Contract
THIS
TERMINATION AND RELEASE AGREEMENT
(this
“Agreement”)
is
made and entered into this October
24, 2006,
by and
among FPL
GROUP, INC.,
a
Florida corporation (“FPL
Group”),
CONSTELLATION
ENERGY GROUP, INC.,
a
Maryland corporation (“Constellation”),
and
CF
MERGER CORPORATION,
a
Florida corporation and a wholly owned subsidiary of Constellation
(“Merger
Sub”
and
together with FPL Group and Constellation, the “Parties”
and
each a “Party”).
W
I T N E S S E T H:
WHEREAS,
FPL
Group, Constellation and Merger Sub entered into that certain Agreement and
Plan
of Merger, dated as of December 18, 2005 (the “Merger
Agreement”,
terms
not otherwise defined herein shall have the respective meanings ascribed to
them
in the Merger Agreement to the extent defined therein);
WHEREAS,
in
connection with the negotiations surrounding the Merger Agreement, FPL Group
and
Constellation entered into a Confidentiality Agreement, dated as of September
6,
2005 (the “Confidentiality
Agreement”);
WHEREAS,
Constellation requested that FPL Group agree to terminate the Merger Agreement
pursuant to Section 7.01(a) of the Merger Agreement, which provides that the
Merger Agreement may be terminated at any time prior to the Effective Time
by
mutual written consent of FPL Group, Constellation and Merger Sub;
WHEREAS,
FPL
Group, on and subject to the terms and conditions of this Agreement, has agreed
to such request by Constellation; and
WHEREAS,
the
boards of directors of each of FPL Group, Constellation and Merger Sub have
determined to terminate the Merger Agreement and release each other from all
duties, rights, claims, obligations and liabilities arising from, in connection
with, or relating to, the Merger Agreement, in each case on the terms and
subject to the conditions set forth herein.
NOW,
THEREFORE,
in
consideration of the covenants and agreements herein set forth and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1. Termination
of Merger Agreement.
Effective immediately, FPL Group, Constellation and Merger Sub hereby abandon
the Merger and all other transactions contemplated by the Merger Agreement
and
mutually terminate the Merger Agreement pursuant to Section 7.01(a) thereof,
including, notwithstanding the provisions of Section 7.02 thereof, Section
5.10
and Article VIII of the Merger Agreement, none of which provisions shall survive
termination of the Merger Agreement hereunder. Notwithstanding anything to
the
contrary contained in the Merger Agreement, no Released Person (as defined
herein) shall have any liability or obligation under the Merger Agreement,
including without limitation, as a result of any action or failure to act in
connection with the Merger Agreement.
2. Publicity;
Confidentiality Agreement.
(a)
FPL
Group and Constellation shall issue a joint press release in the form, and
containing the contents, of Exhibit
A
to this
Agreement announcing the transactions contemplated by this Agreement at 8:00
a.m. (New York time) on the first Business Day immediately following the
execution and delivery hereof.
(b) The
Confidentiality Agreement shall remain in full force and effect in accordance
with its terms, except for Section 3 thereof, which shall be deemed terminated
as of the date hereof, and except as expressly amended by the third sentence
of
this Section 2(b). In addition, all information exchanged pursuant to Section
5.04(a) of the Merger Agreement shall continue to be subject to the
Confidentiality Agreement. Section 8 of the Confidentiality Agreement is hereby
amended so that (i) the period of two years referenced in the third sentence
of
such Section 8 shall be the period of two years from the date of this Agreement
and (ii) the term “Key Employee” shall mean any employee whose total annual
compensation is in excess of $200,000.
3. Fees
and Expenses.
(a)
No Party
shall pay a termination fee to the other Party under the Merger Agreement.
Each
Party shall bear its own costs and expenses heretofore or hereafter incurred
by
each Party in connection with or relating to this Agreement and the Merger
Agreement and the transactions contemplated hereby and thereby; provided,
however,
that
each of FPL Group and Constellation shall bear and pay one-half of the costs
and
expenses incurred in connection with (y) the financial printer and SEC filing
fees in connection with the Form S-4 and the Joint Proxy Statement (it being
understood that if thereafter a Party is able to and does apply any such shared
SEC filing fees to the fees payable in connection with a subsequent SEC filing,
that Party will promptly upon the application of such fees to the subsequent
filing reimburse the other Party for the amount of the SEC filing fees in
connection with the Form S-4 and the Joint Proxy Statement borne by such other
Party pursuant to this Section 3(a)(y)) and (z) the filing fees and economic
consultant fees in connection with the premerger notification and report forms
under the HSR Act and economic consultant fees in connection with the FERC
application.
