SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXX X. XXXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company, and where
applicable, shall be deemed to include Constellation Holdings, Inc. or any
successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the following
events within twenty-four calendar months after the Effective Time shall
constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason (as
defined in Section 1.6);
(iii) Failure or refusal by a successor company to assume
the Company's obligations under this Agreement in its entirety, as
required by Section 9 herein; or
(iv) Commission by the Company of a material breach of
any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include a
termination of the Executive's employment, without Cause, from the date hereof,
but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire, means
an Executive who has not either (i) attained age 55 and completed 20 years of
service with the Company and any successor company or (ii) attained age 60
and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire, means
an Executive who has either (i) attained age 55 and completed 20 years of
service with the Company and any successor company or (ii) attained age 60 with
one year of service with the Company and any successor company, upon the
occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without the
Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties materially
inconsistent with the Executive's authorities, duties, responsibilities,
and status (including offices, title and reporting relationships) as an
executive and/or officer of the Company, or a material reduction or alteration
in the nature or status of the Executive's authorities, duties, or
responsibilities from those in effect as of ninety days prior to the
Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the Executive's base
salary in effect at the Effective Time (or in the case of a reduction after the
date hereof, but prior to the Effective Time, a reduction by the Company of the
Executive's base salary in effect on the date hereof) or as the same shall be
increased from time to time, unless such reduction is less than ten percent
(10%) and it is either (i) replaced by an incentive opportunity equal in value;
or is (ii) consistent and proportional with an overall reduction in
management compensation due to extraordinary business conditions, including
but not limited to reduced profitability and other financial stress (i.e.,
the base salary of the Executive will not be singled out for reduction in a
manner inconsistent with a reduction imposed on other executives of the
Company);
(c) The relocation of the Executive's office more
than 50 miles from the Executive's office at the Effective Time (or in the
case of a relocation after the date hereof, but prior to the Effective
Time, a relocation of the Executive's office more than 50 miles from the
Executive's office on the date hereof).
The Executive's right to terminate employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving moral
turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the
last five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain
employed by the Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the provisions
of Section 5, this Agreement may not be amended in any manner which has
a significant adverse effect on the rights of the Executive without the
written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this
Agreement may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all reasonable
fees and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and that
result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at the
last address he has filed in writing with the Company, or in the case of the
Company, to its principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxx X. Xxxxxx
XXXXX X. XXXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXX X. XXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good
Reason (as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include
a termination of the Executive's employment, without Cause, from the date
hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include
a termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to
Retire, means an Executive who has not either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 and completed one year of service with the Company and
any successor company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving moral
turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the
last five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the provisions
of Section 5, this Agreement may not be amended in any manner which has
a significant adverse effect on the rights of the Executive without the
written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this
Agreement may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all reasonable
fees and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and that
result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxx X. Xxxxx
XXXXXX X. XXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXX X. XXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason
(as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include
a termination of the Executive's employment, without Cause, from the date
hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include
a termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to
Retire, means an Executive who has not either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 and completed one year of service with the Company and
any successor company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving moral
turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the
last five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all reasonable
fees and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and that
result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxx X. Xxxxx
XXXXX X. XXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXXX X. XXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason
(as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall
include a termination of the Executive's employment, without Cause, from the
date hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include
a termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to
Retire, means an Executive who has not either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 and completed one year of service with the Company and
any successor company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving moral
turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all reasonable
fees and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and that
result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxxx X. Xxxx
XXXXXXX X. XXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXX X. XXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason
(as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include
a termination of the Executive's employment, without Cause, from the date
hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire,
means an Executive who has not either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving moral
turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the Executive
an amount equal to two and one-fourth times the Executive's annual base salary
(as in effect on the date of the Qualifying Termination, not reduced by any
reduction described in Section 1.6(b) above) and Annual Award Amount. The
payment shall be made in twenty-four equal monthly installments beginning on the
first day of the month following the Qualifying Termination.
(b) Severance Health Benefits. For the thirty-six month period
commencing on the occurrence of such Qualifying Termination, the Company shall
provide to the Executive and the Executive's family medical and dental benefits
as provided to other executive officers who remain employed by the Company. The
Executive shall be required to make payments for such coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall not
constitute a termination of the Split Dollar Agreement between the Company and
the Executive (or the split dollar agreement between a successor company and the
Executive), and the Executive shall be deemed to have retired upon such
Qualifying Termination for purposes of such Split Dollar Agreement (or the split
dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes of
determining the Executive's supplemental retirement benefits which the Executive
is entitled to under the Company's Executive Benefits Plan (or the supplemental
retirement plan maintained by a successor company), the Early Retirement
Adjustment Factor (as such term is defined in the Company's Pension Plan or
within the meaning of the tax qualified retirement plan maintained by a
successor company) will be one (1).
