the first payments of interest following the issue date of the
additional Series A Debentures) may also be issued by the Corporation
pursuant to the Indenture without the consent of the existing holders of the Series A
Debentures.  Any such additional Series A
Debentures shall be part of the same series as the Outstanding Series A
Debentures;

 

(c)           The
maturity date for Series A Debentures is initially June 15, 2063, but
will be automatically extended, without the consent of the holders of Series A
Debentures, for an additional quarterly period on each of March 15, June 15,
September 15 and December 15 beginning June 15, 2013 and through
and including March 15, 2018 (each, an “Extension Date”), unless (i) earlier
redeemed or (ii) at least 30, but no more than 60, days prior to any such
Extension Date, the Corporation gives notice of its election to discontinue the
automatic extension of the maturity date. 
If the maturity date is automatically extended on all Extension Dates,
the Series A Debentures will mature on June 15, 2068;

 

(d)           The
Series A Debentures will bear interest at the rate of 8.625% per annum,
compounded quarterly, payable (subject to the provisions contained in paragraph
(l) below) quarterly in arrears on the 15th day of March, June,
September and December of each year (each, an “Interest Payment
Date”), commencing on September 15, 2008 and will be payable to the
persons in whose names the Series A Debentures are registered, at the
close of business on the Record Date next preceding such Interest Payment Date;

 

Interest on Series A
Debentures will accrue from the most recent Interest Payment Date to which
interest has been paid or duly provided for, or, if no interest has been paid
or duly provided for, from the Original Issue Date, until the principal hereof
has been paid or duly made 

 

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available for payment
(except as provided below).  The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, subject to certain exceptions described herein, be paid to the
person in whose name Series A Debentures (or one or more predecessor
Debentures) is registered at the close of business on the “Record Date”
for such interest which shall be the close of business on (1) the business
day immediately preceding such Interest Payment Date so long as Series A
Debentures are in book-entry only form, registered in the name of The
Depository Trust Company (“DTC”) or any other successor depositary or a nominee
thereof or (2) the 15th calendar day immediately preceding each Interest
Payment Date if the Series A Debentures are not in book-entry only form,
registered in the name of DTC or any other successor depositary or a nominee
thereof; provided, however, that interest payable at maturity (or on any
redemption date) will be payable to the person to whom the principal hereof
shall be payable.  As used herein, “Business
Day” means any day, that is not a Saturday or Sunday or a day on which
commercial banking institutions in The City of New York are authorized by law,
regulation or executive order to remain closed;

 

(e)           The
Series A Debentures will be redeemable at the option of the Corporation
before June 15, 2013, at any time in whole and from time to time in part,
upon not less than 30 nor more than 60 days’ notice given as provided in the
Indenture, at a redemption price described in the form of the Series A
Debenture set forth as Exhibit A hereto;

 

(f)            On
or after June 15, 2013, the Series A Debentures will be redeemable at
the option of the Corporation, at any time in whole and from time to time in
part, upon not less than 30 nor more than 60 days’ notice given as provided in
the Indenture, at a redemption price equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon, if any, to the Redemption
Date (as defined in the form of the Series A Debentures set forth as Exhibit A
hereto);

 

(g)           If
before June 15, 2013 a Tax Event (as defined in the form of the Series A
Debentures set forth as Exhibit A hereto) shall occur and be continuing,
the Corporation shall have the right to redeem the Series A Debentures, in
whole but not in part, at any time within 90 days following the occurrence of
the Tax Event, upon not less than 30 nor more than 60 days’ notice given as
provided in the Indenture, at a redemption price equal to 100% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the
Redemption Date;

 

(h)           If
before June 15, 2013 a Rating Agency Event (as defined in the form of the Series A
Debentures set forth as Exhibit A hereto) shall occur and be continuing,
the Corporation shall have the right to redeem the Series A Debentures, at
any time in whole and from time to time in part, upon not less than 30 nor more
than 60 days’ notice given as provided in the Indenture, at a Redemption Price
described in the form of the Series A Debentures set forth as Exhibit A
hereto;

 

(i)            The
Series A Debentures will be issued in denominations of $25 and integral
multiples thereof;

 

(j)            The
Series A Debentures will be initially issued in global form registered in
the name of Cede & Co. (as nominee for The Depository Trust
Company).  The Series A Debentures
in global form shall bear the depository legend in substantially the form set forth
in 

 

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Exhibit A
hereto.  The Series A Debentures in
global form will contain restrictions on transfer, substantially as described
in the form of the Series A Debentures set forth in Exhibit A hereto;

 

(k)           So
long as any Series A Debentures are Outstanding, default in the due and
punctual payment of any installments of interest upon any of the Series A
Debentures as and when the same shall become due and payable and continuance of
such default for a period of 30 days (whether or not payment is prohibited by
the subordination provisions of Article XVIII of the Indenture, as amended
by this First Supplemental Indenture) shall constitute an Event of Default;
provided, however, that a valid deferral of the interest payments by the
Corporation as contemplated in Section 3.09 of the Indenture, as amended
by this First Supplemental Indenture, and paragraph (l) of this Section 2
of this First Supplemental Indenture shall not constitute a failure to pay
interest for this purpose;

 

(l)            Notwithstanding
the provisions of Section 7.01 of the Indenture, the principal of and
accrued interest on the Series A Debentures shall not be declared
immediately due and payable by reason of the occurrence and continuation of an
Event of Default specified in Section 7.01(3) of the Indenture
applicable to the Series A Debentures, and any notice of declaration of
acceleration based on such Event of Default shall be null and void with respect
to the Series A Debentures.  The Series A
Debentures will not be considered Outstanding for the purpose of determining
whether the required vote described in Section 7.01 of the Indenture has
been obtained for the declaration of acceleration by reason of the occurrence
and continuation of an Event of Default specified in Section 7.01(3) of
the Indenture applicable to the Series A Debentures;

 

(m)          Pursuant
to Section 3.09 of the Indenture, as amended by this First Supplemental
Indenture, so long as no Event of Default under the Indenture has occurred and
is continuing with respect to Series A Debentures, the Corporation shall
have the right, at any time and from time to time during the term of the Series A
Debentures, to defer the payment of interest for a period not exceeding 10
consecutive years (each period, commencing on the date that the first such
payment would otherwise be made, an “Optional Deferral Period”);
provided that no Optional Deferral Period shall extend beyond the maturity
date, all upon terms and conditions set forth in the form of Series A
Debentures set forth in Exhibit A hereto; and

 

(n)           The
Series A Debentures shall have such other terms and provisions as are
provided in the form of Series A Debentures set forth as Exhibit A
hereto.

 

SECTION 3.           AMENDMENTS
TO THE INDENTURE

 

3.1           DEFINITIONS

 

(a)           The
Indenture is hereby amended to add a definition of “Pari Passu Securities”
after the definition of “Outstanding” in Section 1.01 of the Indenture to
read as follows:

 

“Pari Passu Securities” means: (i) indebtedness
and other securities that, among other things, by its terms ranks equally with
the Securities of any series in right of payment and upon liquidation; and (ii) guarantees
of indebtedness or other securities described in clause (i), and 

 

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(iii) trade accounts payable and accrued
liabilities arising in the ordinary course of business of the Corporation, with
respect to the Securities of any series.

 

(b)           The
Indenture is hereby amended to add a definition of “Person” after the definition
of “Outstanding” in Section 1.01 of the Indenture to read as follows:

 

“Person” means a legal person, including any
individual, corporation, association, bank, company, limited liability company,
joint stock company, statutory trust, estate, partnership, joint venture,
unincorporated association or government, or any agency or political
subdivision thereof or any other entity of whatever nature.

 

(c)           The
Indenture is hereby amended to add a definition of “Senior Indebtedness” after
the definition of “Securityholder” in Section 1.01 of the Indenture to
read as follows:

 

“Senior Indebtedness,” when used with respect
to the Corporation, means all of the Corporation’s obligations whether
presently existing or from time to time hereafter incurred, created, assumed or
existing, to pay principal, premium, interest, penalties, fees and any other
payment in respect of any of the following:

 

(a)   obligations for borrowed money, including without limitation, such
obligations as are evidenced by credit agreements, notes, debentures, bonds or
other securities or instruments;

 

(b)   capitalized lease obligations;

 

(c)   all obligations of the types referred to in clauses (a) and (b) above
of others which the Corporation, has assumed, endorsed, guaranteed,
contingently agreed to purchase or provide funds for the payment of, or
otherwise becomes liable for, under any agreement; or

 

(d)   all renewals, extensions or refundings of obligations of the kinds
described clauses (a), (b) or (c) above.

