Exhibit 10(b)
CONSTELLATION ENERGY GROUP, INC.
LONG-TERM INCENTIVE PLAN
SECTION ONE. PURPOSE OF PLAN.
The purpose of the Constellation Energy Group, Inc. Long-Term Incentive
Plan is to increase the ownership of Constellation Energy Group, Inc. common
stock by those key employees who are mainly responsible for the continued growth
and development and financial success of the Company and its subsidiaries, and
to attract and retain such employees and reward them for the continued
profitable performance of Constellation Energy Group, Inc. and its subsidiaries.
SECTION TWO. DEFINITIONS.
The following definitions are applicable herein:
A. "Award" means, individually or collectively, Options, Stock
Appreciation Rights or Restricted Stock granted hereunder.
B. "Board" means the Board of Directors of the Company.
C. "Book Value" means the book value of a share of Stock determined in
accordance with the Company's regular accounting practices as of the last
business day of the month immediately preceding the month in which a Stock
Appreciation Right is exercised as provided in Section Nine D.
D. "Code" means the Internal Revenue Code of 1954, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations
promulgated thereunder.
E. "Committee" means the Committee of the Board referred to in Section
Four.
F. "Company" means Constellation Energy Group, Inc. or its successors,
including any "New Company" as provided in Section Eleven I.
G. "Date of Disability" means the date on which a Participant is
classified as Disabled.
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H. "Date of Grant" means the date on which the granting of an Award is
authorized by the Board or such later date as may be specified by the Board in
such authorization.
I. "Date of Retirement" means the date of Retirement or Early
Retirement.
J. "Disability" or "Disabled" means the classification of a Participant
as "disabled" pursuant to Section 2.0 (iii) of the Long Term Disability Plan of
Constellation Energy Group, Inc. or any amendment or successor provision to such
section of such Plan.
K. "Early Retirement" means the retirement of an employee prior to the
Normal Retirement Date.
L. "Eligible Employee" means any person employed by the Company or a
Subsidiary on a regularly scheduled basis who satisfies all of the requirements
of Section Six.
M. "Exercise Period" means the period or periods during which a Stock
Appreciation Right is exercisable as described in Section Nine B.
N. "Fair Market Value" means the average of the highest and lowest
price at which the Stock was sold regular way on the New York Stock
Exchange-Composite Transactions on a specified date.
0. "Incentive Stock Option" means an incentive stock option within the
meaning of Section 422A of the Code.
P. "Normal Retirement Date" is the retirement date as described in the
Company's or Subsidiary's retirement or pension plan.
Q. "Option" or "Stock Option" means either a nonqualified stock option
or an incentive stock option granted under Section Eight.
R. "Option Period" or "Option Periods" means the period or periods
during which an Option is exercisable as described in Section Eight E.
S. "Participant" means an employee of the Company or a Subsidiary who
has been granted an Option, a Stock Appreciation
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Right or a Restricted Stock Award under this Plan.
T. "Plan" means the Constellation Energy Group, Inc. Long-Term
Incentive Plan.
U. "Restricted Stock" means an Award granted under Section Seven.
V. "Retirement" means retirement on or after the "Normal Retirement
Date" (as such term is defined in the Company's or Subsidiary's pension or
retirement plan).
W. "Stock" means the common stock, without par value, of the Company.
X. "Stock Appreciation Right" means an Award granted to a participant
under Section Nine.
Y. "Subsidiary" means any corporation of which 20% or more of its
outstanding voting stock or voting power is beneficially owned, directly or
indirectly, by the Company.
Z. "Termination" means resignation or discharge from employment with
the Company or any of its Subsidiaries except in the event of Death, Disability,
Retirement or Early Retirement.
SECTION THREE. EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL.
A. Effective Date and Stockholder Approval. This Plan has been
transferred from Baltimore Gas and Electric Company (BGE) to CEG effective April
30, 1999 in connection with a share exchange between CEG and the common
stockholders of BGE. The Plan was approved by a majority of the outstanding
shares of common stock of BGE voted at the 1986 Annual Meeting of Stockholders,
and became effective as of October 1, 1985.
