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Exhibit 10(q)

Attachment 1

EMPLOYMENT AGREEMENT

        This Employment Agreement (the "Agreement") is made as of the 20th day
of December, 2001 by and between Constellation Energy Group, Inc. ("Company")
and Michael J. Wallace ("Executive").

WITNESSETH:

        WHEREAS, Company desires to employ Executive and Executive is willing to
accept such employment, all upon the terms and conditions hereinafter set forth.

        NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:

        1.    Employment Term.    Company hereby employs Executive and Executive
accepts employment with Company as President of the Company's Generation Group
on the terms and conditions herein set forth, for a period commencing on
January 2, 2002 and expiring on December 31, 2004 (the "Term"). Executive's
duties and responsibilities shall be determined by Company's Chief Executive
Officer ("CEO") consistent with Executive's qualifications and the best
interests of Company. Executive also shall perform such other or additional
duties as may be assigned to him by the CEO from time to time as are reasonably
consistent with the position of President or such other position as may be
mutually agreed upon by the parties.

        2.    Duties.    During the term hereof, Executive shall devote his
entire attention and energy to the business and affairs of Company on a
full-time basis during normal business hours, and as reasonably required,
outside normal business hours, and shall not be engaged in any other business
activity, regardless of whether such business activity is pursued for gain,
profit or other pecuniary advantage, unless the CEO otherwise consents in
writing; but this shall not be construed as preventing Executive from investing
his assets in such form or manner as will not require any services on the part
of the Executive in the operation of the affairs of the companies in which such
investments are made and will not otherwise conflict with the provisions of this
Agreement.

        3.    Compensation.    

        (a)    Base Salary.    During the first year of this Agreement, Company
shall pay Executive an annual base salary of Five Hundred Thousand Dollars
($500,000) (the "Base Salary", subject to adjustment as provided in the next
sentence), payable in accordance with Company's regular payroll procedures.
Company will review Executive's Base Salary for possible increases at least
annually.

        (b)    Incentive Plan.    During the term of this Agreement, Executive
shall be eligible to participate in Company's annual incentive plan for
executives, which shall have a target performance bonus totaling up to an
additional one hundred percent (100%) of Base Salary for the first year of this
Agreement based on achieving reasonably attainable individual and overall
Company performance goals. For the first year of this Agreement, the maximum
performance bonus of Five Hundred Thousand Dollars ($500,000) will be
guaranteed, and it will be paid in accordance with the terms of the current
Executive Annual Incentive Plan. Following the first year of this Agreement and
during the remaining Term, the target performance bonus percentage of Base
Salary shall be no less than the target performance bonus percentage of annual
base salary of the Chief Executive Officer.

        (c)    Restricted Stock.    Upon Executive's execution of the applicable
Restricted Stock Agreement, Executive will receive shares of the Company's
service-based restricted stock as follows: twenty thousand (20,000) shares with
a one (1) year restriction period; thirty thousand (30,000) shares with a five
(5) year restriction period.

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        (d)    Long-Term Incentive.    Prior to June 30, 2002, Company expects
to adopt a new long-term incentive plan for officers. Assuming such a plan is
adopted, Executive will receive a participation valued at Five Million Dollars
($5,000,000), with such value to be determined on the same basis as for other
senior executives. In the event a new long-term incentive plan has not been
implemented by June 30, 2002, Executive will be granted "phantom" stock options
with a strike price of the fair market value of Company's stock on June 30,
2002, and/or other equity-linked instruments, valued at Five Million Dollars
($5,000,000). Executive's participation in the long-term incentive plan or
ownership of the phantom stock options (or other equity-linked instruments) will
vest ratably over the Initial Term of this Agreement, commencing retroactively
to January 2, 2002. In the event of a "termination without cause" or a
"resignation for good reason" provided by subparagraphs 7(d) and 7(e) of this
Agreement, Executive will be deemed fully vested in the long-term incentive plan
or ownership of the phantom stock options (or other equity-linked instruments).