 

unless, in the case of any
particular obligation, indebtedness, renewal, extension or refunding, the
instrument creating or evidencing the same or the assumption or guarantee of
the same provides that such obligation, indebtedness, renewal, extension or
refunding is not superior in right of payment to or is pari passu
with the Securities; and provided further that trade accounts payable and
accrued liabilities arising in the ordinary course of business shall not be
deemed to be Senior Indebtedness.

 

3.2           DEFERRAL OF INTEREST PAYMENTS

 

(a)           The
Indenture is hereby amended to add Section 3.09, to read as follows:

 

SECTION 3.09.              Deferral of Interest Payments.  The
Corporation shall have the right at any time, so long as no Event of Default
hereunder has occurred and is continuing with respect to the Securities of a
series, to defer interest payments from time to time on all Securities 

 

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of such series, if so
specified as contemplated by Section 3.01 with respect to such Securities
and upon such terms as may be specified as contemplated by Section 3.01
with respect to such Securities.

 

3.3           SUBORDINATION PROVISIONS

 

(a)           The
Indenture is hereby amended to add Article XVIII, to read as follows:

 

ARTICLE XVIII

 

Subordination of Securities

 

SECTION 18.01.            Securities
Subordinate to Senior Indebtedness of the Corporation.  The
Corporation, for itself, its successors and assigns, covenants and agrees, and
each holder of the Securities of each series, by its acceptance thereof,
likewise covenants and agrees, that the payment of the principal of and
premium, if any, and interest, if any, on each and all of the Securities is
hereby expressly subordinated and junior in right of payment, and subject, to
the extent and in the manner set forth in this Article Eighteen, in right
of payment to the prior payment in full of all Senior Indebtedness of the
Corporation.  However, the Securities of
each series will rank equally in right of payment with any Pari Passu
Securities of the Corporation.

 

Each holder of the Securities
of each series, by its acceptance thereof, authorizes and directs the Trustee
on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article Eighteen, and
appoints the Trustee its attorney-in-fact for any and all such purposes.

 

SECTION 18.02.            Payment Over of Proceeds of Securities.  In
the event (a) of any insolvency or bankruptcy proceedings or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Corporation or a substantial part of its property and assets, or
of any proceedings for liquidation, dissolution or other winding up of the
Corporation, whether or not involving insolvency or bankruptcy, or (b) subject
to the provisions of Section 18.03, that (i) a default shall have
occurred with respect to the payment of principal of or interest on or other
monetary amounts due and payable on any Senior Indebtedness of the Corporation,
or (ii) there shall have occurred a default (other than a default in the
payment of principal or interest or other monetary amounts due and payable) in
respect of any Senior Indebtedness of the Corporation, as defined therein or in
the instrument under which the same is outstanding, permitting the holder or
holders thereof, or any other Person on its or their behalf to accelerate the
maturity thereof (with notice or lapse of time, or both), and such default
shall have continued beyond the period of grace, if any, in respect thereof,
and, in the cases of subclauses (i) and (ii) of this clause (b), such
default shall not have been cured or waived or shall not have ceased to exist,
or (c) that the principal of and/or premium, if any, and/or accrued
interest, if any, on the Securities of any series shall have been declared due
and payable pursuant to Section 7.01 and such declaration shall not have
been rescinded and annulled as provided in Section 7.01, then:

 

(1)           the holders of all Senior Indebtedness of the Corporation shall first
be entitled to receive payment of the full amount due thereon, or provision
shall be made for such payment in money or money’s worth, before the holders of
any of the Securities are entitled to receive a 

 

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payment on account of the
principal of, premium if any, or interest on the indebtedness evidenced by the
Securities, including, without limitation, any payments made pursuant to
Articles IV and XV;

 

(2)           any payment by, or distribution of property or assets of, the
Corporation of any kind or character, whether in cash, property or securities,
to which any Securityholder or the Trustee would be entitled except for the
provisions of this Article Eighteen, shall be paid or delivered by the
Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders of such
Senior Indebtedness of the Corporation or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Indebtedness of the Corporation
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of such Senior Indebtedness of the Corporation held or
represented by each, to the extent necessary to make payment in full of all
Senior Indebtedness of the Corporation remaining unpaid after giving effect to
any concurrent payment or distribution (or provision therefor) to the holders
of such Senior Indebtedness of the Corporation, before any payment or distribution
is made to the holders of the indebtedness evidenced by the Securities or to
the Trustee under this Indenture; and

 

(3)           in the event that, notwithstanding the foregoing, any payment by, or
distribution of property or assets of, the Corporation of any kind or
character, whether in cash, property or securities, in respect of principal of,
or premium, if any, or interest on the Securities or in connection with any
repurchase by the Corporation of the Securities, shall be received by the
Trustee or any Securityholder before all Senior Indebtedness of the Corporation
is paid in full, or provision is made for such payment in money or money’s
worth, such payment or distribution in respect of principal of, or premium, if
any, or interest on the Securities or in connection with any repurchase by the
Corporation of the Securities shall be paid over to the holders of such Senior
Indebtedness of the Corporation or their representative or representatives or
to the trustee or trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness of the Corporation may have been
issued, ratably as aforesaid, for application to the payment of all Senior
Indebtedness of the Corporation remaining unpaid until all such Senior
Indebtedness of the Corporation shall have been paid in full, after giving
effect to any concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness of the Corporation.

 

Notwithstanding the
foregoing, at any time after the 91st day following the date of deposit of cash
pursuant to Section 13.01 (provided all conditions set out in such Section shall
have been satisfied), the funds so deposited and any interest thereon will not
be subject to any rights of holders of Senior Indebtedness of the Corporation
including, without limitation, those arising under this Article Eighteen;
provided that no event described in clauses (4) and (5) of Section 7.01
has occurred during such 90-day period.

 

For purposes of this Article Eighteen
only, the words “cash, property or securities” shall not be deemed to include
shares of stock of the Corporation as reorganized or readjusted, or securities
of the Corporation or any other Person provided for by a plan of reorganization
or readjustment which are subordinate in right of payment to all Senior
Indebtedness of the Corporation which may at the time be outstanding to the
same extent as, or to a greater extent than, the Securities 

 

7

 

are so subordinated as
provided in this Article Eighteen. 
The consolidation of the Corporation with, or the merger of the
Corporation into, another corporation or the liquidation or dissolution of the
Corporation following the conveyance or transfer of its property and assets as
an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII hereof shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section 18.02 if such other corporation shall, as a part
of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article XII hereof. 
Nothing in Section 18.01 or in this Section 18.02 shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 8.06.

 

SECTION 18.03.            Disputes with Holders of Certain Senior
Indebtedness of the Corporation.  Any failure by the Corporation
to make any payment on or perform any other obligation in respect of Senior
Indebtedness of the Corporation, other than any indebtedness incurred by the
Corporation or assumed or guaranteed, directly or indirectly, by the
Corporation for money borrowed (or any deferral, renewal, extension or
refunding thereof) or any other obligation as to which the provisions of this Section shall
have been waived by the Corporation in the instrument or instruments by which
the Corporation incurred, assumed, guaranteed or otherwise created such
indebtedness or obligation, shall not be deemed a default under clause (b) of
Section 18.02 if (i) the Corporation shall be disputing its
obligation to make such payment or perform such obligation and (ii) either
(A) no final judgment relating to such dispute shall have been issued
against the Corporation which is in full force and effect and is not subject to
further review, including a judgment that has become final by reason of the
expiration of the time within which a party may seek further appeal or review,
or (B) in the event that a judgment that is subject to further review or
appeal has been issued, the Corporation shall in good faith be prosecuting an
appeal or other proceeding for review and a stay or execution shall have been
obtained pending such appeal or review.