B. Period for Grants of Awards. Awards may be made as provided herein
for a period of 10 years after October 1, 1985.
C. Termination. The Plan shall continue in effect until all matters
relating to the payment of Awards and administration of the Plan have been
settled.
D. Grants Outstanding. Grants outstanding at the effective time of the
share exchange between CEG and the common stockholders of Baltimore Gas and
Electric Company (BGE) will be converted from BGE common stock-based grants to
CEG common
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stock-based grants.
SECTION FOUR. ADMINISTRATION.
The Plan shall be administered by the Board; provided, however, that
the Board in its discretion may delegate its authority in this respect to a
Committee, consisting of not less than three members of the Board who are not
eligible for grants hereunder, for the purpose of administering the Plan. Except
as otherwise provided by the Board, such Committee shall have all of the powers
(other than amending this Plan as provided in Section Ten, delegating its
authority pursuant to this Section Four or approving the issuance of Stock)
respecting the Plan. All questions of interpretation and application of the
Plan, or of the terms and conditions pursuant to which Awards are granted,
exercised or forfeited under the provisions hereof, shall be subject to the
determination of the Board or said Committee, as the case may be. Such
determination shall be final and binding upon all parties affected thereby.
SECTION FIVE. GRANT OF AWARDS AND LIMITATION OF NUMBER OF SHARES AWARDED.
The Board may, from time to time, grant Awards to one or more Eligible
Employees, provided that (i) subject to any adjustment pursuant to Section
Eleven H, the aggregate number of shares of Stock subject to Awards under this
Plan may not exceed one million (1,000,000) shares; (ii) to the extent that an
Award lapses or the rights of the Participant to whom it was granted terminate,
any shares of Stock subject to such Award shall again be available for the grant
of an Award under the Plan; and (iii) shares delivered by the Company under the
Plan may be authorized and unissued Stock, Stock held in the treasury of the
Company or Stock purchased on the open market (including private purchases) in
accordance with applicable securities laws. In determining the size of Awards,
the Board shall take into account a Participant's responsibility level,
performance, potential, cash compensation level, and the Fair Market Value of
the Stock at the time of Awards, as well as such other considerations as it
deems appropriate.
SECTION SIX. ELIGIBILITY.
Key employees of the Company and its Subsidiaries (including officers
or employees who are members of the Board, but excluding directors who are not
officers or employees) who, in the opinion of the Board, are mainly responsible
for the
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continued growth and development and financial success of the business of the
Company or one or more of its Subsidiaries shall be eligible to be granted
Awards under the Plan. Subject to the provisions of the Plan, the Board shall
from time to time select from such eligible persons those to whom Awards shall
be granted and determine the number of shares to be granted. No officer or
employee of the Company or its Subsidiaries shall have any right to be granted
an Award under this Plan.
SECTION SEVEN. RESTRICTED STOCK AWARDS.
A. Grants of Restricted Shares. An Award made pursuant to this Section
Seven shall be granted to a Participant in the form of shares of Stock,
restricted as provided in this Section Seven. The Restricted Shares shall be
issued to the Participant without the payment of consideration by the
Participant. The Restricted Shares shall be issued in the name of the
Participant and shall bear a restrictive legend prohibiting sale, transfer,
pledge or hypothecation of the Restricted Shares until the expiration of the
restriction period.
The Board may also impose such other restrictions and conditions on the
Restricted Shares as it deems appropriate.
Upon issuance to the Participant of the Award, the Participant shall
have the right to vote the Restricted Shares and receive the cash dividends
distributable with respect to such shares, such dividends to be treated as
compensation to the Participant.
