UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 8-K





CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934




Date of earliest event reported:   
June 12, 2007


Commission
File
Number

Exact name of registrant as specified in its
charter, address of principal executive offices and
registrant's telephone number

IRS Employer
Identification
Number


1-8841


FPL GROUP, INC.
700 Universe Boulevard
Juno Beach, Florida 33408
(561) 694-4000


59-2449419



State or other jurisdiction of incorporation or organization:  Florida



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

SECTION 8 - OTHER EVENTS

 

Item 8.01  Other Events

 

On June 12, 2007, FPL Group Capital Inc (FPL Group Capital), a wholly-owned subsidiary of FPL Group, Inc. (FPL Group), sold $400 million principal amount of its Series C Junior Subordinated Debentures due 2067.  The debentures will initially bear interest at 6.65% per year, payable semi-annually, and, beginning June 15, 2017, will bear interest at the three-month LIBOR rate plus 212.5 basis points, reset and payable quarterly.  The debentures are fully and unconditionally guaranteed on a subordinated basis by FPL Group.  The debentures were sold pursuant to a Prospectus Supplement dated June 6, 2007 to a Prospectus dated May 3, 2007 and were sold pursuant to Registration Statement Nos. 333-137120, 333-137120-01, 333-137120-02, 333-137120-03, 333-137120-04, 333-137120-05, 333-137120-06, 333-137120-07 and 333-137120-08, as amended.  This Current Report on Form 8-K is being filed to report as exhibits certain documents in connection with this offering.

 
 

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS


Item 9.01  Financial Statements and Exhibits

(d)

Exhibits

 


The following exhibits are being filed pursuant to Item 9.01 herein.

Exhibit
Number


Description

             


4(a)


Officer's Certificate of FPL Group Capital Inc and FPL Group, Inc., dated June 12, 2007, creating the Series C Junior Subordinated Debentures due 2067


4(b)


Replacement Capital Covenant, dated June 12, 2007 by FPL Group Capital Inc and FPL Group, Inc.


5(a)


Opinion and Consent, dated June 12, 2007, of Squire, Sanders & Dempsey L.L.P., counsel to FPL Group, Inc. and FPL Group Capital Inc


5(b) and 8


Opinion and Consent, dated June 12, 2007, of Thelen Reid Brown Raysman & Steiner LLP, counsel to FPL Group, Inc. and FPL Group Capital Inc

 





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


FPL GROUP, INC.
(Registrant)


Date:  June 12, 2007

 

K. MICHAEL DAVIS

K. Michael Davis

Controller and Chief Accounting Officer of FPL Group, Inc.
(Principal Accounting Officer of the Registrant)


Exhibit 4(a)

FPL GROUP CAPITAL INC
FPL GROUP, INC.

OFFICER'S CERTIFICATE

Creating the Series C Junior Subordinated Debentures due 2067

Robert Steven Schauer, an Assistant Treasurer of FPL Group Capital Inc (the "Company"), and Robert Steven Schauer, an Assistant Treasurer of FPL Group, Inc. (the "Guarantor"), pursuant to the authority granted in the accompanying Board Resolutions (all capitalized terms used herein which are not defined herein or in Exhibit A hereto, but are defined in the Indenture referred to below, shall have the meanings specified in the Indenture), and Sections 201 and 301 of the Indenture, do hereby certify to The Bank of New York (the "Trustee"), as Trustee under the Indenture of the Company (For Unsecured Subordinated Debt Securities) dated as of September 1, 2006 (the "Indenture") that:

1.    The securities to be issued under the Indenture shall be designated "Series C Junior Subordinated Debentures due 2067" (the "Debentures of the Third Series") and shall be issued in substantially the form set forth in Exhibit A hereto;

2.    The Debentures of the Third Series shall mature and the principal shall be due and payable together with all accrued and unpaid interest thereon on June 15, 2067 (the "Stated Maturity");

3.    The Debentures of the Third Series will bear interest at (i) the rate of 6.65% per annum (the "Fixed Coupon Rate") until June 15, 2017 (the "Fixed Rate Period"), and (ii) the Three-Month LIBOR Rate (as defined below) plus 2.125% per annum, reset quarterly on the LIBOR Rate Reset Dates (as defined below) (the "Floating Coupon Rate" and, together with the Fixed Coupon Rate, the "Coupon Rate"), from June 15, 2017 up to, but not including, the Stated Maturity (the "Floating Rate Period"), and will bear interest on any overdue principal at the then prevailing Coupon Rate and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the then prevailing Coupon Rate ("Additional Interest"), compounded semi-annually for the Fixed Rate Period and quarterly for the Floating Rate Period, payable (subject to the provisions contained in paragraph 11 below) semi-annually in arrears on the 15th day of June and December of each year during the Fixed Rate Period and quarterly in arrears on the 15th day of March, June, September and December of each year during the Floating Rate Period (each, an "Interest Payment Date"), commencing on December 15, 2007 for the Fixed Rate Period and September 15, 2017 for the Floating Rate Period to the Persons in whose names the Debentures of the Third Series are registered, subject to certain exceptions, at the close of business on the Regular Record Date next preceding such Interest Payment Date;

During the Fixed Rate Period, the amount of interest payable for any semi-annual period will be computed on the basis of a 360-day year of twelve 30-day months (and for any period shorter than a full semi-annual period, on the basis of the actual number of days elapsed during such period using 30-day calendar months), and during the Floating Rate Period, the amount of interest payable for any quarterly period will be computed on the basis of the actual number of days elapsed in the relevant period divided by 360. During the Fixed Rate Period, if an Interest Payment Date or Redemption Date of the Debentures of the Third Series falls on a day that is not a Business Day, the payment of interest and principal will be made on the next succeeding Business Day, and no interest on such payment will accrue for the period from and after the Interest Payment Date or the Redemption Date, as applicable. During the Floating Rate Period, if any Interest Payment Date, other than a Redemption Date or the Stated Maturity of the Debentures of the Third Series, falls on a day that is not a Business Day, the Interest Payment Date will be postponed to the next day that is a Business Day, except that if that Business Day is in the next succeeding calendar month, the Interest Payment Date will be the immediately preceding Business Day. During the Floating Rate Period, if a Redemption Date or the Stated Maturity of the Debentures of the Third Series falls on a day that is not a Business Day, the payment of interest and principal will be made on the next succeeding Business Day, and no interest on such payment will accrue for the period from and after a Redemption Date or the Stated Maturity. During the Floating Rate Period, if any LIBOR Rate Reset Date falls on a day that is not a LIBOR Business Day, the LIBOR Rate Reset Date will be postponed to the next day that is a LIBOR Business Day, except that if that LIBOR Business Day is in the next succeeding calendar month, the LIBOR Rate Reset Date will be the immediately preceding LIBOR Business Day. During the Floating Rate Period, the interest rate in effect on any LIBOR Rate Reset Date will be the applicable rate as reset on that date and the interest rate applicable to any other day will be the interest rate as reset on the immediately preceding LIBOR Rate Reset Date;

"Calculation Agent" means a banking institution or trust company to be appointed by the Company to act as calculation agent.

"LIBOR Business Day" means any Business Day on which dealings in deposits in U.S. Dollars are transacted in the London Inter-Bank Market.

"LIBOR Interest Determination Date" means the second LIBOR Business Day preceding each LIBOR Rate Reset Date.

"LIBOR Rate Reset Date" means, subject to the second paragraph of this paragraph 3, the 15th day of March, June, September and December of each year commencing on June 15, 2017.

"Reuters Page LIBOR01" means the display designated as "LIBOR01" on Reuters 3000 Xtra (or such other page as may replace "LIBOR01" on such service) or such other service displaying the London Inter-Bank offered rates of major banks, as may replace Reuters 3000 Xtra.

"Three-Month LIBOR Rate" means the rate determined in accordance with the following provisions:

(1)    On the related LIBOR Interest Determination Date, the Calculation Agent or its affiliate will determine the Three-Month LIBOR Rate which shall be the rate for deposits in U.S. Dollars having a three-month maturity which appears on the Reuters Page LIBOR01 as of 11:00 a.m., London time, on the LIBOR Interest Determination Date.

