EXHIBIT 10(c)
Baltimore Gas and Electric Company
1995 Long-Term Incentive Plan
(Plan)
[Subject to Shareholder Approval]
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 BGE and its Subsidiaries, who are mainly responsible for
the continued growth, development, and financial success of BGE and
its Subsidiaries, for the continued profitable performance of BGE and
its subsidiaries. The Plan is also designed to permit BGE and its
Subsidiaries to retain talented and motivated officers and key
employees and to increase their ownership of BGE 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.
"BGE" means Baltimore Gas and Electric Company, a Maryland
corporation, or its successor, including any "New Company" as provided
in Section 14I.
"Board" means the Board of Directors of BGE.
"Book Value" means the book value of a share of Stock
determined in accordance with BGE'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.
"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 BGE 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 BGE 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 BGE 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 BGE or a Subsidiary
who has been granted an Award under this Plan.
"Pension Plan" means the Pension Plan of Baltimore Gas
and Electric Company 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, BGE, 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 BGE or its Subsidiaries since the
Date of Grant.
"Stock" means the common stock, without par value, of BGE.
"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 BGE.
"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 BGE 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. Subject to the approval
of the Plan by a majority of the outstanding shares of Stock voted
at the 1995 Annual Meeting of Stockholders, the Plan will be
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.
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
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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 BGE 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 BGE 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
BGE under the Plan may be authorized and unissued Stock, Stock held
in the treasury of BGE, 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 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.
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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 BGE'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 BGE.
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, BGE, one or more Subsidiaries, or
any combination thereof. Performance Periods may overlap and
Participants may participate simultaneously with respect to
Performance-Based Restricted Stock Awards for which different
Performance Periods are prescribed.
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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 BGE'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 BGE.
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 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.
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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
BGE 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 BGE with
another company is submitted to the stockholders of BGE 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.
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
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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, BGE, 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 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
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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 BGE'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 BGE with another
company is submitted to the stockholders of BGE for a vote, the
Committee, 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 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.
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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.
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
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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 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.
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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 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 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 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.
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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 BGE 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. BGE 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 BGE or a Subsidiary. Subject to compliance
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 BGE or a Subsidiary, the retention by
BGE 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.
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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
BGE 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. BGE 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, BGE 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 BGE 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 BGE 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 BGE or any of its
Subsidiaries, as a matter of law, or otherwise, or any power
that BGE 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 BGE 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 action taken,
including the furnishing of information, or failure to act,
if in good faith.
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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. BGE 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 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 BGE
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 BGE 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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