-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lnvhboi/1erTSCv0MXI9eb/LnztFeEouYXAhqC3ghfSWYuBKUAqeCszH3bkeSDGa wq+FW9x2NfAW8nnzm8IvsQ== /in/edgar/work/20000803/0000753308-00-000014/0000753308-00-000014.txt : 20000921 0000753308-00-000014.hdr.sgml : 20000921 ACCESSION NUMBER: 0000753308-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FPL GROUP INC CENTRAL INDEX KEY: 0000753308 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 592449419 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08841 FILM NUMBER: 684829 BUSINESS ADDRESS: STREET 1: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616944000 MAIL ADDRESS: STREET 1: P O BOX 14000 CITY: JUNO BEACH STATE: FL ZIP: 33408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA POWER & LIGHT CO CENTRAL INDEX KEY: 0000037634 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 590247775 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-27612 FILM NUMBER: 684830 BUSINESS ADDRESS: STREET 1: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616944000 MAIL ADDRESS: STREET 1: P O BOX 14000 CITY: JUNO BEACH STATE: FL ZIP: 33408 10-Q 1 0001.txt FPL GROUP AND FPL 6/30/00 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Exact name of Registrants as specified in their charters, address of principal IRS Employer Commission executive offices and Identification File Number Registrants' telephone number Number - ----------- --------------------------------------- -------------- 1-8841 FPL GROUP, INC. 59-2449419 1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775 700 Universe Boulevard Juno Beach, Florida 33408 (561) 694-4000 State or other jurisdiction of incorporation or organization: Florida Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) have been subject to such filing requirements for the past 90 days. Yes X No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of each class of FPL Group, Inc. common stock, as of the latest practicable date: Common Stock, $.01 par value, outstanding at July 31, 2000: 177,752,216 shares. As of July 31, 2000, there were issued and outstanding 1,000 shares of Florida Power & Light Company's common stock, without par value, all of which were held, beneficially and of record, by FPL Group, Inc. ______________________________ This combined Form 10-Q represents separate filings by FPL Group, Inc. and Florida Power & Light Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Florida Power & Light Company makes no representations as to the information relating to FPL Group, Inc.'s other operations. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL) (collectively, the Company) are hereby filing cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of the Company in this combined Form 10-Q, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are expected to, will continue, is anticipated, estimated, projection, outlook) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause the Company's actual results to differ materially from those contained in forward-looking statements made by or on behalf of the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Some important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements include changes in laws or regulations, changing governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC), the Florida Public Service Commission (FPSC), the Public Utility Regulatory Policies Act of 1978, as amended (PURPA), the Public Utility Holding Company Act of 1935, as amended and the U. S. Nuclear Regulatory Commission, with respect to allowed rates of return including but not limited to return on common equity and equity ratio limits, industry and rate structure, operation of nuclear power facilities, acquisition, disposal, depreciation and amortization of assets and facilities, operation and construction of plant facilities, recovery of fuel and purchased power costs, decommissioning costs, and present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs). The business and profitability of the Company are also influenced by economic and geographic factors including political and economic risks, changes in and compliance with environmental and safety laws and policies, weather conditions (including natural disasters such as hurricanes), population growth rates and demographic patterns, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, market demand for energy from plants or facilities, changes in tax rates or policies or in rates of inflation or in accounting standards, unanticipated delays or changes in costs for capital projects, unanticipated changes in operating expenses and capital expenditures, capital market conditions, competition for new energy development opportunities and legal and administrative proceedings (whether civil, such as environmental, or criminal) and settlements. All such factors are difficult to predict, contain uncertainties which may materially affect actual results, and are beyond the control of the Company. PART I - FINANCIAL INFORMATION Item 1. Financial Statements FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (millions, except per share amounts) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 OPERATING REVENUES ............................................... $1,670 $1,614 $3,138 $3,026 OPERATING EXPENSES: Fuel, purchased power and interchange .......................... 605 588 1,146 1,095 Other operations and maintenance................................ 308 327 593 601 Depreciation and amortization .................................. 266 244 525 523 Impairment loss on Maine assets ................................ - 176 - 176 Taxes other than income taxes .................................. 144 144 291 288 Total operating expenses ..................................... 1,323 1,479 2,555 2,683 OPERATING INCOME ................................................. 347 135 583 343 OTHER INCOME (DEDUCTIONS): Interest charges ............................................... (64) (58) (126) (106) Preferred stock dividends - FPL ................................ (4) (4) (7) (7) Gain on sale of Adelphia Communications Corporation stock ...... - - - 149 Other - net .................................................... 26 32 34 41 Total other income (deductions) - net ........................ (42) (30) (99) 77 INCOME BEFORE INCOME TAXES ....................................... 305 105 484 420 INCOME TAXES ..................................................... 101 28 159 134 NET INCOME ....................................................... $ 204 $ 77 $ 325 $ 286 Earnings per share of common stock (basic and assuming dilution).. $ 1.20 $ 0.45 $ 1.91 $ 1.67 Dividends per share of common stock .............................. $ 0.54 $ 0.52 $ 1.08 $ 1.04 Average number of common shares outstanding ...................... 170 171 170 172
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 13 herein and the Notes to Consolidated Financial Statements appearing in the combined Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (1999 Form 10-K) for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (millions) (unaudited)
June 30, December 31, 2000 1999 PROPERTY, PLANT AND EQUIPMENT: Electric utility plant in service and other property, including nuclear fuel and construction work in progress ....................... $20,220 $19,554 Less accumulated depreciation and amortization ................................... (10,764) (10,290) Total property, plant and equipment - net ...................................... 9,456 9,264 CURRENT ASSETS: Cash and cash equivalents ........................................................ 234 361 Customer receivables, net of allowances of $6 and $7, respectively ............... 578 482 Materials, supplies and fossil fuel inventory - at average cost .................. 320 343 Deferred clause expenses ......................................................... 259 54 Other ............................................................................ 219 133 Total current assets ........................................................... 1,610 1,373 OTHER ASSETS: Special use funds of FPL ......................................................... 1,449 1,352 Other investments ................................................................ 782 611 Other ............................................................................ 899 841 Total other assets ............................................................. 3,130 2,804 TOTAL ASSETS ....................................................................... $14,196 $13,441 CAPITALIZATION: Common stock ..................................................................... $ 2 $ 2 Additional paid-in capital........................................................ 2,891 2,904 Retained earnings................................................................. 2,606 2,465 Accumulated other comprehensive loss.............................................. - (1) Total common shareholders' equity............................................... 5,499 5,370 Preferred stock of FPL without sinking fund requirements ......................... 226 226 Long-term debt ................................................................... 3,479 3,478 Total capitalization ........................................................... 9,204 9,074 CURRENT LIABILITIES: Debt due within one year ......................................................... 823 464 Accounts payable ................................................................. 547 407 Deferred clause revenues ......................................................... 74 116 Accrued interest, taxes and other ................................................ 984 883 Total current liabilities ...................................................... 2,428 1,870 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 1,176 1,079 Unamortized regulatory and investment tax credits ................................ 289 310 Other ............................................................................ 1,099 1,108 Total other liabilities and deferred credits ................................... 2,564 2,497 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $14,196 $13,441
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 13 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions) (unaudited)
Six Months Ended June 30, 2000 1999 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 748 $1,090 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures of FPL ......................................................... (660) (378) Independent power investments ....................................................... (294) (1,352) Other - net ......................................................................... (63) 144 Net cash used in investing activities ........................................... (1,017) (1,586) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt .......................................................... 145 621 Retirement of long-term debt ........................................................ (149) (354) Increase in commercial paper ........................................................ 363 899 Repurchase of common stock .......................................................... (34) (84) Dividends on common stock ........................................................... (183) (178) Net cash provided by financing activities ....................................... 142 904 Net increase (decrease) in cash and cash equivalents .................................. (127) 408 Cash and cash equivalents at beginning of period ...................................... 361 187 Cash and cash equivalents at end of period ............................................ $ 234 $ 595 Supplemental disclosures of cash flow information: Cash paid for interest (net of amount capitalized) .................................. $ 135 $ 117 Cash paid for income taxes .......................................................... $ 35 $ 104 Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 22 $ 28
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 13 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (millions) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 OPERATING REVENUES ................................................. $1,533 $1,511 $2,871 $2,869 OPERATING EXPENSES: Fuel, purchased power and interchange ............................ 570 548 1,071 1,033 Other operations and maintenance ................................. 250 284 487 534 Depreciation and amortization .................................... 254 234 501 509 Income taxes ..................................................... 101 95 161 151 Taxes other than income taxes .................................... 140 143 282 285 Total operating expenses ....................................... 1,315 1,304 2,502 2,512 OPERATING INCOME ................................................... 218 207 369 357 OTHER INCOME (DEDUCTIONS): Interest charges ................................................. (42) (43) (82) (86) Other - net ...................................................... - 3 (2) 4 Total other deductions - net ................................... (42) (40) (84) (82) NET INCOME ......................................................... 176 167 285 275 PREFERRED STOCK DIVIDENDS .......................................... 4 4 7 7 NET INCOME AVAILABLE TO FPL GROUP .................................. $ 172 $ 163 $ 278 $ 268
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 13 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (millions) (unaudited)