 

SECTION 18.04.            Subrogation. 
Senior Indebtedness of the Corporation shall not be deemed to have been
paid in full unless the holders thereof shall have received cash (or securities
or other property satisfactory to such holders) in full payment of such Senior
Indebtedness of the Corporation then outstanding.  Upon the payment in full of all Senior
Indebtedness of the Corporation, the rights of the holders of the Securities
shall be subrogated to the rights of the holders of Senior Indebtedness of the
Corporation to receive any further payments or distributions of cash, property
or securities of the Corporation applicable to the holders of the Senior
Indebtedness of the Corporation until all amounts owing on the Securities shall
be paid in full; and such payments or distributions of cash, property or
securities received by the holders of the Securities, by reason of such
subrogation, which otherwise would be paid or distributed to the holders of
such Senior Indebtedness of the Corporation shall, as between the Corporation,
its creditors other than the holders of Senior Indebtedness of the Corporation,
and the Securityholders, be deemed to be a payment by the Corporation to or on
account of Senior Indebtedness of the Corporation, it being understood that the
provisions of this Article Eighteen are and are intended solely for the
purpose of defining the relative rights of the Securityholders, on the one
hand, and the holders of the Senior Indebtedness of the Corporation, on the
other hand.

 

SECTION 18.05.            Obligation of the Corporation Unconditional. 
Nothing contained in this Article Eighteen or elsewhere in this
Indenture or in the Securities is intended to or shall 

 

8

 

impair, as among the
Corporation, its creditors other than the holders of Senior Indebtedness of the
Corporation and the Securityholders, the obligation of the Corporation, which
is absolute and unconditional, to pay to the Securityholders the principal of,
premium, if any, and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Securityholders and creditors of the
Corporation other than the holders of Senior Indebtedness of the Corporation,
nor shall anything herein or therein prevent the Trustee or any Securityholder
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Eighteen
of the holders of Senior Indebtedness of the Corporation in respect of cash,
property or securities of the Corporation received upon the exercise of any
such remedy.

 

Upon any payment or
distribution of assets, cash or property or securities of the Corporation
referred to in this Article Eighteen, the Trustee and the Securityholders
shall be entitled to rely upon any order or decree of a court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Indebtedness of the Corporation and other indebtedness of the Corporation, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon, and all other facts pertinent thereto or to this Article Eighteen.

 

The Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness of the Corporation
(or a representative of such holder or a trustee under any indenture under
which any instruments evidencing any such Senior Indebtedness of the
Corporation may have been issued) to establish that such notice has been given
by a holder of such Senior Indebtedness of the Corporation or such
representative or trustee on behalf of such holder.  In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness, or its representative or representatives
or trustee or trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness of the Corporation may have been
issued, to participate in any payment or distribution pursuant to this Article Eighteen,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of the
Corporation held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to
the right of such Person under this Article Eighteen, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment or distribution.

 

SECTION 18.06.            Priority of Senior Indebtedness of the
Corporation Upon Maturity.  Upon the maturity of the principal of any
Senior Indebtedness of the Corporation by lapse of time, acceleration or
otherwise, all matured principal of Senior Indebtedness of the Corporation and
interest, premium and other payment obligation, if any, thereon shall first be
paid in full before any payment of principal or premium, if any, or interest,
if any, is made upon the Securities or before any Securities can be acquired by
the Corporation or any sinking fund payment is made with respect to the
Securities (except that required sinking fund payments may be reduced by
Securities acquired before such maturity of such Senior Indebtedness of the
Corporation).

 

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SECTION 18.07.                                   Trustee as Holder of Senior Indebtedness of
the Corporation; Preservation of Trustee’ Rights.  The
Trustee shall be entitled to all rights set forth in this Article Eighteen
with respect to any Senior Indebtedness of the Corporation at any time held by
it, to the same extent as any other holder of Senior Indebtedness of the
Corporation.  Nothing in this Article Eighteen
shall deprive the Trustee of any of its rights as such holder.

 

Nothing in this Article Eighteen
shall apply to claims of, or payments to, the Trustee under or pursuant to Section 8.06.

 

SECTION 18.08.                                   Notice to Trustee to Effectuate
Subordination.  Notwithstanding the provisions of this Article Eighteen
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of moneys to or by the Trustee unless and until the Trustee shall have
received written notice thereof from the Corporation, from a Securityholder or
from a holder of any Senior Indebtedness of the Corporation or from any
representative or representatives of such holder or any trustee or trustees
under any indenture under which any instruments evidencing any such Senior
Indebtedness of the Corporation may have been issued and, prior to the receipt
of any such written notice, the Trustee shall be entitled, subject to Section 8.01,
in all respects to assume that no such facts exist; provided, however, that, if
prior to the fifth Business Day preceding the date upon which by the terms of
this Indenture any such moneys may become payable for any purpose, or in the
event of the execution of an instrument pursuant to 13.01 acknowledging
satisfaction and discharge of this Indenture, then if prior to the second
Business Day preceding the date of such execution, the Trustee shall not have
received with respect to such moneys the notice provided for in this Section,
then, anything herein contained to the contrary notwithstanding, the Trustee
may, in its discretion, receive such moneys and/or apply the same to the
purpose for which they were received, and shall not be affected by any notice
to the contrary, which may be received by it on or after such date; provided,
however, that no such application shall affect the obligations under this Article Eighteen
of the persons receiving such moneys from the Trustee.

 

SECTION 18.09.                                   Modification, Extension, etc. of Senior
Indebtedness of the Corporation.  The holders of Senior
Indebtedness of the Corporation or their representative or representatives or
the trustee or trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness of the Corporation may have been issued
may, without affecting in any manner the subordination of the payment of the
principal of and premium, if any, and interest, if any, on the Securities, at
any time or from time to time and in their absolute discretion, agree with the
Corporation to change the manner, place or terms of payment, change or extend
the time of payment of, or renew or alter, any Senior Indebtedness of the
Corporation, or amend or supplement any instrument pursuant to which any Senior
Indebtedness of the Corporation is issued, or exercise or refrain from
exercising any other of their rights under the Senior Indebtedness of the
Corporation including, without limitation, the waiver of default thereunder,
all without notice to or assent from the Securityholders or the Trustee.

 

SECTION 18.10.                                   Trustee Has No Fiduciary Duty to Holders of
Senior Indebtedness of the Corporation.  With respect to the holders of
Senior Indebtedness of the Corporation, the Trustee undertakes to perform or to
observe only such of its covenants and objectives as are specifically set forth
in this Indenture, and no implied covenants or obligations with respect to 

 

10

 

the
holders of Senior Indebtedness of the Corporation shall be read into this
Indenture against the Trustee.  The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Corporation, and shall not be liable to any such holders if
it shall mistakenly pay over or deliver to the Securityholders or the
Corporation or any other Person, money or assets to which any holders of Senior
Indebtedness of the Corporation shall be entitled by virtue of this Article Eighteen
or otherwise.

 

SECTION 18.11.                                   Paying Agents Other Than the Trustee.  In
case at any time any paying agent other than the Trustee shall have been
appointed by the Corporation and be then acting hereunder, the term “Trustee”
as used in this Article Eighteen shall in such case (unless the context
shall otherwise require) be construed as extending to and including such paying
agent within its meaning as fully for all intents and purposes as if such
paying agent were named in this Article Eighteen in addition to or in
place of the Trustee; provided, however, that Sections 18.07, 18.08 and 18.10
shall not apply to the Corporation if it acts as paying agent.

 

SECTION 18.12.                                   Rights of Holders of Senior Indebtedness of
the Corporation Not Impaired.  No right of any present or future holder of
Senior Indebtedness of the Corporation to enforce the subordination herein
shall at any time or in any way be prejudiced or impaired by any act or failure
to act on the part of the Corporation or by any noncompliance by the
Corporation with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.

 

SECTION 18.13.                                   Effect of Subordination Provisions;
Termination.  Notwithstanding anything contained herein to
the contrary, other than as provided in the immediately succeeding sentence,
all the provisions of this Indenture shall be subject to the provisions of this
Article Eighteen, so far as the same may be applicable thereto.

 

Notwithstanding anything
contained herein to the contrary, the provisions of this Article Eighteen
shall be of no further effect, and the Securities shall no longer be
subordinated in right of payment to the prior payment of Senior Indebtedness of
the Corporation, if, and to the extent, the Corporation shall have delivered to
the Trustee a notice to such effect.  Any
such notice delivered by the Corporation shall not be deemed to be a
supplemental indenture for purposes of Article Eleven.

 

SECTION 4.                      MISCELLANEOUS.

 

4.1                                 Ratification of Indenture.  The
Indenture, as supplemented by this First Supplemental Indenture, is in all
respects ratified and confirmed, and this First Supplemental Indenture shall be
deemed a part of the Indenture in the manner and to the extent herein and
therein provided.