(2)    If no rate appears on Reuters Page LIBOR01 on the LIBOR Interest Determination Date, the Calculation Agent or its affiliate will request the principal London offices of four major reference banks in the London Inter-Bank Market to provide it with their offered quotations for deposits in U.S. Dollars for the period of three months, commencing on the applicable LIBOR Rate Reset Date, to prime banks in the London Inter-Bank Market at approximately 11:00 a.m., London time, on that LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in U.S. Dollars in that market at that time. If at least two quotations are provided, then the Three-Month LIBOR Rate will be the average (rounded, if necessary, to the nearest one hundredth (0.01) of a percent) of those quotations. If fewer than two quotations are provided, then the Three-Month LIBOR Rate will be the average (rounded, if necessary, to the nearest one hundredth (0.01) of a percent) of the rates quoted at approximately 11:00 a.m., New York City time, on the LIBOR Interest Determination Date by three major banks in New York City selected by the Calculation Agent or its affiliate for loans in U.S. Dollars to leading European banks, having a three-month maturity and in a principal amount that is representative for a single transaction in U.S. Dollars in that market at that time. If the banks selected by the Calculation Agent or its affiliate are not providing quotations in the manner described by this paragraph, the rate for the quarterly interest period following the LIBOR Interest Determination Date will be the rate in effect on that LIBOR Interest Determination Date.

4.    The Debentures of the Third Series will be issued in denominations of $1,000 and integral multiples thereof;

5.    Registration and registration of transfers and exchanges in respect of the Debentures of the Third Series may be effected at the office or agency of the Company in The City of New York, New York. Notices and demands to or upon the Company in respect of the Debentures of the Third Series may be served at the office or agency of the Company in The City of New York, New York. The Corporate Trust Office of the Trustee will initially be the agency of the Company for such payment, registration and registration of transfers and exchanges and service of notices and demands and the Company hereby appoints the Trustee as its agent for all such purposes; provided, however, that the Company reserves the right to change, by one or more Officer's Certificates, any such office or agency and such agent. The Trustee will initially be the Security Registrar and the Paying Agent for the Debentures of the Third Series;

6.    The Regular Record Date for the interest payable on any given Interest Payment Date with respect to the Debentures of the Third Series shall be the close of business on the 15th calendar day next preceding such Interest Payment Date, provided that if the Debentures of the Third Series are held by a securities depository in book-entry form, the Regular Record Date will be the close of business on the Business Day immediately preceding such Interest Payment Date;

7.    The Debentures of the Third Series will be redeemable at the option of the Company before June 15, 2017, 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 Debentures of the Third Series set forth as Exhibit A hereto;

On or after June 15, 2017, the Debentures of the Third Series will be redeemable at the option of the Company, 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, including Additional Interest, if any, to the Redemption Date;

8.    If before June 15, 2017 a Tax Event (as defined in the form of the Debentures of the Third Series set forth as Exhibit A hereto) shall occur and be continuing, the Company shall have the right to redeem the Debentures of the Third Series, 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 Tax Event Redemption Price described in the form of the Debentures of the Third Series set forth as Exhibit A hereto;

9.    If before June 15, 2017 a Rating Agency Event (as defined in the form of the Debentures of the Third Series set forth as Exhibit A hereto) shall occur and be continuing, the Company shall have the right to redeem the Debentures of the Third Series, 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 Rating Agency Event Redemption Price described in the form of the Debentures of the Third Series set forth as Exhibit A hereto;

10.    So long as any Debentures of the Third Series are Outstanding, the failure of the Company to pay interest, including Additional Interest, if any, on any Debentures of the Third Series within 30 days after the same becomes due and payable (whether or not payment is prohibited by the subordination provisions of Article Fourteen and Article Fifteen of the Indenture) shall constitute an Event of Default; provided, however, that a valid deferral of the interest payments by the Company as contemplated in Section 312 of the Indenture and paragraph 11 of this Certificate shall not constitute a failure to pay interest for this purpose;

11.    Pursuant to Section 312 of the Indenture, so long as no Event of Default under the Indenture has occurred and is continuing with respect to the Securities of any series, the Company shall have the right, at any time and from time to time during the term of the Debentures of the Third Series, 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 Stated Maturity or end on a day other than an Interest Payment Date. During the Optional Deferral Period, interest (calculated for each Interest Period in the manner provided for in Exhibit A hereto, as if the interest payment had not been so deferred) will be compounded semi-annually during the Fixed Rate Period and quarterly during the Floating Rate Period. Any deferred interest on the Debentures of the Third Series will accrue Additional Interest at a rate equal to the Coupon Rate then applicable to the Debentures of the Third Series, to the extent permitted by applicable law. At the end of the Optional Deferral Period, which shall be an Interest Payment Date, the Company shall pay all interest accrued and unpaid thereon, including Additional Interest accrued on the deferred interest, to the Person in whose name the Debentures of the Third Series are registered at the close of business on the Regular Record Date for the Interest Payment Date on which such Optional Deferral Period ended; provided that any such accrued and unpaid interest payable at the Stated Maturity or any Redemption Date will be paid to the Person to whom principal is payable. With respect to the Debentures of Third Series, the term "Interest Period" shall mean each period from, and including, an Interest Payment Date to, but excluding, the next succeeding Interest Payment Date, except that the first Interest Period shall commence on the date of original issuance. However, during any such Optional Deferral Period, neither the Guarantor nor the Company will, and each will cause their majority-owned subsidiaries not to:

(A)    declare or pay any dividends or distributions on the Guarantor's or the Company's capital stock,

(B)    redeem, purchase, acquire or make a liquidation payment with respect to any of the Guarantor's or the Company's capital stock,

(C)    pay any principal, interest or premium on, or repay, repurchase or redeem any of the Guarantor's or the Company's debt securities that are equal or junior in right of payment to the Debentures of the Third Series or the Guarantee (as the case may be), or

(D)    make any payments with respect to any Guarantor or Company guarantee of debt securities if such guarantee is equal or junior in right of payment to the Debentures of the Third Series or the Guarantee (as the case may be)

Subject to the reservation of right to amend clause (f) below, as described in paragraph 17 hereof, the foregoing provisions shall not prevent or restrict the Guarantor or the Company from making:

(a)    purchases, redemptions or other acquisitions of its capital stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or agents or a stock purchase or dividend reinvestment 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 dividend described in clauses (A) and (B) above as a result of a reclassification of its capital stock, or the exchange or conversion of all or a portion of one class or series of its capital stock for another class or series of its capital stock;

(c)    the purchase of fractional interests in shares of its 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 its 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;

(f)    payments under any preferred trust securities guarantee or guarantee of subordinated debentures executed and delivered by the Guarantor concurrently with the issuance by a trust of any preferred trust securities, so long as the amount of payments made on any preferred trust securities or subordinated debentures (as the case may be) is paid on all preferred trust securities or subordinated debentures (as the case may be) then outstanding on a pro rata basis in proportion to the full distributions to which each series of preferred trust securities or subordinated debentures (as the case may be) is then entitled;

(g)    payments under any guarantee of junior subordinated debentures, which guarantee is executed and delivered by the Guarantor (including a Guarantee under the Indenture), so long as the amount of payments made on any junior subordinated debentures is paid on all junior subordinated debentures then outstanding on a pro rata basis in proportion to the full payment to which each series of junior subordinated debentures is then entitled;

(h)    dividends or distributions by the Company on its capital stock to the extent owned by the Guarantor; or

(i)    redemptions, purchases, acquisitions or liquidation payments by the Company with respect to its capital stock to the extent owned by the Guarantor.

Prior to the termination of any such Optional Deferral Period, the Company may further defer the payment of interest, provided that such Optional Deferral Period together with all such previous and further deferrals of interest payments shall not exceed 10 consecutive years at any one time or extend beyond the Stated Maturity of the Debentures of the Third Series. Upon the termination of any such Optional Deferral Period and the payment of all amounts then due, including interest on deferred interest payments, the Company may elect to begin a new Optional Deferral Period, subject to the above requirements. No interest shall be due and payable during an Optional Deferral Period, except at the end thereof. The Company will give the Trustee notice of its election of an Optional Deferral Period at least 10 days and not more than 60 days before the applicable Interest Payment Date. The Trustee will promptly forward notice of such election to each Holder of record of the Debentures of the Third Series;

12.    The Debentures of the Third Series will be initially issued in global form registered in the name of Cede & Co. (as nominee for The Depository Trust Company). The Debentures of the Third Series in global form shall bear the depository legend in substantially the form set forth in Exhibit A hereto. The Debentures of the Third Series in global form will contain restrictions on transfer, substantially as described in the form set forth in Exhibit A hereto;

13.    No service charge shall be made for the registration of transfer or exchange of the Debentures of the Third Series; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer;

14.    If the Company shall make any deposit of money and/or Eligible Obligations with respect to any Debentures of the Third Series, or any portion of the principal amount thereof, as contemplated by Section 701 of the Indenture, the Company shall not deliver an Officer's Certificate described in clause (z) in the first paragraph of said Section 701 unless the Company shall also deliver to the Trustee, together with such Officer's Certificate, either:

(A)    an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of the Debentures of the Third Series, shall assume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of money, if any, or additional Eligible Obligations (meeting the requirements of Section 701), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on such Debentures of the Third Series or portions thereof, all in accordance with and subject to the provisions of said Section 701; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent public accountant of nationally recognized standing, selected by the Trustee, showing the calculation thereof; or