        (e)    Senior Executive Supplemental Plan.    For purposes of
calculating Executive's benefit under the Senior Executive Supplemental Plan,
Company will credit Executive with seven (7) years of vesting service
immediately upon hire. Under this plan, Executive will earn five and one-half
percent (5.5%) of average annual base pay plus average annual incentive for each
year of service, to a maximum of fifty-five percent (55%) of pay. Retirement
eligibility under the Plan is age fifty-five (55) with ten (10) years' service,
or age sixty-two (62) with five (5) years' service, and therefore Executive
would be eligible to retire after three (3) years of service with a benefit of
sixteen and one-half percent (16.5%) of pay.

        4.    Benefits.    Executive shall be entitled to participate in all of
the Company's benefit plans on the same basis as other senior executives,
including, but not limited to, the Company's Flexible Benefits Plan (including
health and dental coverage), Pension Equity Pension Plan, and an Employee
Savings Plan with a 401(k) feature. Executive shall also be provided the
Supplemental Benefits and Perquisites set forth in Appendix A.

        5.    Business Expenses.    Executive shall be entitled to prompt
reimbursement for all reasonable expenses incurred by him in furtherance of
Company's business, in accordance with the policies and procedures established
for senior executives of Company.

        6.    Relocation Expenses.    

        To assist in Executive's relocation to the Maryland area, Company will
provide Executive with reimbursement for the following reasonable, documented
costs:

House-hunting trips for Executive and/or Executive's family

Settlement expenses for the sale of Executive's current residence

Movement of Executive's household goods, using a Company-approved moving company

Settlement expenses for the purchase of Executive's new home

Reasonable temporary living expenses

Storage of Executive's household goods for a reasonable period

Reasonable travel expenses from Illinois for Executive and his wife over a
reasonable transition period

Ten Thousand Dollars ($10,000) incidental moving expenses

        To the extent that the reimbursement of any of these costs is subject to
federal, state or local tax, the Executive shall be entitled to receive an
additional payment ("a gross-up" payment) in an amount such that, after payment
by the Executive of all taxes on such reimbursements, the Executive retains an
amount of the gross-up payment equal to the tax imposed on the reimbursements.

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        7.    Termination.    

        (a)    Death.    Upon the death of Executive, this Agreement shall
automatically terminate and Executive's executor, administrator or designated
beneficiary shall be entitled to receive the Executive's Base Salary which shall
have accrued to the date of such death and a pro rata portion of the performance
bonus earned for that year under Company's annual incentive plan. For purposes
of calculating the pro rata performance bonus, Executive will be deemed to have
attained his individual performance goals at target.

        (b)    Illness or Disability.    If Executive is absent from his
employment for reasons of illness or other physical or mental incapacity for
more than one hundred eighty (180) consecutive days, Company may terminate this
Agreement and Executive's employment hereunder. In such event, Company shall be
obligated to pay Executive his salary to the end of the month in which his
employment is terminated, and a pro rata portion of the performance bonus earned
for that year under Company's annual incentive plan. For purposes of calculating
the pro rata performance bonus, Executive will be deemed to have attained his
individual performance goals at target.

        (c)    Termination for Cause.    Company may terminate this Agreement
and Executive's employment hereunder at any time for Cause. "Cause" shall be
defined in the same manner as it is defined by Section 1.7 of the Form of
Severance Agreement dated December            , 2001, and attached hereto as
Appendix B ("Severance Agreement"). The procedures for effectuating a
termination for Cause as set forth in Section 1.7 of the Severance Agreement
shall be applicable.

        In the event of termination for Cause, Company shall pay Executive his
Base Salary up to the effective date of the termination.

