Exhibit 10(a)
Constellation Energy Group, Inc.
1995 Long-Term Incentive Plan
(Plan)
1. Objective. The objective of this Plan is to increase shareholder value
by providing a long-term incentive to reward officers and key employees
of CEG and its Subsidiaries, who are mainly responsible for the
continued growth, development, and financial success of CEG and its
Subsidiaries, for the continued profitable performance of CEG and its
subsidiaries. The Plan is also designed to permit CEG and its
Subsidiaries to retain talented and motivated officers and key
employees and to increase their ownership of CEG common stock.
2. Definitions. All singular terms defined in this Plan will include the
plural and vice versa. As used herein, the following terms will have
the meaning specified below:
"Award" means individually or collectively, Restricted Stock, Options,
Performance Units, Stock Appreciation Rights, or Dividend Equivalents
granted under this Plan.
"Board" means the Board of Directors of CEG.
"Book Value" means the book value of a share of Stock determined in
accordance with CEG'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 10.
"CEG" means Constellation Energy Group, Inc., a Maryland corporation,
or its successor, including any "New Company" as provided in Section
14I.
"Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code will be deemed to include any
amendments or successor provisions to such section and any regulations
promulgated thereunder.
"Committee" means the Committee on Management of the Board, provided,
however, that if such Committee fails to satisfy the disinterested
administration provisions of Section 16b-3 of the 1934 Act, "Committee"
shall mean a committee of directors of CEG who satisfy the
disinterested person requirements of such Section.
"Date of Grant" means the date on which the granting of an Award is
authorized by the Committee or such later date as may be specified by
the Committee in such authorization.
"Date of Retirement" means the date of Retirement or Early Retirement.
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"Disability" means the determination that a Participant is "disabled"
under the CEG disability plan in effect at that time.
"Dividend Equivalent" means an award granted under Section 11.
"Early Retirement" means retirement prior to the Normal Retirement
Date.
"Earned Performance Award" means an actual award of a specified number
of Performance Units (or shares of Restricted Stock, as the context
requires) which the Committee has determined have been earned and are
payable (or, in the case of Restricted Stock, earned and with respect
to which restrictions will lapse) for a particular Performance Period.
"Eligible Employee" means any person employed by CEG or a Subsidiary on
a regularly scheduled basis who satisfies all of the requirements of
Section 5.
"Exercise Period" means the period or periods during which a Stock
Appreciation Right is exercisable as described in Section 10.
"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.
"Incentive Stock Option" means an incentive stock option within the
meaning of Section 422 of the Code.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Normal Retirement Date" is the retirement date as described in the
Pension Plan or a Subsidiary's retirement or pension plan.
"Option" or "Stock Option" means either a nonqualified stock option or
an incentive stock option granted under Section 8.
"Option Period" or "Option Periods" means the period or periods during
which an Option is exercisable as described in Section 8.
"Participant" means an employee of CEG or a Subsidiary who has been
granted an Award under this Plan.
"Pension Plan" means the Pension Plan of Constellation Energy Group,
Inc. as may be amended from time to time.
"Performance-Based" means that in determining the amount of a Restricted
Stock Award payout, the Committee will take into account the performance
of the Participant, CEG, one or more Subsidiaries, or any combination
thereof.
"Performance Period" means a period of time, established by the
Committee at the time an Award is granted, during which corporate and/or
individual performance is measured.
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"Performance Unit" means a unit of measurement equivalent to such amount
or measure as defined by the Committee which may include, but is not
limited to, dollars, market value shares, or book value shares.
"Plan Administrator" means, as set forth in Section 4, the Committee.
"Restricted Stock" means an Award granted under Section 7.
"Retirement" means retirement on or after the "Normal Retirement Date"
(as such term is defined in the Pension Plan or a Subsidiary's
retirement or pension plan).
"Service-Based" means that in determining the amount of a Restricted
Stock Award payout, the Committee will take into account only the period
of time that the Participant performed services for CEG or its
Subsidiaries since the Date of Grant.
"Stock" means the common stock, without par value, of CEG.
"Stock Appreciation Right" means an Award granted under Section 10.
"Subsidiary(ies)" means any corporation of which 20% or more of its
outstanding voting stock or voting power is beneficially owned, directly
or indirectly, by CEG.