(B)    an Opinion of Counsel to the effect that, as a result of (i) the receipt by the Company from, or the publication by, the Internal Revenue Service of a ruling or (ii) a change in law occurring after the date of this certificate, the Holders of such Debentures of the Third Series, or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company's indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected;

15.    The Company reserves the right to require legends on Debentures of the Third Series as it may determine are necessary to ensure compliance with the securities laws of the United States and the states therein and any other applicable laws;

16.    The Company reserves the right, without any consent, vote or other action by Holders of the Debentures of the Third Series, or of any other series of Securities issued after October 1, 2006, to amend the Indenture as follows:

To amend clause (6) of the second paragraph of Section 608 of the Indenture to read as follows:

"(6) payments under any preferred trust securities, subordinated debentures or junior subordinated debentures, or any guarantee thereof, executed and delivered by the Guarantor, the Company or any of their majority-owned subsidiaries, in each case that rank equal in right of payment to the series of Securities with respect to which the Company has elected to defer the payment of interest, or the related guarantee (as the case may be), 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 rata basis in proportion to the full payment to which each series of such securities and guarantees is then entitled if paid in full;"

17.    The Company reserves the right, without any consent, vote or other action by Holders of the Debentures of the Third Series, or of any other series of Securities issued after October 1, 2006, to amend this Officer's Certificate as follows:

To amend clause (f) of paragraph 11 of this Officer's Certificate and clause (f) of the corresponding paragraph in the form of the Debentures of the Third Series set forth in Exhibit A hereto to read as follows:

"(f) payments under any preferred trust securities, subordinated debentures or junior subordinated debentures, or any guarantee thereof, executed and delivered by the Guarantor, the Company or any of their majority-owned subsidiaries, in each case that rank equal in right of payment to the Debentures of the Third Series or the related guarantee (as the case may be), 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 rata basis in proportion to the full payment to which each series of such securities and guarantees is then entitled if paid in full;"

18.    The Debentures of the Third Series shall have such other terms and provisions as are provided in the form set forth as Exhibit A hereto;

19.    The undersigned has read all of the covenants and conditions contained in the Indenture relating to the issuance of the Debentures of the Third Series and the definitions in the Indenture relating thereto and in respect of which this certificate is made;

20.    The statements contained in this certificate are based upon the familiarity of the undersigned with the Indenture, the documents accompanying this certificate, and upon discussions by the undersigned with officers and employees of the Company familiar with the matters set forth herein;

21.    In the opinion of the undersigned, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenants and conditions have been complied with; and

22.    In the opinion of the undersigned, such conditions and covenants and conditions precedent, if any (including any covenants compliance with which constitutes a condition precedent) to the authentication and delivery of the Debentures of the Third Series requested in the accompanying Company Order No. 3 and Guarantor Order No. 3, have been complied with.

 

IN WITNESS WHEREOF, I have executed this Officer's Certificate on behalf of the Company this 12th day of June, 2007 in New York, New York.

 

FPL GROUP CAPITAL INC

   
   
 

By:

/s/ Robert Steven Schauer

   

Robert Steven Schauer

     

Assistant Treasurer

   
   

IN WITNESS WHEREOF, I have executed this Officer's Certificate on behalf of the Guarantor this 12th day of June, 2007 in New York, New York.

   
   
 

FPL GROUP, INC.

   
   
 

By:

/s/ Robert Steven Schauer

   

Robert Steven Schauer

   

Assistant Treasurer

   

 

Exhibit A

[Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to FPL Group Capital Inc or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]

No.

 

CUSIP No.

 

[FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE]

FPL GROUP CAPITAL INC

SERIES C JUNIOR SUBORDINATED DEBENTURES DUE 2067

FPL GROUP CAPITAL INC, a corporation duly organized and existing under the laws of the State of Florida (herein referred to as the "Company", which term includes any successor Person under the Indenture), for value received, hereby promises to pay to____________________, or registered assigns, the principal sum of ____________________ Dollars on June 15, 2067 (the "Stated Maturity"). The Company further promises to pay to the registered Holder of this Security (a) interest on said principal sum (subject to deferral as set forth herein) at the rate of 6.65% per annum, in like coin or currency, semi-annually in arrears on the 15th day of June and December until June 15, 2017 and at the rate per annum equal to the Three-Month LIBOR Rate plus 2.125% (determined in the manner set forth in the Officer's Certificate hereinafter referred to), reset quarterly on the LIBOR Rate Reset Dates, in like coin or currency, quarterly in arrears on the 15th day of March, June, September and December (each an "Interest Payment Date") commencing December 15, 2007 in the first instance and September 15, 2017 in the second instance, from the Interest Payment Date next preceding the date hereof to which interest has been paid or duly provided for (unless (i) no interest has yet been paid or duly provided for on this Security, in which case from June 12, 2007, or (ii) the date hereof is before an Interest Payment Date but after the Regular Record Date (as defined below) next preceding such Interest Payment Date, in which case from such following Interest Payment Date; provided, however, that if the Company shall default in payment of the interest due on such following Interest Payment Date, then from the next preceding Interest Payment Date to which interest has been paid or duly provided for or if no interest has yet been paid or duly provided for on this Security, in which case from June 12, 2007), until the principal hereof is paid or duly provided for, plus (b) Additional Interest, as defined in the Officer's Certificate, to the extent permitted by applicable law, on any interest payment that is not made on the applicable Interest Payment Date, which shall accrue at the then prevailing rate per annum borne by this Security, compounded semi-annually or quarterly, as applicable. No interest will accrue on the Securities of this series with respect to the day on which the Securities of this series mature. In the event that any Interest Payment Date is not a Business Day, then payment of interest payable on such date will be made as provided in the Officer's Certificate. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be payable to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the "Regular Record Date" for such interest installment which shall be the close of business on the 15th calendar day next preceding such Interest Payment Date, provided that if the Securities are held by a securities depository in book-entry form, the Regular Record Date will be the close of business on the Business Day immediately preceding such Interest Payment Date, and provided further that interest payable at the Stated Maturity or on any Redemption Date will be paid to the Person to whom principal is payable. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder of this Security on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture referred to on the reverse hereof.

Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, the State of New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company, interest on this Security may be paid by check mailed to the address of the Person entitled thereto, as such address shall appear on the Security Register or by a wire transfer to an account designated by the Person entitled thereto. While this Security bears interest at a fixed rate, the amount of interest payable on this Security will be computed on the basis of a 360-day year of twelve 30-day months (and for any period shorter than a full semi-annual period, on the basis of the actual number of days elapsed during such period using 30-day calendar months), and while this Security bears interest at the Three-Month LIBOR Rate, the amount of interest payable on this Security for any period will be computed on the basis of the actual number of days in the relevant period divided by 360.

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

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed in New York, New York.

 

 

FPL GROUP CAPITAL INC

   
   
 

By:

 

 

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

Dated:

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

 

THE BANK OF NEW YORK, as Trustee

   
   
 

By:

 

   

Authorized Signatory

 

[FORM OF GUARANTEE]

FPL GROUP, INC., a corporation organized under the laws of the State of Florida (the "Guarantor", which term includes any successor under the Indenture (the "Indenture") referred to in the Security upon which this Guarantee is endorsed), for value received, hereby unconditionally and irrevocably guarantees to the Holder of the Security upon which this Guarantee is endorsed, the due and punctual payment of the principal of, and premium, if any, and interest, including Additional Interest, if any, on such Security when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption, or otherwise, in accordance with the terms of such Security and of the Indenture regardless of any defense, right of set-off or counterclaim that the Guarantor may have (except the defense of payment). In case of the failure of the Company punctually to make any such payment, the Guarantor hereby agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, and as if such payment were made by the Company. The Guarantor's obligation to make a guarantee payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holder of the Security or to a Paying Agent, or by causing the Company to pay such amount to such Holder or a Paying Agent.

The Guarantor hereby agrees that its payment obligations hereunder shall be absolute and unconditional irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Security or the Indenture, any failure to enforce the provisions of such Security or the Indenture, or any waiver, modification or indulgence granted to the Company with respect thereto (except that the Guarantor will have the benefit of any waiver, modification or indulgence granted to the Company in accordance with the Indenture), by the Holder of such Security or the Trustee or any other circumstance which may otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; provided, however, that notwithstanding the foregoing, no such waiver, modification or indulgence shall, without the consent of the Guarantor, increase the principal amount of such Security, or increase the interest rate thereon (including Additional Interest, if any), or change any redemption provisions thereof (including any change to increase any premium payable upon redemption thereof) or change the Stated Maturity thereof.