B. Restriction Period. At the time a Restricted Stock Award is made,
the Board shall establish a restriction period applicable to such Award which
shall be not less than three years and not more than ten years. Each Restricted
Stock Award may have a different restriction period, at the discretion of the
Board. Notwithstanding the other provisions of this Section Seven B, in the
event of a public tender for all or any portion of the Stock or in the event
that any proposal to merge or consolidate the Company with another company is
submitted to the stockholders of the Company for a vote, the Board, in its sole
discretion, may change or eliminate the restriction period.
C. Forfeiture or Payout of Award. In the event a participant ceases
employment during a restriction period, a Restricted Stock Award is subject to
forfeiture or payout (i.e. removal of restrictions) as follows:
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(i) Termination - the Restricted Stock Award would be
completely forfeited.
(ii) Retirement - payout of the Restricted Stock Award
would be prorated for service during the period.
(iii) Early Retirement
- if at the Participant's request, the Restricted
Stock Award would be completely forfeited; or
- if at the Company's request, payout of the
Restricted Stock Award would be prorated for
service during the period.
(iv) Disability - payout of the Restricted Stock Award would
be prorated as if the Participant had maintained active
employment until the Normal Retirement Date.
(v) Death - payout of the Restricted Stock Award would be
prorated for service during the period.
In any instance where payout of a Restricted Stock Award is to be
prorated, the Board may choose to provide the Participant (or the Participant's
estate) with the entire Award rather than the prorated portion thereof.
Any Restricted Shares which are forfeited will be transferred to the
Company.
Upon completion of the restriction period, all restrictions upon the
Award will expire and new certificates representing the Award will be issued
(the payout) without the restrictive legend described in Section A. As a
condition precedent to receipt of the new certificates, the Participant (or the
Participant's designated beneficiary or personal representative) will agree to
make payment to the Company in the amount of any taxes, payable by the
Participant, which are required to be withheld with respect to such Restricted
Shares.
D. Waiver of Section 83(b) Election. As a condition of receiving an
Award of Restricted Shares, a Participant shall waive in writing the right to
make an election under Section 83(b) of the Code to report the value of the
Restricted Shares as income on the Date of Grant.
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SECTION EIGHT. STOCK OPTIONS.
A. Grant of Option. One or more Options may be granted to any Eligible
Employee.
B. Stock Option Agreement. Each Option granted under the Plan shall be
evidenced by a "Stock Option Agreement" between the Company and the Participant
containing provisions determined by the Board, including, without limitation,
provisions to qualify Incentive Stock Options as such under Section 422A of the
Code; provided, however, that each Stock Option Agreement must include the
following terms and conditions: (i) that the Options are exercisable either in
total or in part with a partial exercise not affecting the exercisability of the
balance of the Option; (ii) every share of Stock purchased through the exercise
of an Option shall be paid for in full at the time of the exercise; (iii) each
Option shall cease to be exercisable, as to any share of Stock, at the earliest
of (a) the Participant's purchase of the Stock to which the Option relates, (b)
the Participant's exercise of a related Stock Appreciation Right, or (c) the
lapse of the Option; (iv) Options shall not be transferable by the Participant
except by Will or the laws of descent and distribution and shall be exercisable
during the Participant's lifetime only by the Participant or by the
Participant's guardian or legal representative; and (v) notwithstanding any
other provision, in the event of a public tender for all or any portion of the
Stock or in the event that any proposal to merge or consolidate the Company with
another company is submitted to the stockholders of the Company for a vote, the
Board, in its sole discretion, may declare any previously granted Option to be
immediately exercisable.
C. Option Price. The Option price per share of Stock shall be set by
the grant, but shall be not less than 100% of the Fair Market Value at the Date
of Grant.
D. Form of Payment. At the time of the exercise of the Option, the
Option price shall be payable in cash or in other shares of Stock or in a
combination of cash and other shares of Stock. When Stock is used in full or
partial payment of the Option price, it shall be valued at the Fair Market Value
on the date the Option is exercised.
