Exhibit 10
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Baltimore Gas and Electric Company
Deferred Compensation Plan
For Non-Employee Directors
1. Objective. The objective of this Plan is to provide a portion of the
Compensation of non-employee Directors of BGE in the form of Stock Units,
thereby promoting a greater identity of interest between BGE's non-employee
Directors and its stockholders, and to enable such Directors to defer
receipt of the portion of their Compensation that is payable in cash.
2. Definitions. As used herein, the following terms will have the meaning
specified below:
"Annual Retainer" means the amount payable by BGE to a Director as annual
compensation for performance of services as a Director, and includes
Committee Chair retainers. All other amounts (including without limitation
Board/committee meeting fees, and expense reimbursements) shall be excluded
in calculating the amount of the Annual Retainer.
"BGE" means Baltimore Gas and Electric Company, a Maryland corporation, or
its successor.
"Board" means the Board of Directors of BGE.
"Cash Account" means an account by that name established pursuant to Section
7. The maintenance of Cash Accounts is for bookkeeping purposes only.
"Change in Control" 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 Securities Exchange Act of 1934 (the "Exchange Act"), or any comparable
successor provisions), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20 percent or more of either
the outstanding shares of common stock of BGE or the combined voting power
of BGE's then outstanding shares of voting securities entitled to a vote
generally, or (ii) the approval by the stockholders of BGE of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were stockholders of BGE 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 BGE or the sale of
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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.
"Committee" means the Committee on Management of the Board.
"Common Stock" means the common stock, without par value, of BGE.
"Compensation" means any Annual Retainer and meeting fees payable by BGE to
a participant in his/her capacity as a Director. Compensation excludes
expense reimbursements paid by BGE to a participant in his/her capacity as a
Director.
"Deferred Cash Compensation" means any cash Compensation that is voluntarily
deferred by a participant pursuant to Section 6.
"Director" means a member of the Board who is not an employee of BGE or any
of its subsidiaries/ affiliates.
"Disability" or "Disabled" means that the Plan Administrator has determined
that the participant is unable to fulfill his/her responsibilities of Board
membership because of illness or injury. For purposes of this Plan, a
participant's eligibility to participate shall be deemed to have terminated
on the date he/she is determined by the Plan Administrator to be Disabled.
"Earnings" means, with respect to the Cash Account, hypothetical interest
credited to the Cash Account. "Earnings" means, with respect to the Stock
Account, hypothetical dividends credited to the Stock Account.
"Fair Market Value" means, as of any specified date, the average closing
price of a share of Common Stock, reported in "New York Stock Exchange
Composite Transactions" as published in the Eastern Edition of The Wall
Street Journal for the most recent 30 days during which Common Stock was
traded on the New York Stock Exchange (including such valuation date if a
trading date).
"Plan Accounts" means a participant's Cash Account and/or Stock Account. The
maintenance of Plan Accounts is for bookkeeping purposes only.
"Plan Administrator" means, as set forth in Section 3, the Board.
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"Stock Account" means an account by that name established pursuant to
Section 8. The maintenance of Stock Accounts is for bookkeeping purposes
only.
"Stock Unit(s)" means the share equivalents credited to a Participant's
Stock Account pursuant to Section 8. The use of Stock Units is for
bookkeeping purposes only; the Stock Units are not actual shares of Common
Stock. BGE will not reserve or otherwise set aside any Common Stock for or
to any Stock Account.
3. Plan Administration.
(i) Plan Administrator - The Plan is administered by the Board, who has sole
authority to interpret the Plan, and, in general, to make all other
determinations advisable for the administration of the Plan to achieve its
stated objective. Decisions by the Plan Administrator shall be final and
binding upon all persons for all purposes. The Plan Administrator shall have
the power to delegate all or any part of its non-discretionary duties to one
or more designees, and to withdraw such authority, by written designation.
(ii) Amendment - This Plan may be amended from time to time or suspended or
terminated at any time, at the written direction of the Plan Administrator.
However, amendments required to keep the Plan in compliance with applicable
laws and regulations may be made by the Vice President Management Services
of BGE (or other vice president succeeding to that function) on advice of
counsel. Nothing herein creates a vested right.
(iii) Indemnification - The Plan Administrator (and its designees), Chairman
of the Board, Chief Executive Officer, President, and Vice
President-Management Services of BGE and all other employees of BGE or its
subsidiaries/affiliates whose assigned duties include matters under the
Plan, shall be indemnified by BGE or its subsidiaries /affiliates or from
proceeds under insurance policies purchased by BGE or its
subsidiaries/affiliates, against any and all liabilities arising by reason
of any act or failure to act made in good faith pursuant to the provisions
of the Plan, including expenses reasonably incurred in the defense of any
related claim.