"Target Performance Award" means a targeted award of a specified number
of Performance Units (or shares of Restricted Stock, as the context
requires) which may be earned and payable (or, in the case of Restricted
Stock, earned and with respect to which restrictions will lapse) based
upon the performance objectives for a particular Performance Period, all
as determined by the Committee. The Target Performance Award will be a
factor in the Committee's ultimate determination of the Earned
Performance Award.
"Termination" means resignation or discharge from employment with CEG or
any of its Subsidiaries except in the event of death, Disability,
Retirement or Early Retirement.
3. 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 its
1995 Annual Meeting of Stockholders, and became effective as of January
1, 1995.
B. Period for Grants of Awards. Awards may be made as provided herein
for a period of 10 years after January 1, 1995.
C. Termination. The Plan will continue in effect until all matters
relating to the payment of outstanding Awards and administration of the
Plan have been settled.
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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 stock-based grants.
4. Plan Administration. The Committee is the Plan Administrator and has
sole authority (except as specified otherwise herein) to determine 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 Plan provisions, and, in general, to make all
determinations advisable for the administration of the Plan to achieve
its stated objective. Such determinations shall be final and not subject
to further appeal.
5. Eligibility. Each officer or key employee of CEG and its Subsidiaries
(including officers or employees who are members of the Board, but
excluding directors who are not officers or employees) may be designated
by the Committee as a Participant, from time to time, with respect to
one or more Awards. No officer or employee of CEG or its Subsidiaries
shall have any right to be granted an Award under this Plan.
6. Grant of Awards and Limitation of Number of Shares Awarded. The
Committee may, from time to time, grant Awards to one or more Eligible
Employees, provided that (i) subject to any adjustment pursuant to
Section 14H, the aggregate number of shares of Stock subject to Awards
under this Plan may not exceed three million (3,000,000) 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 CEG under the Plan may be
authorized and unissued Stock, Stock held in the treasury of CEG, or
Stock purchased on the open market (including private purchases) in
accordance with applicable securities laws.
7. Restricted Stock Awards.
A. Grants of Restricted Shares. One or more shares of Restricted Stock
may be granted to any Eligible Employee. The Restricted Stock will be
issued to the Participant on the Date of Grant without the payment of
consideration by the Participant. The Restricted Stock will be issued
in the name of the Participant and will bear a restrictive legend
prohibiting sale, transfer, pledge or hypothecation of the Restricted
Stock until the expiration of the restriction period.
The Committee may also impose such other restrictions and conditions on
the Restricted Stock as it deems appropriate, and will designate the
grant as either a Service-Based or Performance-Based Award.
Upon issuance to the Participant of the Restricted Stock, the
Participant will have the right to vote the Restricted Stock, and
subject to the Committee's discretion, to receive the cash dividends
distributable with respect to such shares, with such dividends treated
as compensation to the Participant. The Committee, in its sole
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discretion, may direct the accumulation and payment of distributable
dividends to the Participant at such times, and in such form and
manner, as determined by the Committee.
B. Service-Based Award.
i. Restriction Period. At the time a Service-Based Restricted
Stock Award is granted, the Committee will establish a restriction
period applicable to such Award which will be not less than one year
and not more than ten years. Each Restricted Stock Award may have a
different restriction period, at the discretion of the Committee.
ii. 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: (a) Termination - the Restricted Stock Award is completely
forfeited; (b) Retirement, Disability or death - payout of the
Restricted Stock Award is prorated for service during the period; or
(c) Early Retirement - if at the Participant's request, the payout or
forfeiture of the Restricted Stock Award is determined at the
discretion of the Committee, or if at CEG's request, payout of the
Restricted Stock Award is prorated for service during the period;
provided, however, that the Committee may modify the above if it
determines at its sole discretion that special circumstances warrant
such modification.
Any shares of Restricted Stock which are forfeited will be transferred
to CEG.
Upon completion of the restriction period, all Award restrictions will
expire and new certificates representing the Award will be issued (the
payout) without the restrictive legend described in Section 7A.