The Guarantor hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or the Holder of such Security exhaust any right or take any action against the Company or any other Person, the filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged in respect of such Security except by complete performance of the payment obligations contained in such Security and in this Guarantee. This Guarantee shall constitute a guaranty of payment and not of collection. The Guarantor hereby agrees that, in the event of a default in payment of principal, or premium, if any, or interest, if any, on such Security, whether at its Stated Maturity, by declaration of acceleration, call for redemption, or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Security, subject to the terms and conditions set forth in the Indenture, directly against the Guarantor to enforce this Guarantee without first proceeding against the Company.

The obligations of the Guarantor hereunder with respect to such Security shall be continuing and irrevocable until the date upon which the entire principal of, premium, if any, and interest, including Additional Interest, if any, on such Security has been, or has been deemed pursuant to the provisions of Article Seven of the Indenture to have been, paid in full or otherwise discharged.

The obligations evidenced by this Guarantee are, to the extent provided in the Indenture, subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness of the Guarantor, and this Guarantee is issued subject to the provisions of the Indenture with respect thereto. Each Holder of a Security upon which this Guarantee is endorsed, 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, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions.

The Guarantor shall be subrogated to all rights of the Holder of a Security upon which this Guarantee is endorsed against the Company in respect of any amounts paid by the Guarantor on account of such Security pursuant to the provisions of this Guarantee or the Indenture; provided, however, that the Guarantor shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until the principal of, and premium, if any, and interest, if any, on all Securities issued under the Indenture which are then due and payable shall have been paid in full.

This Guarantee shall remain in full force and effect and continue notwithstanding any petition filed by or against the Company for liquidation or reorganization, the Company becoming insolvent or making an assignment for the benefit of creditors or a receiver or trustee being appointed for all or any significant part of the Company's property and assets, and shall, to the fullest extent permitted by law, continue to be effective or reinstated, as the case may be, if at any time payment of the Security upon which this Guarantee is endorsed, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Holder of such Security, whether as a "voidable preference," "fraudulent transfer," or otherwise, all as though such payment or performance had not been made. In the event that any such payment, or any part thereof, is rescinded, reduced, restored or returned on such Security, such Security shall, to the fullest extent permitted by law, be reinstated and deemed paid only by such amount paid and not so rescinded, reduced, restored or returned.

This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication of the Security upon which this Guarantee is endorsed shall have been manually executed by or on behalf of the Trustee under the Indenture.

All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in such Indenture.

This Guarantee shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly executed in New York, New York.

 

FPL GROUP, INC.

   
   
 

By:

 

 

[FORM OF REVERSE OF JUNIOR SUBORDINATED DEBENTURE]

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture (For Unsecured Subordinated Debt Securities), dated as of September 1, 2006 (herein, together with any amendments thereto, called the "Indenture", which term shall have the meaning assigned to it in such instrument), among the Company, FPL Group, Inc. and The Bank of New York, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture, including the Board Resolutions and Officer's Certificate filed with the Trustee on June 12, 2007, creating the series designated on the face hereof (herein called, the "Officer's Certificate"), for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof.

In addition to the option of the Company to redeem the Securities of this series in connection with a Tax Event or a Rating Agency Event described below, this Security shall be redeemable at the option of the Company in whole at any time, or in part from time to time, prior to the Stated Maturity, upon notice, mailed at least 30 but not more than 60 days prior to the date fixed for redemption (the "Redemption Date"), at a price (the "Redemption Price") as follows: (i) if redeemed prior to June 15, 2017, the Redemption Price will be 100% of the principal amount thereof plus accrued and unpaid interest, if any including Additional Interest, if any, to the Redemption Date plus a premium, if any (the "Make-Whole Premium"), or (ii) if redeemed on or after June 15, 2017, the Redemption Price will be 100% of the principal amount thereof plus accrued and unpaid interest, if any including Additional Interest, if any, to the Redemption Date. In no event will the Redemption Price be less than 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest, if any, to the Redemption Date.

The amount of the Make-Whole Premium with respect to any Security of this series (or portion thereof) to be redeemed will be equal to the excess, if any, of:

(1)    the sum of the present values, calculated as of the Redemption Date, of:

(a)    each interest payment that, but for such redemption, would have been payable on the Security of this series (or portion thereof) being redeemed on each Interest Payment Date occurring during the period from the Redemption Date to June 15, 2017 (excluding any accrued interest for the period prior to the Redemption Date); and

(b)    the principal amount that, but for such redemption, would have been payable at the Stated Maturity of the Security of this series (or portion thereof) being redeemed; over

(2)    the principal amount of the Security of this series (or portion thereof) being redeemed.

The present values of interest and principal payments referred to in clause (1) above will be determined in accordance with generally accepted principles of financial analysis. Such present values will be calculated by discounting the amount of each payment of interest or principal from the date that each such payment would have been payable, but for the redemption, to the Redemption Date at a discount rate equal to the Treasury Yield (as defined below) plus 30 basis points.

The Make-Whole Premium will be calculated by an independent investment banking institution of national standing appointed by the Company; provided that if the Company fails to make such appointment at least 30 days prior to the Redemption Date, or if the institution so appointed is unwilling or unable to make such calculation, such calculation will be made by Banc of America Securities LLC, J.P. Morgan Securities Inc., Lehman Brothers Inc. or Wachovia Capital Markets, LLC, or, if such firms are unwilling or unable to make such calculation, by an independent investment banking institution of national standing appointed by the Trustee at the expense of the Company (in any such case, an "Independent Investment Banker").

For purposes of determining the Make-Whole Premium, "Treasury Yield" means a rate of interest per annum equal to the weekly average yield to maturity of United States Treasury Notes that have a constant maturity that corresponds to the remaining term to June 15, 2017 of the Securities of this series to be redeemed, calculated to the nearest 1/12th of a year (the "Remaining Term"). The Treasury Yield will be determined as of the third Business Day immediately preceding the applicable Redemption Date.

The weekly average yields of United States Treasury Notes will be determined by reference to the most recent statistical release published by the Federal Reserve Bank of New York and designated "H.15(519) Selected Interest Rates" or any successor release (the "H.15 Statistical Release"). If the H.15 Statistical Release sets forth a weekly average yield for the United States Treasury Notes having a constant maturity that is the same as the Remaining Term, then the Treasury Yield will be equal to such weekly average yield. In all other cases, the Treasury Yield will be calculated by interpolation, on a straight-line basis, between the weekly average yields on the United States Treasury Notes that have a constant maturity closest to and greater than the Remaining Term and the United States Treasury Notes that have a constant maturity closest to and less than the Remaining Term (in each case as set forth in the H.15 Statistical Release). Any weekly average yields so calculated by interpolation will be rounded to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward. If weekly average yields for United States Treasury Notes are not available in the H.15 Statistical Release or otherwise, then the Treasury Yield will be calculated by interpolation of comparable rates selected by the Independent Investment Banker.

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.

Upon payment of the Redemption Price, on and after the Redemption Date interest will cease to accrue on the Securities of this series or portions thereof called for redemption.

If before June 15, 2017 a Tax Event (as defined below) shall occur and be continuing, the Company shall have the right to redeem this Security, in whole but not in part, at any time within 90 days following the occurrence of the Tax Event, at 100% of the principal amount thereof plus accrued and unpaid interest, if any, including Additional Interest, if any, to the date fixed for redemption ("Tax Event Redemption Date") plus a premium, if any (the "Tax Event Make-Whole Premium"). In no event will the Redemption Price be less than 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest, if any, to the Tax Event Redemption Date.

The amount of the Tax Event Make-Whole Premium with respect to any Security of this series to be redeemed will be equal to the excess, if any, of:

(1)    the sum of the present values, calculated as of the Tax Event Redemption Date, of:

(a)    each interest payment that, but for such redemption, would have been payable on the Security of this series being redeemed on each Interest Payment Date occurring after the Tax Event Redemption Date to June15, 2017 (excluding any accrued interest for the period prior to the Tax Event Redemption Date); and

(b)    the principal amount that, but for such redemption, would have been payable at the final maturity of the Security of this series being redeemed; over

(2)    the principal amount of the Security of this series being redeemed.

The present values of interest and principal payments referred to in clause (1) above will be determined in accordance with generally accepted principles of financial analysis. Such present values will be calculated by discounting the amount of each payment of interest or principal from the date that each such payment would have been payable, but for the redemption, to the Tax Event Redemption Date at a discount rate equal to the Treasury Yield plus 50 basis points.

The Tax Event Make-Whole Premium will be calculated by the Independent Investment Banker in the same manner as the Make-Whole Premium described above.

