Exhibit 10(b)
Constellation Energy Group, Inc.
1995 Long-Term Incentive Plan
(Plan)
1. Objective. The objective of this Plan is to increase shareholder value by
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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
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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.
"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.
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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
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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
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(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
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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.
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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
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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 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 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
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.
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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.
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
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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.
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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
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.
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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.
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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
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
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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 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
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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.
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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.
12. Accelerated Award Payout/Exercise.
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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
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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
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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
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Stock Option Awards or Stock Appreciation Rights will be immediately
exercisable.
Performance Units. The Participant will be entitled to an accelerated Award
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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.
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.
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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
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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.
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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,
(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, and (iii) as requested by the
Participant and approved by the Committee, to members of the Participant's
family, or a trust established by the Participant for the benefit of family
members.
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 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
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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 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.
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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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