 

4.2                                 GOVERNING LAW.  THIS
FIRST SUPPLEMENTAL INDENTURE, EACH SERIES A DEBENTURE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS FIRST SUPPLEMENTAL INDENTURE AND EACH
SERIES A DEBENTURE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE 

 

11

 

EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

4.3                                 Counterparts.  This
First Supplemental Indenture may be executed in several counterparts, each of
which shall be an original, and all collectively but one instrument.

 

4.4                                 The Trustee.  The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this First Supplemental Indenture or for or in respect of the
recitals contained herein, all of which are made solely by the Corporation.

 

12

 

IN WITNESS WHEREOF, the
parties hereto have caused this First Supplemental Indenture to be executed as
of the date first above written.

 

	
   

  	
  CONSTELLATION
  ENERGY GROUP, INC., as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Collins

  
	
   

  	
   

  	
  Name: 

  	
  John
  R. Collins

  
	
   

  	
   

  	
  Title: 

  	
  Executive
  Vice President and Chief

  
	
   

  	
   

  	
  Financial Officer

  

 

13

 

	
   

  	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS,

  as Trustee

  By Deutsche Bank National Trust Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth R. Ring

  
	
   

  	
   

  	
  Name: 

  	
  Kenneth
  R. Ring

  
	
   

  	
   

  	
  Title: 

  	
  Vice
  President

  

 

 

	
   

  	
  By:

  	
  /s/ Rodney Gaughan

  
	
   

  	
   

  	
  Name: 

  	
  Rodney
  Gaughan

  
	
   

  	
   

  	
  Title: 

  	
  Vice
  President

  

 

14

 

EXHIBIT A

 

[FACE OF SERIES A
DEBENTURE]

 

This Debenture is registered
in the name of The Depository Trust Company (the “Depositary”) (55 Water
Street, New York, New York) or its nominee, and this Debenture may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary unless and until this Debenture is exchanged
in whole or in part for Debentures in definitive form. Unless this certificate
is presented by an authorized representative of the Depositary to the
Corporation or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of the Depositary and
any payment is made to Cede & Co., or such other name ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co. has an interest
herein.

 

	
  No. R-

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CUSIP:  

  	
   

  

 

CONSTELLATION ENERGY
GROUP, INC.

 

Series A Junior
Subordinated Debenture

 

	
  ORIGINAL
  ISSUE

  DATE:

  	
   

  	
  INTEREST
  PAYMENT

  DATES:             ,
                  ,
                ,
  and                

  
	
   

  	
   

  	
   

  
	
  INTEREST
  RATE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MATURITY
  DATE:           , but will
  be automatically extended, without the consent of the holders of Debentures,
  for an additional quarterly period on each of
                  ,
                ,
                          
  and
                        ,
  beginning
                  ,
           and through and including
                  ,
          , unless automatic extension
  of the maturity date is discontinued. If the maturity date is automatically
  extended on all extension dates, this Debenture will mature on
                ,
          .

  	
   

  	
   

  

 

A-1

 

Constellation Energy Group, Inc.,
a Maryland corporation (together with its successors and assigns, the “Corporation”),
for value received, hereby promises to pay to
                                  ,
or registered assignees, the principal sum of
                                        
Dollars
($                        )
on the Maturity Date specified above and further described below and to pay
interest thereon at the Interest Rate per annum specified above, quarterly in
arrears on each Interest Payment Date specified above commencing on the
Interest Payment Date next succeeding the Original Issue Date specified above,
and at maturity (or on any redemption date).

 

Interest on this Debenture
will accrue from the most recent Interest Payment Date to which interest has
been paid or duly provided for, or, if no interest has been paid or duly
provided for, from the Original Issue Date, until the principal hereof has been
paid or duly made available for payment (except as provided below).  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, subject to certain
exceptions described herein, be paid to the person in whose name this Debenture
(or one or more predecessor Debentures) is registered at the close of business
on the “Record Date” for such interest which shall be the close of business on
the 15th calendar day next preceding such Interest Payment Date (whether or not
a Business Day), provided that if the Debentures are held by a securities
depository in book-entry form, the Record Date will be the close of business on
the Business Day immediately preceding such Interest Payment Date (each such
date a “Record Date”); provided, however, that interest payable at
maturity (or on any redemption date) will be payable to the person to whom the
principal hereof shall be payable.  As
used herein, “Business Day” means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City of
New York.

 

Payment of the principal of
this Debenture, any premium and the interest due at maturity (or on any
redemption date) will be made in immediately available funds upon surrender of
this Debenture at the office or agency of the Paying Agent, as defined on the
reverse hereof, maintained for that purpose in the Borough of Manhattan, The
City of New York, or at such other paying agency as the Corporation may
determine.  Payment of the principal of
and premium, if any, and interest on this Debenture will be made at the office
of the Paying Agent in U.S. dollars; provided, however, that payments of
interest (other than any interest payable at Maturity Date or upon redemption
or repurchase) may be made at the option of the Corporation (i) by checks
mailed to the addresses of the persons entitled thereto as such addresses shall
appear in the register of the Debentures or (ii) by wire transfer to
persons who are holders of record at such other addresses that have been filed
with the Paying Agent on or prior to the Record Date.

 

Payment of the principal,
premium, if any, and interest payable at Maturity Date, or, if applicable, upon
redemption or repurchase, on this Debenture will be made in immediately
available funds at the request of the holder provided that this Debenture is
presented to the Paying Agent in time for the Paying Agent to make such
payments in such funds in accordance with its normal procedures.

 

Reference is hereby made to
the further provisions of this Debenture set forth on the reverse hereof; which
further provisions shall for all purposes have the same effect as if set forth
at this place.

 

A-2

 

Unless the certificate of
authentication hereon has been executed by or on behalf of the Trustee or a
duly designated authentication agent by manual signature, this Debenture shall
not be entitled to any benefit under said Indenture, or be valid or obligatory
for any purpose.

 

A-3

 

IN WITNESS WHEREOF,
Constellation Energy Group, Inc. has caused this instrument to be executed
in its corporate name with the manual or facsimile signature of its President
or a Vice President and a facsimile of its corporate seal to be imprinted
hereon, attested by the manual or facsimile signature of its Secretary or an
Assistant Secretary.

 

Dated:

 

	
   

  	
  CONSTELLATION
  ENERGY GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  ATTEST:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE

OF AUTHENTICATION

 

This is one of the
Securities referred

to in the within-mentioned Indenture.

 

	
   

  	
  DEUTSCHE
  BANK TRUST COMPANY

  AMERICAS,

  as Trustee

  By Deutsche Bank National Trust Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-4

 

[REVERSE OF SERIES A JUNIOR
SUBORDINATED DEBENTURE]

 

This Debenture is one of a
duly authorized issue of Series A Junior Subordinated Debentures (the “Debentures”)
of the Corporation.  The Debentures are
issuable under an indenture, dated as of July 24, 2006 (as amended by the
First Supplemental Indenture dated as of June 27, 2008, the “Indenture”),
each between the Corporation and Deutsche Bank Trust Company Americas, as
Trustee (the “Trustee,” which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Corporation, the Trustee and holders of
the Debentures and the terms upon which the Debentures are, and are to be,
authenticated and delivered.  The
Corporation has appointed Deutsche Bank Trust Company Americas, at its
principal corporate trust office in The City of New York as the paying agent
(the “Paying Agent,” which term includes any additional or successor
Paying Agent appointed by the Corporation) with respect to the Debentures.

 

The Corporation agrees, and
by acquiring an interest in the Debenture each beneficial owner of the
Debenture will agree, to treat the Debenture as indebtedness for U.S. federal
income tax purposes.

 

Redemption

 

In addition to the option of
the Corporation to redeem the Debentures in connection with a Tax Event or a
Rating Agency Event described below, this Debenture shall be redeemable in
whole or in part at the option of the Corporation upon payment of the
redemption prices specified below, upon notice (“Notice of Redemption”),
mailed to the registered holders of the Debentures at least 30 days, but not
more than 60 days, before the date fixed for redemption (the “Redemption
Date”), at a price (the “Redemption Price”) as follows:

 

(A)(i) if redeemed
prior to June 15, 2013, the redemption price will be the greater of: (a) 100%
of the principal amount of such Debentures being redeemed and (b) the sum of
the present values of the remaining scheduled payments of principal and
interest on the Debentures (exclusive of interest accrued to the Redemption
Date) being redeemed from the Redemption Date to June 15, 2013, discounted
to the Redemption Date on a quarterly basis (assuming a 360-day year consisting
of twelve 30-day months) at the Treasury Rate plus 50 basis points, plus in
each case accrued interest to the Redemption Date, or

 

(ii) if redeemed on or
after June 15, 2013, the redemption price will be 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the Redemption
Date.