        (d)    Termination without Cause.    Notwithstanding anything contained
herein to the contrary, Company also may terminate this Agreement and
Executive's employment hereunder for any reason whatsoever, upon thirty
(30) days' prior written notice to Executive. In the event that Company
terminates this Agreement other than for Cause, Executive shall be entitled to:
(i) Base Salary for the remainder of the Term of this Agreement; (ii) a
performance bonus for each year remaining in the Term of this Agreement
(prorated for partial years remaining) as if Executive and Company attained all
performance goals at target; (iii) removal of the restriction for the twenty
thousand (20,000) shares of Company stock with a one (1) year restriction period
provided by Section 3(c) of this Agreement, without regard to whether the one
(1) year period has elapsed; (iv) removal on a pro rated basis of the
restriction for the thirty thousand (30,000) shares of Company stock with a five
(5) year restriction period provided by Section 3(c) of the Agreement (e.g., if
Executive is employed for two (2) full years, the restriction would be removed
from 2/5 of the 5 year restricted stock; (v) immediate vesting of the Long-Term
Incentive provided by Section 3(d) of this Agreement; and (vi) immediate vesting
of all benefits under the Senior Executive Supplemental Plan provided by
Section 3(e) of this Agreement (i.e., Executive will be eligible to retire at
age 55 with a benefit of sixteen and one-half percent (16.5%) of pay (average
annual base pay plus average annual incentive)). In return for the separation
benefits provided herein, Executive will execute a waiver releasing the Company
and its affiliates from all claims related to his employment or the termination
of his employment.

        (e)    Resignation for Good Reason.    Executive may terminate this
Agreement and Executive's employment hereunder for Good Reason. "Good Reason"
shall be defined in the same manner as it is defined by Section 1.6 of the Form
of Severance Agreement, except that the occurrence of a Change of Control will
not be necessary for Executive to exercise his right to resign for Good Reason.
A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Company written notice ("Notice of Termination for
Good Reason") of the termination within six (6) months of the occurrence of the
event constituting Good Reason or, if such event is not immediately recognizable
by the Executive, within six (6) months of the date the Executive

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became or reasonably should have become aware of such event (but in no event
beyond the expiration of the Term of this Agreement), setting forth in
reasonable detail the specific conduct of the Company that constitutes Good
Reason and the specific provision(s) of this Agreement on which the Executive
relies. A termination of employment by the Executive for Good Reason shall be
effective on the thirtieth (30th) day following the date when the Notice of
Termination for Good Reason is given, unless the notice sets forth a later date
(which date shall in no event be later than sixty (60) days after the notice is
given); provided, however, that no event described hereunder shall constitute
Good Reason if such event is a result of an isolated, insubstantial and
inadvertent action that is not taken in bad faith and that is remedied by the
Company within five (5) days after receipt of the Notice of Termination for Good
Reason by the Company from the Executive. The Executive's continued employment
shall not constitute consent to, or a waiver of rights with respect to, any act
or failure to act constituting Good Reason hereunder. In the event that
Executive terminates this Agreement for Good Reason in accordance with the terms
of this Agreement, Executive shall be entitled to: (i) Base Salary for the
remainder of the Term of this Agreement; (ii) a performance bonus for each year
remaining in the Term of this Agreement (prorated for partial years remaining)
as if Executive and Company attained all performance goals at target;
(iii) removal of the restriction for the twenty thousand (20,000) shares of
Company stock with a one (1) year restriction period provided by Section 3(c) of
this Agreement, without regard to whether the one (1) year period has elapsed;
(iv) removal on a pro rated basis of the restriction for the thirty thousand
(30,000) shares of Company stock with a five (5) year restriction period
provided by Section 3(c) of the Agreement (e.g., if Executive is employed for
two (2) full years, the restriction would be removed from 2/5 of the 5 year
restricted stock); (v) immediate vesting of the Long-Term Incentive provided by
Section 3(d) of this Agreement; and (vi) immediate vesting of all benefits under
the Senior Executive Supplemental Plan provided by Section 3(e) of this
Agreement (i.e., Executive will be eligible to retire at age 55 with a benefit
of sixteen and one-half percent (16.5%) of pay (average annual base pay plus
average annual incentive)). In return for the separation benefits provided
herein, Executive will execute a waiver releasing the Company and its affiliates
from all claims related his employment or the termination of his employment.

        (f)    Change of Control.    In the event of a Change in Control during
the term of this Agreement, Executive shall be entitled to no less than the
severance benefits provided by the Severance Agreement, the form of which is
attached hereto as Exhibit B, regardless of whether said Severance Agreement is
terminated or amended during such Term. In no event shall the Executive be
entitled to benefits under both this Agreement and the Severance Agreement or
any other Company severance program.