C. Performance-Based Award.
i. Restriction Period. At the time a Performance-Based
Restricted Stock Award is granted, the Committee will establish a
restriction period applicable to such Award which will be not less than
one year and not more than ten years. Each Restricted Stock Award may
have a different restriction period, at the discretion of the
Committee. The Committee will also establish a Performance Period.
ii. Performance Objectives. The Committee will determine, no
later than 90 days after the beginning of each Performance Period, the
performance objectives for each Participant's Target Performance Award
and the number of shares of Restricted Stock for each Target
Performance Award that will be issued on the Date of Grant. Performance
objectives may vary from Participant to Participant and will be based
upon such performance criteria or combination of factors as the
Committee deems appropriate, which may include, but not be limited to,
the performance of the Participant, CEG, one or more Subsidiaries, or
any combination thereof. Performance Periods may overlap and
Participants
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may participate simultaneously with respect to Performance-Based
Restricted Stock Awards for which different Performance Periods are
prescribed.
If, during the course of a Performance Period significant events occur
as determined in the sole discretion of the Committee, which the
Committee expects to have a substantial effect on a performance
objective during such period, the Committee may revise such objective.
iii. Forfeiture or Payout of Award. As soon as practicable
after the end of each Performance Period, the Committee will determine
whether the performance objectives and other material terms of the
Award were satisfied. The Committee's determination of all such matters
will be final and conclusive.
As soon as practicable after the later of (i) the date the Committee
makes the above determination, or (ii) the completion of the
restriction period, the Committee will determine the Earned Performance
Award for each Participant. Such determination may result in forfeiture
of all or some shares of Restricted Stock (if Target Performance Award
performance objectives were not attained), or the issuance of
additional shares of Stock (if Target Performance Award performance
objectives were exceeded), and will be based upon such factors as the
Committee determines at its sole discretion, but including the Target
Performance Award performance objectives.
In the event a Participant ceases employment during a restriction
period, the Restricted Stock Award is subject to forfeiture or payout
(i.e., removal of restrictions) as follows: (a) Termination - the
Restricted Stock Award is completely forfeited; (b) Retirement,
Disability or death - payout of the Restricted Stock Award is prorated
taking into account factors including, but not limited to, service
during the period; and the performance of the Participant during the
portion of the Performance Period before employment ceased; or (c)
Early Retirement - if at the Participant's request, the payout or
forfeiture of the Restricted Stock Award is determined at the
discretion of the Committee, or if at CEG's request, payout of the
Restricted Stock Award is prorated taking into account factors
including, but not limited to, service during the period and the
performance of the Participant during the portion of the Performance
Period before employment ceased; provided, however, that the Committee
may modify the above if it determines at its sole discretion that
special circumstances warrant such modification.
Any shares of Restricted Stock which are forfeited will be transferred
to CEG.
With respect to shares of Restricted Stock for which restrictions
lapse, new certificates will be issued (the payout) without the
restrictive legend described in Section 7A. New certificates will also
be issued for additional Stock, if any, awarded to the Participant
because Target Performance Award performance objectives were exceeded.
D. Waiver of Section 83(b) Election. Unless otherwise directed by the
Committee, as a condition of receiving an Award of Restricted Stock, a
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Participant must waive in writing the right to make an election under
Section 83(b) of the Code to report the value of the Restricted Stock
as income on the Date of Grant.
8. Stock Options.
A. Grants of Options. One or more Options may be granted to any
Eligible Employee on the Date of Grant without the payment of
consideration by the Participant.
B. Stock Option Agreement. Each Option granted under the Plan will be
evidenced by a "Stock Option Agreement" between CEG and the Participant
containing provisions determined by the Committee, including, without
limitation, provisions to qualify Incentive Stock Options as such under
Section 422 of the Code if directed by the Committee at the Date of
Grant; provided, however, that each Incentive 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 will
be paid for in full at the time of the exercise; (iii) each Option will
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 will not be
transferable by the Participant except by Will or the laws of descent
and distribution and will 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 CEG with another
company is submitted to the stockholders of CEG for a vote, the
Committee, in its sole discretion, may declare any previously granted
Option to be immediately exercisable.
C. Option Price. The Option price per share of Stock will be set by the
grant, but will 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 will be payable in cash or in other shares of Stock or in
a combination of cash and other shares of Stock, in a form and manner
as required by the Committee in its sole discretion. When Stock is used
in full or partial payment of the Option price, it will be valued at
the Fair Market Value on the date the Option is exercised.
E. Other Terms and Conditions. The Option will become exercisable in
such manner and within such Option Period or Periods, not to exceed 10
years from its Date of Grant, as set 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.