4. Eligibility and Participation.
(i) Mandatory participation - A Director is required to participate in this
Plan with respect to the receipt of fifty
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percent (50%) of his/her Annual Retainer in the form of Stock Units under
Section 5 of the Plan, while so classified.
(ii) Voluntary participation - A Director is eligible to participate in the
Plan by electing to defer all or certain portions of the participant's
Compensation, that is payable in cash, under Section 6 of the Plan, while so
classified.
(iii) Termination of participation - Eligibility to participate shall
terminate on the date the participant ceases to be a Director.
Notwithstanding termination of eligibility, such person with Plan Accounts
will remain a participant of the Plan, solely for purposes of the
administration of existing Plan Accounts, and no additional Stock Units will
be granted and no further deferrals of cash Compensation under the Plan will
be permitted.
5. Mandatory Stock Units. The Stock Account of a participant will be credited
on January 1 of each calendar year with Stock Units equal to the number of
shares of Common Stock (including fractions of a share) that could have been
purchased, with fifty percent (50%) of the participant's Annual Retainer for
such calendar year, at Fair Market Value on such January 1.
If a participant initially becomes eligible to participate in the Plan
during a calendar year, the Stock Account of the participant for such
calendar year will be credited, on the date that is the first day of the
calendar month after the participant initially becomes eligible to
participate in the Plan, with Stock Units equal to the number of shares of
Common Stock (including fractions of a share) that could have been purchased
at Fair Market Value on such date, with an amount equal to (i) fifty percent
(50%) of the participant's Annual Retainer multiplied by (ii) a fraction the
numerator of which is the number of full calendar months in the calendar
year on and after such date, and the denominator of which is 12.
The Stock Account will be maintained pursuant to Section 8.
6. Cash Compensation Deferral Election. A participant may elect to defer none,
all or fifty percent (50%) of his/her Annual Retainer that is payable in
cash (i.e., fifty percent (50%) of the Annual Retainer) and/or may elect to
defer none, all, fifty percent (50%), or seventy-five percent (75%) of
his/her other Compensation that is payable in cash (i.e., one hundred
percent (100%) of all other Compensation). A participant's cash Compensation
deferral election with respect to the Annual Retainer shall specify whether
the deferred Annual
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Retainer is to be credited to the Cash Account or to the Stock Account. All
other Cash Compensation that a participant elects to defer will be credited
to the Cash Account.
Such election shall be made by written notification to the Vice
President-Management Services of BGE (or other vice president succeeding to
that function). Such election shall be made prior to the calendar year
during which the applicable cash Compensation is payable, and shall be
effective as of the first day of such calendar year. If a participant
initially becomes eligible to participate in the Plan during a calendar
year, the election for such calendar year must be made within thirty (30)
calendar days after the date the participant initially becomes eligible to
participate in the Plan, and shall be effective with respect to Compensation
earned after the date the election is received by the Vice
President-Management Services of BGE (or other vice president succeeding to
that function). Elections under this Section shall remain in effect for all
succeeding calendar years until revoked. Elections may be revoked by written
notification to the Vice President-Management Services of BGE (or other vice
president succeeding to that function), and shall be effective as of the
first day of the calendar year following the calendar year during which the
revocation is received by such Vice President.
Notwithstanding anything herein contained to the contrary, the Plan
Administrator shall have the right in its sole discretion to permit a
participant to defer other percentages of his/her Annual Retainer and/or
other Compensation that is payable in cash.
7. Cash Accounts. Cash Compensation that consists of the Annual Retainer that a
participant has elected to defer into the Cash Account is credited to the
participant's Cash Account on January 1 (or if later, the date the
participant's initial election to participate in the Plan becomes
effective). All other cash Compensation that a participant has elected to
defer is credited to the participant's Cash Account on each date such cash
Compensation would otherwise have been paid to the Director. A participant's
Cash Account shall be credited with earnings at the rate earned by the
Interest Income Fund under the Baltimore Gas and Electric Company Employee
Savings Plan, and computed in the same manner as under such plan. Earnings
are credited to the Cash Account commencing on the date the applicable
Deferred Cash Compensation is credited to the Cash Account.
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8. Stock Accounts. Cash Compensation that consists of the Annual Retainer that
a participant has elected to defer into the Stock Account is credited to the
participant's Stock Account on January 1 (or if later, the date the
participant's initial election to participate in the Plan becomes
effective). A participant's Stock Account shall be credited with Stock Units
equal to the number of shares of Common Stock (including fractions of a
share) that could have been purchased with such Deferred Cash Compensation,
at Fair Market Value on such date. Grants of mandatory Stock Units are
credited to the Stock Account as set forth in Section 5.