E. Other Terms and Conditions. The Option shall become exercisable in
such manner and within such Option Period or Periods, not to exceed 10 years
from its Date of Grant, as set
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forth in the Stock Option Agreement upon payment in full. Except as otherwise
provided in this Plan or in the Stock Option Agreement, any Option may be
exercised in whole or in part at any time.
F. Lapse of Option. An Option will lapse upon the first occurrence of
one of the following circumstances: (i) 10 years from the Date of Grant; (ii) on
the 90th day following the Participant's Date of Retirement; (iii) at the time
of a Participant's Termination; or (iv) at the expiration of the Option Period
set by the grant. If, however, the Participant dies within the Option Period and
prior to the lapse of the Option, the Option shall lapse unless it is exercised
within the Option Period or one year from the date of the Participant's death,
whichever is earlier, by the Participant's legal representative or
representatives or by the person or persons entitled to do so under the
Participant's Will or, if the Participant shall fail to make testamentary
disposition of such Option or shall die intestate, by the person or persons
entitled to receive said Option under the applicable laws of descent and
distribution.
G. Special Limitations or Exercise of Incentive Stock Options.
Notwithstanding any other provisions of the Plan, all Incentive Stock Options
must be exercised in the same order or sequence in which they were granted, and
no portion of any Incentive Stock Option may be exercised if at that time there
are unexercised Incentive Stock Options for which the Date of Grant is earlier
than the Date of Grant of the Incentive Stock Option in question.
H. Individual Dollar Limitations. In the case of an Incentive Stock
Option, the aggregate Fair Market Value of the Stock for which any employee may
be granted Incentive Stock Options (whether under this Plan or another
arrangement) in any calendar year shall not exceed $100,000 (or such other
individual grant limit as may be in effect under the Code on the Date of Grant)
plus any unused portion of such limit as the Code may permit to be carried over.
SECTION NINE. STOCK APPRECIATION RIGHTS.
A. Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted under the Plan in conjunction with an Option either at the time of grant
or by amendment or may be separately awarded. Stock Appreciation Rights shall be
subject to such terms and conditions not inconsistent with the
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Plan as the Board shall impose.
B. Right to Exercise; Exercise Period. A Stock Appreciation Right
issued pursuant to an Option shall be exercisable to the extent the Option is
exercisable; both such Stock Appreciation Right and the Option to which it
relates shall not be exercisable during the six months following their
respective Dates of Grant except in the event of the participant's Disability or
death. A Stock Appreciation Right issued independent of an Option shall be
exercisable pursuant to such terms and conditions established in the grant.
Notwithstanding such terms and conditions, in the event of a public tender for
all or any portion of the stock or in the event that any proposal to merge or
consolidate the Company with another company is submitted to the stockholders of
the Company for a vote, the Board, in its sole discretion, may declare any
previously granted Stock Appreciation Right immediately exercisable.
C. Failure to Exercise. If on the last day of the Option Period, in the
case of a Stock Appreciation Right granted pursuant to an Option, or the
specified Award Period, in the case of a Stock Appreciation Right issued
independent of an Option, the participant has not exercised a Stock Appreciation
Right, then such Stock Appreciation Right shall be deemed to have been exercised
by the Participant on the last day of the Option period or Award Period.
D. Payment. An exercisable Stock Appreciation Right granted pursuant to
an Option shall entitle the participant to surrender unexercised the Option or
any portion thereof to which the Stock Appreciation Right is attached, and to
receive in exchange for the Stock Appreciation Right payment (in cash or Stock
or a combination thereof as described below) equal to the greater of (1) the
excess of the Fair Market Value of one share of Stock at the date of exercise
over the Option price, times the number of shares called for by the Stock
Appreciation Right (or portion thereof) which is so surrendered, or (2) the
excess of the Book Value of one share of Stock at the Date of Grant of the
related Option, times the number of shares called for by the Stock Appreciation
Right. Upon exercise of a Stock Appreciation Right not granted pursuant to an
Option, the Participant shall receive for each Stock Appreciation Right payment
(in cash or stock or a combination thereof as described below) equal to the
greater of (1) the excess of the Fair Market Value of one share of Stock at the
date of exercise over the Fair Market Value of one share of Stock at the Date of
Grant
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of the Stock Appreciation Right, of one share of Stock at the Date of Grant of
the Stock Appreciation Right, times the number of shares called for by the Stock
Appreciation Right, or (2) the excess of the Book Value of one share of Stock at
the date of exercise of the Stock Appreciation Right over the Book Value of one
share of Stock at the Date of Grant of the Stock Appreciation Right, times the
number of shares called for by the Stock Appreciation Right.