(c) Severance Health Benefits. The Company shall provide
to the Executive and the Executive's family medical and dental benefits on the
same basis and on the same terms as any retiree who has attained age 65 and
completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as having
retired at the Company's request for purposes of all of the Company's benefit
plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under Section
4999 of Code, and the Company would be denied a deduction under Section
280G of the Code of all or some of such amounts to be paid to the Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to the
Executive are to be reduced under paragraph 4.1 of this Section, the Executive
shall be given the opportunity to designate which benefits or payments shall be
reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any
reason that the amount of "excess parachute payments" are less than
originally calculated, the Company shall promptly pay to the Executive
the amount necessary so that, after such adjustment, the Executive will
have received or be entitled to receive the maximum payments payable under
this Section without any of such payments constituting an "excess
parachute payment," together with interest on such amount at the applicable
Federal rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement
shall remain in effect from the date hereof until the last day of the
twenty-fourth calendar month following the Effective Time. Further, upon
the Effective Time, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no future performance being possible.
Notwithstanding the foregoing, this Agreement shall terminate on the date the
Company's Board of Directors decides by formal vote not to proceed with the
Merger; provided, however, that in the event a Qualifying Termination occurs
prior to such date, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases where
they would so apply.
8. Governing Law. This Agreement shall be
governed by the laws of Maryland.
9. Successors and Assigns. This Agreement
shall be binding upon the Company and any assignee or successor in interest to
the Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or
other communications provided for by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at the last
address he has filed in writing with the Company, or in the case of the Company,
to its principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxx X. Xxxxx
XXXXXX X. XXXXX
SEVERANCE AGREEMENT
This Agreement is made the 31st day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXXX X. XXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason
(as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include
a termination of the Executive's employment, without Cause, from the date
hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include
a termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to
Retire, means an Executive who has not either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 and completed one year of service with the Company and
any successor company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of
any one or more of the following:
(a) The Executive is convicted of a felony
involving moral turpitude; or
(b) The Executive engages in conduct or
activities that constitutes disloyalty to the Company and such conduct or
activities are materially damaging to the property, business or reputation of
the Company; or
(c) The Executive persistently fails or
refuses to comply with any written direction of an authorized
representative of the Company other than a directive constituting an
assignment described in Section 1.6(a); or
(d) The Executive embezzles or knowingly,
and with intent, misappropriates property of the Company, or unlawfully
appropriates any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two
highest annual incentive awards under the Company's Executive Incentive Plan
(or the annual cash incentive plan maintained by a successor company) paid
in the last five years to the Executive prior to the occurrence of the
Qualifying Termination.
2. Severance Benefits for an Executive
Ineligible to Retire. Upon the occurrence of a Qualifying Termination with
respect to an Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to
the Executive an amount equal to two and one-fourth times the Executive's
annual base salary (as in effect on the date of the Qualifying Termination,
not reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the
thirty-six month period commencing on the occurrence of such Qualifying
Termination, the Company shall provide to the Executive and the Executive's
family medical and dental benefits as provided to other executive officers who
remain employed by the Company. The Executive shall be required to make
payments for such coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall not
constitute a termination of the Split Dollar Agreement between the Company and
the Executive (or the split dollar agreement between a successor company and the
Executive), and the Executive shall be deemed to have retired upon such
Qualifying Termination for purposes of such Split Dollar Agreement (or the split
dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes of
determining the Executive's supplemental retirement benefits which the Executive
is entitled to under the Company's Executive Benefits Plan (or the supplemental
retirement plan maintained by a successor company), the Early Retirement
Adjustment Factor (as such term is defined in the Company's Pension Plan or
within the meaning of the tax qualified retirement plan maintained by a
successor company) will be one (1).
(c) Severance Health Benefits. The Company shall provide
to the Executive and the Executive's family medical and dental benefits on the
same basis and on the same terms as any retiree who has attained age 65 and
completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as having
retired at the Company's request for purposes of all of the Company's benefit
plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any
reason that the amount of "excess parachute payments" are less than
originally calculated, the Company shall promptly pay to the Executive
the amount necessary so that, after such adjustment, the Executive will
have received or be entitled to receive the maximum payments payable under
this Section without any of such payments constituting an "excess
parachute payment," together with interest on such amount at the applicable
Federal rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement
shall remain in effect from the date hereof until the last day of the
twenty-fourth calendar month following the Effective Time. Further, upon
the Effective Time, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no future performance being possible.
Notwithstanding the foregoing, this Agreement shall terminate on the date the
Company's Board of Directors decides by formal vote not to proceed with the
Merger; provided, however, that in the event a Qualifying Termination occurs
prior to such date, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any
manner which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this
Agreement may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases where
they would so apply.
8. Governing Law. This Agreement shall be
governed by the laws of Maryland.