"Tax Event" means the receipt by the Guarantor or the Company of an Opinion of Counsel experienced in such 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 political subdivisions or taxing authorities, or any regulations under such laws or treaties; (b) 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 such administrative pronouncement, ruling, regulatory procedure or regulation) (each, an "Administrative Action"), or (c) any amendment to, clarification of, or change in the official position or the interpretation of any such Administrative Action or judicial decision or any interpretation or pronouncement that provides for a position with respect to such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case by any legislative body, court, governmental authority or regulatory body, irrespective of the time or manner in which such amendment, clarification or change is introduced or made known, which amendment, clarification, or change is effective, or which Administrative Action is taken or which judicial decision, interpretation or pronouncement is issued, in each case after June 6, 2007, there is more than an insubstantial risk that interest payable by the Company on this Security is not deductible, or within 90 days would not be deductible, in whole or in part, by the Company for United States Federal income tax purposes.

If before June 15, 2017 a Rating Agency Event (as defined below) shall occur and be continuing, the Company shall have the right to redeem this Security, in whole at any time, or in part from time to time, at 100% of the principal amount thereof plus accrued and unpaid interest, if any, including Additional Interest, if any, to the date fixed for redemption ("Rating Agency Event Redemption Date") plus a premium, if any (the "Rating Agency Event Make-Whole Premium"). In no event will the Redemption Price be less than 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest, if any, to the Rating Agency Event Redemption Date.

The amount of the Rating Agency Event Make-Whole Premium with respect to any Security of this series to be redeemed will be equal to the excess, if any, of:

(1)    the sum of the present values, calculated as of the Rating Agency Event Redemption Date, of:

(a)    each interest payment that, but for such redemption, would have been payable on the Security of this series being redeemed on each Interest Payment Date occurring after the Rating Agency Event Redemption Date to June 15, 2017 (excluding any accrued interest for the period prior to the Rating Agency Event Redemption Date); and

(b)    the principal amount that, but for such redemption, would have been payable at the final maturity of the Security of this series being redeemed; over

(2)    the principal amount of the Security of this series being redeemed.

The present values of interest and principal payments referred to in clause (1) above will be determined in accordance with generally accepted principles of financial analysis. Such present values will be calculated by discounting the amount of each payment of interest or principal from the date that each such payment would have been payable, but for the redemption, to the Rating Agency Event Redemption Date at a discount rate equal to the Treasury Yield plus 50 basis points.

The Rating Agency Event Make-Whole Premium will be calculated by the Independent Investment Banker in the same manner as the Make-Whole Premium described above.

"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, as amended (a "Rating Agency"), that currently publishes a rating for the Company or the Guarantor in assigning equity credit to securities such as the Securities of this series, as such methodology is in effect on June 6, 2007 (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 Securities of this series, or (b) a lower or higher equity credit being assigned by such Rating Agency to the Securities of this series as of the date of such change than the equity credit that would have been assigned to the Securities of this series as of the date of such change by such Rating Agency pursuant to its current criteria.

In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness of the Company, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, 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 Company, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions.

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security upon compliance with certain conditions set forth in the Indenture including the Officer's Certificate described above.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of and interest on the Securities of this series 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 Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of all series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company 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 Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security 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 Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

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

Pursuant to Section 312 of the Indenture, so long as no Event of Default under the Indenture has occurred and is continuing with respect to the Securities of any series, the Company shall have the right, at any time and from time to time during the term of the Securities of this series, 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 Stated Maturity or end on a day other than an Interest Payment Date. During the Optional Deferral Period, interest (calculated for each Interest Period in the manner provided for on the face hereof, as if the payment of interest had not been so deferred) will be compounded semi-annually while this Security bears interest at a fixed rate and quarterly while this Security bears interest at the Three-Month LIBOR Rate. Any deferred interest on the Securities of this series will accrue Additional Interest at a rate equal to the interest rate then applicable to the Securities of this series, to the extent permitted by applicable law. At the end of the Optional Deferral Period, which shall be an Interest Payment Date, the Company shall pay all interest accrued and unpaid hereon, including Additional Interest accrued on the deferred interest, to the Person in whose name the Securities of this series are registered at the close of business on the Regular Record Date for the Interest Payment Date on which such Optional Deferral Period ended; provided that any such accrued and unpaid interest payable at the Stated Maturity or any Redemption Date will be paid to the Person to whom principal is payable. During any such Optional Deferral Period, neither the Guarantor nor the Company will, and each will cause their majority-owned subsidiaries not to (i) declare or pay any dividends or distributions on the Guarantor's or the Company's capital stock, (ii) redeem, purchase, acquire or make a liquidation payment with respect to any of the Guarantor's or the Company's capital stock, (iii) pay any principal, interest or premium on, or repay, repurchase or redeem any of the Guarantor's or the Company's debt securities that are equal or junior in right of payment to the Securities of this series or the Guarantee (as the case may be), or (iv) make any payments with respect to any Guarantor or Company guarantee of debt securities if such guarantee is equal or junior in right of payment to the Securities of this series or the Guarantee (as the case may be).

Subject to the reservation of right to amend clause (f) below, as described in paragraph 16 of the Officer's Certificate, the foregoing provisions shall not prevent or restrict the Guarantor or the Company from making:

(a)    purchases, redemptions or other acquisitions of its capital stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or agents or a stock purchase or dividend reinvestment 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 dividend described in clauses (i) and (ii) above as a result of a reclassification of its capital stock, or the exchange or conversion of all or a portion of one class or series of its capital stock for another class or series of its capital stock;

(c)    the purchase of fractional interests in shares of its 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 its 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;

(f)    payments under any preferred trust securities guarantee or guarantee of subordinated debentures executed and delivered by the Guarantor concurrently with the issuance by a trust of any preferred trust securities, so long as the amount of payments made on any preferred trust securities or subordinated debentures (as the case may be) is paid on all preferred trust securities or subordinated debentures (as the case may be) then outstanding on a pro rata basis in proportion to the full distributions to which each series of preferred trust securities or subordinated debentures (as the case may be) is then entitled;

(g)    payments under any guarantee of junior subordinated debentures, which guarantee is executed and delivered by the Guarantor (including a Guarantee under the Indenture), so long as the amount of payments made on any junior subordinated debentures is paid on all junior subordinated debentures then outstanding on a pro rata basis in proportion to the full payment to which each series of junior subordinated debentures is then entitled;

(h)    dividends or distributions by the Company on its capital stock to the extent owned by the Guarantor; or

(i)    redemptions, purchases, acquisitions or liquidation payments by the Company with respect to its capital stock to the extent owned by the Guarantor.

Prior to the termination of any such Optional Deferral Period, the Company may further defer the payment of interest, provided that such Optional Deferral Period together with all such previous and further deferrals of interest payments shall not exceed 10 consecutive years at any one time or extend beyond the Stated Maturity of the Securities of this series. Upon the termination of any such Optional Deferral Period and the payment of all amounts then due, including interest on deferred interest payments, the Company may elect to begin a new Optional Deferral Period, subject to the above requirements. No interest shall be due and payable during an Optional Deferral Period, except at the end thereof. The Company shall give the Trustee notice of its election of an Optional Deferral Period at least 10 days and not more than 60 days before the applicable Interest Payment Date. The Trustee will promptly forward notice of such election to each holder of record of the Securities of this series.

The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and of authorized denominations, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

All terms used in this Security which are defined either in the Indenture or in the Officer's Certificate shall have the meanings assigned to them in the Indenture or in the Officer's Certificate.

Exhibit 4(b)

Replacement Capital Covenant , dated June 12, 2007 (this " Replacement Capital Covenant "), by FPL Group Capital Inc, a Florida corporation (together with its successors and assigns, the " Corporation "), and FPL Group, Inc., a Florida corporation (together with its successors and assigns, the "Guarantor" ), in favor of and for the benefit of each Covered Debtholder (as defined below).

Recitals

A.    On the date hereof, the Corporation is issuing $400,000,000 aggregate principal amount of its Series C Junior Subordinated Debentures due 2067 (including any such junior subordinated debentures issued after the date hereof that may be consolidated and form a single series with such junior subordinated debentures issued on the date hereof, the "Subordinated Debentures" ), which Subordinated Debentures were issued pursuant to, and fully and unconditionally guaranteed (the "Guarantee" ) by the Guarantor in accordance with, the Indenture (For Unsecured Subordinated Debt Securities), dated as of September 1, 2006, among the Corporation, the Guarantor, and The Bank of New York, as trustee, as supplemented by the Officer's Certificate (the "Subordinated Indenture" ).

B.    This Replacement Capital Covenant is the "Replacement Capital Covenant" referred to in the Prospectus Supplement, dated June 6, 2007, relating to the Subordinated Debentures.

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

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

NOW, THEREFORE, the Corporation and the Guarantor hereby covenant and agree as follows in favor of and for the benefit of each Covered Debtholder.