If the Participant elects to receive cash in full or partial settlement
of the Stock Appreciation Right (i) the Board must consent to or disapprove such
election and (ii) the election and the exercise must be made during the period
beginning on the 3rd business day following the date of public release of
quarterly or year-end earnings and ending on the 12th business day following the
date of public release of quarterly or year-end earnings. The value of the Stock
to be received upon exercise of a Stock Appreciation Right shall be the Fair
Market Value of the Stock on the trading day preceding the date on which the
Stock Appreciation Right is exercised. To the extent that a Stock Appreciation
Right issued pursuant to an Option is exercised, such Option shall be deemed to
have been exercised, and shall not be deemed to have lapsed.
E. Nontransferable. A Stock Appreciation Right shall not be
transferable by the Participant except by Will or the laws of descent and
distribution and shall be exercisable during the Participant's lifetime only by
the Participant or by the Participant's guardian or legal representative.
F. Lapse of a Stock Appreciation Right. A Stock Appreciation Right
will lapse upon the first occurrence of one of the following circumstances: (i)
10 years from the Date of Grant; (ii) on the 90th day following the
Participant's Date of Retirement; (iii) at the time of a Participant's
Termination; or (iv) at the expiration of the Exercise Period, as set by the
grant. If, however, the Participant dies within the Exercise Period and prior to
the lapse of the Stock Appreciation Right, then the Stock Appreciation Right
shall lapse unless it is exercised within the Exercise Period or one year from
the date of the Participant's death, whichever is earlier, by the Participants
legal representative or representatives or by the person or persons entitled to
do so under the Participant's Will or, if the Participant shall fail to make
testamentary disposition of the Stock Appreciation Right or shall die intestate,
by the person or persons entitled to receive the Stock Appreciation Right under
the applicable laws of descent
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and distribution.
SECTION TEN. AMENDMENT OF PLAN.
The Board may at any time and from time to time alter, amend, suspend
or terminate the Plan in whole or in part, except (i) no such action may be
taken without stockholder approval which materially increases the benefits
accruing to Participants pursuant to the Plan, materially increases the number
of securities which may be issued pursuant to the Plan (except as provided in
Section Eleven H), extends the period for granting Options under the Plan or
materially modifies the requirements as to eligibility for participation in the
Plan; and (ii) no such action may be taken without the consent of the
Participant to whom any award shall theretofore have been granted, which
adversely affects the rights of such Participant concerning such award, except
as such termination or amendment of the Plan is required by statute, or rules
and regulations promulgated thereunder.
SECTION ELEVEN. MISCELLANEOUS PROVISIONS.
A. Nontransferability. No benefit provided under this Plan shall be
subject to alienation or assignment by a Participant (or by any person entitled
to such benefit pursuant to the terms of this Plan), nor shall it be subject to
attachment or other legal process of whatever nature. Any attempted alienation,
assignment or attachment shall be void and of no effect whatsoever. Payment
shall be made only into the hands of the Participant entitled to receive the
same or into the hands of the Participant's authorized legal representative.
Deposit of any sum in any financial institution to the credit of any Participant
(or of a person entitled to such sum pursuant to the terms of this Plan) shall
constitute payment into the hands of that Participant (or such person).