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F. Lapse of Option. An Option will lapse upon the earlier of: (i) 10
years from the Date of Grant, or (ii) at the expiration of the Option
Period set by the grant. If the Participant ceases employment within
the Option Period and prior to the lapse of the Option, the Option will
lapse as follows: (a) Termination - the Option will lapse on the
effective date of the Termination; or (b) Retirement, Early Retirement,
or Disability - the Option will lapse at the expiration of the Option
Period set by the grant; provided, however, that the Committee may
modify the above if it determines in its sole discretion that special
circumstances warrant such modification. If the Participant dies within
the Option Period and prior to the lapse of the Option, the Option will
lapse at the expiration of the Option Period set by the grant unless it
is exercised before such time by the Participant's legal
representative(s) or by the person(s) entitled to do so under the
Participant's Will or, if the Participant fails to make testamentary
disposition of the Option or dies intestate, by the person(s) entitled
to receive the Option under the applicable laws of descent and
distribution.
G. Individual Limitation. In the case of an Incentive Stock Option, the
aggregate Fair Market Value of the Stock for which Incentive Stock
Options (whether under this Plan or another arrangement) in any
calendar year are first exercisable will not exceed $100,000 with
respect to such calendar year (or such other individual 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.
9. Performance Units.
A. Performance Units. One or more Performance Units may be earned by an
Eligible Employee based on the achievement of preestablished
performance objectives during a Performance Period.
B. Performance Period and Performance Objectives. The Committee will
determine a Performance Period and will determine, no later than 90
days after the beginning of each Performance Period, the performance
objectives for each Participant's Target Performance Award and the
number of Performance Units subject to each Target Performance Award.
Performance objectives may vary from Participant to Participant and
will be based upon such performance criteria or combination of factors
as the Committee deems appropriate, which may include, but not be
limited to, the performance of the Participant, CEG, one or more
Subsidiaries, or any combination thereof. Performance Periods may
overlap and Participants may participate simultaneously with respect to
Performance Units for which different Performance Periods are
prescribed.
If during the course of a Performance Period significant events occur
as determined in the sole discretion of the Committee which the
Committee expects to have a substantial effect on a performance
objective during such period, the Committee may revise such objective.
C. Forfeiture or Payout of Award. As soon as practicable after the end
of each Performance Period, the Committee will determine whether the
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performance objectives and other material terms of the Award were
satisfied. The Committee's determination of all such matters will be
final and conclusive.
As soon as practicable after the date the Committee makes the above
determination, the Committee will determine the Earned Performance
Award for each Participant. Such determination may result in an
increase or decrease in the number of Performance Units payable based
upon such Participant's Target Performance Award, and will be based
upon such factors as the Committee determines in its sole discretion,
but including the Target Performance Award performance objectives.
In the event a Participant ceases employment during a Performance
Period, the Performance Unit Award is subject to forfeiture or payout
as follows: (a) Termination - the Performance Unit Award is completely
forfeited; (b) Retirement, Disability or death - payout of the
Performance Unit Award is prorated taking into account factors
including, but not limited to, service and the performance of the
Participant during the portion of the Performance Period before
employment ceased; or (c) Early Retirement - if at the Participant's
request, the payout or forfeiture of the Performance Unit Award is
determined at the discretion of the Committee, or if at CEG's request,
payout of the Performance Unit Award is prorated taking into account
factors including, but not limited to, service and the performance of
the Participant during the portion of the Performance Period before
employment ceased; provided, however, that the Committee may modify the
above if it determines in its sole discretion that special
circumstances warrant such modification.
D. Form and Timing of Payment. Each Performance Unit is payable in cash
or shares of Stock or in a combination of cash and Stock, as determined
by the Committee in its sole discretion. Such payment will be made as
soon as practicable after the Earned Performance Award is determined.
10. Stock Appreciation Rights.
A. Grants of Stock Appreciation Rights. Stock Appreciation Rights may
be granted under the Plan in conjunction with an Option either at the
Date of Grant or by amendment or may be separately granted. Stock
Appreciation Rights will be subject to such terms and conditions not
inconsistent with the Plan as the Committee may impose.
B. Right to Exercise; Exercise Period. A Stock Appreciation Right
issued pursuant to an Option will be exercisable to the extent the
Option is exercisable; both such Stock Appreciation Right and the
Option to which it relates will 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 will 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 CEG with another company is submitted to the stockholders
of CEG for a vote, the Committee, in its sole
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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 Exercise 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 will be deemed to have been exercised by the Participant on the
last day of the Option Period or Exercise Period.