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

SECTION 2.   Limitations on Redemption, Defeasance or Purchase of Subordinated Debentures . The Corporation and the Guarantor hereby promise and covenant to and for the benefit of each Covered Debtholder that the Corporation shall not redeem or purchase, or satisfy, discharge or defease any portion of the principal amount of the Subordinated Debentures through the deposit of money and/or U.S. government obligations, as contemplated by Article Seven of the Indenture (such satisfaction, discharge or defeasance herein referred to as "defeasance" ), the Guarantor shall not purchase, and the Corporation and the Guarantor shall cause their majority-owned Subsidiaries not to purchase, all or any part of the Subordinated Debentures on or before the Termination Date except to the extent that 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)    the Applicable Percentage of (x) the aggregate amount of the net cash proceeds received by the Parent and/or the Corporation from the sale of Common Stock and Rights to acquire Common Stock, and (y) the Market Value of any Common Stock that has been issued 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 Parent and/or the Corporation or any of their Subsidiaries has received equity credit from any NRSRO; plus

(ii)    100% of the aggregate amount of net cash proceeds received by the Parent and/or the Corporation and their Subsidiaries from the sale of Replacement Capital Securities (other than the securities set forth in clause (i) above);

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

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

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

(b)    (i)  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:

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

(B)    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;

(C)    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;

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

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

(F)    the series of outstanding long-term indebtedness for money borrowed that is determined to be the Covered Debt pursuant to clause (B), (C), (D) or (E) 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

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

(d)    In order to give effect to the intent of the Corporation and the Guarantor described in Recital C, the Corporation and the Guarantor covenant that (i) simultaneously with the execution of this Replacement Capital Covenant, or as soon as practicable after the date hereof, (A) notice shall be given to the Holders of the Initial Covered Debt, in the manner provided in the indenture or other instrument under which such Initial Covered Debt was issued, of this Replacement Capital Covenant and the rights granted to such Holders hereunder and (B) the Guarantor shall file a copy of this Replacement Capital Covenant with the Commission as an exhibit to a Form 8-K; (ii) so long as the Parent is a reporting company under the Securities Exchange Act (or the Corporation if it becomes a reporting company under the Securities Exchange Act), the Parent or the Corporation, as applicable, will include or cause to be included in each Form 10-K filed with the Commission by the Parent or the Corporation, as applicable, a description of the covenant set forth in Section 2 and identify the series of long-term indebtedness for borrowed money that is Covered Debt as of the date such Form 10-K is filed with the Commission; (iii) if a series of the Guarantor's or the Corporation's long-term indebtedness for money borrowed (1) becomes 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 Parent or the Corporation, as applicable, shall report such change in a Form 8-K, which must include or incorporate by reference the Replacement Capital Covenant, and, if reported in a Form 8-K, also in the next Form 10-Q or Form 10-K, as applicable, of the Parent or the Corporation, as applicable; (iv) upon succession of any new entity as the Corporation or the Guarantor hereunder as a result of a merger, consolidation, statutory share exchange, sale, lease or transfer of all or substantially all of the assets or other business combination of the Corporation or the Guarantor as it existed prior thereto, notice of such occurrence shall be given within 30 days to the holders of the Covered Debt in the manner provided for in the indenture or other instrument under which such long-term indebtedness for money borrowed was issued, and the Parent (or the Corporation if it becomes a reporting company under the Securities Exchange Act), shall report such change in a Form 8-K, which must include or incorporate by reference this Replacement Capital Covenant, and, if reported in a Form 8-K, also in the next Form 10-Q or Form 10-K, as applicable, of the Parent or the Corporation, as applicable; (v) if, and only if, neither the Parent nor the Corporation is a reporting company under the Securities Exchange Act, the Corporation will (A) post on its website (or the Parent's website if the Corporation does not maintain a website at that time) (in each case, or on any other similar electronic platform generally available to the public) the information otherwise required to be included in Securities Exchange Act filings pursuant to clauses (ii), (iii) and (iv) above; and (B) cause a notice of this Replacement Capital Covenant to be posted on the Bloomberg screen for the Initial Covered Debt or any successor Bloomberg screen or, if none, a similar third-party vendor's screen the Corporation reasonably believes is appropriate (each an "Investor Screen" ) and cause a hyperlink of this Replacement Capital Covenant to be included on the Investor Screen for each series of 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 and the Guarantor pursuant to this Replacement Capital Covenant shall remain in full force and effect until the earliest date (the "Termination Date" ) to occur of (i) June 15, 2037, or if earlier, the date on which the Subordinated Debentures are otherwise paid, redeemed, defeased or purchased in full (in compliance with the terms of Section 2 of this Replacement Capital Covenant), (ii) the date, if any, on which the Holders of at least a majority of the outstanding principal amount of the then effective Covered Debt consent or agree in writing to the termination of the obligations of the Corporation and the Guarantor hereunder, (iii) the date on which neither the Corporation nor the Guarantor has any Eligible Senior Debt or Eligible Subordinated Debt (in each case without giving effect to the rating requirement in clause (ii) of the definition of each such term) and (iv) the date on which the Subordinated Debentures are accelerated as a result of an event of default under the Subordinated Indenture. From and after the Termination Date, the obligations of the Corporation and the Guarantor pursuant to this Replacement Capital Covenant shall be of no further force and effect with respect to the Holders, or otherwise.

(b)    This Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed by the Corporation and the Guarantor 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 the Guarantor (and without the consent of the Holders) if any of the following apply: (i) such amendment or supplement eliminates Common Stock, Rights to acquire Common Stock, Common Equity Units and/or Mandatorily Convertible Preferred Stock as Replacement Capital Securities, if, in the case of this clause, after the date of this Replacement Capital Covenant, an accounting standard or interpretive guidance of an existing accounting standard issued by an organization or regulator that has responsibility for establishing or interpreting accounting standards in the United States 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 or the Guarantor's earnings per share as calculated in accordance with generally accepted accounting principles in the United States ( "EPS" ), or the Corporation or the Guarantor otherwise have been advised in writing by a nationally recognized independent accounting firm that there is more than an insubstantial risk that the failure to eliminate such securities as Replacement Capital Securities would result in a reduction of the Corporation's or the Guarantor's EPS, (ii) the effect of such amendment or supplement is solely to impose additional restrictions on the ability of (x) the Corporation to redeem, purchase or defease Subordinated Debentures or (y) the Guarantor or any majority-owned Subsidiary of either the Corporation or the Guarantor to purchase Subordinated Debentures, and in each case an officer of the Corporation has delivered to the Holders of the then effective Covered Debt in the manner provided for in the indenture or other instrument under which such 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 and the Guarantor hereunder shall be the Holders of the then effective Covered Debt as of a record date established by the Corporation that is not more than 30 days prior to the date on which the Corporation and the Guarantor propose that such termination, amendment or supplement becomes effective.

SECTION 5.   Miscellaneous . (a) This Replacement Capital Covenant shall be governed by and construed in accordance with the laws of the State of New York.

(b)    This Replacement Capital Covenant shall be binding upon the Corporation (and its successors and assigns) and the Guarantor (and its successors and assigns) and shall inure to the benefit of the Covered Debtholders as they exist from time-to-time (it being understood and agreed by the Corporation and the Guarantor that any Person who is a Covered Debtholder shall retain its status as a Covered Debtholder for so long as the series of long-term indebtedness for borrowed money owned by such Person is Covered Debt and, if such Person initiates a claim or proceeding to enforce its rights under this Replacement Capital Covenant after the Corporation or the Guarantor has violated its covenants in Section 2 and before the series of long-term indebtedness for money borrowed held by such Person is no longer 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 and the Guarantor agree that, if at any time the Covered Debt is held by a trust (for example, where the Covered Debt is part of an issuance of trust preferred securities), a holder of the securities issued by such trust may enforce (including by instituting legal proceedings) this Replacement Capital Covenant directly against the Corporation as though such holder owned the Covered Debt directly, and the holders of such trust securities shall be deemed Holders of 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, it being understood that such holders may have rights under the Subordinated Indenture.

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

FPL Group Capital Inc
Attention: Treasurer
700 Universe Boulevard
Juno Beach, Florida 33408

 

FPL Group, Inc.
Attention: Treasurer
700 Universe Boulevard
Juno Beach, Florida 33408

 

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

 

 

FPL GROUP CAPITAL INC

   
   
 

By:

/s/ Robert Steven Schauer

   

Name:

Robert Steven Schauer

   

Title:

Assistant Treasurer

   
   
 

FPL GROUP, INC.