(b) In
the
event that, on or prior to September 30, 2007, Constellation (i) consummates
a
Constellation Transaction (as defined below) or (ii) publicly announces its
entry into a letter of intent, agreement in principle, acquisition agreement,
joint venture agreement, partnership agreement or other agreement (other than
a
confidentiality or standstill agreement) with respect to a Constellation
Transaction, then, upon the first of such events to occur, Constellation shall
immediately pay FPL Group the Constellation Fee (as defined below), which shall
be payable by wire transfer of immediately available funds to an account
specified in writing by FPL Group for such payment. For purposes of this
Agreement, “Constellation Fee” means four hundred twenty-five million dollars
($425,000,000) if the event giving rise to Constellation’s obligation to make
the payment to FPL Group occurs on or before June 30, 2007, and two hundred
ten
million dollars ($210,000,000) if such event occurs on or after July 1, 2007
but
no later than September 30, 2007. For purposes of this Agreement, “Constellation
Transaction” means (i) any merger (including any triangular merger),
consolidation, share exchange, recapitalization, liquidation, dissolution,
business combination or similar transaction involving Constellation or any
subsidiary of Constellation owning, operating or controlling a Constellation
Material Business (as defined below) which, at consummation, results in any
third party owning 35% or more of the voting securities of Constellation (or,
if
Constellation shall not survive as the ultimate parent company, then of the
ultimate parent company resulting from such transaction) or any third party
owning, directly or indirectly, 35% or more of any class of voting securities
of
any such subsidiary, (ii) any direct or indirect acquisition or purchase by
a
third party of a business or businesses (a “Constellation Material Business”)
that constitutes 35% or more of the net revenues, net income or the assets
(including equity securities) of Constellation and its subsidiaries, taken
as a
whole, (iii) any direct or indirect acquisition or purchase by a third party
of
35% or more of any class of voting securities of Constellation or any subsidiary
of Constellation owning, operating or controlling a Constellation Material
Business, or (iv) any tender offer or exchange offer by a third party that
if
consummated would result in any person beneficially owning 35% or more of any
class of voting securities of Constellation or any subsidiary of Constellation
owning, operating or controlling a Constellation Material Business; provided,
however,
that in
each case the term “Constellation Transaction” shall not include (x) any
separation (in and of itself) of the regulated and non-regulated businesses
of
Constellation by means of a spin-off, split-off or other similar transaction
whereby the stockholders of Constellation receive shares of either BGE or an
existing or newly organized entity that owns all or substantially all of the
non-regulated businesses of Constellation (in addition to their existing shares
of Constellation or as part of a share exchange transaction, such that they
end
up with shares in two separate businesses), (y) a public offering or private
sale of capital stock of BGE, or (z) the sale or other disposition of the
natural gas-fired generation assets that Constellation agreed, on October 10,
2006, to sell to Tenaska Power Fund, L.P. (“Tenaska”),
whether such transaction involves Tenaska or any other third party. If a
transaction falling within the scope of clause (x) of the proviso in the
preceding sentence occurs, and if Constellation will cease to own all or
substantially all of the non-regulated businesses as a result of such
transaction, then Constellation shall cause this Section 3(b) to be expressly
assumed by, and to become an obligation of, the entity that will own all or
substantially all of the non-regulated businesses, and a “Constellation
Transaction” shall thereafter be read to apply to such entity, as if it were
Constellation. In no event shall more than one fee be payable under this Section
3(b).
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4. Mutual
Release.
Effective immediately, each of FPL Group, on the one hand, and Constellation,
on
the other hand, on behalf of itself and each of its respective predecessors,
successors, subsidiaries and assigns (as well as all of the present and former
officers, directors employees, agents and representatives of each of the
foregoing, and the heirs of any of the foregoing who is a natural person) (each,
a “Releasing
Party”),
hereby irrevocably, unconditionally and forever covenants not to xxx, releases
and discharges (a) the other such Party and (b) any and all of such other
Party’s present and former directors, officers, representatives, advisors
(including but not limited to financial advisors), attorneys, accountants,
employees, agents, parents, subsidiaries, shareholders, partners, members,
affiliated persons and entities, predecessors, successors and assigns and heirs,
executors and administrators and all persons acting in concert with any such
party (each, a “Released
Party”)
from
any and all manner of claims, obligations, actions, demands, judgments, damages,
rights, liabilities, causes of action or suits, at law or in equity, known
or
unknown, liquidated or unliquidated, fixed or contingent, matured or unmatured,
foreseen or unforeseen, which each now has or hereafter can, shall or may have
by reason of any matter, cause or thing whatsoever relating to or arising out
of
the Merger Agreement or the agreements or instruments ancillary thereto or
the
transactions contemplated thereby, or any action or failure to act under the
Merger Agreement or in connection therewith, or in connection with the events
leading to the abandonment of the Merger and any other transactions contemplated
by the Merger Agreement and the mutual termination of the Merger Agreement,
excepting only any claim, action, cause of action or suit arising (i) out of
an
undertaking or promise contained in this Agreement, (ii) after the date of
this
Agreement, by virtue of obligations under the Confidentiality Agreement, (iii)
with respect to any statements made or actions taken after the date of this
Agreement, or (iv) by virtue of transactions or dealings undertaken in the
ordinary course of business, including without limitation leases or outstanding
energy trading and transportation transactions, and not arising out of, or
in
connection with, the Merger Agreement and the transactions contemplated thereby.
Nothing in this Agreement or the Merger Agreement shall in any way constitute
an
agreement by any Party hereto to indemnify any other Party against any
third-party claim.