D. Payment. An exercisable Stock Appreciation Right granted pursuant to
an Option will 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 either of the following amounts, determined in the sole
discretion of the Committee at the Date of Grant: (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
exercise over 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 will receive for
each Stock Appreciation Right payment (in cash or Stock or a
combination thereof as described below) equal to either of the
following amounts, determined in the sole discretion of the Committee
at the Date of Grant: (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 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.
The Committee may direct the payment in settlement of the Stock
Appreciation Right to be in cash or Stock or a combination thereof.
Alternatively, the Committee may permit the Participant to elect to
receive cash in full or partial settlement of the Stock Appreciation
Right, provided that (i) the Committee must consent to or disapprove
such election and (ii) unless the Committee directs otherwise, 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.
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E. Nontransferable. A Stock Appreciation Right will not be transferable
by the Participant except by Will or the laws of descent and
distribution and will 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 earlier of: (i) 10 years from the Date of Grant; or (ii)
at the expiration of the Exercise Period as set by the grant. If the
Participant ceases employment within the Exercise Period and prior to
the lapse of the Stock Appreciation Right, the Stock Appreciation Right
will lapse as follows: (a) Termination - the Stock Appreciation Right
will lapse on the effective date of the Termination; or (b) Retirement,
Early Retirement, or Disability - the Stock Appreciation Right will
lapse at the expiration of the Exercise Period set by the grant;
provided, however, that the Committee may modify the above if it
determines in its sole discretion that special circumstances warrant
such modification. If the Participant dies within the Exercise Period
and prior to the lapse of the Stock Appreciation Right, the Stock
Appreciation Right will lapse at the expiration of the Exercise Period
set by the grant unless it is exercised before such time by the
Participant's legal representative(s) or by the person(s) entitled to
do so under the Participant's Will or, if the Participant fails to make
testamentary disposition of the Stock Appreciation Right or dies
intestate, by the person(s) entitled to receive the Stock Appreciation
Right under the applicable laws of descent and distribution.
11. Dividend Equivalents.
A. Grants of Dividend Equivalents. Dividend Equivalents may be granted
under the Plan in conjunction with an Option or a separately awarded
Stock Appreciation Right, at the Date of Grant or by amendment, without
consideration by the Participant. Dividend Equivalents may also be
granted under the Plan in conjunction with Performance Units, at any
time during the Performance Period, without consideration by the
Participant. Dividend Equivalents will be granted under a
Performance-Based Restricted Stock Award in conjunction with additional
shares of Stock issued if Target Performance Award performance
objectives are exceeded.
B. Payment. Each Dividend Equivalent will entitle the Participant to
receive an amount equal to the dividend actually paid with respect to a
share of Stock on each dividend payment date from the Date of Grant to
the date the Dividend Equivalent lapses as set forth in Section 11D.
The Committee, in its sole discretion, may direct the payment of such
amount at such times and in such form and manner as determined by the
Committee.
C. Nontransferable. A Dividend Equivalent will not be transferable by
the Participant.
D. Lapse of a Dividend Equivalent. Each Dividend Equivalent will lapse
on the earlier of (i) the date of the lapse of the related Option or
Stock Appreciation Right; (ii) the date of the exercise of the related
Option or Stock Appreciation
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Right; (iii) the end of the Performance Period (or if earlier, the date
the Participant ceases employment) of the related Performance Units or
Performance-Based Restricted Stock Award; or (iv) the lapse date
established by the Committee on the Date of Grant of the Dividend
Equivalent.
12. Accelerated Award Payout/Exercise.
A. Change in Control. Notwithstanding anything in this Plan document to
the contrary, a Participant is entitled to an accelerated payout or
accelerated Option or Exercise Period (as set forth in Section 12B)
with respect to any previously granted Award, upon the happening of a
change in control.