 

The following defined terms
shall have the meanings specified below:

 

“Comparable Treasury
Issue” means the United States Treasury security or securities selected by
an Independent Investment Banker as having an actual or interpolated maturity
comparable to the time period from the Redemption Date or the Rating Agency
Event Redemption Date (as defined below) to June 15, 2013 that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of a comparable
maturity to such time period.

 

A-5

 

“Comparable Treasury
Price” means, with respect to any Redemption Date or Rating Agency Event
Redemption Date (A) the average of the Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations or (B) if fewer than four such
Reference Treasury Dealer Quotations are obtained, the average of all such
quotations.

 

“Independent Investment
Banker” means one of the Reference Treasury Dealers appointed by the
Corporation.

 

“Reference Treasury
Dealer” means each of Citigroup Global Markets Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated, UBS Securities LLC and one other primary U.S. Government
securities dealer in the United States of America (“Primary Treasury Dealer”)
selected by Wachovia Capital Markets, LLC or their affiliates, and their
respective successors; provided, however, that if any of the foregoing or their
affiliates shall cease to be a Primary Treasury Dealer, Corporation shall
substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury
Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date or Rating Agency Event Redemption Date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by the Reference Treasury Dealers at 3:30 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.

 

“Treasury Rate”
means, with respect to any Redemption Date or Rating Agency Event Redemption
Date, the rate per annum equal to the quarterly equivalent yield to maturity or
interpolated (on a day count basis) of the Comparable Treasury Issue, assuming
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such Redemption
Date.

 

In the event of redemption
of this Debenture in part only, a new Debenture or Debentures for the amount of
the unredeemed portion hereof shall be issued in the name of the holder hereof
upon the cancellation hereof.

 

If at the time Notice of
Redemption is given, the redemption moneys are not on deposit with the Trustee,
then the redemption shall be subject to their receipt on or before the
Redemption Date and such notice shall be of no effect unless such moneys are
received.

 

If the Corporation at any
time elects to redeem some but not all of the Debentures, the Trustee will
select the particular Debentures to be redeemed using any method that it deems
fair and appropriate.  However, if the
Debentures are registered solely in the name of Cede & Co. and traded
through DTC, then DTC will select the Debentures to be redeemed in accordance
with its practices.

 

(B)           If before June 15, 2013, a Tax
Event (as defined below) has occurred and is continuing, the Corporation shall
have the right to redeem this Debenture, in whole, but not in part, at any time
within 90 days following the occurrence of the Tax Event, at a redemption price
equal to 100% of the principal amount of such Debentures being redeemed plus
accrued and 

 

A-6

 

unpaid
interest thereon, if any, to the date fixed for such redemption (“Tax Event
Redemption Date”).

 

If at the time Notice of
Redemption is given, the redemption moneys are not on deposit with the Trustee,
then the redemption shall be subject to their receipt on or before the Tax
Event Redemption Date and such notice shall be of no effect unless such moneys
are received at any time within 90 days after there is a Tax Event.

 

A “Tax Event” means
the receipt by the Corporation of an Opinion of Counsel experienced in tax
matters to the effect that, as a result of:

 

(a)           any amendment to, clarification of, or change, including
any announced prospective change, in the laws or treaties of the United States
or any of its political subdivisions or taxing authorities, or any regulations
under those laws or treaties;

 

(b)           an administrative action, which means any judicial
decision or any official administrative pronouncement, ruling, regulatory
procedure, notice or announcement including any notice or announcement of
intent to issue or adopt any administrative pronouncement, ruling, regulatory
procedure or regulation;

 

(c)           any amendment to, clarification of, or change in the
official position or the interpretation of any administrative action or
judicial decision or any interpretation or pronouncement that provides for a
position with respect to an administrative action or judicial decision that
differs from the previously generally accepted position, in each case by any
legislative body, court, governmental authority or regulatory body, regardless
of the time or manner in which that amendment, clarification or change is
introduced or made known; or

 

(d)           a threatened challenge asserted in writing in connection
with an audit of the Corporation or its subsidiaries, or a publicly-known
threatened challenge asserted in writing against any other taxpayer that has
raised capital through the issuance of securities that are substantially
similar to the Debentures,

 

which
amendment, clarification, or change, in each case, is effective or which
administrative action is taken or judicial decision, interpretation or
pronouncement is issued, or which threatened challenge is asserted, after June 20,
2008, there is more than an insubstantial risk that interest payable by the
Corporation on this Debenture is not deductible, or within 90 days would not be
deductible, in whole or in part, by the Corporation for United States federal
income tax purposes.

 

(C)           If before June 15, 2013, a Rating Agency Event (as
defined below) shall occur and be continuing, the Corporation shall have the
right to redeem, upon a Notice of Redemption, this Debenture, whole at any
time, or in part from time to time, at a redemption price equal to the greater
of (i) 100% of the principal amount of this Debenture and (ii) the
sum of the present values of the remaining scheduled payments of principal and
interest on this Debenture (exclusive of interest accrued to the date fixed for
such redemption) (“Rating Agency Event Redemption Date”) being redeemed
from the Rating Agency Event Redemption Date to June 15, 2013, discounted
to the Rating Agency Event Redemption Date on a quarterly basis (assuming a 

 

A-7

 

360-day
year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis
points, plus in each case accrued interest to the Rating Agency Event Redemption
Date.

 

If at the time Notice of
Redemption is given, the redemption moneys are not on deposit with the Trustee,
then the redemption shall be subject to their receipt on or before the Rating
Agency Event Redemption Date and such notice shall be of no effect unless such
moneys are received.

 

A
“Rating Agency Event” means a change in the methodology employed by any nationally recognized
statistical rating organization within the meaning of Section 3(a)(62) of
the Securities Exchange Act of 1934 (a “Rating Agency”) that currently
publishes a rating for the Corporation in assigning equity credit to securities
such as the Debentures, as such methodology is in effect on June 20, 2008
(the “current criteria”), which change results in (a) the length of time
for which such current criteria are scheduled to be in effect being shortened
with respect to the Debentures, or (b) a lower or higher equity credit
being assigned by such Rating Agency to the Debentures as of the date of such
change than the equity credit that would have been assigned to the Debentures
as of the date of such change by such rating agency pursuant to its current
criteria.

 

Option
to Defer Interest Payments.  Pursuant to Section 3.09
of the Indenture, so long as no Event of Default has occurred and is continuing
with respect to the Debentures, the Corporation shall have a right to defer
quarterly interest payments on the Debentures, from time to time, for one or
more periods (“Optional Deferral Periods”) of up to 10 consecutive years per
Optional Deferral Period.  However, a
deferral of interest payments cannot extend beyond the Maturity Date of the
Debentures.  During an Optional Deferral
Period, interest will continue to accrue on the Debentures, compounded
quarterly and deferred interest payments will accrue additional interest at a
rate equal to the interest rate on the Debentures, to the extent permitted by
applicable law.  No interest will be due
and payable on the Debentures until the end of the Optional Deferral Period
except upon a redemption of the Debentures during the Optional Deferral Period.

 

The Corporation may pay at
any time all or any portion of the interest accrued to that point during an
Optional Deferral Period.  At the end of
the Optional Deferral Period or on any redemption date, the Corporation will be
obligated to pay all accrued and unpaid interest.

 

Once all accrued and unpaid
interest on the Debentures has been paid, the Corporation again can defer
interest payments on the Debentures as described above, provided that an Optional
Deferral Period cannot extend beyond the Maturity Date of the Debentures.

 

If the Corporation defers
interest for a period of 10 consecutive years from the commencement of an
Optional Deferral Period, the Corporation will be required to pay all accrued
and unpaid interest at the conclusion of the 10-year period.  If the Corporation fails to pay in full all
accrued and unpaid interest at the conclusion of the 10-year period and such
failure continues for 30 days, an Event of Default that gives rise to acceleration
of principal and interest on the Debentures will occur under the Indenture.