9. Successors and Assigns. This Agreement
shall be binding upon the Company and any assignee or successor in interest to
the Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or
other communications provided for by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at the last
address he has filed in writing with the Company, or in the case of the Company,
to its principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxxx X. Xxxxx
XXXXXXX X. XXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXX X. XXXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason
(as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include
a termination of the Executive's employment, without Cause, from the date
hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include
a termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to
Retire, means an Executive who has not either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 and completed one year of service with the Company and
any successor company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of
any one or more of the following:
(a) The Executive is convicted of a felony
involving moral turpitude; or
(b) The Executive engages in conduct or
activities that constitutes disloyalty to the Company and such conduct or
activities are materially damaging to the property, business or reputation of
the Company; or
(c) The Executive persistently fails or
refuses to comply with any written direction of an authorized
representative of the Company other than a directive constituting an
assignment described in Section 1.6(a); or
(d) The Executive embezzles or knowingly,
and with intent, misappropriates property of the Company, or unlawfully
appropriates any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two
highest annual incentive awards under the Company's Executive Incentive Plan
(or the annual cash incentive plan maintained by a successor company) paid in
the last five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive
Ineligible to Retire. Upon the occurrence of a Qualifying Termination with
respect to an Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to
the Executive an amount equal to two and one-fourth times the Executive's
annual base salary (as in effect on the date of the Qualifying Termination,
not reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six
month period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall not
constitute a termination of the Split Dollar Agreement between the Company and
the Executive (or the split dollar agreement between a successor company and the
Executive), and the Executive shall be deemed to have retired upon such
Qualifying Termination for purposes of such Split Dollar Agreement (or the split
dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes of
determining the Executive's supplemental retirement benefits which the Executive
is entitled to under the Company's Executive Benefits Plan (or the supplemental
retirement plan maintained by a successor company), the Early Retirement
Adjustment Factor (as such term is defined in the Company's Pension Plan or
within the meaning of the tax qualified retirement plan maintained by a
successor company) will be one (1).
(c) Severance Health Benefits. The Company shall provide
to the Executive and the Executive's family medical and dental benefits on the
same basis and on the same terms as any retiree who has attained age 65 and
completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as having
retired at the Company's request for purposes of all of the Company's benefit
plans (or the benefit plans maintained by a successor company).
4 Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and
3, in the event that a change in ownership or control (within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")) of
the Company occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax
under Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to
be paid to the Executive are to be reduced under paragraph 4.1 of this Section,
the Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced
payments or benefits pursuant to the preceding paragraph, or if it had
been determined that no such reduction was required, but it nonetheless is
established pursuant to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any
reason that the amount of "excess parachute payments" are less than
originally calculated, the Company shall promptly pay to the Executive
the amount necessary so that, after such adjustment, the Executive will
have received or be entitled to receive the maximum payments payable under
this Section without any of such payments constituting an "excess
parachute payment," together with interest on such amount at the applicable
Federal rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement
shall remain in effect from the date hereof until the last day of the
twenty-fourth calendar month following the Effective Time. Further, upon
the Effective Time, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no future performance being possible.
Notwithstanding the foregoing, this Agreement shall terminate on the date the
Company's Board of Directors decides by formal vote not to proceed with the
Merger; provided, however, that in the event a Qualifying Termination occurs
prior to such date, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases where
they would so apply.
8. Governing Law. This Agreement shall be
governed by the laws of Maryland.
9. Successors and Assigns. This Agreement
shall be binding upon the Company and any assignee or successor in interest to
the Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or
other communications provided for by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at the last
address he has filed in writing with the Company, or in the case of the Company,
to its principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxx X. Xxxxxx
XXXXXX X. XXXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXXXX XXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the following
events within twenty-four calendar months after the Effective Time shall
constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason (as
defined in Section 1.6);
(iii) Failure or refusal by a successor company to assume
the Company's obligations under this Agreement in its entirety, as
required by Section 9 herein; or
(iv) Commission by the Company of a material breach of
any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include a
termination of the Executive's employment, without Cause, from the date hereof,
but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire, means
an Executive who has not either (i) attained age 55 and completed 20 years
of service with the Company and any successor company or (ii) attained age 60
and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire, means an
Executive who has either (i) attained age 55 and completed 20 years of
service with the Company and any successor company or (ii) attained age 60 with
one year of service with the Company and any successor company, upon the
occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without the
Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the Executive's
base salary in effect at the Effective Time (or in the case of a reduction
after the date hereof, but prior to the Effective Time, a reduction by the
Company of the Executive's base salary in effect on the date hereof) or as the
same shall be increased from time to time, unless such reduction is less than
ten percent (10%) and it is either (i) replaced by an incentive opportunity
equal in value; or is (ii) consistent and proportional with an overall
reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's office more
than 50 miles from the Executive's office at the Effective Time (or in the
case of a relocation after the date hereof, but prior to the Effective
Time, a relocation of the Executive's office more than 50 miles from the
Executive's office on the date hereof).
The Executive's right to terminate employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving moral
turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and
3, in the event that a change in ownership or control (within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")) of
the Company occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax
under Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to
be paid to the Executive are to be reduced under paragraph 4.1 of this Section,
the Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced
payments or benefits pursuant to the preceding paragraph, or if it had
been determined that no such reduction was required, but it nonetheless is
established pursuant to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any
reason that the amount of "excess parachute payments" are less than
originally calculated, the Company shall promptly pay to the Executive
the amount necessary so that, after such adjustment, the Executive will
have received or be entitled to receive the maximum payments payable under
this Section without any of such payments constituting an "excess
parachute payment," together with interest on such amount at the applicable
Federal rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement
shall remain in effect from the date hereof until the last day of the
twenty-fourth calendar month following the Effective Time. Further, upon
the Effective Time, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no future performance being possible.
Notwithstanding the foregoing, this Agreement shall terminate on the date the
Company's Board of Directors decides by formal vote not to proceed with the
Merger; provided, however, that in the event a Qualifying Termination occurs
prior to such date, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases where
they would so apply.
