Exhibit 4
Constellation Energy Group, Inc.
Management Long-Term Incentive Plan
(Plan)
1. Objective. The objective of this Plan is to increase shareholder value
by providing a long-term incentive to reward management level and other
designated employees of Constellation Energy and its Subsidiaries,
whose responsibilities include the continued growth, development, and
financial success of Constellation Energy and its Subsidiaries, for the
continued profitable performance of Constellation Energy and its
Subsidiaries. The Plan is also designed to assist Constellation Energy
and its Subsidiaries to retain talented and motivated management level
and other designated employees and to increase their ownership of
Constellation Energy common stock.
2. Definitions. All singular terms defined in this Plan will include the
plural and vice versa. As used herein, the following terms will have
the meaning specified below:
"Award" means individually or collectively, Restricted Stock, Options,
Performance Units, Stock Appreciation Rights, or Dividend Equivalents
granted under this Plan.
"Board" means the Board of Directors of Constellation Energy.
"Book Value" means the book value of a share of Stock determined in
accordance with Constellation Energy'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.
"Constellation Energy" 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.
"Date of Grant" means the date on which the granting of an Award is
authorized by the Plan Administrator or such later date as may be
specified by the Plan Administrator 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 Constellation Energy disability plan in effect at that time.
"Dividend Equivalent" means an award granted under Section 11.
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"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 Plan Administrator 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 Constellation Energy
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 Constellation Energy 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 Plan Administrator will take into account the
performance of the Participant, Constellation Energy, one or more
Subsidiaries, or any combination thereof.
"Performance Period" means a period of time, established by the Plan
Administrator at the time an Award is granted, during which corporate
and/or individual performance is measured.
"Performance Unit" means a unit of measurement equivalent to such amount
or measure as defined by the Plan Administrator which may include, but
is not limited to, dollars, market value shares, or book value shares.
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"Plan Administrator" means, as set forth in Section 4, the Chief
Executive Officer of Constellation Energy.
"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 Plan Administrator will take into account only
the period of time that the Participant performed services for
Constellation Energy or its Subsidiaries since the Date of Grant.
"Stock" means the common stock, without par value, of Constellation
Energy.
"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 Constellation Energy.
"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 Plan Administrator. The Target Performance Award
will be a factor in the Plan Administrator's ultimate determination of
the Earned Performance Award.
"Termination" means resignation or discharge from employment with
Constellation Energy or any of its Subsidiaries except in the event of
death, Disability, Retirement or Early Retirement.
3. Effective Date and Duration.
A. Effective Date. The Plan became effective as of February 1, 1998.
B. Period for Grants of Awards. Awards may be made as provided herein
for a period of 10 years after February 1, 1998.
C. Grants Outstanding. Grants outstanding at the effective time of the
share exchange between Constellation Energy and the common stockholders
of Baltimore Gas and Electric Company (BGE) were converted from BGE
common stock-based grants to Constellation Energy common stock-based
grants.
4. Plan Administration. The Chief Executive Officer of Constellation Energy
is the Plan Administrator and has sole authority (except as specified
otherwise herein) to determine all questions of interpretation and
application of the Plan, or of the terms and conditions pursuant to
which Awards are granted, exercised or forfeited under the Plan
provisions, and, in general, to make all determinations advisable for
the administration of the Plan to achieve its stated objective. Such
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determinations shall be final and not subject to further appeal. The
Plan Administrator shall have the power to delegate all or any part of
his/her duties to one or more designees, and to withdraw such authority,
by written designation.
5. Eligibility. Each employee of Constellation Energy who holds a
management level position, and other employees of Constellation Energy
and its Subsidiaries, may be designated by the Plan Administrator as a
Participant, from time to time, with respect to one or more Awards. No
employee of Constellation Energy 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 Plan Administrator 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
Constellation Energy under the Plan may be authorized and unissued
Stock, Stock held in the treasury of Constellation Energy, 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
either in the name of the Participant or in an agent account on behalf
of one or more Participants, and will bear a restrictive legend
prohibiting sale, transfer, pledge or hypothecation of the Restricted
Stock until the expiration of the restriction period.