June 30, December 31, 2000 1999 ELECTRIC UTILITY PLANT: Plant in service, including nuclear fuel and construction work in progress ....... $18,576 $18,162 Less accumulated depreciation and amortization ................................... (10,618) (10,184) Electric utility plant - net ................................................... 7,958 7,978 CURRENT ASSETS: Cash and cash equivalents ........................................................ 143 - Customer receivables, net of allowances of $6 and $7, respectively ............... 510 433 Materials, supplies and fossil fuel inventory - at average cost .................. 279 299 Deferred clause expenses ......................................................... 259 54 Other ............................................................................ 194 107 Total current assets ........................................................... 1,385 893 OTHER ASSETS: Special use funds ................................................................ 1,449 1,352 Other ............................................................................ 455 385 Total other assets ............................................................. 1,904 1,737 TOTAL ASSETS ....................................................................... $11,247 $10,608 CAPITALIZATION: Common shareholder's equity ...................................................... $ 4,853 $ 4,793 Preferred stock without sinking fund requirements ................................ 226 226 Long-term debt ................................................................... 2,080 2,079 Total capitalization ........................................................... 7,159 7,098 CURRENT LIABILITIES: Debt due within one year ......................................................... 468 219 Accounts payable ................................................................. 521 379 Deferred clause revenues ........................................................ 74 116 Accrued interest, taxes and other ................................................ 888 719 Total current liabilities ...................................................... 1,951 1,433 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 898 802 Unamortized regulatory and investment tax credits ................................ 289 310 Other ............................................................................ 950 965 Total other liabilities and deferred credits ................................... 2,137 2,077 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $11,247 $10,608
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 13 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions) (unaudited)
Six Months Ended June 30, 2000 1999 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 722 $1,030 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................................ (660) (378) Other - net ......................................................................... (43) (59) Net cash used in investing activities ........................................... (703) (437) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt .......................................................... 145 224 Retirement of long-term debt ........................................................ (149) (225) Increase in commercial paper ........................................................ 253 - Dividends ........................................................................... (225) (220) Capital contribution from FPL Group ................................................. 100 - Net cash provided by (used in) financing activities ............................... 124 (221) Net increase in cash and cash equivalents ............................................. 143 372 Cash and cash equivalents at beginning of period ...................................... - 152 Cash and cash equivalents at end of period ............................................ $ 143 $ 524 Supplemental disclosures of cash flow information: Cash paid for interest .............................................................. $ 89 $ 96 Cash paid (received) for income taxes ............................................... $ (27) $ 84 Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 22 $ 28 Transfer of net assets to FPL FiberNet, LLC ......................................... $ 100 $ -
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 13 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The accompanying condensed consolidated financial statements should be read in conjunction with the 1999 Form 10-K for FPL Group and FPL. In the opinion of FPL Group and FPL management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior year's consolidated financial statements have been reclassified to conform to the current year's presentation. The results of operations for an interim period may not give a true indication of results for the year. 1. Capitalization FPL Group Common Stock - During the three and six months ended June 30, 2000, FPL Group repurchased 381,000 shares and 750,400 shares of common stock, respectively, under its share repurchase program. A total of approximately 4.6 million shares have been repurchased under the share repurchase program that began in April 1997. Long-Term Debt - In April 2000, FPL sold approximately $96 million principal amount of variable-rate pollution control revenue refunding bonds maturing in July 2022. The proceeds were used in July 2000 to redeem approximately $96 million of pollution control revenue refunding bonds, consisting of $76 million bearing interest at 7.3% and maturing in 2020 and $20 million with variable rate interest maturing in 2024. In June 2000, FPL sold approximately $49 million principal amount of variable-rate solid waste disposal revenue refunding bonds maturing in 2025. A portion of the proceeds was used to redeem, in June 2000, solid waste disposal revenue bonds totalling $16 million bearing interest at 7.15% and maturing in 2023, and $7 million bearing interest at 6.7% and maturing in 2027. The remaining proceeds will be used to redeem solid waste disposal revenue bonds in August and September 2000, of which $10 million bear interest at 7.5% and mature in 2020 and $16 million are variable rate and mature in 2027. Long-Term Incentive Plan - Performance shares and options granted to date under FPL Group's long-term incentive plan resulted in assumed incremental shares of common stock outstanding for purposes of computing both basic and diluted earnings per share for the three and six months ended June 30, 2000 and 1999. These incremental shares were not material in the periods presented and did not cause diluted earnings per share to differ from basic earnings per share. Other - Comprehensive income of FPL Group, totaling $204 million and $76 million for the three months ended June 30, 2000 and 1999 and $325 million and $285 million for the six months ended June 30, 2000 and 1999, respectively, includes net income, changes in unrealized gains and losses on securities and foreign currency translation adjustments. Accumulated other comprehensive income is separately displayed in the condensed consolidated balance sheets of FPL Group. 2. Commitments and Contingencies Commitments - FPL has made commitments in connection with a portion of its projected capital expenditures. Capital expenditures for the construction or acquisition of additional facilities and equipment to meet customer demand are estimated to be approximately $3.1 billion for 2000 through 2002. Included in this three-year forecast are capital expenditures for 2000 of approximately $1.3 billion, of which $629 million had been spent through June 30, 2000. As of June 30, 2000, FPL Energy, LLC (FPL Energy), has made commitments in connection with the development and expansion of independent power projects totaling approximately $79 million. FPL Group and its subsidiaries, other than FPL, have guaranteed approximately $370 million of purchased power agreement obligations, debt service payments and other payments subject to certain contingencies. Insurance - Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of the insurance available from private sources and under an industry retrospective payment plan. In accordance with this Act, FPL maintains $200 million of private liability insurance, which is the maximum obtainable, and participates in a secondary financial protection system under which it is subject to retrospective assessments of up to $363 million per incident at any nuclear utility reactor in the United States, payable at a rate not to exceed $43 million per incident per year. FPL participates in nuclear insurance mutual companies that provide $2.75 billion of limited insurance coverage for property damage, decontamination and premature decommissioning risks at its nuclear plants. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. FPL also participates in an insurance program that provides limited coverage for replacement power costs if a nuclear plant is out of service because of an accident. In the event of an accident at one of FPL's or another participating insured's nuclear plants, FPL could be assessed up to $38 million in retrospective premiums. In the event of a catastrophic loss at one of FPL's nuclear plants, the amount of insurance available may not be adequate to cover property damage and other expenses incurred. Uninsured losses, to the extent not recovered through rates, would be borne by FPL and could have a material adverse effect on FPL Group's and FPL's financial condition. FPL self-insures the majority of its transmission and distribution (T&D) property due to the high cost and limited coverage available from third- party insurers. As approved by the FPSC, FPL maintains a funded storm and property insurance reserve, which totaled approximately $216 million at June 30, 2000, for uninsured property storm damage or assessments under the nuclear insurance program. Recovery from customers of any losses in excess of the storm and property insurance reserve will require the approval of the FPSC. FPL's available lines of credit include $300 million to provide additional liquidity in the event of a T&D property loss. Contracts - FPL Group has entered into a $3.7 billion long-term agreement with General Electric Company for the supply of 66 gas turbines from 2000 through 2004 and parts, repairs and on-site services through 2011. The turbines are intended to support expansion at FPL and FPL Energy, and the related commitments for a portion of the 66 gas turbines are included in Commitments above. FPL has entered into long-term purchased power and fuel contracts. Take- or-pay purchased power contracts with the Jacksonville Electric Authority (JEA) and with subsidiaries of The Southern Company (Southern Companies) provide approximately 1,300 megawatts (mw) of power through mid-2010 and 383 mw thereafter through 2021. FPL also has various firm pay-for- performance contracts to purchase approximately 900 mw from certain cogenerators and small power producers (qualifying facilities) with expiration dates ranging from 2002 through 2026. The purchased power contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts. Capacity payments for the pay-for-performance contracts are subject to the qualifying facilities meeting certain contract conditions. FPL has long-term contracts for the transportation and supply of natural gas, coal and oil with various expiration dates through 2021. FPL Energy has long-term contracts for the transportation and storage of natural gas with expiration dates ranging from 2005 through 2017, and a contract for the supply of natural gas that expires in mid-2002. The required capacity and minimum payments under these contracts for the remainder of 2000 through 2004 are estimated to be as follows:
2000 2001 2002 2003 2004 (millions) FPL: Capacity payments: JEA and Southern Companies .......................................... $110 $210 $210 $200 $200 Qualifying facilities (a) ........................................... $170 $340 $355 $365 $375 Minimum payments, at projected prices: Natural gas, including transportation ............................... $390 $555 $555 $560 $555 Coal ................................................................ $ 25 $ 45 $ 45 $ 20 $ 10 Oil ................................................................. $145 $195 $ 10 $ - $ - FPL Energy: Natural gas, including transportation and storage ..................... $ 10 $ 20 $ 20 $ 15 $ 15 _______________ (a) Excludes capacity payments associated with two contracts that are in dispute. The capacity payments would no longer be required pursuant to a proposed settlement, which is subject to regulatory approval. See Litigation.
Charges under these contracts were as follows:
Three Months Ended June 30, Six Months Ended June 30, 2000 Charges 1999 Charges 2000 Charges 1999 Charges Energy/ Energy/ Energy/ Energy/ Capacity Fuel Capacity Fuel Capacity Fuel Capacity Fuel (millions) FPL: JEA and Southern Companies $51(a) $ 41(b) $49(a) $ 31(b) $102(a) $ 72(b) $101(a) $ 55(b) Qualifying facilities ......$80(c) $ 28(b) $76(c) $ 28(b) $159(c) $ 59(b) $151(c) $ 49(b) Natural gas, including .. $ - $130(b) $ - $111(b) $ - $212(b) $ - $186(b) transportation Coal .......................$ - $ 11(b) $ - $ 11(b) $ - $ 23(b) $ - $ 23(b) Oil ........................$ - $ 89(b) $ - $ 29(b) $ - $110(b) $ - $ 40(b) FPL Energy: Natural gas transportation $ - $ 4 $ - $ 4 $ - $ 8 $ - $ 8 and storage _______________ (a) Recovered through base rates and the capacity cost recovery clause (capacity clause). (b) Recovered through the fuel and purchased power cost recovery clause (fuel clause). (c) Recovered through the capacity clause.