        8.    Confidential Information and Discoveries.    Executive
acknowledges that he will, as a result of his duties as an employee of Company,
have access to and be in a position to receive confidential information.
Therefore, Executive agrees that during his employment by Company and thereafter
he will not divulge to, or use for the benefit of, himself or any other person,
any information concerning any inventions, discoveries, improvements, processes,
methods, trade secrets, research or secret data (including, without limitation,
computer programs, software development or executive systems), or other
confidential matters possessed, owned or used by Company that may be obtained or
learned by the Executive in the course of or as a result of his employment
hereunder unless such disclosure is authorized in writing by the CEO. The
expiration or termination of employment shall not be deemed to release the
Executive from his duties hereunder not to reveal or convert to his own use or
the use of others the information described herein.

        9.    Remedy.    Executive understands that Company would not have an
adequate remedy at law for the material breach or threatened breach by Executive
of the covenants set forth in Paragraph 8 of this Agreement and agrees that in
the event of any such material breach or threatened breach, Company

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may, in addition to the other remedies which may be available to it, file a suit
in equity to enjoin Executive from the breach or threatened breach of such
covenant.

        10.    Miscellaneous.    

        (a)    Notices.    Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and if sent by registered or
certified mail to Executive or Company at the address set forth below their
signatures at the end of this Agreement or to such other address as they shall
notify each other in writing.

        (b)    Assignment.    This Agreement shall be binding upon and inure to
the benefit of Company and its successors and assigns. This Agreement shall not
be assignable by Executive.

        (c)    Applicable Law.    This Agreement shall be construed in
accordance with the laws of the State of Maryland in every respect, including,
without limitation, validity, interpretation and performance.

        (d)    Headings.    Section headings and numbers herein are included for
convenience of reference only and this Agreement is not to be construed with
reference thereto. If there be any conflict between such numbers and headings
and the text hereof, the text shall control.

        (e)    Severability.    If for any reason any portion of this Agreement
shall be held invalid or unenforceable, it is agreed that the same shall not
affect the validity or enforceability of the remainder hereof.

        (f)    Entire Agreement.    This Agreement, including its Appendices,
contains the entire agreement of the parties with respect to its subject matter
and supersedes all previous agreements between the parties. No modification of
this Agreement shall be valid unless made in writing and signed by the parties
hereto.

        (g)    Waiver of breach.    The waiver of Company or Executive of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach.

        (h)    Counterparts.    This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.

CONSTELLATION ENERGY GROUP, INC.   MICHAEL J. WALLACE
By:
 
/S/

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/S/

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Its:
 
V.P., HR

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Address:
 
        

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Address:
 
        

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Date:
 
12/20/01

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Date:
 
12/20/01

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Exhibit 10(q)

Attachment 2

SEVERANCE AGREEMENT

        This Agreement is made the    day of                        , 2003, by
and between CONSTELLATION ENERGY GROUP, INC. (the "Company") and Michael J.
Wallace (the "Executive"), and is effective as of January 24, 2003.

        WHEREAS, the Company wishes to encourage the orderly succession of
management in the event of a Change in Control (as hereinafter defined); and

        WHEREAS, the Company desires to maintain a severance benefit for the
Executive covering the period from the date of a Change in Control until the end
of the twenty-four month period following the date of a Change in Control, to
avoid the loss or the serious distraction of the Executive to the detriment of
the Company and its stockholders prior to and during such period 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 the Executive's time and energy
for the benefit of the Company and its stockholders and not to be distracted as
a result of a Change in Control.

        NOW, THEREFORE, the parties agree as follows:

        1.    Definitions.    

        1.1    Board.    The term "Board" means the Board of Directors of the
Company.

        1.2    Change in Control.    The term "Change in Control" means:

        (i)    individuals who, on January 24, 2003, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to
January 24, 2003, whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection to
such nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be deemed to be an Incumbent
Director;

        (ii)  any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities eligible to
vote for the election of the Board (the "Company Voting Securities"); provided,
however, that the event described in this paragraph (ii) shall not be deemed to
be a Change in Control by virtue of any of the following acquisitions: (A) by
the Company or any Subsidiary, (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (iii)), or (E) pursuant to any acquisition by Executive or any group
of persons including Executive (or any entity controlled by Executive or any
group of persons including Executive);

        (iii)  Company shareholder approval of a merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company or any of its Subsidiaries,

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whether for such transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such Business Combination:
(A) more than 60% of the total voting power of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of at least 95% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent Corporation"), is
represented by Company Voting Securities that were outstanding immediately prior
to such Business Combination (or, if applicable, is represented by shares into
which such Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan (or related
trust) sponsored or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or indirectly, of 20%
or more of the total voting power of the outstanding voting securities eligible
to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or

        (iv)  the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company, or the consummation of a sale of all
or substantially all of the Company's assets.

        Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 20% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which reduces the number of Company
voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company
shall then occur.

        1.3    Qualifying Termination.    

        (a)  The occurrence of any one or more of the following employment
termination events within twenty-four calendar months after the date of a Change
in Control shall constitute a "Qualifying Termination":

        (i)    The Company's termination of the Executive's employment without
Cause (as defined in Section 1.7); or

        (ii)  The Executive's resignation for Good Reason (as defined in
Section 1.6).

        (b)  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 met the eligibility requirements for retirement under any Company or
Subsidiary supplemental executive non-qualified defined benefit retirement plan
in which the Executive participated immediately prior to the occurrence of a
Qualifying Termination.

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        1.5    Eligible to Retire.    Eligible to Retire, means an Executive who
has met the eligibility requirements for retirement under any Company or
Subsidiary supplemental executive non-qualified defined benefit retirement plan
in which the Executive participated immediately prior to the occurrence of a
Qualifying Termination.

        1.6    Good Reason.    Good Reason means, without the Executive's
express written consent, the occurrence after the date of a Change in Control 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 Subsidiary immediately prior to the date of the
Change in Control, or a material reduction or alteration in the nature or status
of the Executive's authorities, duties, or responsibilities from those in effect
immediately prior to the date of the Change in Control, (including as a type of
such reduction or alteration for an Executive who is an officer of a publicly
traded company immediately prior to the date of the Change in Control, the
Executive occupying the same position or title but with a company whose stock is
not publicly traded), unless such act is remedied by the Company or such
Subsidiary within 10 business days after receipt of written notice thereof given
by the Executive; or

        (b)  A reduction by the Company or a Subsidiary of the Executive's base
salary in effect immediately prior to the date of the Change in Control 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 or such
Subsidiary); or

        (c)  The relocation of the Executive's office more than 50 miles from
the Executive's office immediately prior to the date of the Change in Control;
or

        (d)  Failure of the Company or a Subsidiary (whichever is the
Executive's employer) to provide (i) the Executive the opportunity to
participate in all applicable incentive, savings and retirement plans,
practices, policies and programs of the Company or such Subsidiary to the same
extent as other senior executives (or, where applicable, retired senior
executives) of the Company or such Subsidiary, and (ii) the Executive and/or the
Executive's family, as the case may be, the opportunity to participate in, and
receive all benefits under, all applicable welfare benefit plans, practices,
policies and programs provided by the Company or such Subsidiary, including,
without limitation, medical, prescription, dental, disability, sick benefits,
accidental death and travel insurance plans and programs, to the same extent as
other senior executives (or, where applicable, retired senior executives) of the
Company or such Subsidiary; or

        (e)  Failure of the Company or a Subsidiary (whichever is the
Executive's employer) to provide the Executive such perquisites as the Company
or such Subsidiary may establish from time to time which are commensurate with
the Executive's position and at least comparable to those received by other
senior executives at the Company or such Subsidiary; or

        (f)    The failure by the Company to comply with paragraph (c) of
Section 11 of this Agreement; or

        (g)  Any other substantial breach of this Agreement by the Company that
either is not taken in good faith or is not remedied by the Company promptly
after receipt of notice thereof from the Executive.