As of any dividend distribution date for the Common Stock, the participant's
Stock Account shall be credited with additional Stock Units equal to the
number of shares of Common Stock (including fractions of a share) that could
have been purchased, at the closing price of a share of Common Stock on such
date as reported in "New York Stock Exchange Composite Transactions" as
published in the Eastern Edition of the The Wall Street Journal, with the
amount which would have been paid as dividends on that number of shares
(including fractions of a share) of Common Stock which is equal to the
number of Stock Units then credited to the participant's Stock Account.
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, combination or
exchange of shares or other similar changes in the Common Stock, then
appropriate adjustments shall be made in the number of Stock Units in each
participant's Stock Account. Such adjustments shall be made effective on the
date of the change related to the Common Stock.
9. Distributions of Plan Accounts. Distributions of Plan Accounts shall be made
in cash only, from the general assets of BGE.
A participant may elect (by notification in the form and manner established
by the Vice President-Management Services of BGE (or other vice President
succeeding to that function) from time to time) to begin distributions (i)
in the calendar year following the calendar year that eligibility to
participate terminates, (ii) in the calendar year following the calendar
year in which a participant attains age 70, if later, or (iii) any calendar
year between (i) and (ii). Such election must be made prior to the end of
the calendar year in which eligibility to participate terminates.
Alternatively, a participant who reaches age 70 while still
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eligible to participate may elect to begin distributions, in the calendar
year following the calendar year that the participant reaches age 70, of
amounts in his/her Plan Accounts as of the end of the calendar year the
participant reaches age 70. Such election must be made prior to the end of
the calendar year in which the participant reaches age 70, and a
distribution election to receive any subsequently deferred amounts beginning
in the calendar year following the calendar year that eligibility to
participate terminates, must be made prior to the end of the calendar year
in which eligibility to participate terminates.
A participant may elect (by notification in the form and manner established
by the Vice President-Management Services of BGE (or other vice President
succeeding to that function) from time to time) to receive distributions in
a single payment or in annual installments during a period not to exceed
fifteen years. The single payment or the first installment payment,
whichever is applicable, shall be made within the first sixty (60) calendar
days of the calendar year elected for distribution. Subsequent installments,
if any, shall be made within the first sixty (60) calendar days of each
succeeding calendar year until the participant's Cash Account has been paid
out.
In the event applicable elections are not timely made, a participant shall
receive a distribution in a single payment within the first sixty (60)
calendar days of the calendar year following the calendar year that
eligibility to participate terminates.
The value of the Stock Account, which is equal to the number of Stock Units
in the Stock Account multiplied by the Fair Market Value on the date on
which the participant's eligibility to participate terminates (or, the date
that is the last day of the calendar year during which the participant
reaches age 70, for a participant who elects to begin distributions while
still eligible to participate), is transferred to the Cash Account on such
date. Earnings are credited to the Cash Account through the date of
distribution, and amounts held for installment payments shall continue to be
credited with Earnings. The value of the Cash Account that is payable in
cash on the date of the single payment distribution is equal to the balance
in the Cash Account on the date that is no earlier than five (5) calendar
days prior to the day of such distribution ("Distribution Valuation Date").
The amount of any cash distribution to be made in installments from the Cash
Account will be determined by multiplying (i) the balance in such Cash
Account on the Distribution Valuation Date by (ii) a fraction, the
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numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the current
distribution).
If a participant dies or becomes Disabled, the entire unpaid balance of
his/her Plan Accounts shall be paid to the beneficiary(ies) designated by
the participant by notification in the form and manner established by the
Vice President-Management Services of BGE (or other vice president
succeeding to that function) from time to time or, if no designation was
made, in the event of death, to the estate of the participant, and in the
event of Disability, to the participant. Payment shall be made within sixty
(60) calendar days after notice of death or Disability is received by such
Vice President, unless prior to the participant's death or Disability, the
participant elected (in the form and manner established by the Vice
President-Management Services of BGE (or other vice president succeeding to
that function) from time to time) a delayed and/or installment distribution
option for such beneficiary(ies); provided, however that (i) such a
distribution option election shall be effective only if the value of the
participant's Plan Accounts is more than $50,000 on the date of the
participant's death or Disability; and (ii) the final distribution must be
made to such beneficiary(ies) no later than 15 years after the participant's
death or Disability. After the end of the calendar year that a participant's
eligibility to participate terminates, a distribution option election for a
particular beneficiary is irrevocable; provided, however, that the
participant may make a distribution option election for a new beneficiary
who is initially designated after the participant's eligibility to
participate terminates, and such election is irrevocable with respect to the
new beneficiary.