Litigation - In 1997, FPL filed a complaint against the owners of two qualifying facilities (plant owners) seeking an order declaring that FPL's obligations under the power purchase agreements with the qualifying facilities were rendered of no force and effect because the power plants failed to accomplish commercial operation before January 1, 1997, as required by the agreements. The plant owners disputed this claim. In 1997, the plant owners filed for bankruptcy under Chapter XI of the U.S. Bankruptcy Code and entered into an agreement with the holders of more than 70% of the bonds that partially financed the construction of the plants. This agreement gives the holders of a majority of the principal amount of the bonds (the majority bondholders) the right to control, fund and manage any litigation against FPL and the right to settle with FPL on any terms to which the majority bondholders agree, subject to approval by the bankruptcy court. In 1998, the plant owners (through the attorneys for the majority bondholders) filed an answer denying the allegations in FPL's complaint and asserting counterclaims for approximately $2 billion, consisting of all capacity and energy payments that could have been earned over the 30-year term of the power purchase agreements and three times their actual damages for alleged violations of Florida antitrust laws by FPL, FPL Group and FPL Group Capital Inc (FPL Group Capital), plus attorneys' fees. Recent disclosures by the plant owners state that they now seek $322.5 million in damages, plus prejudgement interest. In 1998, the trial court dismissed all of the plant owners' antitrust claims. In July 2000, FPL, the majority bondholders, and the trustee of the indenture under which the bonds were issued entered into a conditional settlement agreement and release (settlement). Under the terms of the settlement, the trustee would be paid $222.5 million plus the amount of the security deposits, to be distributed as directed by the bankruptcy court. The settlement is conditioned upon (i) the approval of the bankruptcy court and (ii) the approval of the FPSC determining that the settlement is an appropriate buyout of the power purchase agreements and authorizing FPL to recover the settlement amount through the capacity clause and fuel clause. FPL estimates the net present value of the savings to its customers from the settlement versus the payments that would have been due under the power purchase agreements to be in excess of $350 million. A contract with Cedar Bay Generating Company, L.P. (Cedar Bay), a qualifying facility, provides FPL with the right to dispatch the Cedar Bay facility "in any manner it deems appropriate." Despite this contractual right, Cedar Bay initiated an action in 1997 in the circuit court challenging, among other things, the manner in which the facility had been dispatched by FPL. Although the court granted summary judgment to FPL with regard to Cedar Bay's claim that FPL's dispatch decisions violated the express terms of the contract, it permitted a jury to hear Cedar Bay's claim that such dispatch decisions violated an implied duty of good faith and fair dealing. The jury awarded Cedar Bay approximately $13 million on this claim. Thereafter, the court entered a declaration that FPL was, in the future, to dispatch the Cedar Bay facility in accordance with certain specified parameters. FPL has appealed both the jury award and the court's declaration. If the jury award is upheld on appeal, FPL expects to recover this amount through the capacity clause. In 1999, after FPL filed its notice of appeal in the Cedar Bay action, a lender, on behalf of itself and a group of other Cedar Bay lenders, filed an action against FPL in the circuit court alleging breach of contract, breach of an implied duty of good faith and fair dealing, fraud, tortious interference with contract and several other claims regarding the manner in which FPL has dispatched the Cedar Bay facility. It seeks unspecified damages and other relief. FPL has moved to dismiss all counts of this complaint. In 1999, the Attorney General of the United States, on behalf of the U.S. Environmental Protection Agency (EPA) brought an action against Georgia Power Company and other subsidiaries of The Southern Company for injunctive relief and the assessment of civil penalties for certain violations of the Clean Air Act. Among other things, the EPA alleges Georgia Power Company constructed and is continuing to operate Scherer Unit No. 4, in which FPL owns a 76% interest, without obtaining proper permitting, and without complying with performance and technology standards as required by the Clean Air Act. The suit seeks injunctive relief requiring the installation of such technology and civil penalties of up to $25,000 per day for each violation from an unspecified date after August 7, 1977 through January 30, 1997, and $27,500 per day for each violation thereafter. Georgia Power Company has filed an answer to the complaint asserting that it has complied with all requirements of the Clean Air Act, denying the plaintiff's allegations of liability, denying that the plaintiff is entitled to any of the relief that it seeks and raising various other defenses. In June 2000, Southern California Edison Company (SCE) filed with the FERC a Petition for Declaratory Order (petition) asking the FERC to apply a November 1999 federal circuit court of appeals' decision to all qualifying small power production facilities, including two solar facilities operated by partnerships indirectly owned in part by FPL Energy. The federal circuit court of appeals' decision invalidated the FERC's so-called essential fixed assets standard, which permitted secondary uses of fossil fuels by qualifying small power production facilities beyond those expressly set forth in PURPA. The petition requests that FERC declare that qualifying small power production facilities may not continue to use fossil fuel under the essential fixed assets standard and that they may be required to make refunds with respect to past usage. The partnerships intend to file a Motion to Intervene and Protest before the FERC, vigorously objecting to the position taken by SCE in its petition. The partnerships have always operated the solar facilities in accordance with orders issued by the FERC. Such orders were neither challenged nor appealed at the time they were granted, and it is the position of the partnerships that the orders remain in effect. FPL Group and FPL believe that they have meritorious defenses to all the above litigation and are vigorously defending the suits. Accordingly, the liabilities, if any, arising from the proceedings are not anticipated to have a material adverse effect on their financial statements. 3. Segment Information FPL Group's reportable segments include FPL, a regulated utility, and FPL Energy, an unregulated energy generating subsidiary. Corporate and Other represents other business activities, other segments that are not separately reportable and eliminating entries. FPL Group's segment information is as follows:
Three Months Ended June 30, 2000 1999 FPL Corporate FPL Corporate FPL Energy & Other Total FPL Energy & Other Total (millions) Operating revenues ..... $ 1,533 $ 114 $ 23 $ 1,670 $ 1,511 $ 93 $ 10 $ 1,614 Net income ............. $ 172 $ 28 $ 4 $ 204 $ 163 $ (86)(a) $ - $ 77 Six Months Ended June 30, 2000 1999 FPL Corporate FPL Corporate FPL Energy & Other Total FPL Energy(a) & Other(a) Total (millions) Operating revenues ..... $ 2,871 $ 222 $ 45 $ 3,138 $ 2,869 $ 134 $ 23 $ 3,026 Net income ............. $ 278 $ 42 $ 5 $ 325 $ 268 $ (77)(a) $ 95(b) $ 286 June 30, 2000 December 31, 1999 FPL Corporate FPL Corporate FPL(c) Energy & Other(c) Total FPL Energy & Other Total (millions) Total assets ........... $11,247 $2,471 $478 $14,196 $10,608 $2,212 $621 $13,441 _______________ (a) Includes effect of $104 million after-tax impairment loss. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - FPL Energy. (b) Includes $96 million after-tax gain on the sale of an investment in Adelphia Communications Corporation (Adelphia) common stock. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Corporate and Other. (c) Includes effect of $100 million net asset transfer in January 2000 from FPL to FPL FiberNet, LLC.
4. Summarized Financial Information of FPL Group Capital FPL Group Capital provides funding for and holds ownership interest in FPL Group's operating subsidiaries other than FPL. FPL Group Capital's debentures are guaranteed by FPL Group and included in FPL Group's condensed consolidated balance sheets. Summarized financial information of FPL Group Capital is as follows: Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 (millions) (millions) Operating revenues .... $138 $103 $268 $157 Operating expenses .... $109 $269 (a) $214 $321(a) Net income ............ $ 38 $(81)(a) $ 58 $ 31(a)(b) June 30, December 31, 2000 1999 (millions) Current assets ......... $ 567 $ 640 Noncurrent assets ...... $3,008 $2,627 Current liabilities .... $ 535 $ 414 Noncurrent liabilities.. $1,851 $1,840 _______________ (a) Includes effect of $176 million ($104 million after-tax) impairment loss. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - FPL Energy. (b) Includes $96 million after-tax gain on the sale of an investment in Adelphia common stock. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Corporate and Other. Management has not presented separate financial statements and other disclosures concerning FPL Group Capital because management has determined that such information is not material to holders of the FPL Group Capital debentures. 5. Subsequent Event On July 30, 2000, FPL Group and Entergy Corporation (Entergy) entered into an Agreement and Plan of Merger (agreement). Based on the number of common shares currently outstanding, FPL Group shareholders will own 57 percent of the common equity of the combined company, and Entergy shareholders will own 43 percent. The new company's board of directors will initially consist of 15 members, eight from FPL Group and seven from Entergy. Corporate headquarters of the merged company will be located in Juno Beach, Florida, while the utility group will be headquartered in New Orleans, Louisiana. The agreement has been unanimously approved by FPL Group's and Entergy's Boards of Directors. The merger is conditioned, among other things, upon the approvals of the shareholders of both companies and is subject to approval by various regulatory bodies. The companies' objective is to complete the transaction within 15 months. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion should be read in conjunction with the Notes to Condensed Consolidated Financial Statements contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 1999 Form 10-K for FPL Group and FPL. The results of operations for an interim period may not give a true indication of results for the year. In the following discussion, all comparisons are with the corresponding items in the prior year. RESULTS OF OPERATIONS FPL Group's earnings for the three and six months ended June 30, 2000 improved over the same periods last year. The improvement, excluding the effects of nonrecurring transactions in 1999, was primarily the result of growth at FPL and FPL Energy, as well as positive contributions from the newly formed subsidiary, FPL FiberNet. Nonrecurring transactions in the second quarter of 1999 included the impairment loss related to the Maine assets, which, on a year-to-date basis, more than offset the first quarter 1999 gain on the sale of Adelphia stock. FPL - FPL's net income for the three and six months ended June 30, 2000 was higher than the same periods last year despite the rate reduction that went into effect in mid-April 1999. The improvement in the second quarter was due to higher sales and lower other operations and maintenance (O&M) expense partly offset by the effect of the rate reduction agreement and higher special depreciation expense. FPL's revenues from retail base operations for the three months ended June 30, 2000 were $850 million, up from $838 million in 1999. This improvement was due to increased usage per retail customer of 2.9% primarily due to weather and a 2.5% increase in the number of customer accounts, partly offset by an increase in the accrual for revenue refund associated with the rate reduction agreement. During the second quarter 2000, FPL accrued approximately $37 million associated with refunds to retail customers, $34 million of which relates to the second twelve-month period under the rate agreement. No such amount was recorded in the second quarter of 1999. In June 2000, FPL refunded approximately $23 million, including interest, to retail customers for the first twelve- month period under the rate agreement, essentially all of which was accrued for in 1999. The rate agreement also allows for special depreciation of up to $100 million, in each year of the three-year agreement period to be applied to nuclear and/or fossil generating assets. For the three months ended June 30, 2000, FPL recorded special depreciation of approximately $36 million compared to $20 million for the same period in 1999. Second quarter earnings also reflect successful cost control efforts, as well as the timing of expenditures. Net income for the six months ended June 30, 2000 benefited from higher sales, lower O&M expense and lower special depreciation expense partly offset by the rate reduction agreement. FPL's revenues from retail base operations for the six months ended June 30, 2000 were $1,579 million compared to $1,598 million in 1999. Increased usage per retail customer of 3.4% and an increase in the number of customer accounts of 2.4% was more than offset by the reduction in rates combined with the revenue refund accrual. Special depreciation expense recorded for the six months ended June 30, 2000 and 1999 was $65 million and $82 million, respectively. Continued cost control efforts and timing of expenditures also contributed to lower O&M expense on a year-to-date basis. FPL Energy - FPL Energy's net income for the three and six months ended June 30, 2000 benefited from increased revenues generated by the Maine assets as a result of warmer weather and higher prices in the Northeast during May 2000. FPL Energy's net income for the three and six months ended June 30, 1999, includes the effect of a $176 million ($104 million after-tax) impairment loss recorded in the second quarter of 1999. Corporate and Other - For the three months ended June 30, 2000, net income for the corporate and other segment was essentially flat. Net income for the six months ended June 30, 1999 reflects a $149 million ($96 million after-tax) gain recorded by FPL Group Capital on the sale of an investment in Adelphia common stock in the first quarter of 1999. LIQUIDITY AND CAPITAL RESOURCES For financing activity during the six months ended June 30, 2000, see Note 1 - Long-Term Debt. During the three and six months ended June 30, 2000, FPL Group repurchased 381,000 and 750,400 shares of common stock, respectively. For information concerning capital commitments, see Note 2 - Commitments. For information concerning the announced merger of FPL Group and Entergy, see Note 5. PART II - OTHER INFORMATION Item 1. Legal Proceedings Reference is made to Item 3. Legal Proceedings in the 1999 Form 10-K for FPL Group and FPL. With regard to a contract dispute between FPL and two qualifying facilities, in July 2000, FPL, the majority bondholders, and the trustee of the indenture under which the bonds were issued entered into a settlement. Under the terms of the settlement, the trustee would be paid $222.5 million plus the amount of the security deposits, to be distributed as directed by the bankruptcy court. The settlement is conditioned upon (i) the approval of the bankruptcy court and (ii) the approval of the FPSC determining that the settlement is an appropriate buyout of the power purchase agreements and authorizing FPL to recover the settlement amount through the capacity clause and fuel clause. FPL estimates the net present value of the savings to its customers from the settlement versus the payments that would have been due under the power purchase agreements to be in excess of $350 million. In June 2000, Southern California Edison Company (SCE) filed with the FERC a Petition for Declaratory Order (petition) asking the FERC to apply the November 1999 decision of the U.S. Court of Appeals for the District of Columbia Circuit in Southern California Edison Co. v. FERC, to all qualifying small power production facilities, including the SEGS VIII and SEGS IX facilities owned by Luz Solar Partners Ltd., VIII and Luz Solar Partners Ltd., IX (collectively, the partnerships), indirectly owned in part by FPL Energy. The federal circuit court of appeals' decision invalidated the FERC's so-called essential fixed assets standard, which permitted secondary uses of fossil fuels by qualifying small power production facilities beyond those expressly set forth in PURPA. The petition requests that FERC declare that qualifying small power production facilities may not continue to use fossil fuel under the essential fixed assets standard and that they may be required to make refunds with respect to past usage. The partnerships intend to file a Motion to Intervene and Protest before the FERC, vigorously objecting to the position taken by SCE in its petition. The partnerships have always operated the SEGS VIII and SEGS IX facilities in accordance with orders issued by the FERC. Such orders were neither challenged nor appealed at the time they were granted, and it is the position of the partnerships that the orders remain in effect. Item 4. Submission of Matters to a Vote of Security Holders FPL Group: (a) The Annual Meeting of FPL Group's shareholders was held on May 15, 2000. Of the 178,166,118 shares of common stock outstanding on the record date of March 6, 2000, a total of 149,201,828 shares were represented in person or by proxy. (b) The following directors were elected effective May 15, 2000:
Votes Cast Against or For Withheld H. Jesse Arnelle ................................ 146,294,886 2,906,942 Sherry S. Barrat ................................ 146,413,964 2,787,864 Robert M. Beall, II ............................. 146,480,450 2,721,378 James L. Broadhead .............................. 133,839,726 15,362,102 J. Hyatt Brown .................................. 146,071,324 3,130,504 Armando M. Codina ............................... 128,961,380 20,240,448 Marshall M. Criser .............................. 146,343,848 2,857,980 Willard D. Dover ................................ 146,435,696 2,766,132 Alexander W. Dreyfoos, Jr. ...................... 146,471,033 2,730,795 Paul J. Evanson ................................. 146,354,389 2,847,439 Drew Lewis ...................................... 146,294,494 2,907,334 Frederic V. Malek ............................... 146,251,565 2,950,263 Paul R. Tregurtha ............................... 146,335,914 2,865,914
(c) The vote to ratify the appointment of Deloitte & Touche LLP as independent auditors for 2000 was 147,228,814 for, 972,189 against and 1,000,825 abstaining. FPL: (a) The following FPL directors were elected effective May 15, 2000 by the written consent of FPL Group, as the sole common shareholder of FPL, in lieu of an annual meeting of shareholders: James L. Broadhead Dennis P. Coyle Paul J. Evanson Lawrence J. Kelleher Armando J. Olivera Thomas F. Plunkett Antonio Rodriguez Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Exhibit FPL Number Description Group FPL 10(a) Employment Agreement between FPL Group and Armando J. Olivera, x dated as of June 12, 2000 10(b) Employment Agreement between FPL Group and Antonio Rodriguez, x dated as of June 12, 2000 12(a) Computation of Ratio of Earnings to Fixed Charges x 12(b) Computation of Ratios x 27 Financial Data Schedule x x
(b) Reports on Form 8-K A Current Report on Form 8-K was filed with the Securities and Exchange Commission on July 31, 2000 by FPL Group reporting one event under Item 5. Other Events and filing exhibits under Item 7. Exhibits. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. FPL GROUP, INC. FLORIDA POWER & LIGHT COMPANY (Registrants) Date: August 2, 2000 K. MICHAEL DAVIS K. Michael Davis Controller and Chief Accounting Officer of FPL Group, Inc. Vice President, Accounting, Controller and Chief Accounting Officer of Florida Power & Light Company (Principal Accounting Officer of the Registrants) EX-12.A 2 0002.txt COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12(a) FPL GROUP, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Six Months Ended June 30, 2000 (millions) Earnings, as defined: Net income .............................................................................. $ 204 Income taxes ............................................................................ 101 Fixed charges included in the determination of net income, as below ..................... 71 Distributed income of independent power investments...................................... 33 Less: Equity in earnings of independent power investments ............................... 16 Total earnings, as defined ............................................................ $ 393 Fixed charges, as defined: Interest charges ........................................................................ $ 64 Rental interest factor .................................................................. 3 Fixed charges included in nuclear fuel cost ............................................. 4 Fixed charges included in the determination of net income ............................... 71 Capitalized interest .................................................................... 12 Total fixed charges, as defined ....................................................... $ 83 Ratio of earnings to fixed charges ........................................................ 4.73
EX-12.B 3 0003.txt COMPUTATION OF RATIOS EXHIBIT 12(b) FLORIDA POWER & LIGHT COMPANY COMPUTATION OF RATIOS
Six Months Ended June 30, 2000 (millions) RATIO OF EARNINGS TO FIXED CHARGES Earnings, as defined: Net income .............................................................................. $ 285 Income taxes ............................................................................ 157 Fixed charges, as below ................................................................. 88 Total earnings, as defined ............................................................ $ 530 Fixed charges, as defined: Interest charges ........................................................................ $ 82 Rental interest factor .................................................................. 2 Fixed charges included in nuclear fuel cost ............................................. 4 Total fixed charges, as defined ....................................................... $ 88 Ratio of earnings to fixed charges ........................................................ 6.02 RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS Earnings, as defined: Net income .............................................................................. $ 285 Income taxes ............................................................................ 157 Fixed charges, as below ................................................................. 88 Total earnings, as defined ............................................................ $ 530 Fixed charges, as defined: Interest charges ........................................................................ $ 82 Rental interest factor .................................................................. 2 Fixed charges included in nuclear fuel cost ............................................. 4 Total fixed charges, as defined ....................................................... 88 Non-tax deductible preferred stock dividends .............................................. 7 Ratio of income before income taxes to net income ......................................... 1.55 Preferred stock dividends before income taxes ............................................. 11 Combined fixed charges and preferred stock dividends ...................................... $ 99 Ratio of earnings to combined fixed charges and preferred stock dividends ................. 5.35
EX-10.A 4 0004.txt EMPLOYMENT AGREEMENT EXHIBIT 10(a) EMPLOYMENT AGREEMENT Employment Agreement between FPL Group, Inc., a Florida corporation (the "Company"), and Armando J. Olivera (the "Executive"), dated as of June 12, 2000. The Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company and its affiliated companies will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company and its affiliated companies currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Employment Agreement (the "Agreement"). Therefore, the Company and the Executive agree as follows: 1. Effective Date. The effective date of this Agreement shall be the date on which a Change of Control occurs (the "Effective Date"). Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company or its affiliated companies is terminated or the Executive is demoted to a position with the Company that is less than an officer position and if it is reasonably demonstrated by the Executive that such termination of employment or diminution in position (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control or (ii) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment or diminution in position. As used in this Agreement, the term "affiliated companies" shall include any corporation or other entity controlled by, controlling or under common control with the Company. 2. Change of Control. For the purposes of this Agreement, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition by the Company or any or its subsidiaries, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (iii) any acquisition by any corporation with respect to which, following such acquisition, more than 75% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A promulgated under the Exchange Act applies or other actual or threatened solicitation of proxies or consents; or (c) Approval by the shareholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 75% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (d) Approval by the shareholders of the Company of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, more than 75% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be. The term "the sale or disposition by the Company of all or substantially all of the assets of the Company" shall mean a sale or other disposition transaction or series of related transactions involving assets of the Company or of any direct or indirect subsidiary of the Company (including the stock of any direct or indirect subsidiary of the Company) in which the value of the assets or stock being sold or otherwise disposed of (as measured by the purchase price being paid therefor or by such other method as the Board determines is appropriate in a case where there is no readily ascertainable purchase price) constitutes more than two-thirds of the fair market value of the Company (as hereinafter defined). The "fair market value of the Company" shall be the aggregate market value of the then Outstanding Company Common Stock (on a fully diluted basis) plus the aggregate market value of the Company's other outstanding equity securities. The aggregate market value of the shares of Outstanding Company Common Stock shall be determined by multiplying the number of shares of Outstanding Company Common Stock (on a fully diluted basis) outstanding on the date of the execution and delivery of a definitive agreement with respect to the transaction or series of related transactions (the "Transaction Date") by the average closing price of the shares of Outstanding Company Common Stock for the ten trading days immediately preceding the Transaction Date. The aggregate market value of any other equity securities of the Company shall be determined in a manner similar to that prescribed in the immediately preceding sentence for determining the aggregate market value of the shares of Outstanding Company Common Stock or by such other method as the Board shall determine is appropriate. 3. Employment Period. The Company hereby agrees to continue the Executive in its or its affiliated companies' employ, or both, as the case may be, and the Executive hereby agrees to remain in the employ of the Company, or its affiliated companies, or both, as the case may be, for a period commencing on the Effective Date and ending on the last day of the month immediately preceding the third anniversary of such date (the "Employment Period"). 4. Position and Duties. During the Employment Period, the Executive's position (including status, offices, titles, and reporting requirements), authority, duties, and responsibilities with the Company or its affiliated companies or both, as the case may be, shall be those assigned to the Executive as the Chief Executive Officer of the Company may in his discretion and acting in good faith from time to time assign to the Executive, but in no event shall the Executive's position with the Company be less than an officer position. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any location less than 100 miles from such location, although the Executive understands and agrees that he may be required to travel from time to time for business purposes. During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his time and attention during normal business hours to the business and affairs of the Company and its affiliated companies and to use his reasonable best efforts to perform faithfully and efficiently the duties and responsibilities assigned to him hereunder. During the Employment Period it shall not be a violation of this Agreement for the Executive to serve on corporate, civic or charitable boards or committees, deliver lectures, fulfill speaking engagements or teach at educational institutions and devote reasonable amounts of time to the management of his and his family's personal investments and affairs, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company or its affiliated companies in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the reinstatement or continued conduct of such activities (or the reinstatement or conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company and its affiliated companies. 5. Compensation. During the Employment Period, the Executive shall be compensated as follows: (a) Annual Base Salary. The Executive shall be paid an annual base salary ("Annual Base Salary"), in equal biweekly installments, at least equal to the annual base salary being paid to the Executive by the Company and its affiliated companies with respect to the year in which the Effective Date occurs. The Annual Base Salary shall be reviewed at least annually and shall be increased substantially consistent with increases in base salary generally awarded to other peer executives of the Company and its affiliated companies. Such increases shall in no event be less than the increases in the U.S. Department of Labor Consumer Price Index - U.S. City Average Index. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term "Annual Base Salary" as utilized in this Agreement shall refer to Annual Base Salary as so increased. (b) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the highest annual incentive compensation (annualized for any fiscal year consisting of less than twelve full months or with respect to which the Executive has been employed by the Company for less than twelve full months) paid or payable, including by reason of any deferral, to the Executive by the Company and its affiliated companies in respect of the three fiscal years immediately preceding the fiscal year in which the Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the Company and its affiliated companies after the Effective Date (target or actual, whichever is greater) is herein called the "Highest Annual Bonus". Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive otherwise elects to defer the receipt of such Annual Bonus. (c) Long Term Incentive Compensation. During the Employment Period, the Executive shall be entitled to participate in all incentive compensation plans, practices, policies, and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with incentive opportunities and potential benefits, both as to amount and percentage of compensation, less favorable, in the aggregate, than those provided by the Company and its affiliated companies for the Executive under the FPL Group Long Term Incentive Plan (including, without limitation, performance share grants and awards) as in effect at any time during the 90-day period immediately preceding the Effective Date or; if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. In addition, on the Effective Date (i) the maximum performance criteria of all outstanding performance awards, performance-based restricted stock, and other stock-based awards granted to the Executive shall be deemed fully achieved and all such awards shall be fully earned and vested; (ii) any option, stock appreciation right, and other award in the nature of a right that may be exercised that was granted to the Executive and which was not previously exercisable and vested shall become fully exercisable and vested; (iii) the restrictions, deferral limitations, and forfeiture conditions applicable to any outstanding award granted to the Executive under an incentive compensation plan, practice, policy or program shall lapse and such awards shall be deemed fully vested; and (iv) all outstanding awards shall be canceled and the Executive shall be paid in cash for such awards on the basis of the change of control price as of the date of the occurrence of the Change of Control (or such other date applicable to awards granted to other peer executives under the applicable incentive compensation plan, practice, policy or program) to the extent such cancellation of and payment for an award would not cause the Executive to incur actual short-swing profits liability under Section 16(b) of the Exchange Act. For purposes of this paragraph, the term "change of control price" means the highest price per share paid in any transaction reported on the securities exchange or trading system on which the shares of common stock of the Company are then primarily listed or traded, or paid or offered in any transaction related to the Change of Control at any time during the preceding 60-day period, except that in the case of incentive stock options (within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code")) and stock appreciation rights relating thereto, such price shall be based only on transactions reported for the date such awards are cashed out. (d) Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies, and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies, and programs as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. In addition, during the Employment Period the Executive shall be entitled under this Agreement to the supplemental retirement benefit described in Annex A attached hereto and made a part hereof by this reference. The payment and vesting of such supplemental retirement benefit shall be determined in accordance with Section 7 of this Agreement. (e) Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies, and programs provided by the Company and its affiliated companies (including, without limitation, medical, executive medical, annual executive physical, prescription, dental, vision, short-term disability, long-term disability, executive long-term disability, salary continuance, employee life, group life, benefits pursuant to split dollar arrangements, accidental death and dismemberment, and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies, and programs in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. (f) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices, and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 90- day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (g) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including but not limited to those described in Section 7(a)(iii), in accordance with the most favorable plans, practices, programs, and policies of the Company and its affiliated companies in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (h) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (i) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs, and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer incentives of the Company and its affiliated companies. 6. Termination of Employment. (a) Disability. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 14(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to perform his duties in accordance with Section 4. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean (i) repeated violations by the Executive of the Executive's obligations under Section 4 of this Agreement (other than as a result of incapacity due to physical or mental illness) which are demonstrably willful and deliberate on the Executive's part, which are committed in bad faith or without reasonable belief that such violations are in the best interests of the Company and which are not remedied in a reasonable period of time after receipt of written notice from the Company specifying such violations or (ii) the conviction of the Executive of a felony involving an act of dishonesty intended to result in substantial personal enrichment at the expense of the Company or its affiliated companies. (c) Good Reason. The Executive's employment may be terminated during the Employment Period by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) a substantial and continuing breach by the Company of any material term of this Agreement including, without limitation, a diminution in the Executive's position contrary to the minimum position contemplated by Section 4, or a reduction in the Executive's Annual Base Salary, Annual Bonus opportunity or other item of compensation described in Section 5, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice given by the Executive; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based at any office or location other than that described in Section 4 hereof; (iv) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or (v) any failure by the Company to comply with and satisfy Section 13(c) of this Agreement, provided that such successor has received at least ten days prior written notice from the Company or the Executive of the requirements of Section 13(c) of the Agreement. For purposes of this Section 6(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 14(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstances which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, and (iii) if the Executive's employment is terminated by reason of Disability, the Date of Termination shall be the Disability Effective Date. 7. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause or Disability. If, during the Employment Period, the Company terminates the Executive's employment other than for Cause or Disability or the Executive terminates employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts (such aggregate being hereinafter referred to as the "Special Termination Amount"): A. the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the Highest Annual Bonus and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) (including, without limitation, compensation, bonus, incentive compensation or awards deferred under the FPL Group, Inc. Deferred Compensation Plan or incentive compensation or awards deferred under the FPL Group, Inc. Long Term Incentive Plan of 1985, the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an individual deferral agreement) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) being herein called the "Accrued Obligations"); and B. the amount equal to the product of (1) the greater of two or the number of years (with any partial year expressed as a fraction) remaining in the Employment Period, and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided, however, that such amount shall be paid in lieu of, and the Executive hereby waives the right to receive, any other amount of severance relating to salary or bonus continuation to be received by the Executive upon termination of employment of the Executive under any severance plan, policy or arrangement of the Company; and C. the maximum amount payable under all performance share grants and all other long term incentive compensation grants to the Executive that have not been paid in accordance with the terms of the grant or Section 5(c) hereof, calculated as though the Executive had remained employed by the Company for the remainder of the Employment Period and on the basis of actual achievement of performance measures through the end of the fiscal year preceding the fiscal year in which the Date of Termination occurs and thereafter assuming maximum achievement of all performance measures (e.g., currently 160%) through the end of the Employment Period; and D. a separate lump-sum supplemental retirement benefit equal to the greater of (i) the supplemental pension benefit described in Paragraph 1(b) of Annex A that the Executive would have been entitled had his employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the greater of two years or the remainder of the Employment Period and based upon his Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the difference between (1) the actuarial equivalent (utilizing for this purpose the actuarial assumptions utilized with respect to the FPL Group Employee Pension Plan (or any successor plan thereto) (the "Retirement Plan") during the 90-day period immediately preceding the Effective Date) of the benefit payable under the Retirement Plan and all supplemental and/or excess retirement plans providing benefits for the Executive (other than the supplemental retirement benefit described in Annex A) (the "SERP") (including, but not limited to the Supplemental Pension Benefit (as defined in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the Executive would receive if the Executive's employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for, and his age increased by, the greater of two years or the remainder of the Employment Period, assuming for this purpose that all accrued benefits are fully vested and that benefit accrual formulas are no less advantageous to the Executive than those in effect during the 90-day period immediately preceding the Effective Date, or, if more favorable to the Executive, as in effect generally at any time thereafter during the Employment Period with respect to other peer executives of the Company and its affiliated companies, and (2) the actuarial equivalent (utilizing for this purpose the actuarial assumptions utilized with respect to the Retirement Plan during the 90-day period immediately preceding the Effective Date) of the Executive's actual benefits (paid or payable), if any, under the Retirement Plan and the SERP; and E. a separate lump-sum supplemental retirement benefit equal to the greater of (i) the supplemental matching contributions account described in Paragraph 1(c) of Annex A that the Executive would have been entitled had his employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the greater of two years or the remainder of the Employment Period and assuming that the Executive made After Tax Member Basic Contributions (within the meaning of the FPL Group Employee Thrift Plan or any successor plan thereto (the "Thrift Plan")) and Tax Saver Member Basic Contributions (within the meaning of the Thrift Plan) to the Thrift Plan at the highest permissible rate (disregarding any limitations imposed by the Code) following the Date of Termination, or (ii) the difference between (1) the value of the Company Account (as defined in the Thrift Plan) and any other matching contribution accounts (including, but not limited to the Supplemental Matching Contribution Account (as defined in the FPL Group, Inc. Supplemental Executive Retirement Plan)) under a SERP (other than the supplemental retirement benefit described in Annex A) which the Executive would receive if (i) the Executive's employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the greater of two years or the remainder of the Employment Period, (ii) the Executive made pre- and after-tax contributions at the highest permissible rate (disregarding any limitations imposed by the Code, which may or may not be set forth in the Thrift Plan) for the greater of two years or each year remaining in the Employment Period, (iii) the Company Account and the matching contribution accounts are fully vested, and (iv) the matching contribution formulas are no less advantageous to the Executive than those in effect during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time during the remainder of the Employment Period with respect to other peer executives of the Company and its affiliated companies, and (2) the actual value of the Executive's Company Account and matching contribution accounts (paid or payable), if any, under the Thrift Plan and the SERP; (ii) for the remainder of the Employment Period, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Sections 5(e) and 5(g) of this Agreement if the Executive's employment had not been terminated, in accordance with the most favorable plans, practices, programs or policies of the Company and its affiliated companies applicable generally to other peer executives and their families during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period; (iii) for the remainder of the Employment Period and to the extent previously paid for or provided by the Company, the Company shall continue to provide the following: A. social and business club memberships to the Executive (as in effect immediately prior to the Date of Termination); B. use, maintenance, insurance, and repair of the company car that is in the possession of the Executive, until the earlier of the end of the lease term or the end of the Employment Period, at which time the Executive may purchase such car. The Company shall replace the company car in the Executive's possession on the Effective Date with a new company car at such time(s) as provided under the Company car policy applicable to other peer executives, but in no case less frequently than the Company car policy in effect during the 90-day period immediately preceding the Effective Date; C. up to $15,000 annually for personal financial planning, accounting and legal advice; D. communication equipment such as a car and/or cellular phone, and home or laptop computer until the end of the Employment Period, at which time the Executive may purchase such equipment; E. security system at the Executive's residence, and the related monitoring and maintenance fees; and F. up to $800 annually for personal excess liability insurance coverage. In lieu of continuing these benefits for the remainder of the Employment Period, the Executive, in his sole discretion, may elect to receive a lump sum payment equal to the present value of the amount projected to be paid by the Company to provide these benefits. In determining the present value, a six percent interest assumption shall be utilized. The Executive shall make any such election by giving the Company written notice in accordance with Section 14(b). (iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive pursuant to this Agreement or otherwise under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies, but excluding solely for purposes of this Section 7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B); and (v) the Company shall provide the Executive with the following benefits in the event of his termination under this Section 7(a): A. If the Executive is required to move his primary residence in order to pursue other business opportunities during the Employment Period, the Company shall reimburse the Executive for all such relocation expenses incurred during the Employment Period (not in excess of $10,000) that are not reimbursed by another employer, including, without limitation, assistance in selling the Executive's home and all other assistance and benefits that were customarily provided by the Company to transferred executives prior to the Change of Control; B. If the Executive retains counsel or an accounting firm in connection with the taxation of payments made pursuant to Section 10 of this Agreement, the Company shall reimburse the Executive for such reasonable legal and/or accounting fees and disbursements (not in excess of $15,000); C. The Company shall continue to pay the Executive's Annual Base Salary during the pendency of a dispute over his termination. Amounts paid under this subsection are in addition to all other amounts due under this Agreement (other than those due under Section 5(a) hereof) and shall not be offset against or reduce any other amounts due under this Agreement; and D. The Company shall provide the Executive with outplacement services commensurate with those provided to terminated executives of comparable level made available through and at the facilities of a reputable and experienced vendor; and (vi) any outstanding options, stock appreciation rights, and other awards in the nature of a right that may be exercised granted to the Executive shall become fully exercisable and vested; any restrictions, deferral limitations, and forfeiture conditions applicable to any outstanding award granted to the Executive shall lapse and such awards shall be deemed fully vested; and the Executive shall have for the remainder of the Employment Period (but in no event past the expiration of the term of the award) to exercise any and all rights granted under such awards then exercisable or which become exercisable pursuant to this Section 7(a)(vi), except that with respect to incentive stock options (within the meaning of Section 422(b) of the Code) and stock appreciation rights relating thereto, the Executive may exercise such awards during the period of exercise provided for in the agreements granting such options. (b) Death. Upon the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations, the supplemental retirement benefit described in Annex A, and the timely payment or provision of the benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits"). All Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. The supplemental retirement benefit shall be paid to the Executive's Beneficiary (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan) at his option in a lump sum distribution to be made not later than three months after the occurrence of his death or in the same manner as the Executive's benefits under the Retirement Plan or Thrift Plan to which his benefits under Annex A of this Agreement relates. The term "Other Benefits" as utilized in this Section 7(b) shall include, without limitation, and the Executive's family shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and any of its affiliated companies to surviving families of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to family death benefits, if any, as in effect with respect to other peer executives and their families at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other peer executives of the Company and its affiliated companies and their families. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations, the supplemental retirement benefit described in Annex A, and the timely payment or provision of Other Benefits. All Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. The supplemental retirement benefit shall be paid to the Participant or his Beneficiary (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan), as the case may be, at the option of the Executive or if the Executive is deceased, at the option of such Beneficiary, in a lump sum distribution to be made not later than three months after the occurrence of such event or in the same manner as the Executive's benefits under the Retirement Plan or Thrift Plan to which his benefits under Annex A of this Agreement relates. The term "Other Benefits" as utilized in this Section 7(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families. (d) Cause; Other Than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive Annual Base Salary through the Date of Termination plus the amount of any compensation previously deferred by the Executive, in each case to the extent theretofore unpaid. If the Executive terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations, the supplemental retirement benefit described in Annex A to the extent the Executive is vested in his benefits under the Retirement Plan, and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. The supplemental retirement benefit shall be paid to the Executive or his Beneficiary (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan), as the case may be, at the option of the Executive or if the Executive is deceased, at the option of such Beneficiary, in a lump sum distribution to be made not later than three months after the occurrence of such event or in the same manner as the Executive's benefits under the Retirement Plan or Thrift Plan to which his benefits under Annex A of this Agreement relates. 8. Non-exclusivity of Rights. Except as otherwise expressly provided for in this Agreement, nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 9. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as otherwise expressly provided for in this Agreement, such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Executive may reasonably incur at all stages of proceedings, including, without limitation, preparation and appellate review, as a result of any contest (regardless of whether formal legal proceedings are ever commenced and regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. 10. Certain Additional Payments by the Company. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income or employment taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of Gross-Up Payment equal to the Excise Tax imposed upon the Payments. In the event that Federal or state legislation is enacted by imposing additional excise or supplementary income taxes on amounts payable or benefits provided to the Executive (other than a mere change in marginal income tax rates), the Company agrees to review the Agreement with the Executive and to consider in good faith any changes hereto that may be required to preserve the full amount of all Payments and the economic purposes of the foregoing provisions of this Section 10. 11. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 11 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 12. Indemnification. The Company will, to the fullest extent permitted by law, indemnify and hold the Executive harmless from any and all liability arising from the Executive's service as an employee, officer or director of the Company and its affiliated companies. To the fullest extent permitted by law, the Company will advance legal fees and expenses to the Executive for counsel selected by the Executive in connection with any litigation or proceeding related to the Executive's service as an employee, officer or director of the Company and its affiliates. The terms of this indemnification provision shall survive the expiration of this Agreement. 13. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 14. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Armando J. Olivera 329 Cadima Avenue Coral Gables, FL 33134 If to the Company: FPL Group, Inc. 700 Universe Boulevard Juno Beach, Florida 33408 Attention: Chairman of the Board or such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 6(c)(i) - (v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, prior to the Effective Date, may be terminated by either the Executive or the Company at any time. Moreover, except as provided in Section 1, if prior to the Effective Date, (i) the Executive's employment with the Company terminates, or (ii) there is a diminution in the Executive's position with the Company or its affiliated companies, then the Executive shall have no further rights under this Agreement. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. ARMANDO J. OLIVERA Armando J. Olivera FPL GROUP, INC. By LAWRENCE J. KELLEHER Lawrence J. Kelleher VP Human Resources ANNEX A TO THE EMPLOYMENT AGREEMENT SUPPLEMENTAL RETIREMENT BENEFIT 1. Supplement Retirement Benefit. (a) In General. The supplemental retirement benefit to which the Executive shall be entitled under this Agreement shall be (i) the supplemental pension benefit described in Paragraph 1(b) of this Annex A, and (ii) the supplemental matching contribution account described in Paragraph 1(c) of this Annex A. (b) Supplemental Pension Benefit. The "supplemental pension benefit" shall be the greater of (i) the supplement cash balance accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the supplement unit credit accrued benefit described in Paragraph 1(b)(2) of this Annex A. (1) The "supplement cash balance accrued benefit" is the difference, if any, between (A) and (B) where: (A) is the benefit to which the Executive would be entitled under the Retirement Plan as in effect immediately prior to the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter during the Employment Period with respect to other peer executives of the Company and its affiliated companies, expressed in the normal form of benefit, if such benefit was computed (i) as if benefits under such plan were based upon the Executive's Base Compensation (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan as in effect immediately prior to the Change of Control), (ii) without the annual compensation limitation imposed by Section 401(a)(17) of the Code, and (iii) without the restrictions or the limitations imposed by Sections 415(b) or 415(e) of the Code; and (B) is the sum of the benefits payable to the Executive under the Retirement Plan and the SERP, expressed in the normal form of benefit. (2) The "supplement unit credit accrued benefit" is the difference, if any, between (A) and (B) where: (A) is the benefit to which the Executive would be entitled under the Prior Pension Plan (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan as in effect immediately prior to the Change of Control), expressed in the normal form of benefit, if such benefit was computed (i) as if benefits under such plan were based upon the Executive's Base Compensation, (ii) without the annual compensation limitation imposed by Section 401(a)(17) of the Code, and (iii) without the restrictions or the limitations imposed by Sections 415(b) or 415(e) of the Code; and (B) is the sum of the benefits payable to the Executive under the Retirement Plan and the SERP, expressed in the normal form of benefit. (c) Supplemental Matching Contribution Account. The "supplemental matching contribution account" shall be an account that is credited annually with (i) supplemental matching contributions described in Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described in Paragraph 1(c)(2) of this Annex A. (1) "Supplemental matching contributions" shall be for each year ending on or prior to the Effective Date in which the Executive participated in the SERP and for each year ending after the Effective Date in which the Executive performs services for the Company or its affiliated companies the difference, if any, between (A) and (B) where: (A) is the matching contribution allocation for such year to which the Executive would be entitled under the Thrift Plan as in effect immediately prior to the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter during the Employment Period with respect to other peer executives of the Company and its affiliated companies if such allocation were computed (i) as if the matching contribution allocation under such plan was based upon the Executive's Base Compensation, (ii) without the annual compensation limitation imposed by Section 401(a)(17) of the Code, (iii) without the restrictions or the limitations imposed by Sections 415(c) or 415(e) of the Code, and (iv) as if he made After Tax Member Basic Contributions (within the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions (within the meaning of the Thrift Plan) at the same percentage of Base Compensation as he made such contributions to the Thrift Plan for such years; and (B) is the sum of the matching contributions allocated or credited to the Executive under the Thrift Plan and the SERP for such year. (2) "Theoretical earnings" shall be the income, gains and losses which would have been credited on the Executive's supplemental matching contribution account balance if such account were invested in the Company Stock Fund (within the meaning of the Thrift Plan) offered as a part of the Thrift Plan. 2. Construction and Definitions. Unless defined below or otherwise in this Annex A, all of the capitalized terms used in this Annex A shall have the meanings assigned to them in this Agreement: (a) "Projected Years of Service" shall mean the Executive's Years of Service (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan as in effective immediately prior to the Change of Control), plus the Years of Service he would have otherwise been credited had his employment terminated on the later of the second anniversary of his Date of Termination or the last day of the Employment Period. (b) "Projected Age" shall mean the age that the Executive will have attained on the later of the second anniversary of his Date of Termination or the last day of the Employment Period. EX-10.B 5 0005.txt EMPLOYMENT AGREEMENT EXHIBIT 10(b) EMPLOYMENT AGREEMENT Employment Agreement between FPL Group, Inc., a Florida corporation (the "Company"), and Antonio Rodriguez (the "Executive"), dated as of June 12, 2000. The Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company and its affiliated companies will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company and its affiliated companies currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Employment Agreement (the "Agreement"). Therefore, the Company and the Executive agree as follows: 1. Effective Date. The effective date of this Agreement shall be the date on which a Change of Control occurs (the "Effective Date"). Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company or its affiliated companies is terminated or the Executive is demoted to a position with the Company that is less than an officer position and if it is reasonably demonstrated by the Executive that such termination of employment or diminution in position (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control or (ii) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment or diminution in position. As used in this Agreement, the term "affiliated companies" shall include any corporation or other entity controlled by, controlling or under common control with the Company. 2. Change of Control. For the purposes of this Agreement, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition by the Company or any or its subsidiaries, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (iii) any acquisition by any corporation with respect to which, following such acquisition, more than 75% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A promulgated under the Exchange Act applies or other actual or threatened solicitation of proxies or consents; or (c) Approval by the shareholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 75% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (d) Approval by the shareholders of the Company of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, more than 75% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be. The term "the sale or disposition by the Company of all or substantially all of the assets of the Company" shall mean a sale or other disposition transaction or series of related transactions involving assets of the Company or of any direct or indirect subsidiary of the Company (including the stock of any direct or indirect subsidiary of the Company) in which the value of the assets or stock being sold or otherwise disposed of (as measured by the purchase price being paid therefor or by such other method as the Board determines is appropriate in a case where there is no readily ascertainable purchase price) constitutes more than two-thirds of the fair market value of the Company (as hereinafter defined). The "fair market value of the Company" shall be the aggregate market value of the then Outstanding Company Common Stock (on a fully diluted basis) plus the aggregate market value of the Company's other outstanding equity securities. The aggregate market value of the shares of Outstanding Company Common Stock shall be determined by multiplying the number of shares of Outstanding Company Common Stock (on a fully diluted basis) outstanding on the date of the execution and delivery of a definitive agreement with respect to the transaction or series of related transactions (the "Transaction Date") by the average closing price of the shares of Outstanding Company Common Stock for the ten trading days immediately preceding the Transaction Date. The aggregate market value of any other equity securities of the Company shall be determined in a manner similar to that prescribed in the immediately preceding sentence for determining the aggregate market value of the shares of Outstanding Company Common Stock or by such other method as the Board shall determine is appropriate. 3. Employment Period. The Company hereby agrees to continue the Executive in its or its affiliated companies' employ, or both, as the case may be, and the Executive hereby agrees to remain in the employ of the Company, or its affiliated companies, or both, as the case may be, for a period commencing on the Effective Date and ending on the last day of the month immediately preceding the third anniversary of such date (the "Employment Period"). 4. Position and Duties. During the Employment Period, the Executive's position (including status, offices, titles, and reporting requirements), authority, duties, and responsibilities with the Company or its affiliated companies or both, as the case may be, shall be those assigned to the Executive as the Chief Executive Officer of the Company may in his discretion and acting in good faith from time to time assign to the Executive, but in no event shall the Executive's position with the Company be less than an officer position. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any location less than 100 miles from such location, although the Executive understands and agrees that he may be required to travel from time to time for business purposes. During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his time and attention during normal business hours to the business and affairs of the Company and its affiliated companies and to use his reasonable best efforts to perform faithfully and efficiently the duties and responsibilities assigned to him hereunder. During the Employment Period it shall not be a violation of this Agreement for the Executive to serve on corporate, civic or charitable boards or committees, deliver lectures, fulfill speaking engagements or teach at educational institutions and devote reasonable amounts of time to the management of his and his family's personal investments and affairs, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company or its affiliated companies in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the reinstatement or continued conduct of such activities (or the reinstatement or conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company and its affiliated companies. 5. Compensation. During the Employment Period, the Executive shall be compensated as follows: (a) Annual Base Salary. The Executive shall be paid an annual base salary ("Annual Base Salary"), in equal biweekly installments, at least equal to the annual base salary being paid to the Executive by the Company and its affiliated companies with respect to the year in which the Effective Date occurs. The Annual Base Salary shall be reviewed at least annually and shall be increased substantially consistent with increases in base salary generally awarded to other peer executives of the Company and its affiliated companies. Such increases shall in no event be less than the increases in the U.S. Department of Labor Consumer Price Index - U.S. City Average Index. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term "Annual Base Salary" as utilized in this Agreement shall refer to Annual Base Salary as so increased. (b) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the highest annual incentive compensation (annualized for any fiscal year consisting of less than twelve full months or with respect to which the Executive has been employed by the Company for less than twelve full months) paid or payable, including by reason of any deferral, to the Executive by the Company and its affiliated companies in respect of the three fiscal years immediately preceding the fiscal year in which the Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the Company and its affiliated companies after the Effective Date (target or actual, whichever is greater) is herein called the "Highest Annual Bonus". Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive otherwise elects to defer the receipt of such Annual Bonus. (c) Long Term Incentive Compensation. During the Employment Period, the Executive shall be entitled to participate in all incentive compensation plans, practices, policies, and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with incentive opportunities and potential benefits, both as to amount and percentage of compensation, less favorable, in the aggregate, than those provided by the Company and its affiliated companies for the Executive under the FPL Group Long Term Incentive Plan (including, without limitation, performance share grants and awards) as in effect at any time during the 90-day period immediately preceding the Effective Date or; if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. In addition, on the Effective Date (i) the maximum performance criteria of all outstanding performance awards, performance-based restricted stock, and other stock-based awards granted to the Executive shall be deemed fully achieved and all such awards shall be fully earned and vested; (ii) any option, stock appreciation right, and other award in the nature of a right that may be exercised that was granted to the Executive and which was not previously exercisable and vested shall become fully exercisable and vested; (iii) the restrictions, deferral limitations, and forfeiture conditions applicable to any outstanding award granted to the Executive under an incentive compensation plan, practice, policy or program shall lapse and such awards shall be deemed fully vested; and (iv) all outstanding awards shall be canceled and the Executive shall be paid in cash for such awards on the basis of the change of control price as of the date of the occurrence of the Change of Control (or such other date applicable to awards granted to other peer executives under the applicable incentive compensation plan, practice, policy or program) to the extent such cancellation of and payment for an award would not cause the Executive to incur actual short-swing profits liability under Section 16(b) of the Exchange Act. For purposes of this paragraph, the term "change of control price" means the highest price per share paid in any transaction reported on the securities exchange or trading system on which the shares of common stock of the Company are then primarily listed or traded, or paid or offered in any transaction related to the Change of Control at any time during the preceding 60-day period, except that in the case of incentive stock options (within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code") and stock appreciation rights relating thereto, such price shall be based only on transactions reported for the date such awards are cashed out. (d) Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies, and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies, and programs as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. In addition, during the Employment Period the Executive shall be entitled under this Agreement to the supplemental retirement benefit described in Annex A attached hereto and made a part hereof by this reference. The payment and vesting of such supplemental retirement benefit shall be determined in accordance with Section 7 of this Agreement. (e) Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies, and programs provided by the Company and its affiliated companies (including, without limitation, medical, executive medical, annual executive physical, prescription, dental, vision, short-term disability, long-term disability, executive long-term disability, salary continuance, employee life, group life, benefits pursuant to split dollar arrangements, accidental death and dismemberment, and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies, and programs in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. (f) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices, and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 90- day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (g) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including but not limited to those described in Section 7(a)(iii), in accordance with the most favorable plans, practices, programs, and policies of the Company and its affiliated companies in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (h) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (i) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs, and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer incentives of the Company and its affiliated companies. 6. Termination of Employment. (a) Disability. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 14(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to perform his duties in accordance with Section 4. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean (i) repeated violations by the Executive of the Executive's obligations under Section 4 of this Agreement (other than as a result of incapacity due to physical or mental illness) which are demonstrably willful and deliberate on the Executive's part, which are committed in bad faith or without reasonable belief that such violations are in the best interests of the Company and which are not remedied in a reasonable period of time after receipt of written notice from the Company specifying such violations or (ii) the conviction of the Executive of a felony involving an act of dishonesty intended to result in substantial personal enrichment at the expense of the Company or its affiliated companies. (c) Good Reason. The Executive's employment may be terminated during the Employment Period by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) a substantial and continuing breach by the Company of any material term of this Agreement including, without limitation, a diminution in the Executive's position contrary to the minimum position contemplated by Section 4, or a reduction on the Executive's Annual Base Salary, Annual Bonus opportunity or other item of compensation described in Section 5, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice given by the Executive; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based at any office or location other than that described in Section 4 hereof; (iv) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or (v) any failure by the Company to comply with and satisfy Section 13(c) of this Agreement, provided that such successor has received at least ten days prior written notice from the Company or the Executive of the requirements of Section 13(c) of the Agreement. For purposes of this Section 6(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 14(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstances which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, and (iii) if the Executive's employment is terminated by reason of Disability, the Date of Termination shall be the Disability Effective Date. 7. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause or Disability. If, during the Employment Period, the Company terminates the Executive's employment other than for Cause or Disability or the Executive terminates employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts (such aggregate being hereinafter referred to as the "Special Termination Amount"): A. the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the Highest Annual Bonus and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) (including, without limitation, compensation, bonus, incentive compensation or awards deferred under the FPL Group, Inc. Deferred Compensation Plan or incentive compensation or awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985, the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an individual deferral agreement) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) being herein called the "Accrued Obligations"); and B. the amount equal to the product of (1) the greater of two or the number of years (with any partial year expressed as a fraction) remaining in the Employment Period, and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided, however, that such amount shall be paid in lieu of, and the Executive hereby waives the right to receive, any other amount of severance relating to salary or bonus continuation to be received by the Executive upon termination of employment of the Executive under any severance plan, policy or arrangement of the Company; and C. the maximum amount payable under all performance share grants and all other long term incentive compensation grants to the Executive that have not been paid in accordance with the terms of the grant or Section 5(c) hereof, calculated as though the Executive had remained employed by the Company for the remainder of the Employment Period and on the basis of actual achievement of performance measures through the end of the fiscal year preceding the fiscal year in which the Date of Termination occurs and thereafter assuming maximum achievement of all performance measures (e.g., currently 160%) through the end of the Employment Period; and D. a separate lump-sum supplemental retirement benefit equal to the greater of (i) the supplemental pension benefit described in Paragraph 1(b) of Annex A that the Executive would have been entitled had his employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the greater of two years or the remainder of the Employment Period and based upon his Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the difference between (1) the actuarial equivalent (utilizing for this purpose the actuarial assumptions utilized with respect to the FPL Group Employee Pension Plan (or any successor plan thereto) (the "Retirement Plan") during the 90-day period immediately preceding the Effective Date) of the benefit payable under the Retirement Plan and all supplemental and/or excess retirement plans providing benefits for the Executive (other than the supplemental retirement benefit described in Annex A) (the "SERP") (including, but not limited to the Supplemental Pension Benefit (as defined in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the Executive would receive if the Executive's employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for, and his age increased by, the greater of two years or the remainder of the Employment Period, assuming for this purpose that all accrued benefits are fully vested and that benefit accrual formulas are no less advantageous to the Executive than those in effect during the 90-day period immediately preceding the Effective Date, or, if more favorable to the Executive, as in effect generally at any time thereafter during the Employment Period with respect to other peer executives of the Company and its affiliated companies, and (2) the actuarial equivalent (utilizing for this purpose the actuarial assumptions utilized with respect to the Retirement Plan during the 90-day period immediately preceding the Effective Date) of the Executive's actual benefits (paid or payable), if any, under the Retirement Plan and the SERP; and E. a separate lump-sum supplemental retirement benefit equal to the greater of (i) the supplemental matching contributions account described in Paragraph 1(c) of Annex A that the Executive would have been entitled had his employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the greater of two years or the remainder of the Employment Period and assuming that the Executive made After Tax Member Basic Contributions (within the meaning of the FPL Group Employee Thrift Plan or any successor plan thereto (the "Thrift Plan") and Tax Saver Member Basic Contributions (within the meaning of the Thrift Plan) to the Thrift Plan at the highest permissible rate (disregarding any limitations imposed by the Code) following the Date of Termination, or (ii) the difference between (1) the value of the Company Account (as defined in the Thrift Plan) and any other matching contribution accounts (including, but not limited to the Supplemental Matching Contribution Account (as defined in the FPL Group, Inc. Supplemental Executive Retirement Plan)) under a SERP (other than the supplemental retirement benefit described in Annex A) which the Executive would receive if (i) the Executive's employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the greater of two years or the remainder of the Employment Period, (ii) the Executive made pre- and after-tax contributions at the highest permissible rate (disregarding any limitations imposed by the Code, which may or may not be set forth in the Thrift Plan) for the greater of two years or each year remaining in the Employment Period, (iii) the Company Account and the matching contribution accounts are fully vested, and (iv) the matching contribution formulas are no less advantageous to the Executive than those in effect during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time during the remainder of the Employment Period with respect to other peer executives of the Company and its affiliated companies, and (2) the actual value of the Executive's Company Account and matching contribution accounts (paid or payable), if any, under the Thrift Plan and the SERP; and (ii) for the remainder of the Employment Period, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Sections 5(e) and 5(g) of this Agreement if the Executive's employment had not been terminated, in accordance with the most favorable plans, practices, programs or policies of the Company and its affiliated companies applicable generally to other peer executives and their families during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period; (iii) for the remainder of the Employment Period and to the extent previously paid for or provided by the Company, the Company shall continue to provide the following: A. social and business club memberships to the Executive (as in effect immediately prior to the Date of Termination); B. use, maintenance, insurance, and repair of the company car that is in the