8. Governing Law. This Agreement shall be
governed by the laws of Maryland.
9. Successors and Assigns. This Agreement
shall be binding upon the Company and any assignee or successor in interest to
the Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or
other communications provided for by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at the last
address he has filed in writing with the Company, or in the case of the Company,
to its principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxxxx Xxxxx
CARSERLO XXXXX
XXXXXXXXX AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXX X. FILES (the
"Executive"). For purposes of Sections 1 through 11 of this Agreement the term
"Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason
(as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include
a termination of the Executive's employment, without Cause, from the date
hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include
a termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to
Retire, means an Executive who has not either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 and completed one year of service with the Company and
any successor company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to
Retire, means an Executive who has either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 with one year of service with the Company and any
successor company, upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of
any one or more of the following:
(a) The Executive is convicted of a felony
involving moral turpitude; or
(b) The Executive engages in conduct or
activities that constitutes disloyalty to the Company and such conduct or
activities are materially damaging to the property, business or reputation of
the Company; or
(c) The Executive persistently fails or
refuses to comply with any written direction of an authorized
representative of the Company other than a directive constituting an
assignment described in Section 1.6(a); or
(d) The Executive embezzles or knowingly,
and with intent, misappropriates property of the Company, or unlawfully
appropriates any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two
highest annual incentive awards under the Company's Executive Incentive Plan
(or the annual cash incentive plan maintained by a successor company) paid in
the last five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive
Ineligible to Retire. Upon the occurrence of a Qualifying Termination with
respect to an Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to
the Executive an amount equal to two and one-fourth times the Executive's
annual base salary (as in effect on the date of the Qualifying Termination,
not reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the
thirty-six month period commencing on the occurrence of such Qualifying
Termination, the Company shall provide to the Executive and the Executive's
family medical and dental benefits as provided to other executive officers who
remain employed by the Company. The Executive shall be required to make
payments for such coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall not
constitute a termination of the Split Dollar Agreement between the Company and
the Executive (or the split dollar agreement between a successor company and the
Executive), and the Executive shall be deemed to have retired upon such
Qualifying Termination for purposes of such Split Dollar Agreement (or the split
dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes of
determining the Executive's supplemental retirement benefits which the Executive
is entitled to under the Company's Executive Benefits Plan (or the supplemental
retirement plan maintained by a successor company), the Early Retirement
Adjustment Factor (as such term is defined in the Company's Pension Plan or
within the meaning of the tax qualified retirement plan maintained by a
successor company) will be one (1).
(c) Severance Health Benefits. The Company shall provide
to the Executive and the Executive's family medical and dental benefits on the
same basis and on the same terms as any retiree who has attained age 65 and
completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as having
retired at the Company's request for purposes of all of the Company's benefit
plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and
3, in the event that a change in ownership or control (within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")) of
the Company occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax
under Section 4999 of Code, and the Company would be denied a deduction
under Section 280G of the Code of all or some of such amounts to be paid to
the Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to
be paid to the Executive are to be reduced under paragraph 4.1 of this Section,
the Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced
payments or benefits pursuant to the preceding paragraph, or if it had
been determined that no such reduction was required, but it nonetheless is
established pursuant to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any
reason that the amount of "excess parachute payments" are less than
originally calculated, the Company shall promptly pay to the Executive
the amount necessary so that, after such adjustment, the Executive will
have received or be entitled to receive the maximum payments payable under
this Section without any of such payments constituting an "excess
parachute payment," together with interest on such amount at the applicable
Federal rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement
shall remain in effect from the date hereof until the last day of the
twenty-fourth calendar month following the Effective Time. Further, upon
the Effective Time, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no future performance being possible.
Notwithstanding the foregoing, this Agreement shall terminate on the date the
Company's Board of Directors decides by formal vote not to proceed with the
Merger; provided, however, that in the event a Qualifying Termination occurs
prior to such date, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases where
they would so apply.
8. Governing Law. This Agreement shall be
governed by the laws of Maryland.
9. Successors and Assigns. This Agreement
shall be binding upon the Company and any assignee or successor in interest to
the Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or
other communications provided for by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at the last
address he has filed in writing with the Company, or in the case of the Company,
to its principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
Xxxxxxxxx X. Xxxxxxxxxx
Chairman of the Board
/s/ Xxx X. Files
XXX X. FILES
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXX XXXXXXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote her time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the
following events within twenty-four calendar months after the Effective Time
shall constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason
(as defined in Section 1.6);
(iii) Failure or refusal by a successor company to
assume the Company's obligations under this Agreement in its entirety,
as required by Section 9 herein; or
(iv) Commission by the Company of a material
breach of any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include
a termination of the Executive's employment, without Cause, from the date
hereof, but prior to the Effective Time.