The value of the Stock Account, which is equal to the number of Stock Units
in the Stock Account multiplied by the Fair Market Value on the date of the
participant's death or Disability, is transferred to the Cash Account on
such date. Earnings are credited to the Cash Account through the date of
distribution, and amounts held for installment payments shall continue to be
credited with Earnings. The value of the Cash Account that is payable in
cash on the date of the single payment distribution is equal to the balance
in the Cash Account on the date that is no earlier than five (5) calendar
days prior to the day of such distribution ("Beneficiary Distribution
Valuation Date"). The amount of any cash distribution to be made in
installments from the Cash Account will be determined by multiplying (i) the
balance in such Cash Account on the Beneficiary Distribution Valuation Date
by (ii) a fraction, the numerator of which is one and the
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denominator of which is the number of installments in which distributions
remain to be made (including the current distribution).
Upon the death of a participant's beneficiary for whom a delayed and/or
installment distribution option was elected, the entire unpaid balance of
the participant's Cash Account shall be paid to the beneficiary(ies)
designated by the participant's beneficiary by notification in the form and
manner established by the Vice President-Management Services of BGE (or
other vice president succeeding to that function) from time to time or, if
no designation was made, to the estate of the participant's beneficiary.
Payment shall be made within sixty (60) calendar days after notice of death
is received by such Vice President. The value of the Cash Account that is
payable in cash is equal to the balance in the Cash Account on the date that
is no earlier than five (5) calendar days prior to the day of such
distribution.
Notwithstanding anything herein contained to the contrary, the Plan
Administrator shall have the right in its sole discretion to (i) vary the
manner and timing of distributions of a participant or beneficiary entitled
to a distribution under this Section 9, and may make such distributions in a
single payment or over a shorter or longer period of time than that elected
by a participant; and (ii) vary the period during which the closing price of
Common Stock is referenced to determine the value of the Stock Account that
is transferred to the Cash Account on the date on which the participant's
eligibility to participate terminates. Any affected participants will not
participate in exercising such discretion.
10. Beneficiaries. A participant shall have the right to designate, change or
rescind a beneficiary(ies) who is to receive a distribution(s) pursuant to
Section 9 in the event of the death or Disability of the participant. A
participant's beneficiary(ies) for whom a delayed and/or installment
distribution option was elected shall have the right to designate a
beneficiary(ies) who is to receive a distribution pursuant to Section 9 in
the event of the death of the participant's beneficiary(ies).
Any designation, change or recision of the designation of beneficiary shall
be made by notification in the form and manner established by the Vice
President-Management Services of BGE (or other vice president succeeding to
that function) from time to time. The last designation of beneficiary
received by such Vice President shall be controlling over any testamentary
or purported disposition by the participant (or,
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if applicable, the participant's beneficiary(ies)), provided that no
designation, recision or change thereof shall be effective unless received
by such Vice President prior to the death or Disability (whichever is
applicable) of the participant (or, if applicable, the death of the
participant's beneficiary(ies)).
If the designated beneficiary is the estate, or the executor or
administrator of the estate, of the participant (or, if applicable, the
participant's beneficiary(ies)), a distribution pursuant to Section 9 may be
made to the person(s) or entity (including a trust) entitled thereto under
the will of the participant (or, if applicable, the participant's
beneficiary(ies)), or, in the case of intestacy, under the laws relating to
intestacy.
11. Valuation of Plan Accounts. The Plan Administrator shall cause the value of
a participant's Plan Accounts to be determined and reported to BGE and the
participant at least once per year as of the last business day of the
calendar year. The value of the Stock Account will equal the number of Stock
Units in the Stock Account multiplied by the closing price of a share of
Common Stock on the last business day of the calendar year as reported in
"New York Stock Exchange Composite Transactions" as published in the Eastern
Edition of the The Wall Street Journal. The value of the Cash Account will
equal the balance in the Cash Account on the last business day of the
calendar year.
12. Withdrawals. No withdrawals of Plan Accounts may be made, except a
participant may at any time request a hardship withdrawal from his/her Plan
Accounts if he/she has incurred an unforeseeable financial emergency. An
unforeseeable financial emergency is defined as severe financial hardship to
the participant resulting from a sudden and unexpected illness or accident
of the participant (or of his/her dependents), loss of the participant's
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
participant. The need to send a child to college or the desire to purchase a
home are not considered to be unforeseeable emergencies. The circumstance
that will constitute an unforeseeable emergency will depend upon the facts
of each case.