   
   
 

By:

/s/ Robert Steven Schauer

   

Name:

Robert Steven Schauer

   

Title:

Assistant Treasurer

 

 

Schedule I

Definitions

"Alternative Payment Mechanism" means, with respect to any Qualifying Capital Securities, provisions in the related transaction documents 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) that such issuer has received during the 180 days prior to the related Distribution Date from the issuance of APM Qualifying Securities to Persons other than the Parent and/or the Corporation and their Subsidiaries, up to the Preferred Cap (as defined in (e) below) in the case of APM Qualifying Securities that are Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock;

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

(c)    if deferral of Distributions continues for more than one year (or such shorter period as may be provided for in the terms of such securities), require such issuer or any of its Subsidiaries not to redeem or purchase any securities that rank pari passu with or junior to any APM Qualifying Securities that such issuer has issued to settle deferred Distributions in respect to that deferral period until at least one year after all deferred Distributions have been paid (a "Purchase Restriction" );

(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, 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 Parent's most recent publicly available consolidated financial statements at the time of such issuance (the " Common Cap" ); and

(e)    limit the right of such issuer to issue (or use Commercially Reasonable Efforts to issue) APM Qualifying Securities that are Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock, 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 or the Parent, at its option, to provide that if the Corporation or the Parent, as the case may be, 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 surviving or resulting entity's voting securities 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 (i) and, only to the extent it can do so, 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)    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 or the Parent to issue Qualifying Warrants.

"Applicable Percentage" means 200% with respect to any redemption, purchase or defeasance of Subordinated Debentures prior to the Termination 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:

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

(b)    in the case of any other Qualifying Capital Securities, an amount not in excess of the sum of (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 Parent, the Corporation or any of their Subsidiaries in public offerings or private placements. The issuer of APM Qualifying Securities shall not be considered to have made Commercially Reasonable Efforts to effect a sale of APM Qualifying Securities if it determines not to pursue or complete such sale due to pricing, coupon, dividend rate or dilution considerations.

"Commission" means the United States Securities and Exchange Commission.

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

"Common Equity Units" means a security or combination of securities that

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

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

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

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

"Corporation" has the meaning specified in the introduction to this instrument.

"Covered 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.

"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.

"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 holders a beneficial interest in (i) subordinated debt securities of the Corporation or the Parent that include a provision requiring the Corporation or the Parent to issue (or use Commercially Reasonable Efforts to issue) one or more types of APM Qualifying Securities raising proceeds at least equal to the deferred Distributions on such subordinated debt securities commencing not later than the second anniversary of the commencement of such deferral period and that are the most junior subordinated debt of the Corporation or the Parent, as applicable, (or rank pari passu with the most junior subordinated debt of the Corporation or the Parent, as applicable) (in this definition, " subordinated debt ") and (ii) a fractional interest in a stock purchase contract for a share or shares of Qualifying Preferred Stock of the Corporation or the Parent that ranks pari passu with or junior to all other preferred stock of the Corporation or the Parent, as applicable (in this definition, " preferred stock ");

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

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

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

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

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

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

"Distribution Period" means, as to any security or combination of securities, each period from and including a Distribution Date for such securities to but not including the next succeeding Distribution Date for such securities.

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

"Defeasance" has the meaning specified in Section 2.

"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 have) a separate CUSIP number shall be deemed to be a series of the issuer's long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

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

"Explicit Replacement Covenant" means, as to any security or combination of securities, that the issuer has made a covenant substantially similar to 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 amount raised thorough 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 (or an affiliate of the issuer, if the covenant so provides) to the same extent as this Replacement Capital Covenant is binding on the Corporation for the benefit of the Holders of the Initial Covered Debt.

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

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

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

"Guarantee" has the meaning specified in Recital A.

"Guarantor" has the meaning specified in the introduction to this instrument.

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

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

"Intent-Based Replacement Disclosure" means, as to any security or combination of securities issued, directly or indirectly, that the issuer has publicly stated its intention, either in the prospectus or other offering 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 such securities only with securities that would be considered Replacement Capital Securities, substantially as that term is defined herein but as applied to such securities instead of to the Subordinated Debentures, raised within 180 days prior to the applicable redemption or purchase date.

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

"Mandatorily Convertible Preferred Stock" means cumulative preferred stock of the Corporation of the Parent with (a) no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and (b) a requirement that the preferred stock convert into Common Stock of the issuer within three years from the date of its issuance for a determinable number of shares or within a range established at the time of issuance of the 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, 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 or 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, 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 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 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 affiliate of the issuer that may issue securities in settlement of an Alternative Payment Mechanism) specifically, on The New York Stock Exchange or any other national securities exchange or over-the-counter market on which such securities are then listed or traded shall have been suspended or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or market by the Commission, by the relevant exchange or by any other regulatory body or governmental body having jurisdiction, and the establishment of such minimum prices materially disrupts or otherwise has a material adverse effect on trading in, or the issuance and sale of, such securities;

(ii)    the issuer (or an affiliate as specified in clause (i)) would be required to obtain the consent or approval of its shareholders (or the shareholders of an affiliate as specified in clause (i)) or a regulatory body (including, without limitation, any securities exchange) or governmental authority to issue APM Qualifying Securities and the issuer (or an affiliate as specified in clause (i)) fails to obtain that consent or approval notwithstanding the commercially reasonable efforts of the issuer (or such affiliate) to obtain that consent or approval or a regulatory authority instructs the issuer (or an affiliate 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;

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

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

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

(vii)    an event occurs and is continuing as a result of which the offering document for the offer and sale of the APM Qualifying Securities would, in the reasonable judgment of the issuer (or an affiliate 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 an affiliate as specified in clause (i)), would have a material adverse effect on the business of the issuer (or an affiliate 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 affiliate to consummate that transaction, provided that no single suspension period contemplated by this paragraph (vii) shall exceed 90 consecutive days and multiple suspension periods contemplated by this paragraph (vii) shall not exceed an aggregate of 180 days in any 360-day period; or

(viii)    the issuer (or an affiliate as specified in clause (i)) reasonably believes, for reasons other than those referred to in paragraph (vii) above, that the offering document for such offer and sale of APM Qualifying Securities would not be in compliance with a rule or regulation of the Commission and the issuer (or an affiliate as specified in 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.

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

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

" Non-Cumulative " means, with respect to any securities, that the issuer thereof may elect not to make any number of periodic Distributions without any remedy arising under the terms of the securities or related 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.

"Officer's Certificate" means the Officer's Certificate, dated June 12, 2007, with respect to the Subordinated Debentures.

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

"Parent" shall mean (i) the Guarantor, (ii) any successor guarantor of the Subordinated Debentures or (iii) any direct or indirect parent company of the Guarantor or such successor guarantor.

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

"Person" means any individual, corporation, partnership, joint venture, trust, limited liability company or 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 on or prior to the Stepdown Date:

(i)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) have no maturity or a maturity of at least 60 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; or

(ii)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) have no maturity or a maturity of at least 40 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, the Parent or their Subsidiaries that (A) have no maturity or a maturity of at least 60 years, (B) are subject to an Explicit Replacement Covenant and (C) have an Optional Deferral Provision;

(iv)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) have no maturity or a maturity of at least 60 years and (B) are subject to Intent-Based Replacement Disclosure and (C) are Non-Cumulative;

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

(vi)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) have no maturity or a maturity of at least 40 years, (B) are subject to an Explicit Replacement Covenant and (C) are Non-Cumulative;

(vii)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) either (x) have no maturity or a maturity of at least 40 years and are subject to Intent-Based Replacement Disclosure or (y) have no maturity or a maturity of at least 25 years and are subject to an Explicit Replacement Covenant, (B) have an Optional Deferral Provision and (C) have a Mandatory Trigger Provision; or

(viii)    any other preferred stock issued by the Corporation or the Parent that (A) has no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, (B) has no maturity or a maturity of at least 60 years and (C) is subject to an Explicit Replacement Covenant; or

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

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

(ii)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) have no maturity or a maturity of at least 60 years, (B) are subject to Intent-Based Replacement Disclosure and (C) have an Optional Deferral Provision;

(iii)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) have no maturity or a maturity of at least 40 years, (B) are subject to an Explicit Replacement Covenant and (C) have an Optional Deferral Provision;

(iv)    securities issued by the Corporation, the Parent or their Subsidiaries that (A) either (x) have no maturity or a maturity of at least 40 years and are subject to Intent-Based Replacement Disclosure or (y) have no maturity or a maturity of at least 25 years and are subject to an Explicit Replacement Covenant and (B) are Non-Cumulative;

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

(vi)    any other preferred stock issued by the Corporation or the Parent that (A) has no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise and (B) either (x) has no maturity or a maturity of at least 60 years and is subject to Intent-Based Replacement Disclosure or (y) has no maturity or a maturity of at least 40 years and is subject to an Explicit Replacement Covenant.

"Qualifying Preferred Stock" means preferred or preference stock of the Parent or the Corporation that (i) ranks pari passu with or junior to other preferred stock of the issuer, (ii) is perpetual with no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and (iii) either (A) is Non-Cumulative Preferred Stock and has Intent-Based Replacement Disclosure, or (B) is cumulative preferred stock and has an Explicit Replacement Covenant.