(c) A Qualifying Termination shall not include
a termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to
Retire, means an Executive who has not either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 and completed one year of service with the Company and
any successor company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to
Retire, means an Executive who has either (i) attained age 55 and
completed 20 years of service with the Company and any successor company or
(ii) attained age 60 with one year of service with the Company and any
successor company, upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without
the Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the
Executive's base salary in effect at the Effective Time (or in the case of a
reduction after the date hereof, but prior to the Effective Time, a reduction
by the Company of the Executive's base salary in effect on the date hereof) or
as the same shall be increased from time to time, unless such reduction is
less than ten percent (10%) and it is either (i) replaced by an incentive
opportunity equal in value; or is (ii) consistent and proportional with an
overall reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's
office more than 50 miles from the Executive's office at the Effective
Time (or in the case of a relocation after the date hereof, but prior to
the Effective Time, a relocation of the Executive's office more than 50
miles from the Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of
any one or more of the following:
(a) The Executive is convicted of a felony
involving moral turpitude; or
(b) The Executive engages in conduct or
activities that constitutes disloyalty to the Company and such conduct or
activities are materially damaging to the property, business or reputation of
the Company; or
(c) The Executive persistently fails or
refuses to comply with any written direction of an authorized
representative of the Company other than a directive constituting an
assignment described in Section 1.6(a); or
(d) The Executive embezzles or knowingly,
and with intent, misappropriates property of the Company, or unlawfully
appropriates any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two
highest annual incentive awards under the Company's Executive Incentive Plan
(or the annual cash incentive plan maintained by a successor company) paid in
the last five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive
Ineligible to Retire. Upon the occurrence of a Qualifying Termination with
respect to an Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to
the Executive an amount equal to two and one-fourth times the Executive's
annual base salary (as in effect on the date of the Qualifying Termination,
not reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the
thirty-six month period commencing on the occurrence of such Qualifying
Termination, the Company shall provide to the Executive and the Executive's
family medical and dental benefits as provided to other executive officers who
remain employed by the Company. The Executive shall be required to make
payments for such coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall not
constitute a termination of the Split Dollar Agreement between the Company and
the Executive (or the split dollar agreement between a successor company and the
Executive), and the Executive shall be deemed to have retired upon such
Qualifying Termination for purposes of such Split Dollar Agreement (or the split
dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes of
determining the Executive's supplemental retirement benefits which the Executive
is entitled to under the Company's Executive Benefits Plan (or the supplemental
retirement plan maintained by a successor company), the Early Retirement
Adjustment Factor (as such term is defined in the Company's Pension Plan or
within the meaning of the tax qualified retirement plan maintained by a
successor company) will be one (1).
(c) Severance Health Benefits. The Company shall provide
to the Executive and the Executive's family medical and dental benefits on the
same basis and on the same terms as any retiree who has attained age 65 and
completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as having
retired at the Company's request for purposes of all of the Company's benefit
plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for her benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any
reason that the amount of "excess parachute payments" are less than
originally calculated, the Company shall promptly pay to the Executive
the amount necessary so that, after such adjustment, the Executive will
have received or be entitled to receive the maximum payments payable under
this Section without any of such payments constituting an "excess
parachute payment," together with interest on such amount at the applicable
Federal rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement
shall remain in effect from the date hereof until the last day of the
twenty-fourth calendar month following the Effective Time. Further, upon
the Effective Time, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no future performance being possible.
Notwithstanding the foregoing, this Agreement shall terminate on the date the
Company's Board of Directors decides by formal vote not to proceed with the
Merger; provided, however, that in the event a Qualifying Termination occurs
prior to such date, this Agreement shall continue until the Company or its
successor shall have fully performed all of its obligations thereunder with
respect to the Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used
herein in the feminine gender they shall be construed as though they were also
used in the masculine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases where
they would so apply.
8. Governing Law. This Agreement shall be
governed by the laws of Maryland.
9. Successors and Assigns. This Agreement
shall be binding upon the Company and any assignee or successor in interest to
the Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or
other communications provided for by this Agreement shall be sufficient if in
writing and if sent by registered or certified mail to the Executive at the
last address she has filed in writing with the Company, or in the case of the
Company, to its principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxx Xxxxxxxxx
XXXXXX XXXXXXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXX X. XXXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the following
events within twenty-four calendar months after the Effective Time shall
constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason (as
defined in Section 1.6);
(iii) Failure or refusal by a successor company to assume
the Company's obligations under this Agreement in its entirety, as
required by Section 9 herein; or
(iv) Commission by the Company of a material breach of
any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include a
termination of the Executive's employment, without Cause, from the date hereof,
but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire, means
an Executive who has not either (i) attained age 55 and completed 20 years
of service with the Company and any successor company or (ii) attained age 60
and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without the
Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the Executive's
base salary in effect at the Effective Time (or in the case of a reduction
after the date hereof, but prior to the Effective Time, a reduction by the
Company of the Executive's base salary in effect on the date hereof) or as the
same shall be increased from time to time, unless such reduction is less than
ten percent (10%) and it is either (i) replaced by an incentive opportunity
equal in value; or is (ii) consistent and proportional with an overall
reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's office more
than 50 miles from the Executive's office at the Effective Time (or in the
case of a relocation after the date hereof, but prior to the Effective
Time, a relocation of the Executive's office more than 50 miles from the
Executive's office on the date hereof).