 

A-8

 

During any period in which
the Corporation defers interest payments on the Debentures, the Corporation
will not, and will cause its majority-owned subsidiaries not to, do any of the
following:

 

(a)           declare or pay any dividend or distribution on the
Corporation’s capital stock;

 

(b)           redeem, purchase, acquire or make a liquidation payment
with respect to any of the Corporation’s capital stock;

 

(c)           pay any principal, interest or premium on, or repay,
purchase or redeem any of the Corporation’s debt securities that are equal or
junior in right of payment with the Debentures; or

 

(d)           make any payments with respect to any Corporation
guarantee of debt securities if such guarantee is equal or junior in right of
payment to the Debentures,

 

other than

 

(a)           purchases, redemptions or other acquisitions of the
Corporation’s capital stock in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of employees,
officers, directors, agents, consultants or a stock purchase, dividend
reinvestment or similar plan, or the satisfaction of its obligations pursuant
to any contract or security outstanding on the date that the payment of
interest is deferred requiring it to purchase, redeem or acquire its capital
stock;

 

(b)           any payment, repayment, redemption, purchase, acquisition
or declaration of a dividend as a result of any reclassification of the
Corporation’s capital stock or the exchange or conversion of all or a portion
of one class or series of its capital stock or debt securities for a class or
series of its capital stock;

 

(c)           the purchase of fractional interests in shares of the Corporation’s
capital stock pursuant to the conversion or exchange provisions of its capital
stock or the security being converted or exchanged, or in connection with the
settlement of stock purchase contracts;

 

(d)           dividends or distributions paid or made in the Corporation’s
capital stock (or rights to acquire its capital stock), or repurchases,
redemptions or acquisitions of capital stock in connection with the issuance or
exchange of capital stock (or of securities convertible into or exchangeable
for shares of its capital stock) and distributions in connection with the
settlement of stock purchase contracts;

 

(e)           redemptions, exchanges or repurchases of, or with respect
to, any rights outstanding under a shareholder rights plan or the declaration
or payment thereunder of a dividend or distribution of or with respect to
rights in the future; or

 

(f)            payments under any trust preferred securities,
subordinated debentures or junior subordinated debentures, or any guarantee of
any of the foregoing, in each case that rank equal in right of payment to the
Debentures, so long as the amount of payments made on account of such
securities or guarantees is paid on all such securities and guarantees then
outstanding on a pro 

 

A-9

 

rata
basis in proportion to the full payment to which each series of such securities
and guarantees is then entitled if paid in full.

 

The indebtedness evidenced
by this Debenture, to the extent provided in the Indenture, is subordinated and
subject in right of payment to the prior payment in full of all Senior
Indebtedness of the Corporation, and this Security is issued subject to the
provisions of the Indenture with respect thereto.  Each holder of this Debenture, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints
the Trustee his attorney-in-fact for any and all such purposes.  Each holder hereof, by his acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness of
the Corporation, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

 

Interest payments on this
Debenture will include interest accrued to but excluding the Interest Payment
Dates or the Maturity Date (or any earlier redemption or repayment date), as
the case may be.  Interest payments for
this Debenture will be computed and paid on the basis of a 360-day year of
twelve 30-day months.  The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed will be computed on the basis of the number of days in the
period using 30-day calendar months.

 

In the case where the
Interest Payment Date or the Maturity Date (or any redemption date) does not
fall on a Business Day, payment of interest, premium, if any, or principal
otherwise payable on such date need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the Interest Payment Date or on the Maturity Date (or any redemption date),
and no interest on such payment shall accrue for the period from and after the
Interest Payment Date or the Maturity Date (or any redemption date) to such
next succeeding Business Day.

 

This Debenture and all the
obligations of the Corporation hereunder are direct, unsecured obligations of
the Corporation and rank without preference or priority among themselves and pari passu with all other existing and future unsecured and
junior subordinated indebtedness of the Corporation, subject to certain
statutory exceptions in the event of liquidation upon insolvency.

 

This Debenture, and any
Debenture or Debentures issued upon registration of transfer or exchange
hereof, is issuable only in fully registered form, without coupons, and is
issuable only in denominations of U.S. $25 and any integral multiple thereof.

 

The Trustee has been
appointed registrar for the Debentures, and the Trustee will maintain at its
principal corporate trust office in The City of New York a register for the
registration and transfer of Debentures. 
This Debenture may be transferred at the aforesaid office of the Trustee
by surrendering this Debenture for cancellation, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and duly executed by
the registered holder hereof in person or by the holder’s attorney duly
authorized in writing, and thereupon the Trustee shall issue in the name of the
transferee or transferees, in exchange herefor, a new 

 

A-10

 

Debenture
or Debentures having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein.  All such
exchanges and transfers of Debentures will be free of charge, but the
Corporation or the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge in connection therewith.

 

If an Event of Default (as
defined in the Indenture) with respect to the Debentures shall occur and be
continuing, the principal of all the Debentures may be declared due and payable
in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the modification
of the rights and obligations of the Corporation and the rights of the holders
of the Securities of any series under the Indenture at any time by the
Corporation with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of the Securities at the time Outstanding to be
affected (voting as one class).  The
Indenture also permits the Corporation and the Trustee to enter into
supplemental indentures without the consent of the holders of Securities of any
series for certain purposes specified in the Indenture, including the making of
such other provisions in regard to matters arising under the Indenture which
shall not adversely affect the interest of the holders of such Securities.  The Indenture also contains provisions
permitting the holders of specified percentages in aggregate principal amount
of the Securities of any series at the time Outstanding, on behalf of the
holders of all the Securities of such series, to waive compliance by the
Corporation with certain provisions of the Indenture and certain past Defaults
under the Indenture and their consequences. 
Any such consent or waiver by the holder of this Debenture shall be
conclusive and binding upon such holder and upon all future holders of this
Debenture and of any Debenture issued upon the registration of transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Debenture.

 

The Indenture provides that
no holder of any Security of any series may enforce any remedy with respect to
such series under the Indenture except in the case of refusal or neglect of the
Trustee to act after notice of a continuing Event of Default and after written
request by the holders of not less than 25% in aggregate principal amount of
the Outstanding Securities of such series and the offer to the Trustee of
reasonable indemnity; provided, however, that such provision shall not prevent
the holder hereof from enforcing payment of the principal of or interest on
this Debenture.

 

No reference herein to the
Indenture and no provision of this Debenture or of the Indenture shall alter or
impair the obligation of the Corporation, which is absolute and unconditional,
to pay the principal of and interest on this Debenture at the times, place and
rate, and in the coin or currency, herein prescribed.

 

No recourse shall be had for
the payment of the principal of or the interest on this Debenture, or for any
claim based hereon, or otherwise in respect hereof, or based on or in respect
of the Indenture or any indenture supplemental thereto, against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Corporation or any predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by 

 

A-11

 

the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.  This
Debenture shall be governed by and construed in accordance with the laws of the
State of New York.

 

All terms used in this
Debenture which are defined in the Indenture and not otherwise defined herein
shall have the meanings assigned to them in the Indenture.

 

A-12

 

Assignment Form

 

To assign this Note, fill in the form below:

 

	
  Assignee’s
  Social Security or Tax I.D. Number:

  	
   

  
	
   

  
	
  FOR
  VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

  
	
   

  
	
   

  
	
  (Print or Type Assignee’s Name, Address and Zip Code)

  
	
   

  
	
  the
  within Note of the Company and hereby does irrevocably constitute and appoint

  
	
   

  
	
   

  
	
   

  
	
  Attorney
  to transfer the said Note on the books of the Company, with full power of
  substitution in the premises.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Signature
  of Assignor

  
	
  (Sign
  exactly as name appears on the face of the Note)

  
	
   

  
	
  Dated:

  	
   

  	
   

  
					

 

A-13

 

SIGNATURE GUARANTEE

 

Signatures must be guaranteed
by an “eligible guarantor institution” meeting the requirements of the
Registrar, which requirements include membership or participation in the
Security Transfer Agent Medallion Program (“STAMP”) or such other “signature
guarantee program” as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.

 

A-14Exhibit 4b

 

Replacement Capital Covenant, dated June 27,
2008 (this “Replacement Capital Covenant”), by
Constellation Energy Group, Inc., a Maryland 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 $450,000,000
aggregate principal amount of its Series A Junior Subordinated Debentures
(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 the Indenture, dated as
of July 24, 2006, between the Corporation and Deutsche Bank Trust Company
Americas, as trustee, as supplemented by the Supplemental Indenture (the “Indenture”).