"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 does 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 Parent, the Corporation or a majority-owned Subsidiary of the Parent elects to purchase, such Covered Debt either in whole or in part with the consequence that after giving effect to such redemption, defeasance or purchase the outstanding principal amount of such Covered Debt is less than $100,000,000, the applicable redemption, defeasance or purchase date and (iii) if the then outstanding Covered Debt is not Eligible Subordinated Debt, the date on which the Corporation issues long-term indebtedness for money borrowed that is Eligible Subordinated Debt.

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

"Replacement Capital Securities" means 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.

"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 June 15, 2017.

"Subordinated Debentures" has the meaning specified in Recital A.

"Subordinated Indenture" has the meaning specified in Recital A.

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

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

Exhibit 5(a)

 

SQUIRE, SANDERS & DEMPSEY L.L.P.

200 South Biscayne Boulevard Suite 4000
Miami, Florida 33131-2398

Office:    +1.305.577.7000
Fax:       +1.305.577.7001

June 12, 2007

FPL Group, Inc.
FPL Group Capital Inc
700 Universe Boulevard
Juno Beach, Florida 33408

Ladies and Gentlemen:

     As counsel for FPL Group, Inc., a Florida corporation ("FPL Group"), and FPL Group Capital Inc, a Florida corporation ("FPL Group Capital"), we have participated in the preparation of or reviewed (1) Registration Statement Nos. 333-137120, 333-137120-01, 333-137120-02, 333-137120-03, 333-137120-04, 333-137120-05, 333-137120-06, 333-137120-07 and 333-137120-08, as amended by Post-Effective Amendment No. 1 thereto (the "Registration Statement"), which registration statement, as amended, was filed jointly by FPL Group, FPL Group Capital, Florida Power & Light Company, FPL Group Capital Trust II, FPL Group Capital Trust III, FPL Group Trust I, FPL Group Trust II, Florida Power & Light Company Trust I and Florida Power & Light Company Trust II with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"); (2) the Base Prospectus dated May 3, 2007 forming a part of the Registration Statement, as supplemented by a prospectus supplement dated June 6, 2007 ("Prospectus Supplement") relating to $400,000,000 aggregate principal amount of Series C Junior Subordinated Debentures due 2067 ("Subordinated Debentures"), issued under the Indenture (For Unsecured Subordinated Debt Securities), dated as of September 1, 2006 (the "Subordinated Indenture"), from FPL Group Capital, as issuer, and FPL Group, as guarantor, to The Bank of New York, as Subordinated Trustee (the "Subordinated Trustee"), which Subordinated Debentures are fully and unconditionally guaranteed (the "Subordinated Guarantee") by FPL Group pursuant to and in accordance with the terms of the guarantee of FPL Group endorsed on the Subordinated Debentures, both such Base Prospectus and Prospectus Supplement filed pursuant to Rule 424(b) under the Securities Act; (3) the Subordinated Indenture; (4) the corporate proceedings of FPL Group Capital with respect to the Registration Statement, the Subordinated Indenture and the Subordinated Debentures; (5) the corporate proceedings of FPL Group with respect to the Registration Statement and the Subordinated Guarantee endorsed on the Subordinated Debentures; and (6) such other corporate records, certificates and other documents (including a receipt executed on behalf of FPL Group Capital acknowledging receipt of the purchase price for the Subordinated Debentures) and such questions of law as we have considered necessary or appropriate for the purposes of this opinion.

     Based on the foregoing, we are of the opinion that the Subordinated Debentures and the Subordinated Guarantee, as it relates to the Subordinated Debentures, are legally issued, valid, and binding obligations of FPL Group Capital and FPL Group, respectively, except as limited or affected by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws affecting creditors' rights and remedies generally and general principles of equity .

     In rendering the foregoing opinion, we have assumed that the certificates representing the Subordinated Debentures conform to specimens examined by us and that the Subordinated Debentures have been duly authenticated by the Subordinated Trustee under the Subordinated Indenture and that the signatures on all documents examined by us are genuine, assumptions which we have not independently verified.

     We hereby consent to the filing of this opinion as an exhibit to a Current Report on Form 8-K to be filed by FPL Group on or about June 12, 2007, which will be incorporated by reference in the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

     We are members of the Florida Bar and this opinion is limited to the laws of the State of Florida and the federal laws of the United States insofar as they bear on the matters covered hereby. As to all matters of New York law, we have relied, with your consent, upon the opinion of even date herewith rendered to you by Thelen Reid Brown Raysman & Steiner LLP, New York, New York. As to all matters of Florida law, Thelen Reid Brown Raysman & Steiner LLP is authorized to rely upon this opinion as if it were addressed to it.

 

Very truly yours,

/s/ Squire, Sanders & Dempsey L.L.P.

SQUIRE, SANDERS & DEMPSEY L.L.P.

Exhibit 5(b) and 8

 

June 12, 2007

FPL Group, Inc.
FPL Group Capital Inc
700 Universe Boulevard
Juno Beach, Florida 33408

Ladies and Gentlemen:

     As counsel for FPL Group, Inc., a Florida corporation ("FPL Group"), and FPL Group Capital Inc, a Florida corporation ("FPL Group Capital"), we have participated in the preparation of or reviewed (1) Registration Statement Nos. 333-137120, 333-137120-01, 333-137120-02, 333-137120-03, 333-137120-04, 333-137120-05, 333-137120-06, 333-137120-07 and 333-137120-08, as amended by Post-Effective Amendment No. 1 thereto (the "Registration Statement"), which registration statement, as amended, was filed jointly by FPL Group, FPL Group Capital, Florida Power & Light Company, FPL Group Capital Trust II, FPL Group Capital Trust III, FPL Group Trust I, FPL Group Trust II, Florida Power & Light Company Trust I and Florida Power & Light Company Trust II with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"); (2) the Base Prospectus dated May 3, 2007 forming a part of the Registration Statement, as supplemented by a prospectus supplement dated June 6, 2007 ("Prospectus Supplement") relating to $400,000,000 aggregate principal amount of Series C Junior Subordinated Debentures due 2067 ("Subordinated Debentures"), issued under the Indenture (For Unsecured Subordinated Debt Securities), dated as of September 1, 2006 (the "Subordinated Indenture"), from FPL Group Capital, as issuer, and FPL Group, as guarantor, to The Bank of New York, as Subordinated Trustee (the "Subordinated Trustee"), which Subordinated Debentures are fully and unconditionally guaranteed (the "Subordinated Guarantee") by FPL Group pursuant to and in accordance with the terms of the guarantee of FPL Group endorsed on the Subordinated Debentures, both such Base Prospectus and Prospectus Supplement filed pursuant to Rule 424(b) under the Securities Act; (3) the Subordinated Indenture; (4) the corporate proceedings of FPL Group Capital with respect to the Registration Statement, the Subordinated Indenture and the Subordinated Debentures; (5) the corporate proceedings of FPL Group with respect to the Registration Statement and the Subordinated Guarantee endorsed on the Subordinated Debentures; and (6) such other corporate records, certificates and other documents (including a receipt executed on behalf of FPL Group Capital acknowledging receipt of the purchase price for the Subordinated Debentures) and such questions of law as we have considered necessary or appropriate for the purposes of this opinion.

     Based on the foregoing, we are of the opinion that the Subordinated Debentures and the Subordinated Guarantee, as it relates to the Subordinated Debentures, are legally issued, valid, and binding obligations of FPL Group Capital and FPL Group, respectively, except as limited or affected by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws affecting creditors' rights and remedies generally and general principles of equity.

     We are further of the opinion that the statements contained in the Prospectus Supplement under the caption "Material United States Federal Income Tax Consequences," to the extent they constitute matters of federal income tax law or legal conclusions with respect thereto, are an accurate summary of the matters referred to therein in all material respects.

     In rendering the foregoing opinion, we have assumed that the certificates representing the Subordinated Debentures conform to specimens examined by us and that the Subordinated Debentures have been duly authenticated by the Subordinated Trustee under the Subordinated Indenture and that the signatures on all documents examined by us are genuine, assumptions which we have not independently verified.

     We hereby consent to the filing of this opinion as an exhibit to a Current Report on Form 8-K to be filed by FPL Group on or about June 12, 2007, which will be incorporated by reference in the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

     We are members of the New York Bar and this opinion is limited to the laws of the State of New York and the federal laws of the United States insofar as they bear on the matters covered hereby. As to all matters of Florida law, we have relied, with your consent, upon the opinion of even date herewith rendered to you by Squire, Sanders & Dempsey L.L.P., Miami, Florida. As to all matters of New York law, Squire, Sanders & Dempsey L.L.P. is authorized to rely upon this opinion as if it were addressed to it.

 

Very truly yours,

/s/ Thelen Reid Brown Raysman & Steiner LLP

THELEN REID BROWN RAYSMAN & STEINER LLP