The Executive's right to terminate employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving moral
turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive. Notwithstanding the
foregoing, at and after the Effective Time, this Agreement may not be amended in
any respect without the written consent of the Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxx X. Xxxxxx
XXXXXX X. XXXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and G. XXXXXX
XXXXXXXX, XX. (the "Executive"). For purposes of Sections 1 through 11 of this
Agreement the term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the following
events within twenty-four calendar months after the Effective Time shall
constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason (as
defined in Section 1.6);
(iii) Failure or refusal by a successor company to assume
the Company's obligations under this Agreement in its entirety, as
required by Section 9 herein; or
(iv) Commission by the Company of a material breach of
any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include a
termination of the Executive's employment, without Cause, from the date hereof,
but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire, means
an Executive who has not either (i) attained age 55 and completed 20 years
of service with the Company and any successor company or (ii) attained age 60
and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without the
Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the Executive's
base salary in effect at the Effective Time (or in the case of a reduction
after the date hereof, but prior to the Effective Time, a reduction by the
Company of the Executive's base salary in effect on the date hereof) or as the
same shall be increased from time to time, unless such reduction is less than
ten percent (10%) and it is either (i) replaced by an incentive opportunity
equal in value; or is (ii) consistent and proportional with an overall
reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's office more
than 50 miles from the Executive's office at the Effective Time (or in the
case of a relocation after the date hereof, but prior to the Effective
Time, a relocation of the Executive's office more than 50 miles from the
Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving
moral turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in
the event that a change in ownership or control (within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code")) of the
Company occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ G. Xxxxxx Xxxxxxxx, Xx.
G. XXXXXX XXXXXXXX, XX.
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXXX X.
XXXXXXX (the "Executive"). For purposes of Sections 1 through 11 of this
Agreement the term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the following
events within twenty-four calendar months after the Effective Time shall
constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason (as
defined in Section 1.6);
(iii) Failure or refusal by a successor company to assume
the Company's obligations under this Agreement in its entirety, as
required by Section 9 herein; or
(iv) Commission by the Company of a material breach of
any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include a
termination of the Executive's employment, without Cause, from the date hereof,
but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire, means
an Executive who has not either (i) attained age 55 and completed 20 years
of service with the Company and any successor company or (ii) attained age 60
and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without the
Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the Executive's
base salary in effect at the Effective Time (or in the case of a reduction
after the date hereof, but prior to the Effective Time, a reduction by the
Company of the Executive's base salary in effect on the date hereof) or as the
same shall be increased from time to time, unless such reduction is less than
ten percent (10%) and it is either (i) replaced by an incentive opportunity
equal in value; or is (ii) consistent and proportional with an overall
reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's office more
than 50 miles from the Executive's office at the Effective Time (or in the
case of a relocation after the date hereof, but prior to the Effective
Time, a relocation of the Executive's office more than 50 miles from the
Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving
moral turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in
the event that a change in ownership or control (within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code")) of the
Company occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxxx X. Xxxxxxx
XXXXXXX X. XXXXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXX X. XXXXXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the following
events within twenty-four calendar months after the Effective Time shall
constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason (as
defined in Section 1.6);
(iii) Failure or refusal by a successor company to assume
the Company's obligations under this Agreement in its entirety, as
required by Section 9 herein; or
(iv) Commission by the Company of a material breach of
any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include a
termination of the Executive's employment, without Cause, from the date hereof,
but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire, means
an Executive who has not either (i) attained age 55 and completed 20 years
of service with the Company and any successor company or (ii) attained age 60
and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without the
Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the Executive's
base salary in effect at the Effective Time (or in the case of a reduction
after the date hereof, but prior to the Effective Time, a reduction by the
Company of the Executive's base salary in effect on the date hereof) or as the
same shall be increased from time to time, unless such reduction is less than
ten percent (10%) and it is either (i) replaced by an incentive opportunity
equal in value; or is (ii) consistent and proportional with an overall
reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's office more
than 50 miles from the Executive's office at the Effective Time (or in the
case of a relocation after the date hereof, but prior to the Effective
Time, a relocation of the Executive's office more than 50 miles from the
Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving
moral turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the
Early Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in the
event that a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company
occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive. Notwithstanding the
foregoing, at and after the Effective Time, this Agreement may not be amended in
any respect without the written consent of the Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXX
SEVERANCE AGREEMENT
This Agreement is made the 6th day of December, 1995, by and
between BALTIMORE GAS AND ELECTRIC COMPANY (the "Company") and XXXXXXX X. XXXX
(the "Executive"). For purposes of Sections 1 through 11 of this Agreement the
term "Company" shall be deemed to include any successor company.
WHEREAS, Potomac Electric Power Company ("PEPCO") and the
Company have entered into an Agreement and Plan of Merger dated as of September
22, 1995 (the "Merger Agreement"), whereby PEPCO and the Company will merge into
RH Acquisition Corp. ("RH"), with RH as the surviving entity; and
WHEREAS, the Company desires to establish a severance benefit
for the Executive covering the period from the date hereof through the Effective
Time (as hereinafter defined) and for the twenty-four month period following the
Effective Time in the event the Merger (as hereinafter defined) occurs, to avoid
the loss or the serious distraction of the Executive to the detriment of the
Company and its stockholders during such periods when the Executive's undivided
attention and commitment to the needs of the Company would be particularly
important; and
WHEREAS, the Executive desires to devote his time and energy
for the benefit of the Company and its stockholders and not to be distracted
during the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 Merger. The term "Merger" shall have the meaning
ascribed to such term in the Merger Agreement.