A change in control for purposes of this Section 12 means (i) the
purchase or acquisition by any person, entity or group of persons,
(within the meaning of section 13(d) or 14(d) of the 1934 Act, or any
comparable successor provisions), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 20 percent or
more of either the outstanding shares of common stock of CEG or the
combined voting power of CEG's then outstanding shares of voting
securities entitled to a vote generally, or (ii) the consummation of,
following the approval by the stockholders of CEG of a reorganization,
merger, or consolidation, in each case, with respect to which persons
who were stockholders of CEG immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own more than
50 percent of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated
entity's then outstanding securities, or (iii) a liquidation or
dissolution of CEG or the sale of substantially all of its assets, or
(iv) a change of more than one-half of the members of the Board within
a 90-day period for reasons other than the death, disability, or
retirement of such members.
B. Amount of Award Subject to Accelerated Payout/Option Period/Exercise
Period. The amount of a Participant's previously granted Award that
will be paid or exercisable upon the happening of a change in control
will be determined as follows:
Restricted Stock Awards. The Participant will be entitled to an
accelerated Award payout, and the amount of the payout will be based on
the number of shares of Restricted Stock that were issued on the Date
of Grant, prorated based on the number of months of the restriction
period that have elapsed as of the payout date. Also, with respect to
Performance-Based Restricted Stock Awards, in determining the amount of
the payout, maximum performance achievement will be assumed.
Stock Option Awards and Stock Appreciation Rights. Any previously
granted Stock Option Awards or Stock Appreciation Rights will be
immediately exercisable.
Performance Units. The Participant will be entitled to an accelerated
Award payout, and the amount of the payout will be based on the number
of
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Performance Units subject to the Target Performance Award as
established on the Date of Grant, prorated based on the number of
months of the Performance Period that have elapsed as of the payout
date, and assuming that maximum performance was achieved.
C. Timing of Accelerated Payout/Option Period/Exercise Period. The
accelerated payout set forth in Section 12B will be made in cash within
30 days after the date of the change in control. The accelerated Option
Period/Exercise Period set forth in Section 12B will begin on the date
of the change in control, and applicable payments will be in cash. When
Stock is related to the Award, the amount of cash will be determined
based on the Fair Market Value of Stock on the payout or exercise date,
whichever is applicable.
13. Amendment of Plan.
The Committee 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 14H), 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 was previously 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. Notwithstanding the foregoing,
the Committee may amend the Plan as desirable at the discretion of the
Committee to address any issues concerning (i) Section 162(m) of the
Code, or (ii) maintaining an exemption under rule 16b-3 of the 1934
Act.
14. 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 except (i) to the
extent specifically mandated and directed by applicable state or
federal statute, and (ii) as requested by the Participant (or by any
person entitled to such benefit pursuant to the terms of this Plan),
and approved by the Committee, to satisfy income tax withholding.
B. No Employment Right. Participation in this Plan shall not constitute
a contract of employment between CEG or any Subsidiary and any person
and shall not be deemed to be consideration for, or a condition of,
continued employment of any person.
C. Tax Withholding. CEG or a Subsidiary may withhold any applicable
federal, state or local taxes at such time and upon such terms and
conditions as required by law or determined by CEG or a Subsidiary.
Subject to compliance
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with any requirements of applicable law, the Committee may permit or
require a Participant to have any portion of any withholding or other
taxes payable in respect to a distribution of Stock satisfied through
the payment of cash by the Participant to CEG or a Subsidiary, the
retention by CEG or a Subsidiary of shares of Stock, or delivery of
previously owned shares of the Participant's Stock, having a Fair
Market Value equal to the withholding amount.
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 CEG 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. CEG 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, CEG
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 Committee (and each person or Committee to whom the
Committee or any member thereof has delegated any of its authority or
power under this Plan) shall be indemnified and held harmless by CEG
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 CEG 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 CEG or any of its Subsidiaries, as a matter of law, or
otherwise, or any power that CEG may have to indemnify such person or
hold such person harmless.
G. Reliance on Reports. Each member of the Committee (and each person
or Committee to whom the Committee or any member thereof has delegated
any of its authority or power under this Plan) shall be fully justified
in relying or acting in good faith upon any report made by the
independent public accountants of CEG 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 Committee 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
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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. CEG Successors. In the event CEG becomes a party to a merger,
consolidation, sale of substantially all of its assets or any other
corporate reorganization in which CEG 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 CEG 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. Any Awards under this Plan are not
considered compensation for purposes of determining benefits under any
pension, profit sharing, or other retirement or welfare plan, or for
any other general employee benefit program.
L. Expenses. The expenses of administering the Plan shall be borne by
CEG 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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