The Plan Administrator 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 Plan Administrator's discretion, to receive the cash
dividends distributable with respect to such shares, with such dividends
treated as compensation to the Participant. The Plan Administrator, in
his/her 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 Plan Administrator.
B. Service-Based Award.
i. Restriction Period. At the time a Service-Based Restricted
Stock Award is granted, the Plan Administrator 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 Plan
Administrator.
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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 Plan Administrator, or if at Constellation Energy's
request, payout of the Restricted Stock Award is prorated for service
during the period; provided, however, that the Plan Administrator may
modify the above if it determines at his/her sole discretion that
special circumstances warrant such modification.
Any shares of Restricted Stock which are forfeited will be transferred
to Constellation Energy.
Upon completion of the restriction period, all Award restrictions will
expire and 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 Plan Administrator 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 Plan Administrator. The Plan Administrator will also establish a
Performance Period.
ii. Performance Objectives. The Plan Administrator 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 Plan Administrator deems appropriate, which may include,
but not be limited to, the performance of the Participant,
Constellation Energy, 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.
If, during the course of a Performance Period significant events occur
as determined in the sole discretion of the Plan Administrator, which
the Plan Administrator expects to have a substantial effect on a
performance objective during such period, the Plan Administrator may
revise such objective.
iii. Forfeiture or Payout of Award. As soon as practicable
after the end of each Performance Period, the Plan Administrator will
determine whether the performance objectives and other material terms
of the Award were satisfied. The Plan Administrator's determination of
all such matters will be final and conclusive.
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As soon as practicable after the later of (i) the date the Plan
Administrator makes the above determination, or (ii) the completion of
the restriction period, the Plan Administrator 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 Plan Administrator determines at his/her 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 Plan Administrator, or if at Constellation Energy'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 Plan Administrator may modify the above if it determines at his/her
sole discretion that special circumstances warrant such modification.
Any shares of Restricted Stock which are forfeited will be transferred
to Constellation Energy.
With respect to shares of Restricted Stock for which restrictions
lapse, certificates will be issued (the payout) without the restrictive
legend described in Section 7A. 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
Plan Administrator, 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
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 Constellation Energy
and the Participant containing provisions determined by the Plan
Administrator, including, without limitation, provisions to qualify
Incentive Stock Options as such under Section 422 of the Code if
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directed by the Plan Administrator 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 Constellation Energy with another
company is submitted to the stockholders of Constellation Energy for a
vote, the Plan Administrator, in his\her 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 Plan Administrator in his/her 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 Plan Administrator
may modify the above if he/she determines in his/her 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.
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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 Plan
Administrator 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 Plan Administrator deems appropriate,
which may include, but not be limited to, the performance of the
Participant, Constellation Energy, 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 Plan Administrator which
the Plan Administrator expects to have a substantial effect on a
performance objective during such period, the Plan Administrator may
revise such objective.
C. Forfeiture or Payout of Award. As soon as practicable after the end
of each Performance Period, the Plan Administrator will determine
whether the performance objectives and other material terms of the
Award were satisfied. The Plan Administrator's determination of all
such matters will be final and conclusive.
As soon as practicable after the date the Plan Administrator makes the
above determination, the Plan Administrator 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 Plan Administrator determines in his/her
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
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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 Plan Administrator, or if at
Constellation Energy'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 Plan Administrator may modify the above if it determines in
his/her 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 Plan Administrator in his/her 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 Plan Administrator 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 Constellation Energy with another company is submitted to
the stockholders of Constellation Energy for a vote, the Plan
Administrator, in his/her 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 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 Plan Administrator 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
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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 Plan
Administrator 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 Plan Administrator may direct the payment in settlement of the
Stock Appreciation Right to be in cash or Stock or a combination
thereof. Alternatively, the Plan Administrator may permit the
Participant to elect to receive cash in full or partial settlement of
the Stock Appreciation Right, provided that (i) the Plan Administrator
must consent to or disapprove such election and (ii) unless the Plan
Administrator 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 Plan Administrator may modify the above if
he/she determines in his/her 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
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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 Plan Administrator, in his/her sole discretion, may direct the
payment of such amount at such times and in such form and manner as
determined by the Plan Administrator.