B. No Employment Right. Neither this Plan nor any action taken
hereunder shall be construed as giving any right to be retained as an officer or
employee of the Company or any of its Subsidiaries.
C. Tax Withholding. Either the company or a Subsidiary, as appropriate,
shall have the right to deduct from all Awards paid in cash any federal, state
or local taxes as it deems to be required by law to be withheld with respect to
such cash payments. In the case of Awards paid in Stock, the employee or other
person receiving such Stock may be required to pay to the
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Company or a Subsidiary, as appropriate, the amount of any such taxes which the
Company or Subsidiary is required to withhold with respect to such Stock. At the
request of a Participant, or as required by law, such sums as may be required
for the payment of any estimated or accrued income tax liability may be withheld
and paid over to the governmental entity entitled to receive the same.
D. Fractional Shares. Any fractional shares concerning Awards shall be
eliminated at the time of payment or payout by rounding down for fractions of
less than one-half and rounding up for fractions of equal to or more than
one-half. No cash settlements shall be made with respect to fractional shares
eliminated by rounding.
E. Government and Other Regulations. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any government agencies
as may be required. The Company shall be under no obligation to register under
the Securities Act of 1933, as amended ("Act"), any of the shares of Stock
issued, delivered or paid in settlement under the Plan. If Stock awarded under
the Plan may in certain circumstances be exempt from registration under the Act,
the Company may restrict its transfer in such manner as it deems advisable to
ensure such exempt status.
F. Indemnification. Each person who is or at any time serves as a
member of the Board (and each person or Committee to whom the Board or any
member thereof has delegated any of its authority or power under this Plan
pursuant to Section Four) shall be indemnified and held harmless by the Company
against and from (i) any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by such person in connection with or resulting from
any claim, action, suit, or proceeding to which such person may be a party or in
which such person may be involved by reason of any action or failure to act
under the Plan; and (ii) any and all amounts paid by such person in satisfaction
of judgment in any such action, suit, or proceeding relating to the Plan. Each
person covered by this indemnification shall give the Company an opportunity, at
its own expense, to handle and defend the same before such person undertakes to
handle and defend it on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Charter or By-Laws of the Company
or any of its Subsidiaries, as a matter of law, or
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otherwise, or any power that the Company may have to indemnify such person or
hold such person harmless.
G. Reliance on Reports. Each member of the Board (and each person or
Committee to whom the Board or any member thereof has delegated any of its
authority or power under this Plan pursuant to Section Four) shall be fully
justified in relying or acting in good faith upon any report made by the
independent public accountants of the Company and its Subsidiaries and upon any
other information furnished in connection with the Plan. In no event shall any
person who is or shall have been a member of the Board be liable for any
determination made or other action taken or any omission to act in reliance upon
any such report or information or for any action taken, including the furnishing
of information, or failure to act, if in good faith.
H. Changes in Capital Structure. In the event of any change in the
outstanding shares of Stock by reason of any stock dividend or split,
recapitalization, combination or exchange of shares or other similar changes in
the Stock, then appropriate adjustments shall be made in the shares of Stock
theretofore awarded to the Participants and in the aggregate number of shares of
Stock which may be awarded pursuant to the Plan. Such adjustments shall be
conclusive and binding for all purposes. Additional shares of Stock issued to a
Participant as the result of any such change shall bear the same restrictions as
the shares of Stock to which they relate.
I. Company Successors. In the event the Company becomes a party to a
merger, consolidation, sale of substantially all of its assets or any other
corporate reorganization in which the Company will not be the surviving
corporation or in which the holders of the Stock will receive securities of
another corporation (in any such case, the "New Company"), then the New Company
shall assume the rights and obligations of the Company under this plan.
J. Governing Law. All matters relating to the Plan or to Awards granted
hereunder shall be governed by the laws of the State of Maryland, without regard
to the principles of conflict of laws.
K. Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing or group insurance plan of the Company or any subsidiary.
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L. Expenses. The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries.
M. Titles and Headings. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
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