1.2 Effective Time. The term "Effective Time" shall
have the meaning ascribed to such term in the Merger Agreement.
1.3 Qualifying Termination.
(a) The occurrence of any one or more of the following
events within twenty-four calendar months after the Effective Time shall
constitute a "Qualifying Termination":
(i) The Company's termination of the Executive's
employment without Cause (as defined in Section 1.7);
(ii) The Executive's resignation for Good Reason (as
defined in Section 1.6);
(iii) Failure or refusal by a successor company to assume
the Company's obligations under this Agreement in its entirety, as
required by Section 9 herein; or
(iv) Commission by the Company of a material breach of
any of the provisions of this Agreement.
(b) A Qualifying Termination also shall include a
termination of the Executive's employment, without Cause, from the date hereof,
but prior to the Effective Time.
(c) A Qualifying Termination shall not include a
termination of employment by reason of death, disability, the Executive's
voluntary termination of employment without Good Reason, or the Company's
termination of the Executive's employment for Cause.
1.4 Ineligible to Retire. Ineligible to Retire, means
an Executive who has not either (i) attained age 55 and completed 20 years
of service with the Company and any successor company or (ii) attained age 60
and completed one year of service with the Company and any successor
company, upon the occurrence of a Qualifying Termination.
1.5 Eligible to Retire. Eligible to Retire,
means an Executive who has either (i) attained age 55 and completed 20
years of service with the Company and any successor company or (ii) attained
age 60 with one year of service with the Company and any successor company,
upon the occurrence of a Qualifying Termination.
1.6 Good Reason. Good Reason means, without the
Executive's express written consent, the occurrence (i) after the
Effective Time, or (ii) after the date hereof, but prior to the Effective Time,
of any one or more of the following:
(a) The assignment to the Executive of duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, title and reporting
relationships) as an executive and/or officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of ninety days prior to
the Effective Time (or, in the case of such an assignment, reduction or
alteration after the date hereof, but prior to the Effective Time, ninety
days prior to the date hereof), unless such act is remedied by the Company
within 10 business days after receipt of written notice thereof given by the
Executive;
(b) A reduction by the Company of the Executive's
base salary in effect at the Effective Time (or in the case of a reduction
after the date hereof, but prior to the Effective Time, a reduction by the
Company of the Executive's base salary in effect on the date hereof) or as the
same shall be increased from time to time, unless such reduction is less than
ten percent (10%) and it is either (i) replaced by an incentive opportunity
equal in value; or is (ii) consistent and proportional with an overall
reduction in management compensation due to extraordinary business
conditions, including but not limited to reduced profitability and other
financial stress (i.e., the base salary of the Executive will not be singled out
for reduction in a manner inconsistent with a reduction imposed on other
executives of the Company);
(c) The relocation of the Executive's office more
than 50 miles from the Executive's office at the Effective Time (or in the
case of a relocation after the date hereof, but prior to the Effective
Time, a relocation of the Executive's office more than 50 miles from the
Executive's office on the date hereof).
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason herein.
1.7 Cause. Cause shall mean the occurrence of any one or
more of the following:
(a) The Executive is convicted of a felony involving
moral turpitude; or
(b) The Executive engages in conduct or activities that
constitutes disloyalty to the Company and such conduct or activities are
materially damaging to the property, business or reputation of the Company; or
(c) The Executive persistently fails or refuses to
comply with any written direction of an authorized representative of the
Company other than a directive constituting an assignment described in
Section 1.6(a); or
(d) The Executive embezzles or knowingly, and with
intent, misappropriates property of the Company, or unlawfully appropriates
any corporate opportunity of the Company.
1.8 Annual Award Amount. The average of the two highest
annual incentive awards under the Company's Executive Incentive Plan (or the
annual cash incentive plan maintained by a successor company) paid in the last
five years to the Executive prior to the occurrence of the Qualifying
Termination.
2. Severance Benefits for an Executive Ineligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Ineligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two and one-fourth times the Executive's annual
base salary (as in effect on the date of the Qualifying Termination, not
reduced by any reduction described in Section 1.6(b) above) and Annual
Award Amount. The payment shall be made in twenty-four equal monthly
installments beginning on the first day of the month following the Qualifying
Termination.
(b) Severance Health Benefits. For the thirty-six month
period commencing on the occurrence of such Qualifying Termination, the
Company shall provide to the Executive and the Executive's family medical and
dental benefits as provided to other executive officers who remain employed by
the Company. The Executive shall be required to make payments for such
coverage in
the same amount as is required of executive officers who remain employed by the
Company.
(c) Split Dollar. The Qualifying Termination shall
not constitute a termination of the Split Dollar Agreement between the Company
and the Executive (or the split dollar agreement between a successor company and
the Executive), and the Executive shall be deemed to have retired upon
such Qualifying Termination for purposes of such Split Dollar Agreement (or the
split dollar agreement between a successor company and the Executive).