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 Plan Administrator on
the Date of Grant of the Dividend Equivalent.
12. Accelerated Award Payout/Exercise.
A. Change in Control. Notwithstanding anything in this Plan document to
the contrary, a Participant is entitled to an accelerated payout or
accelerated Option or Exercise Period (as set forth in Section 12B)
with respect to any previously granted Award, upon the happening of a
change in control.
A change in control for purposes of this Section 12 means (i) the
purchase or acquisition by any person, entity or group of persons,
(within the meaning of section 13(d) or 14(d) of the 1934 Act, or any
comparable successor provisions), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 20 percent or
more of either the outstanding shares of common stock of Constellation
Energy or the combined voting power of Constellation Energy's then
outstanding shares of voting securities entitled to a vote generally,
or (ii) the consummation of, following the approval by the stockholders
of Constellation Energy, of a reorganization, merger, or consolidation,
in each case, with respect to which persons who were stockholders of
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Constellation Energy 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 Constellation Energy 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.
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 Plan Administrator may at any time and from time to time alter,
amend, suspend or terminate the Plan in whole or in part, except 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.
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, 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 Plan Administrator, to satisfy income tax
withholding.
B. No Employment Right. Participation in this Plan shall not constitute
a contract of employment between Constellation Energy 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. Constellation Energy 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 Constellation
Energy or a Subsidiary. Subject to compliance with any requirements of
applicable law, the Plan Administrator 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 Constellation Energy or a
Subsidiary, the retention by Constellation Energy 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 Constellation
Energy 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. Constellation Energy
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,
Constellation Energy may restrict its transfer in such manner as it
deems advisable to ensure such exempt status. The Plan is not subject
to any provisions of the Employee Retirement Income Security Act of
1974.
F. Indemnification. The Plan Administrator (and his/her designees), and
Constellation Energy's Chairman of the Board, and President and all
other employees of Constellation Energy or its Subsidiaries whose
assigned duties include matters under the Plan, shall be indemnified by
Constellation Energy or its Subsidiaries or from proceeds under
insurance policies purchased by Constellation Energy or its
Subsidiaries 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.
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G. 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 as the result of any such
change shall bear the same restrictions as the shares of Stock to which
they relate.
H. Constellation Energy Successors. In the event Constellation Energy
becomes a party to a merger, consolidation, sale of substantially all
of its assets or any other corporate reorganization in which
Constellation Energy 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 Constellation Energy under this
Plan.
I. 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.
J. 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.
K. Expenses. The expenses of administering the Plan shall be borne by
Constellation Energy and its Subsidiaries.
L. 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.
This document constitutes part of a prospectus covering
securities that have been registered under the Securities Act
of 1933.
You may obtain without charge, upon written or oral
request, a copy of documents incorporated by reference in the
Registration Statement on file with the Securities and
Exchange Commission pertaining to the securities offered under
the Management Long-Term Incentive Plan. In addition you may
obtain, without charge, upon written or oral request, a copy
of documents that are required to be delivered under Rule
428(b) of the Securities Act including our annual report to
shareholders or annual report on Form 10-K and a copy of the
documents that comprise the prospectus.
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To make a request for any of these documents, you may
telephone or write:
David A. Brune,
Corporate Secretary
250 West Pratt Street
20th floor
Baltimore, Maryland 21201-2437
(410) 783-3600
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Management Long-Term Incentive Plan
Appendix
Additional Information
Participants may obtain additional information about the
Plan by contacting:
Steven R. Mantegna
Director - Compensation
Constellation Energy Group, Inc.
250 West Pratt Street
20th Floor
Baltimore, MD 21201-2437
(410) 783-3680
After each grant is made, participants will be
furnished with information about the amount of the grant. At
least annually, participants will be furnished with
information about their outstanding grants.
In general, grants subject to restrictions are
taxable to participants when the restrictions lapse, and
deductible by Constellation Energy at such time, based on the
fair market value of the awards when the restrictions lapse.
Additionally, options are subject to other special tax
provisions.
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