Exhibit No. 2(a)
Agreement and Plan of Reorganization
and Corporation Separation
(NUCLEAR)
AGREEMENT, made June 26, 2000, effective as of July 1, 2000, among
Baltimore Gas and Electric Company ("Distributing"), a Maryland corporation,
Calvert Cliffs Nuclear Power Plant, Inc ("Controlled 2"), a Maryland
corporation, Constellation Energy Group, Inc., a Maryland corporation
("Parent"), and Constellation Nuclear LLC ("Nuclear LLC") a single member
Maryland LLC that is a disregarded entity for federal income tax purposes
(collectively, the "Parties").
Recitals
--------
1. Distributing owns all the assets of its nuclear generation business
(including Units 1 and 2 at its Calvert Cliffs nuclear power plant and the
independent spent fuel storage facility) and all of the stock of Controlled 2;
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 nuclear generation
business from its transmission and distribution business by transferring its
nuclear generation business to Controlled 2 effective July 1, 2000 (the
"Effective Date");
3. Distributing also intends to separate its fossil generation assets from
its transmission and distribution assets by transferring its fossil generation
assets to another entity pursuant to a separate agreement; and
4. On the Effective Date, Distributing will distribute the stock of
Controlled 2 to Parent and Parent will then contribute the stock of Controlled 2
to Nuclear LLC.
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
--------------------------------------------------------------------
A. Transfer of Assets. On the Effective Date, Distributing will assign,
transfer and deliver to Controlled 2 all of its right, title and interest in its
nuclear generation assets.
B. Assumption of Liabilities. On the Effective Date, Controlled 2 agrees to
assume and become responsible for liabilities, contracts and obligations
relating to Distributing's nuclear generation assets and business, whether
accrued, contingent, or otherwise including the obligation to decommission the
Calvert Cliffs nuclear power plant and independent spent fuel storage facility
(collectively, the "Facilities") in accordance with all applicable laws and
regulations.
1
<PAGE>
C. Allocation and Assumption of Debt. On the Effective Date, Controlled 2
will assume the rights and obligations of Distributing with respect to the tax
exempt debt set forth in Exhibit A hereto that was entered into by Distributing
to finance certain pollution control equipment installed at the Calvert Cliffs
nuclear power plant.
2. Nuclear Decommissioning Funds and Competitive Transition Charge
------------------------------------------------------------------
A. Decommissioning Funds.
(1) Assignment. On the Effective Date, Distributing will assign, transfer
and deliver to Controlled 2 all of its right, title and interest free and clear
of any liens or other encumbrances in (a) the qualified and nonqualified
decommissioning trust funds maintained by Distributing ("Master Trust")
established to decommission the Facilities; and (b) the revenue to be collected
from Distributing's electric customers for the decommissioning of the Facilities
that is included in the electric service rates of Distributing as specified in
the PSC Order.
(2) Collection Agreement. Distributing and Controlled 2 have executed a
Decommissioning Funds Collection Agent Agreement, substantially in the form
attached hereto as Exhibit B, pursuant to which Distributing will collect
decommissioning funds for decommissioning the Facilities from its electric
customers and will remit such funds to Controlled 2 beginning on the Effective
Date.
B. Competitive Transition Charge.
(1) Assignment. On the Effective Date, Distributing will assign, transfer
and deliver to Controlled 2 all of its right, title and interest in 90% of the
revenue collected from Distributing's electric customers through the imposition
of the competitive transition charge ("CTC") representing the amount of stranded
costs attributable to the Calvert Cliff's nuclear power plant.
(2) Collection Agreement. Distributing and Controlled 2 have executed a
Competitive Transition Charge Collection Agent Agreement, substantially in the
form attached hereto as Exhibit C, effective concurrently with the transfer of
nuclear assets and liabilities, pursuant to which Distributing will collect the
CTC authorized by the PSC Order from its electric customers and remit 90% of it
to Controlled 2 beginning on the Effective Date. The remittance of the CTC shall
be adjusted by the SOS Offset as specified in Exhibit C.
2
<PAGE>
3. Distribution of Controlled 2 Stock
-------------------------------------
On the Effective Date, Distributing will distribute all its common stock in
Controlled 2 to Parent, which shall constitute all its stock outstanding.
4. Contribution of Controlled 2 Stock
-------------------------------------
Immediately after the distribution of Controlled 2 stock to Parent, Parent
will contribute 100% of Controlled 2 stock to Nuclear LLC.
5. Intentionally left blank
---------------------------
6. Conditions to Effectiveness
------------------------------
The Parties acknowledge that each of the following conditions have been
met:
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 2, nor Parent 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 Paragraph 1.
(2) Approval of the Maryland Public Service Commission of Distributing's
application for transfer of its generating assets to Controlled 2.
(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 2 to Issue Securities and
Assume Liabilities.
(5) Approval of the FERC of the Joint Application - Authorization for
Controlled 2 to Make Sales of Capacity, Energy, and Ancillary Services at
market-based rates pursuant to Controlled 2 FERC Rate Schedule.
(6) Approval of the FERC of the Joint Application - Acceptance for filing
of the Interconnection Agreement applicable to Controlled 2 and Distributing.
3
<PAGE>
(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 2 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 2 and CPS.
(10) Approval of the Nuclear Regulatory Commission of Distributing's
application to transfer to Controlled 2 and to amend License Nos. DTR-53, DPR-69
and SNM-2505 for Calvert Cliffs unit 1, Calvert Cliffs unit 2, and Calvert
Cliffs independent spent fuel storage facility, respectively.
(11) Receipt of all governmental approvals required for closing under that
certain Agreement and Plan of Reorganization and Corporate Separation of even
date herewith among Distributing, Parent, Constellation Power Source Generation,
Inc., Constellation Enterprises, Inc. and Constellation Holdings, Inc.
B. Other Agreements and Delivery of Documents.
(1) Controlled 2 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.
7. Miscellaneous
----------------
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.
4
<PAGE>
Constellation Energy Group, Inc.
By: ____________________________
Baltimore Gas and Electric Company
By: _____________________________
Constellation Nuclear, LLC
By: _____________________________
Calvert Cliffs Nuclear Power Plant, Inc.
By: ______________________________
5
<PAGE>
Exhibit List
------------
Exhibit A - Schedule of Distributing's Tax Exempt Debt to be assumed by
Controlled 2
Exhibit B - Decommissioning Funds Collection Agent Agreement
Exhibit C - Competitive Transition Charge Collection Agent Agreement and
calculation of percent attributable to Calvert Cliffs Nuclear Power Plant
We agree to furnish supplementally a copy of the omitted exhibits to the
Commission upon request.
6
<PAGE>