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        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. A
termination of employment by the Executive for Good Reason for purposes of this
Agreement shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination within six (6) months of the
occurrence of the event constituting Good Reason or, if such event is not
immediately recognizable by the Executive, within six (6) months of the date the
Executive became or reasonably should have become aware of such event, setting
forth in reasonable detail the specific conduct of the Company that constitutes
Good Reason and the specific provision(s) of this Agreement on which the
Executive relies. A termination of employment by the Executive for Good Reason
shall be effective on the thirtieth (30th) day following the date when the
Notice of Termination for Good Reason is given, unless the notice sets forth a
later date (which date shall in no event be later than sixty (60) days after the
notice is given); provided, however, that no event described hereunder shall
constitute Good Reason if such event is a result of an isolated, insubstantial
and inadvertent action that is not taken in bad faith and that is remedied by
the Company within ten (10) days after receipt of the Notice of Termination for
Good Reason by the Company from the Executive. If the Company disputes the
existence of Good Reason, the burden of proof is on the Company to establish
that Good Reason does not exist.

        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 or a Subsidiary and such conduct or activities are
materially damaging to the property, business or reputation of the Company or a
Subsidiary; 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 a Subsidiary, or unlawfully
appropriates any corporate opportunity of the Company or a Subsidiary.

        A termination of the Executive's employment for Cause for purposes of
this Agreement shall be effected in accordance with the following procedures.
The Company shall give the Executive written notice ("Notice of Termination for
Cause") of its intention to terminate the Executive's employment for Cause,
setting forth in reasonable detail the specific conduct of the Executive that it
considers to constitute Cause and the specific provision(s) of this Agreement on
which it relies, and stating the date, time and place of the Board Meeting for
Cause. The "Board Meeting for Cause" means a meeting of the Board at which the
Executive's termination for Cause will be considered, that takes place not less
than ten (10) and not more than twenty (20) business days after the Executive
receives the Notice of Termination for Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Board Meeting for Cause.
The Executive's Termination for Cause shall be effective when and if a
resolution is duly adopted at the Board Meeting for Cause by a two-thirds vote
of the entire membership of the Board, excluding employee directors, stating
that in the good faith opinion of the Board, the Executive is guilty of the
conduct described in the Notice of Termination for Cause, and that conduct
constitutes Cause under this Agreement.

        1.8    Annual Award Amount.    The average of the two highest annual
incentive awards under the Company's annual incentive plan (or the annual cash
incentive plan maintained by a successor

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company or a Subsidiary) payable under the terms of such annual incentive plan
for the performance year during which the Qualifying Termination occurs, and
paid in the last four years to the Executive prior to the occurrence of the
Qualifying Termination; provided, however, that (a) if the Executive has not
been employed by the Company or a Subsidiary for a sufficient length of time to
have been eligible for payment of at least two full annual incentive awards,
deemed target award payout shall be used for the one or two years for which the
Executive was not so eligible; (b) for any year during which an annual incentive
award was paid or is payable to the Executive that was prorated because of less
than a full year of plan participation, such award shall be annualized; and
(c) for any year during which a guaranteed minimum annual incentive award amount
was paid or is payable to the Executive, such full (not prorated because of less
than a full year of plan participation) guaranteed annual incentive amount shall
be used for such year.

        1.9.    Subsidiary.    Any corporation with respect to which the Company
owns a majority of the outstanding shares of common stock or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors.

        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 three times the sum of 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 a lump sum after the Qualifying Termination, and within approximately 10
business days after the Company receives the executed agreement referred to in
2(e) below but in no case prior to the expiration of any period during which the
Executive is permitted to revoke such agreement.

        (b)    Supplemental Retirement Benefits.    For purposes of determining
the Executive's supplemental retirement benefits which the Executive is entitled
to under the Company's supplemental non-qualified retirement plan in which the
Executive participated immediately prior to the Qualifying Termination (or the
supplemental retirement plan maintained by a successor company or a Subsidiary),
(i) the Executive's age shall be deemed equal to the greater of (A) age 55 or
(B) the Executive's actual age, (ii) the Executive's service percentage shall be
deemed equal to 40%, (iii) any minimum service eligibility requirements for such
benefits shall be waived and such benefits shall be fully vested, and
(iv) Annual Award Amount shall be used to compute such benefits in lieu of any
other annual incentive award amount under such plan.