3
5. Representations
and Warranties.
(a) Representations
and Warranties of FPL Group.
FPL
Group represents and warrants to Constellation that: (i) FPL Group has all
requisite corporate power and authority to enter into this Agreement and to
take
the actions contemplated hereby; (ii) the execution and delivery of this
Agreement and the actions contemplated hereby have been duly authorized by
all
necessary corporate action on the part of FPL Group, including approval of
the
board of directors of FPL Group; and (iii) this Agreement has been duly and
validly executed and delivered by FPL Group and constitutes a legal, valid
and
binding obligation of FPL Group enforceable against FPL Group in accordance
with
its terms.
(b) Representations
and Warranties of Constellation and Merger Sub.
Constellation and Merger Sub each represents and warrants to FPL Group that:
(i)
Constellation and Merger Sub each has all requisite corporate power and
authority to enter into this Agreement and to take the actions contemplated
hereby; (ii) the execution and delivery of this Agreement and the actions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of each of Constellation and Merger Sub, including approval of
the
board of directors of each of Constellation and Merger Sub; and (iii) this
Agreement has been duly and validly executed and delivered by Constellation
and
Merger Sub and constitutes a legal, valid and binding obligation of
Constellation and Merger Sub enforceable against Constellation and Merger Sub
in
accordance with its terms.
6. Entire
Agreement; Third Party Beneficiaries.
This
Agreement and the Confidentiality Agreement (a) constitute the entire agreement
between the Parties with respect to the subject matter hereof and supersede
all
prior agreements and understandings, both written and oral, between the Parties,
or any of them, with respect to the subject matter hereof and (b) except for
the
provisions of Section 4 hereof, are not intended to confer on any person other
than the Parties any rights or remedies.
7. Cooperation.
The
Parties shall cooperate with each other and promptly prepare and file all
necessary documentation to withdraw all applications, notices, petitions and
filings made with, and shall use their reasonable best efforts to terminate
the
proceedings before, any Governmental Authority in connection with the Merger
Agreement. Without limiting the generality of the foregoing, FPL Group shall
cause to be dismissed with prejudice (as moot) the complaint filed by FPL Group
in the Circuit Court of Baltimore City concerning certain provisions of the
June
2006 Maryland energy legislation addressing the process for approval of the
Merger by the Maryland Public Service Commission.
8. Non-Disparagement.
Constellation and FPL Group shall use their reasonable best efforts to prevent
their respective directors and officers from directly or indirectly, whether
in
writing or orally, making any statements related to the Merger Agreement or
the
transactions contemplated thereby or this Agreement that criticize, denigrate
or
disparage FPL Group or Constellation, as applicable, or any of its affiliates,
predecessors or successors or any current or former directors, officers,
employees, shareholders, partners, members, agents or representatives of any
of
the foregoing; provided,
however,
that
(a) this Section 8 shall have no force or effect in any legal proceeding that
arises from or relates to this Agreement and its performance, (b) nothing in
this Section 8 shall or shall be deemed to prevent or impair any current or
former director, officer, employee, shareholder, partner, member, agent or
representative of Constellation or FPL Group from testifying truthfully in
any
legal or administrative proceeding in which such person’s testimony is compelled
or requested or otherwise complying with any legal requirements or responding
to
inquiries or requests for information by any regulator or auditor, and (c)
this
Section 8 shall not restrain the Parties or their director and senior officers
from engaging in legitimate competition with each other.
4
9. Amendment
and Modification.
This
Agreement may be amended, modified, and supplemented only by a written
instrument signed on behalf of each of the Parties.
10. Representation
by Counsel; Mutual Drafting.
The
Parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and have participated jointly in
the
negotiation and drafting of this Agreement and hereby waive the application
of
any law, regulation, holding or rule of construction providing that ambiguities
in an agreement or other document will be construed against the party drafting
such agreement or document. In the event an ambiguity or question of intent
or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions
of
this Agreement.
11. Incorporation
by Reference.
The
provisions of Article VIII of the Merger Agreement (other than Sections 8.01
and
8.06 thereof) are hereby incorporated by reference herein, with the same force
and effect as if set forth in full herein, it being understood that references
in such Article VIII to “this Agreement” shall be deemed only to refer to this
Agreement as incorporated by reference herein. The Parties agree that delivery
of executed signature pages by facsimile shall be sufficient to render this
Agreement effective.
{Remainder
of page intentionally left blank.}
5
IN
WITNESS WHEREOF, FPL Group, Constellation and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
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FPL
GROUP, INC.
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By:
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Xxxxxx X. Xxxxxx
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Name:
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Title:
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Vice
President & General Counsel
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CONSTELLATION
ENERGY GROUP, INC.
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By:
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Xxxxxx Xxxxx
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Name:
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Xxxxxx
Xxxxx
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Title:
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Executive
Vice President
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CF
MERGER CORPORATION
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By:
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Xxxxxxx X. Xxxxxxxxxx
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Name:
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Xxxxxxx
X. Xxxxxxxxxx
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Title:
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Senior
Vice President
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