Exhibit No. 2 (b)
Agreement and Plan of Reorganization
and Corporation Separation
(Fossil)
AGREEMENT, made June 26, 2000, effective as of July 1, 2000, among
Baltimore Gas and Electric Company ("Distributing"), a Maryland corporation,
Constellation Power Source Generation, Inc. ("Controlled 1"), a Maryland
corporation, Constellation Energy Group, Inc., a Maryland corporation
("Parent"), Constellation Enterprises, Inc. ("Enterprises"), a Maryland
corporation and Constellation Holdings, Inc. ("Holdings"), a Maryland
corporation (collectively, the "Parties").
Recitals
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1. Distributing owns all the assets of its fossil generation business
(including jointly held assets comprising two mine mouth coal generating
stations and one hydroelectric generating station in Pennsylvania) and all of
the stock of Controlled 1; and
2. As a result of the deregulation of Distributing's electric generation
assets in accordance with Maryland's Electric Customer Choice and Competition
Act of 1999 and Maryland Public Service Commission Order No. 75757 ("PSC
Order"), it is the desire of Distributing to separate its fossil generation
business from its transmission and distribution business by transferring its
fossil generation business (including the jointly held assets) to Controlled 1
on July 1, 2000 (the "Effective Date");
3. Distributing also intends to separate its nuclear generation assets from
its transmission and distribution assets by transferring its nuclear generation
assets to another entity pursuant to a separate agreement; and
4. All on the Effective Date, Distributing will distribute the stock of
Controlled 1 to Parent and Parent will then contribute the stock of Controlled 1
to Enterprises. Enterprises will then transfer the stock of Controlled 1 to
Holdings. Holdings will then transfer the stock of Controlled 1 to Constellation
Power Source Holdings, Inc.
NOW THEREFORE, in consideration of the mutual 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. Transfer of Assets; Assumption of Liabilities; Allocation of Debt
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A. Transfer of Assets. On the Effective Date, Distributing will assign,
transfer and deliver to Controlled 1 all of its right, title and interest in its
fossil generation assets (including its jointly held assets).
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B. Assumption of Liabilities. On the Effective Date, Controlled 1 agrees to
assume and become responsible for liabilities, contracts and obligations
relating to Distributing's fossil generation assets and business, whether
accrued, contingent, or otherwise.
C. Allocation and Assumption of Debt. Effective with the transfer of fossil
assets and liabilities, Controlled 1 will be indebted to Distributing as
evidenced by promissory notes in the aggregate principal amount of $366,266,000,
each note in such principal amount, and with such maturity date and interest
rate as set forth on Exhibit A hereto, to Distributing. Such notes will be
substantially in the form attached hereto as Exhibit B. In addition, Controlled
1 will assume the rights and obligations of Distributing with respect to the tax
exempt debt set forth in Exhibit C hereto that was entered into by Distributing
to finance certain pollution control and solid waste disposal equipment
installed at Distibuting's fossil generation plants.
2. Distribution of Controlled 1 Stock
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On the Effective Date, Distributing will distribute all its common stock in
Controlled 1 to Parent, which shall constitute all the stock outstanding of
Controlled 1.
3. Contribution of Controlled 1 Stock
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Immediately after the distribution of Controlled 1 stock to Parent, Parent
will contribute 100% of Controlled 1 stock to Enterprises. Immediately
thereafter, Enterprises will contribute 100% of the Controlled 1 stock to
Holdings. Immediately thereafter, Holdings will contribute 100% of the
Controlled 1 stock to Constellation Power Source Holdings, Inc.
4. Intentionally left blank
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5. Conditions to Closing
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The Parties acknowledge that each of the following conditions have been
satisfied:
A. Governmental Approvals. The following approvals have been received:
(1) Ruling by the Internal Revenue Service that the transactions described
therein will constitute a tax-free corporate separation under ss.368 and ss.355
of the Internal Revenue Code of 1986, as amended and that neither Distributing,
Controlled 1, Parent, Enterprises nor Holdings will recognize any gain or loss
or otherwise take any income or deduction into account by reason of the transfer
of the assets and liabilities set forth in Paragraphs 1 and 2.
(2) Approval of the Maryland Public Service Commission of Distributing's
application for transfer of its generating assets to Controlled 1.
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(3) Approval of the Federal Energy Regulatory Commission (FERC) of the
Joint Application under Section 203 of The Federal Power Act for the Disposition
of Jurisdictional Facilities.
(4) Approval of the FERC of the Application under Section 204 of The
Federal Power Act for the Authorization for Controlled 1 to Issue Securities and
Assume Liabilities.
(5) Approval of the FERC of the Joint Application - Authorization for
Controlled 1 to Make Sales of Capacity, Energy, and Ancillary Services at
market-based rates pursuant to Controlled 1 FERC Rate Schedule.
(6) Approval of the FERC of the Joint Application - Acceptance for filing
of the Interconnection Agreement applicable to Controlled 1 and Distributing.
(7) Approval of the FERC of the Joint Application - Cancellation of the
Codes of Conduct applicable to Constellation Power Source, Inc. (an affiliate of
Parent) and Distributing.
(8) Approval of the FERC of the Controlled 1 application for determination
of exempt wholesale generator ("EWG") status within the meaning of Section
32(a)(1) of PUHCA.
(9) Approval of the FERC of the Power Sales Agreements between Distributing
and Constellation Power Source, Inc. ("CPS") and Controlled 1 and CPS.
B. Other Agreements and Delivery of Documents. Controlled 1 and
Distributing have agreed on the proper allocation or proration of additional
assets, items and liabilities, and each Party has executed and delivered all
documentation reasonably requested by either party necessary to consummate the
transactions contemplated in this Agreement.
C. Orders and Laws. There is not in effect any governmental order or law
restraining, enjoining, or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
6. Miscellaneous
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This Agreement shall be governed by the laws of the State of Maryland.
Neither this Agreement nor any of the Parties' rights or obligations hereunder
may be assigned, in whole or in part, by any Party whether by operation of law
or otherwise without the prior written consent of all of the other Parties.
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Constellation Energy Group, Inc.
By: ____________________________
Baltimore Gas and Electric Company
By: _____________________________
Constellation Enterprises, Inc.
By: _____________________________
Constellation Holdings, Inc.
By: ______________________________
Constellation Power Source Generation, Inc.
By: ______________________________
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Exhibit List
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Exhibit A - Schedule of Promissory Notes to be issued by Controlled 1 to
Distributing corresponding to certain debt of Distributing
Exhibit B - Form of Promissory Note
Exhibit C - Schedule of Distributing's Tax Exempt Debt to be assumed by
Controlled 1
We agree to furnish supplementally a copy of the omitted exhibits to the
Commission upon request.
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