        (c)    Severance Health Benefits.    The Company shall provide to the
Executive a lump sum payment equal to the present value of the Company subsidy
toward medical and dental benefits provided to active employees (based on the
amount of such subsidy in effect as of the date of the Qualifying Termination),
assuming such subsidy is provided to the Executive for three years after the
date of the Qualifying Termination. Also, (i) for an Executive who is at least
age 55 with seven or more years of service on the date of the Qualifying
Termination, the Company shall provide to the Executive an additional lump sum
payment equal to the present value of the Company subsidy toward medical and
dental benefits provided to a retiree of the Company who has the deemed service
used to compute supplemental retirement benefits in Section 2(b) above (based on
the amount of such subsidy in effect as of the date of the Qualifying
Termination), assuming such subsidy is provided to the Executive beginning
immediately after the three year period referenced in the first sentence of this
paragraph until the end of the estimated life expectancy of the Executive; and
(ii) for an Executive who is not at least age 55 with seven or more years of
service on the date of the Qualifying Termination, no additional health benefits
payment shall be provided by the Company. Such payment(s) shall be made within
approximately 10 business days after the

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Company receives the executed agreement referred to in 2(e) below but in no case
prior to the expiration of any period during which the Executive is permitted to
revoke such agreement.

        (d)    Outplacement.    For a 60-day period commencing on the date of
the Qualifying Termination, the Executive is entitled to receive outplacement
services from one or more organizations that are offered by the Company from
time to time, with such services capped at a Company cost of $50,000.

        (e)    Release.    The benefits described in this Section 2 are payable
by the Company to the Executive only if after the date of the Qualifying
Termination, the Executive executes (and does not subsequently revoke) in
writing and submits to the Company, in the form, manner, and subject to the
timing established by the Company, an agreement releasing legal claims,
including those against the Company and its Subsidiaries, including but not
limited to claims arising out of the Executive's Company or Subsidiary
employment or termination of such employment. Such agreement shall be furnished
by the Company to the Executive as soon as possible, but no later than ten
(10) business days, after the date of the Qualifying Termination.

        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 three times the sum of 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 a lump sum after the Qualifying Termination, and within approximately 10
business days after the Company receives the executed agreement referred to in
3(f) below but in no case prior to the expiration of any period during which the
Executive is permitted to revoke such agreement.

        (b)    Supplemental Retirement Benefits.    For purposes of determining
the Executive's supplemental retirement benefits which the Executive is entitled
to under the Company's supplemental non-qualified retirement plan in which the
Executive participated immediately prior to the Qualifying Termination (or the
supplemental retirement plan maintained by a successor company or a Subsidiary),
(i) the Executive's service percentage shall be deemed equal to 40% or the
Executive's actual service percentage (whichever is greater); (ii) the
Executive's supplemental retirement benefit shall not be reduced for early
receipt; and (iii) Annual Award Amount shall be used to compute such benefits in
lieu of any other annual incentive award amount under such plan.

        (c)    Severance Health Benefits.    The Company shall provide to the
Executive a lump sum payment equal to the present value of the Company subsidy
toward medical and dental benefits provided to active employees, less the
Executive's actual Company subsidy toward such benefits (based on the amount of
such subsidies in effect as of the date of the Qualifying Termination), assuming
such subsidies are provided to the Executive for three years after the date of
the Qualifying Termination. Also, the Company shall provide to the Executive an
additional lump sum payment equal to the present value of the Company subsidy
toward medical and dental benefits provided to a retiree of the Company who has
attained age 65 and completed the greater of 20 years or actual years of
service, less the Executive's actual Company subsidy toward such benefits (based
on the amount of such subsidies in effect as of the date of the Qualifying
Termination), assuming such subsidies are provided to the Executive beginning
immediately after the three year period referenced in the first sentence of this
paragraph until the end of the estimated life expectancy of the Executive. Such
payments shall be made within approximately 10 business days after the Company
receives the executed agreement referred to in 3(e) below but in no case prior
to the expiration of any period during which the Executive is permitted to
revoke such agreement.

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        (d)    Outplacement.    For a 60-day period commencing on the date of
the Qualifying Termination, the Executive is entitled to receive outplacement
services from one or more organizations that are offered by the Company from
time to time, with such services capped at a Company cost of $50,000.

