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• Exelon does not make, within five business days of receipt of PSEG’s written notification of its intention to enter into a definitive agreement for a superior proposal, an offer that the PSEGboard of directors determines, in its reasonable good faith judgment after consultation with itsfinancial advisors, is at least as favorable, from a financial point of view, to the shareholders ofPSEG; and • prior to or concurrently with the termination of the merger agreement, PSEG pays to Exelon a termination fee of $400 million and Exelon’s out-of-pocket expenses up to a maximum of$40 million.
The merger agreement may also be terminated by PSEG prior to the PSEG annual meeting if Exelon enters into a definitive agreement with respect to a ‘‘parent acquisition transaction’’ (see ‘‘TheMerger Agreement—Termination of Merger Agreement’’ beginning on page 134 of this joint proxystatement/prospectus for a discussion of this term) or consummates such a transaction and PSEGnotifies Exelon in writing that it is terminating the merger agreement within 10 business days of theearlier to occur of such parent acquisition transaction and the public announcement of the entry intosuch definitive agreement. If the merger agreement is terminated under this provision, Exelon will berequired to pay PSEG a termination fee of $400 million and up to $40 million of PSEG’s out-of-pocketexpenses.
The merger agreement may be terminated by Exelon prior to completion of the merger if: • PSEG’s board of directors or a committee thereof recommends to PSEG shareholders a • a tender offer or exchange offer for 20% or more of the outstanding shares of PSEG capital stock is commenced and PSEG’s board of directors fails to recommend against acceptance ofsuch offer within 10 business days after such commencement; • PSEG breaches in any material respect its obligations under the no-solicitation provisions of the • prior to Exelon’s annual meeting, Exelon enters into a definitive agreement with respect to a parent acquisition transaction or consummates such a transaction and notifies PSEG in writingthat it is terminating the merger agreement within 10 business days from the earlier to occur ofsuch parent acquisition transaction and the public announcement of the entry into suchdefinitive agreement.
Termination Fees and Expenses May Be Payable Under Some Circumstances (see page 136)
Generally, if the merger agreement is terminated by Exelon in specified circumstances where the PSEG board of directors has withdrawn, qualified or modified its declaration with respect to or itsapproval or recommendation of the merger agreement and the merger with Exelon in a manneradverse to Exelon, by either party in specified circumstances involving the acquisition of PSEG byanother person, or by Exelon upon a material breach by PSEG of the no-solicitation provisions of themerger agreement, PSEG will be required to pay Exelon a termination fee of $400 million and up to$40 million of Exelon’s out-of-pocket expenses.
Generally, if the merger agreement is terminated by PSEG where the Exelon board of directors has withdrawn, qualified or modified its declaration with respect to or its approval or recommendationof the merger agreement, the issuance of shares of Exelon common stock as contemplated by themerger agreement and the merger in a manner adverse to PSEG, Exelon will be required to pay up to$40 million of PSEG’s out-of-pocket expenses. If the merger agreement is terminated by PSEG orExelon where Exelon enters into a definitive agreement with respect to a parent acquisition transactionor consummates such a transaction, Exelon will be required to pay PSEG a termination fee of$400 million and up to $40 million of PSEG’s out-of-pocket expenses.

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