 

B.                                     This
Replacement Capital Covenant is the “Replacement Capital Covenant” referred to
in the Prospectus Supplement, dated June 20, 2008, relating to the
Subordinated Debentures which supplements the Corporation’s Prospectus, dated July 24,
2006.

 

C.                                     The Corporation, in entering into and disclosing the content
of this Replacement Capital Covenant in the manner provided below, is doing so
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,
Defeasance or Purchase of Subordinated Debentures. 
The Corporation hereby promises and covenants 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, as contemplated by Article XIII
of the Indenture (such satisfaction, discharge or defeasance herein referred to
as “defeasance”) and the Corporation shall
cause its 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 raised through the issuance of Replacement Capital
Securities:

 

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

 

(ii) Applicable Percentage of the aggregate amount of
net cash proceeds received by the Corporation and its 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 Corporation and its 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.

 

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 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;

 

2

 

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

 

(v)                                 in connection with such identification of
a new series of the Covered Debt, notice shall be given 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, if a series of Eligible Senior Debt of the
Corporation is the Covered Debt, 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.

 

(d)                                 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, (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 Corporation 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 Corporation is a reporting company under the Securities Exchange
Act, the Corporation will include in each Form 10-K filed with the
Commission 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, 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
Corporation shall report such change in a Form 8-K, which must include or
incorporate by reference this Replacement Capital Covenant, and also in the
next Form 10-Q or Form 10-K, as applicable, of the Corporation; (iv) upon
succession of any new entity as the Corporation hereunder as a result of a
merger, consolidation, statutory share exchange, sale, lease or transfer of all
or substantially all of the assets or other business combination of the
Corporation 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 Corporation 

 

3

 

shall report such change in a Form 8-K, which
must include or incorporate by reference this Replacement Capital Covenant, and
also in the next Form 10-Q or Form 10-K, as applicable, of the
Corporation; (v) if, and only if, the Corporation ceases to be a reporting
company under the Securities Exchange Act, the Corporation will (A) post
on its website (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 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 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 pursuant to this Replacement Capital Covenant
shall remain in full force and effect until the earliest date (the “Termination Date”) to occur of (i) (x) June 15,
2033 or (y) if the maturity date of the Subordinated Debentures shall be
extended in accordance with the Supplemental Indenture, the date which is 30
years prior to the maturity date, as extended, 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 hereunder, (iii) the date on which the Corporation has no
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 Indenture.  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 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 with 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 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 becomes effective 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
earnings per share as calculated in accordance with generally accepted
accounting principles in the United 

 

4

 

States (“EPS”), or the
Corporation otherwise has 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 EPS, (ii) the effect of
such amendment or supplement is solely to impose additional restrictions on the
ability of the Corporation to redeem, purchase or defease Subordinated
Debentures or any majority-owned Subsidiary of the Corporation to purchase
Subordinated Debentures, or 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 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 long-term indebtedness for money borrowed 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
long-term indebtedness for money borrowed 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 Covered Debt if, following such
amendment or supplement, this Replacement Capital Covenant would satisfy the
definition of Explicit Replacement Covenant.

 

(c)                                  For purposes of Sections 4(a) and
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 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 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 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).  The
Corporation agrees 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 

 

5

 

Debt directly, and the holders of such trust
securities shall be deemed Holders of Covered Debt for purposes of this
Replacement Capital Covenant for so long as the indebtedness held by such trust
remains 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 Indenture.

 

(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) or (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), and in each case to the
Corporation at the address set forth below, or at such other address as may
thereafter be listed as the principal executive offices of the Corporation in
the then most recently filed Form 10-K or Form 10-Q of the
Corporation or as may thereafter be posted on the Corporation’s website as the
address for notices under this Replacement Capital Covenant:

 

Constellation Energy Group, Inc.

Attention:  Treasurer

750 East Pratt Street

Baltimore, Maryland 21202

 

6

 

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

 

	
   

  	
  CONSTELLATION
  ENERGY GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
           /s/
  John R. Collins

  
	
   

  	
   

  	
  Name: 

  	
  John R. Collins

  
	
   

  	
   

  	
  Title: 

  	
  Executive Vice President and 

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  

 

7

 

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 or skip 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 Corporation and its 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
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, 

 

I-1

 

either
(i) during the first five years of any deferral period or (ii) with
respect to deferred Distributions attributable to the first five years of any
deferral period (provided that such limitation shall not apply after the ninth
anniversary of the commencement of any deferral period), to a number of shares
of Common Stock and Rights to acquire Common Stock which does not, in the
aggregate, exceed 2% of the outstanding number of shares of such issuer’s
Common Stock, in each case as of the date of the Corporation’s most recent
publicly available consolidated financial statements at the time of such issuance
(the “Common Cap”);

 

(e)           limit the
right of such issuer 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 the
Corporation, at its option, to provide that if the Corporation is involved in a
merger, consolidation, amalgamation, statutory share exchange or conveyance,
transfer or lease of assets substantially as an entirety to any other person or
a similar transaction (a “business
combination”) where immediately after the consummation of the
business combination more than 50% of the voting securities of the surviving
entity of the business combination, or the entity to whom all or substantially
all of the Corporation’s assets are conveyed, transferred or leased, is owned
by the equityholders of the other party to the business combination, then
clauses (a), (b) and (c) above will not apply to any deferral period
that is terminated on the next 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 for
purposes of satisfying its obligations to pay deferred Distributions;

 

I-2

 

(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 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 that if the APM Qualifying Securities for any
Alternative Payment Mechanism, any Debt Exchangeable for Preferred Equity or
any Mandatory Trigger Provision include both Common Stock and Qualifying
Warrants, such Alternative Payment Mechanism, Debt Exchangeable for Preferred
Equity or Mandatory Trigger Provision may permit, but need not require, the
Corporation to issue Qualifying Warrants.

 

“Applicable Percentage”
means:

 

(i)            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;

 

(ii)           (a) 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 (b) with respect to Qualifying Capital Securities
described in clause (b) of the definition of that term, 100%; and

 

I-3

 

(iii)          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 (a) any deferral period, in the case of Qualifying Capital
Securities that have an Alternative Payment Mechanism or (b) 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:

 

(i)            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

 

(ii)           in the
case of any other Qualifying Capital Securities, an amount not in excess of the
sum of (x) 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 (y) an
amount equal to the excess, if any, of the Preferred Cap over the aggregate
amount of net proceeds from the sale of Qualifying 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 remaining claim exceeds
the amount set forth in subclause (x), the amount they receive in respect of
such excess shall not exceed the amount they would have received had the claim
for such excess ranked pari passu with the interests of the holders, if any, of
Qualifying 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 Corporation or any of its 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.

 

I-4

 

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

 

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

 

(i) gives the
holders (a) a beneficial interest in a fixed income security of the
Corporation (including a debt security, a trust preferred security of a
subsidiary trust or preferred stock) and (b) a beneficial interest in a
stock purchase contract that obligates the holder to acquire shares of Common
Stock to be within a range established at the time of issuance of the Common
Equity Units subject to customary anti-dilution adjustments;

 

(ii) provides that
the holders directly or indirectly grant the Corporation a security interest in
such fixed income securities and their proceeds (including any substitute
collateral permitted under the transaction documents) to secure the holders’
direct or indirect obligation to purchase Common Stock pursuant to such stock
purchase contracts;

 

(iii) includes a
remarketing feature pursuant to which the fixed income security is required to
be remarketed to new investors commencing not later than the first Distribution
Date that is at least three years after the issuance of the security; and

 

(iv) provides for
the proceeds raised in the remarketing to be used to purchase Common Stock
pursuant to the stock purchase contracts, and, if there has not been a
successful remarketing by the first Distribution Date that is one year after
the earliest scheduled settlement date of the stock purchase contracts,
provides that the stock purchase contract will be settled by the Corporation
exercising its remedies as a secured party with respect to the fixed income
securities or other collateral directly or indirectly pledged by the holders.

 

“Common Stock”
means common stock of the Corporation (including common stock issued pursuant
to a stock purchase plan or employee benefit plan).

 

“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 Covered Debt, provided that a
Person who has sold all its right, title and interest in 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.