A hardship withdrawal will be permitted by the Plan Administrator only as
necessary to satisfy an immediate and heavy financial need. A hardship
withdrawal may be permitted only to the extent reasonably necessary to
satisfy the financial need. Payment may not be made to the extent that
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such hardship is or may be relieved (i) through reimbursement or
compensation by insurance or otherwise, (ii) by liquidation of the
participant's assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship, or (iii) by cessation of deferrals
under the Plan.
The request for hardship withdrawal shall be made by notification in the
form and manner established by the Plan Administrator from time to time.
Such hardship withdrawal will be permitted only with approval of the Plan
Administrator. The participant will receive a lump sum payment after the
Plan Administrator has had reasonable time to consider and then approve the
request.
The value of the Stock Account for purposes of processing a hardship cash
withdrawal is equal to the number of Stock Units in the Stock Account
multiplied by the Fair Market Value on the date on which the hardship
withdrawal is processed. The value of the Cash Account for purposes of
processing a hardship cash withdrawal is equal to the balance in the Cash
Account on the date on which the hardship withdrawal is processed.
13. Change in Control. The terms of this Section 13 shall immediately become
operative, without further action or consent by any person or entity, upon a
Change in Control, and once operative shall supersede and control over any
other provisions of this Plan. Upon the occurrence of a Change in Control
followed within one year of the date of such Change in Control by the
participant's cessation of Board membership for any reason, such participant
shall be paid the value of his/her Plan Accounts in a single, lump sum cash
payment. The value of the Stock Account, which is equal to the number of
Stock Units in the Stock Account multiplied by the Fair Market Value on the
date of the participant's cessation of Board membership, is transferred to
the Cash Account on such date. Earnings are credited to the Cash Account
through the date of distribution. The value of the Cash Account that is
payable in cash on the date of the single lump sum cash payment is equal to
the balance in the Cash Account on the date that is no earlier than five (5)
calendar days prior to the day of such distribution. Such payment shall be
made as soon as practicable, but in no event later than thirty (30) calendar
days after the date of the participant's cessation of Board membership. On
or after a Change in Control, no action, including, but not by way of
limitation, the amendment, suspension or termination of the Plan, shall be
taken which would affect the rights of any participant or the
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operation of this Plan with respect to the balance in the participant's Plan
Accounts.
14. Withholding. BGE may withhold to the extent required by law all applicable
income and other taxes from amounts deferred or distributed under the Plan.
15. Copies of Plan Available. Copies of the Plan and any and all amendments
thereto shall be made available to all participants during normal business
hours at the office of the Plan Administrator.
16. Miscellaneous.
(i) Inalienability of benefits - Except as may otherwise be required by law
or court order, the interest of each participant or beneficiary under the
Plan cannot be sold, pledged, assigned, alienated or transferred in any
manner or be subject to attachment or other legal process of whatever
nature; provided, however, that any applicable taxes may be withheld from
any cash benefit payment made under this Plan.
(ii) Controlling law - The Plan and its administration shall be governed by
the laws of the State of Maryland, except to the extent preempted by federal
law.
(iii) Gender and number - A masculine pronoun when used herein refers to
both men and women and words used in the singular are intended to include
the plural, and vice versa, whenever appropriate.
(iv) Titles and headings - Titles and headings to articles and sections in
the Plan are placed herein solely for convenience of reference and in any
case of conflict, the text of the Plan rather than such titles and headings
shall control.
(v) References to law - All references to specific provisions of any federal
or state law, rule or regulation shall be deemed to also include references
to any successor provisions or amendments.
(vi) Funding and expenses - Benefits under the Plan are not vested or
funded, and shall be paid out of the general assets of BGE. To the extent
that any person acquires a right to receive payments from BGE under this
Plan, such rights shall be no greater than the right of any unsecured
general creditor of BGE. The expenses of administering the Plan will be
borne by BGE.
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(vii) Not a contract - Participation in this Plan shall not constitute a
contract of employment or Board membership between BGE and any person and
shall not be deemed to be consideration for, or a condition of, continued
employment or Board membership of any person.
(viii) Successors - In the event BGE becomes a party to a merger,
consolidation, sale of substantially all of its assets or any other
corporate reorganization in which BGE will not be the surviving corporation
or in which the holders of the common stock of BGE will receive securities
of another corporation (in any such case, the "New Company"), then the New
Company shall assume the rights and obligations of BGE under this Plan.
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