3. Severance Benefits for an Executive Eligible to
Retire. Upon the occurrence of a Qualifying Termination with respect to an
Executive who is Eligible to Retire:
(a) Severance Payment: The Company shall pay to the
Executive an amount equal to two times the Executive's annual base salary (as in
effect on the date of the Qualifying Termination, not reduced by any reduction
described in Section 1.6(b) above) and Annual Award Amount. The payment shall
be made in twenty-four equal monthly installments beginning on the first day
of the month following the Qualifying Termination.
(b) Supplemental Retirement Benefits. For purposes
of determining the Executive's supplemental retirement benefits which the
Executive is entitled to under the Company's Executive Benefits Plan (or the
supplemental retirement plan maintained by a successor company), the Early
Retirement Adjustment Factor (as such term is defined in the Company's
Pension Plan or within the meaning of the tax qualified retirement plan
maintained by a successor company) will be one (1).
(c) Severance Health Benefits. The Company shall
provide to the Executive and the Executive's family medical and dental benefits
on the same basis and on the same terms as any retiree who has attained age 65
and completed the greater of 20 years or actual years of service.
(d) Retirement. The Executive shall be treated as
having retired at the Company's request for purposes of all of the Company's
benefit plans (or the benefit plans maintained by a successor company).
4. Code Section 28OG.
4.1 Limitations. Notwithstanding Section 2 and 3, in
the event that a change in ownership or control (within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code")) of the
Company occurs and the independent public accountants for the Company (the
"Accountants") determine that if the benefits to be provided under Section 2
and 3 (together with any other benefits payable to the Executive under any
applicable plan maintained by the Company) were paid to the Executive:
(a) the Executive would incur an excise tax under
Section 4999 of Code, and the Company would be denied a deduction under
Section 280G of the Code of all or some of such amounts to be paid to the
Executive, and
(b) the net after tax benefits to the Executive
attributable to payments under Sections 2 and 3 hereof would not be at least
$10,000 greater than the net after tax benefits which would accrue to the
Executive if the amounts which would otherwise cause the Executive to be
subject to this excise tax were not paid, the amounts payable to the Executive
pursuant to Section 2 and 3 (or pursuant to such other plans maintained by the
Company) shall be reduced so that the amount payable to the Executive hereunder
is the greatest amount (as determined by the Accountants) that may be paid by
the Company to the Executive without any such amount being subject to an excise
tax under Section 4999 or being nondeductible for the Company pursuant to
Section 280G.
4.2 Executive's Election. If the amounts to be paid to
the Executive are to be reduced under paragraph 4.1 of this Section, the
Executive shall be given the opportunity to designate which benefits or
payments shall be reduced and in what order of priority.
4.3 Later Adjustments.
(a) If the Executive receives reduced payments or
benefits pursuant to the preceding paragraph, or if it had been determined
that no such reduction was required, but it nonetheless is established pursuant
to the final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section, the aggregate amount paid to the Executive or for his benefit would
result in any amount being treated as an "excess parachute payment" for purposes
of Sections 28OG and 4999 of the Code, then an amount equal to the amount that
would be an "excess parachute payment" shall be deemed for all purposes a loan
to the Executive made on the date of the receipt of such excess amount, which
the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the date of the Executive's receipt of such
excess until the date of such repayment.
(b) In the event that it is determined for any reason
that the amount of "excess parachute payments" are less than originally
calculated, the Company shall promptly pay to the Executive the amount
necessary so that, after such adjustment, the Executive will have
received or be entitled to receive the maximum payments payable under this
Section without any of such payments constituting an "excess parachute
payment," together with interest on such amount at the applicable Federal
rate (as defined in Section 1274(d) of the Code).
5. Termination of Agreement. This Agreement shall
remain in effect from the date hereof until the last day of the twenty-fourth
calendar month following the Effective Time. Further, upon the Effective
Time, this Agreement shall continue until the Company or its successor shall
have fully performed all of its obligations thereunder with respect to the
Executive, with no future performance being possible. Notwithstanding the
foregoing, this Agreement shall terminate on the date the Company's Board of
Directors decides by formal vote not to proceed with the Merger; provided,
however, that in the event a Qualifying Termination occurs prior to such date,
this Agreement shall continue until the Company or its successor shall have
fully performed all of its obligations thereunder with respect to the
Executive, with no further performance being possible.
6. Amendment of Agreement. Subject to the
provisions of Section 5, this Agreement may not be amended in any manner
which has a significant adverse effect on the rights of the Executive
without the written consent of the Executive.
Notwithstanding the foregoing, at and after the Effective Time, this Agreement
may not be amended in any respect without the written consent of the
Executive.
7. Construction. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.
8. Governing Law. This Agreement shall be governed by
the laws of Maryland.
9. Successors and Assigns. This Agreement shall be
binding upon the Company and any assignee or successor in interest to the
Company.
10. Indemnification. The Company will pay all
reasonable fees and expenses, if any, (including, without limitation, legal
fees and expenses) that are incurred by the Executive to enforce this Agreement
and that result from a breach of this Agreement by the Company.
11. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company, or in the case of the Company, to its
principal offices.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ Xxx X. Files
Xxx X. Files
Vice President Management Services
/s/ Xxxxxxx X. Xxxx
XXXXXXX X. XXXX