possession of the Executive, until the earlier of the end of the lease term or the end of the Employment Period, at which time the Executive may purchase such car. The Company shall replace the company car in the Executive's possession on the Effective Date with a new company car at such time(s) as provided under the Company car policy applicable to other peer executives, but in no case less frequently than the Company car policy in effect during the 90-day period immediately preceding the Effective Date; C. up to $15,000 annually for personal financial planning, accounting and legal advice; D. communication equipment such as a car and/or cellular phone, and home or laptop computer until the end of the Employment Period, at which time the Executive may purchase such equipment; E. security system at the Executive's residence, and the related monitoring and maintenance fees; and F. up to $800 annually for personal excess liability insurance coverage; In lieu of continuing these benefits for the remainder of the Employment Period, the Executive, in his sole discretion, may elect to receive a lump sum payment equal to the present value of the amount projected to be paid by the Company to provide these benefits. In determining the present value, a six percent interest assumption shall be utilized. The Executive shall make any such election by giving the Company written notice in accordance with Section 14(b). (iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive pursuant to this Agreement or otherwise under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies, but excluding solely for purposes of this Section 7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B); and (v) the Company shall provide the Executive with the following benefits in the event of his termination under this Section 7(a): A. If the Executive is required to move his primary residence in order to pursue other business opportunities during the Employment Period, the Company shall reimburse the Executive for all such relocation expenses incurred during the Employment Period (not in excess of $10,000) that are not reimbursed by another employer, including, without limitation, assistance in selling the Executive's home and all other assistance and benefits that were customarily provided by the Company to transferred executives prior to the Change of Control; B. If the Executive retains counsel or an accounting firm in connection with the taxation of payments made pursuant to Section 10 of this Agreement, the Company shall reimburse the Executive for such reasonable legal and/or accounting fees and disbursements (not in excess of $15,000); C. The Company shall continue to pay the Executive's Annual Base Salary during the pendency of a dispute over his termination. Amounts paid under this subsection are in addition to all other amounts due under this Agreement (other than those due under Section 5(a) hereof) and shall not be offset against or reduce any other amounts due under this Agreement; and D. The Company shall provide the Executive with outplacement services commensurate with those provided to terminated executives of comparable level made available through and at the facilities of a reputable and experienced vendor; and (vi) any outstanding options, stock appreciation rights, and other awards in the nature of a right that may be exercised granted to the Executive shall become fully exercisable and vested; any restrictions, deferral limitations, and forfeiture conditions applicable to any outstanding award granted to the Executive shall lapse and such awards shall be deemed fully vested; and the Executive shall have for the remainder of the Employment Period (but in no event past the expiration of the term of the award) to exercise any and all rights granted under such awards then exercisable or which become exercisable pursuant to this Section 7(a)(vi), except that with respect to incentive stock options (within the meaning of Section 422(b) of the Code) and stock appreciation rights relating thereto, the Executive may exercise such awards during the period of exercise provided for in the agreements granting such options. (b) Death. Upon the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations, the supplemental retirement benefit described in Annex A, and the timely payment or provision of the benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits"). All Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. The supplemental retirement benefit shall be paid to the Executive's Beneficiary (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan) at his option in a lump sum distribution to be made not later than three months after the occurrence of his death or in the same manner as the Executive's benefits under the Retirement Plan or Thrift Plan to which his benefits under Annex A of this Agreement relates. The term "Other Benefits" as utilized in this Section 7(b) shall include, without limitation, and the Executive's family shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and any of its affiliated companies to surviving families of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to family death benefits, if any, as in effect with respect to other peer executives and their families at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other peer executives of the Company and its affiliated companies and their families. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations, the supplemental retirement benefit described in Annex A, and the timely payment or provision of Other Benefits. All Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. The supplemental retirement benefit shall be paid to the Participant or his Beneficiary (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan), as the case may be, at the option of the Executive or if the Executive is deceased, at the option of such Beneficiary, in a lump sum distribution to be made not later than three months after the occurrence of such event or in the same manner as the Executive's benefits under the Retirement Plan or Thrift Plan to which his benefits under Annex A of this Agreement relates. The term "Other Benefits" as utilized in this Section 7(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families. (d) Cause; Other Than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive Annual Base Salary through the Date of Termination plus the amount of any compensation previously deferred by the Executive, in each case to the extent theretofore unpaid. If the Executive terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations, the supplemental retirement benefit described in Annex A to the extent the Executive is vested in his benefits under the Retirement Plan, and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. The supplemental retirement benefit shall be paid to the Executive or his Beneficiary (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan), as the case may be, at the option of the Executive or if the Executive is deceased, at the option of such Beneficiary, in a lump sum distribution to be made not later than three months after the occurrence of such event or in the same manner as the Executive's benefits under the Retirement Plan or Thrift Plan to which his benefits under Annex A of this Agreement relates. 8. Non-exclusivity of Rights. Except as otherwise expressly provided for in this Agreement, nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 9. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as otherwise expressly provided for in this Agreement, such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Executive may reasonably incur at all stages of proceedings, including, without limitation, preparation and appellate review, as a result of any contest (regardless of whether formal legal proceedings are ever commenced and regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. 10. Certain Additional Payments by the Company. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income or employment taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of Gross-Up Payment equal to the Excise Tax imposed upon the Payments. In the event that Federal or state legislation is enacted by imposing additional excise or supplementary income taxes on amounts payable or benefits provided to the Executive (other than a mere change in marginal income tax rates), the Company agrees to review the Agreement with the Executive and to consider in good faith any changes hereto that may be required to preserve the full amount of all Payments and the economic purposes of the foregoing provisions of this Section 10. 11. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 11 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 12. Indemnification. The Company will, to the fullest extent permitted by law, indemnify and hold the Executive harmless from any and all liability arising from the Executive's service as an employee, officer or director of the Company and its affiliated companies. To the fullest extent permitted by law, the Company will advance legal fees and expenses to the Executive for counsel selected by the Executive in connection with any litigation or proceeding related to the Executive's service as an employee, officer or director of the Company and its affiliates. The terms of this indemnification provision shall survive the expiration of this Agreement. 13. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 14. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Antonio Rodriguez 130 North River Drive West Jupiter, FL 33458 If to the Company: FPL Group, Inc. 700 Universe Boulevard Juno Beach, Florida 33408 Attention: Chairman of the Board or such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, prior to the Effective Date, may be terminated by either the Executive or the Company at any time. Moreover, except as provided in Section 1, if prior to the Effective Date, (i) the Executive's employment with the Company terminates, or (ii) there is a diminution in the Executive's position with the Company or its affiliated companies, then the Executive shall have no further rights under this Agreement. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. ANTONIO RODRIGUEZ Antonio Rodriguez FPL GROUP, INC. By LAWRENCE J. KELLEHER Lawrence J. Kelleher VP Human Resources ANNEX A TO THE EMPLOYMENT AGREEMENT SUPPLEMENTAL RETIREMENT BENEFIT 1. Supplement Retirement Benefit. (a) In General. The supplemental retirement benefit to which the Executive shall be entitled under this Agreement shall be (i) the supplemental pension benefit described in Paragraph 1(b) of this Annex A, and (ii) the supplemental matching contribution account described in Paragraph 1(c) of this Annex A. (b) Supplemental Pension Benefit. The "supplemental pension benefit" shall be the greater of (i) the supplement cash balance accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the supplement unit credit accrued benefit described in Paragraph 1(b)(2) of this Annex A. (1) The "supplement cash balance accrued benefit" is the difference, if any, between (A) and (B) where: (A) is the benefit to which the Executive would be entitled under the Retirement Plan as in effect immediately prior to the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter during the Employment Period with respect to other peer executives of the Company and its affiliated companies, expressed in the normal form of benefit, if such benefit was computed (i) as if benefits under such plan were based upon the Executive's Bonus Compensation (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan as in effect immediately prior to the Change of Control), (ii) without the annual compensation limitation imposed by Section 401(a)(17) of the Code, and (iii) without the restrictions or the limitations imposed by Sections 415(b) or 415(e) of the Code; and (B) is the sum of the benefits payable to the Executive under the Retirement Plan and the SERP, expressed in the normal form of benefit. (2) The "supplement unit credit accrued benefit" is the difference, if any, between (A) and (B) where: (A) is the benefit to which the Executive would be entitled under the Prior Pension Plan (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan as in effect immediately prior to the Change of Control), expressed in the normal form of benefit, if such benefit was computed (i) as if benefits under such plan were based upon the Executive's Bonus Compensation, (ii) without the annual compensation limitation imposed by Section 401(a)(17) of the Code, and (iii) without the restrictions or the limitations imposed by Sections 415(b) or 415(e) of the Code; and (B) is the sum of the benefits payable to the Executive under the Retirement Plan and the SERP, expressed in the normal form of benefit. (c) Supplemental Matching Contribution Account. The "supplemental matching contribution account" shall be an account that is credited annually with (i) supplemental matching contributions described in Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described in Paragraph 1(c)(2) of this Annex A. (1) "Supplemental matching contributions" shall be for each year ending on or prior to the Effective Date in which the Executive participated in the SERP and for each year ending after the Effective Date in which the Executive performs services for the Company or its affiliated companies the difference, if any, between (A) and (B) where: (A) is the matching contribution allocation for such year to which the Executive would be entitled under the Thrift Plan as in effect immediately prior to the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter during the Employment Period with respect to other peer executives of the Company and its affiliated companies if such allocation were computed (i) as if the matching contribution allocation under such plan was based upon the Executive's Base Compensation, (ii) without the annual compensation limitation imposed by Section 401(a)(17) of the Code, (iii) without the restrictions or the limitations imposed by Sections 415(c) or 415(e) of the Code, and (iv) as if he made After Tax Member Basic Contributions (within the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions (within the meaning of the Thrift Plan) at the same percentage of Base Compensation as he made such contributions to the Thrift Plan for such years; and (B) is the sum of the matching contributions allocated or credited to the Executive under the Thrift Plan and the SERP for such year. (2) "Theoretical earnings" shall be the income, gains and losses which would have been credited on the Executive's supplemental matching contribution account balance if such account were invested in the Company Stock Fund (within the meaning of the Thrift Plan) offered as a part of the Thrift Plan. 2. Construction and Definitions. Unless defined below or otherwise in this Annex A, all of the capitalized terms used in this Annex A shall have the meanings assigned to them in this Agreement: (a) "Projected Years of Service" shall mean the Executive's Years of Service (within the meaning of the FPL Group, Inc. Supplemental Executive Retirement Plan as in effective immediately prior to the Change of Control), plus the Years of Service he would have otherwise been credited had his employment terminated on the later of the second anniversary of his Date of Termination or the last day of the Employment Period. (b) "Projected Age" shall mean the age that the Executive will have attained on the later of the second anniversary of his Date of Termination or the last day of the Employment Period. EX-27 6 0006.txt FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from FPL Group's and FPL's condensed consolidated balance sheet as of June 30, 1999 and condensed consolidated statements of income and cash flows for the six months ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000753308 FPL Group, Inc. 1,000,000 DEC-31-1999 JUN-30-2000 6-MOS PER-BOOK $7,958 $3,729 $1,610 $0 $899 $14,196 $2 $2,891 $2,606 $5,499 $0 $226 $3,479 $0 $0 $0 $0 $0 $0 $0 $4,992 $14,196 $3,138 $159 $2,555 $2,555 $583 $34 $451 $126 $325 $7 $325 $183 $0 $748 $1.20 $1.20
EX-27 7 0007.txt FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of June 30, 2000 and condensed consolidated statements of income and cash flows for the six months ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000037634 Florida Power & Light Company 1,000,000 DEC-31-1999 JUN-30-2000 6-MOS PER-BOOK $7,958 $1,449 $1,385 $0 $455 $11,247 $0 $0 $0 $4,853 $0 $226 $2,080 $0 $0 $0 $0 $0 $0 $0 $4,088 $11,247 $2,871 $161 $2,341 $2,502 $369 ($2) $367 $82 $285 $7 $278 $0 $0 $722 $0 $0
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