 

I-5

 

“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 (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 that ranks pari passu with or
junior to all other preferred stock of the Corporation (in this definition, “preferred stock”);

 

(b)           provides
that the holders directly or indirectly grant to the Corporation 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
pursuant to such stock purchase contracts;

 

(c)           includes a
remarketing feature pursuant to which the subordinated debt of the issuer is
remarketed to new investors commencing not later than the first Distribution
Date that is at least five years after the date of issuance of such securities
or earlier in the event of an early settlement event based on: (i) 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 under the stock purchase
contracts and, if there has not been a successful remarketing by the first
Distribution Date that is six years after the date of issuance of such
securities, provides that the stock purchase contracts will be settled by the
Corporation exercising its 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 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,
provides the holders of such securities with a beneficial interest in such
preferred stock of the Corporation.

 

“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.

 

I-6

 

“Distribution Period”
means, as to any security 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. 
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.

 

I-7

 

“Explicit Replacement Covenant”
means, as to any security or combination of securities, that the issuer has
made a covenant substantially similar to this Replacement Capital Covenant or a
replacement capital covenant, as identified by the Board of Directors acting in
good faith and in their reasonable discretion and reasonably construing the
definitions and other terms of this Replacement Capital Covenant to the effect
that the issuer will redeem, defease or purchase, and any Subsidiaries of the
issuer will purchase, such securities only if and to the extent that the
applicable percentage of the net proceeds raised through 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, raised within
180 days prior to the applicable redemption, defeasance or purchase date,
and 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 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.

 

“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” has
the meaning specified in Recital A.

 

“Initial Covered Debt”
means the Corporation’s 7.60% Notes due April 1, 2032 (CUSIP
No. 210371 AF7).

 

“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 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 Subsidiaries
will purchase, such securities only with the applicable percentage of the net
proceeds raised through 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, issued within 180 days prior to the
applicable redemption, purchase or defeasance date.

 

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

 

I-8

 

“Mandatorily Convertible Preferred Stock” means cumulative preferred stock or
Non-Cumulative Preferred Stock of the Corporation 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 preferred stock or the Non-Cumulative Preferred
Stock, subject to customary anti-dilution 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 only in connection with the
issuance and sale of APM Qualifying Securities, within two years of a failure to satisfy one or more financial tests
set forth in the terms of such securities or related transaction agreements
(for the avoidance of doubt, payment of such Distributions with cash from any
source other than APM Qualifying Securities is not permitted within such
two-year period immediately following the failure of the issuer to satisfy such
financial test(s)), in an amount such that the net proceeds of such sale at
least equal 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, (a) 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; (b) if, due to a Market Disruption
Event or otherwise, the issuer is able to raise and apply some, but not all, of
the eligible proceeds necessary to pay all deferred Distributions on any
Distribution Date, the issuer will apply any available eligible proceeds to pay
accrued and unpaid Distributions on the applicable Distribution Date in
chronological order subject to the Common Cap, the Preferred Cap and the Share
Cap (if any), as applicable; and (c) if the issuer has outstanding more
than one class or series of securities under which it is obligated to sell a 

 

I-9

 

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 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 Subsidiary 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 a Subsidiary as specified
in clause (i)) would be required to obtain the consent or approval of its
shareholders (or the shareholders of a Subsidiary as specified in 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 a Subsidiary as specified in clause (i))
fails to obtain that consent or approval notwithstanding the commercially
reasonable efforts of the issuer (or such Subsidiary) to obtain that consent or
approval or a regulatory authority instructs the issuer (or a Subsidiary as
specified in 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 or Qualifying Capital
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 or Qualifying Capital 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 

 

I-10

 

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 or Qualifying Capital 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 a Subsidiary as specified in clause (i)), 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 a Subsidiary
as specified in clause (i)), would have a material adverse effect on the
business of the issuer (or a Subsidiary as specified in 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 Subsidiary 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
paragraph (vii) shall not exceed an aggregate of 180 days in any 360-day
period; or

 

(viii) the issuer (or a Subsidiary as specified
in clause (i)) 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 or Qualifying Capital Securities would not be in
compliance with a rule or regulation of the Commission and the issuer (or
a Subsidiary as specified in 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 paragraph (viii) shall exceed 90
consecutive days and multiple suspension periods contemplated by this paragraph
(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 paragraphs outlined above, as
determined by the issuer thereof at the time of issuance of such securities,
and in the case of clauses (i), (ii), (iii) and (iv), as applicable to a
circumstance where the issuer would otherwise endeavor to issue preferred
stock, shall be limited to circumstances affecting markets where the issuer’s
preferred stock trades or where a listing for its trading is being sought.

 

“Market Value” means, on any date, the closing sale price per share
of Common Stock (or if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on that date as reported in composite
transactions by The New York Stock Exchange or, if the Common Stock is not then

 

I-11

 

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 for this
purpose.

 

“Measurement Period” with respect to any redemption, purchase or
defeasance of Subordinated Debentures, means 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 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.

 

“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 agreements in favor of the holders, 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
having Distributions which may be skipped by the issuer thereof for any number
of Distribution Periods without any remedy arising under the terms of such
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 Permitted Remedies.

 

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

 

“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.

 

“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) and (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 

 

I-12

 

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.

 

“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.

 

“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 or
its Subsidiaries that (A) have no maturity or a maturity of at least
51 years and (B) either (x) are subject to an Explicit
Replacement Covenant and are Non-Cumulative or (y) have a Mandatory
Trigger Provision and an Optional Deferral Provision and are subject to
Intent-Based Replacement Disclosure;

 

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

 

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

 

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

 

(v)                                                securities issued by the Corporation or
its Subsidiaries that (A) have no maturity or a maturity of at least
51 years, 

 

I-13

 

(B) have an Optional Deferral Provision and (C) have a
Mandatory Trigger Provision;

 

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

 

(vii)                                                  securities issued by the Corporation or
its Subsidiaries that (A) either (x) have no maturity or a maturity
of at least 31 years and are subject to Intent-Based Replacement Disclosure or (y) have
no maturity or a maturity of at least 21 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 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 51 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 or
its Subsidiaries that (A) have no maturity or a maturity of at least
51 years, (B) are subject to Intent-Based Replacement Disclosure and (C) have
an Optional Deferral Provision;

 

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

 

(iv)                                                     securities issued by the Corporation or
its Subsidiaries that (A) either (x) have no maturity or a maturity
of at least 31 years and are subject to Intent-Based Replacement Disclosure or (y) have
no maturity or a maturity of at least 21 years and are subject to an Explicit
Replacement Covenant and (B) are Non-Cumulative;

 

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

 

I-14

 

(vi)                                                     any other preferred stock issued by the
Corporation 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
(x) has no maturity or a maturity of at least 51 years and is subject
to Intent-Based Replacement Disclosure or (y) has no maturity or a maturity
of at least 31 years and is subject to an Explicit Replacement Covenant.

 

“Qualifying Preferred Stock” means Non-Cumulative Preferred Stock of
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 (x) is subject to an Explicit
Replacement Capital Covenant or (y) is subject to Intent-Based Replacement
Disclosure and has a provision that prohibits the Corporation 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 greater than the current
Market Value of the issuer’s Common Stock as of their date of issuance, that do
not entitle the issuer to redeem for cash and the holders of such warrants are
not entitled to require the issuer to repurchase for cash in any circumstance.

 

“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 Corporation or a majority-owned
Subsidiary of the Corporation elects to purchase, such Covered Debt either in
whole or in part with the consequence that after giving effect to such
redemption, 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 of the Corporation, 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 securities that meet one or more
of the following criteria in the determination of the Board of Directors
reasonably construing the definitions and other terms of this Replacement
Capital Covenant:

 

(i)                                     Common Stock,

 

(ii)                                  Rights to acquire Common Stock;

 

(iii)                               Debt Exchangeable for Equity;

 

(iv)                              Mandatorily Convertible Preferred Stock;
and

 

(v)                                 Qualifying Capital Securities.

 

I-15

 

“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 the date that is 50 years prior to the maturity
date, as it may be extended in accordance with the Supplemental Indenture, of
the Subordinated Debentures, subject to the following provisos: (i) that
the Stepdown Date for any Subordinated Debenture(s) for which a notice of
redemption has been delivered shall be the date that is 50 years prior to the
maturity date of the Subordinated Debenture(s) as of the date such notice
of redemption was delivered and (ii) that if a redemption of such
Subordinated Debenture(s) is not effectuated by the redemption date
contained in such notice, provisio (i) shall have no effect.

 

“Subordinated Debentures” 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.

 

“Supplemental Indenture” means the
First Supplemental Indenture, dated June 27, 2008, with respect to the
Indenture.

 

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

 

I-16

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