        (e)    Release.    The benefits described in this Section 3 are payable
by the Company to the Executive only if after the date of the Qualifying
Termination, the Executive executes (and does not subsequently revoke) in
writing and submits to the Company, in the form, manner, and subject to the
timing established by the Company, an agreement releasing legal claims,
including those against the Company and its Subsidiaries, including but not
limited to claims arising out of the Executive's Company or Subsidiary
employment or termination of such employment. Such agreement shall be furnished
by the Company to the Executive as soon as possible, but no later than ten
(10) business days, after the date of the Qualifying Termination.

        4.    Non-Exclusivity of Rights.    Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or a successor company or a
Subsidiary (whichever is the Executive's employer) for which the Executive may
qualify, nor shall anything in this Agreement limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or a successor Company or such Subsidiary. However, if the Executive
receives severance benefits under this Agreement, the Executive is not also
entitled to any benefit under any other severance plan, program, arrangement or
agreement maintained by the Company or a Subsidiary except under the Employment
Agreement made December 20, 2001 between the Company and the Executive
(Employment Agreement); provided, however the Base Salary and performance bonus
payments under Sections 7(d)(i) and (ii), and 7(e)(i) and (ii) of the Employment
Agreement shall be offset by any cash payment made under Section 2(a) or 3(a) of
this Agreement, and the Senior Executive Supplemental Plan benefit under
Sections 7(d)(vi) and 7(e)(vi) of the Employment Agreement shall be offset by
any such benefit under Section 2(b) or 3(b) of this Agreement. Vested benefits
and other amounts that the Executive is otherwise entitled to receive under any
incentive compensation (including, but not limited to any restricted stock or
stock option agreements), deferred compensation and other benefit programs
listed in Section 1.6(d), life insurance coverage, or any other plan, policy,
practice or program of, or any contract or agreement with, the Company or a
successor Company or such Subsidiary on or after the date of the Qualifying
Termination shall be payable in accordance with the terms of each such plan,
policy, practice, program, contract or agreement, as the case may be, except as
explicitly modified by this Agreement.

        5.    Full Settlement.    The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, such amounts shall
not be reduced, regardless of whether the Executive obtains other employment.

        6.    Certain Additional Payments by the Company.    

        (a)  Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by

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the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereon) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

        (b)  Subject to the provisions of paragraph (c) of this Section 6, all
determinations required to be made under this Section 6, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by one of the major internationally recognized certified public accounting firms
(commonly referred to, as of the date hereof, as a Big Four firm) designated by
the Executive and approved by the Company (which approval shall not be
unreasonably withheld) (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen
(15) business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group affecting the change of control, the Executive shall
designate another Big Four accounting firm (subject to the approval of the
Company, which approval shall not be unreasonably withheld) to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 6, shall be paid by the Company to the Executive within
five (5) days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment") consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to paragraph (c) of this Section 6 and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.

        (c)  The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which the Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

        (i)    give the Company any information reasonably requested by the
Company relating to such claim,

        (ii)  take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

        (iii)  cooperate with the Company in good faith in order effectively to
contest such claim, and

        (iv)  permit the Company to participate in any proceedings relating to
such claim;

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PROVIDED, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this paragraph (c) of Section 6, the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or forego
any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; PROVIDED, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and PROVIDED, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

        (d)  If, after the receipt by the Executive of an amount advanced by the
Company pursuant to paragraph (c) of this Section 6, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
promptly take all necessary action to obtain such refund and (subject to the
Company's complying with the requirements of paragraph (c) of this Section 6)
upon receipt of such refund shall promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If after the receipt by the Executive of an amount advanced
by the Company pursuant to paragraph (c) of this Section 6, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty (30) days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.

        7.    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 date of a Change in Control. Further, upon the date of a Change in
Control, 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. This Agreement may be
terminated at any time by the Board with the written consent of the Executive.
Notwithstanding the foregoing, this Agreement shall automatically terminate upon
cessation of Executive's employment with the Company and its Subsidiaries prior
to the date of a Change in Control.

        8.    Amendment of Agreement.    This Agreement may be amended at any
time by the Board with the written consent of the Executive.

        9.    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.

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        10.    Governing Law.    This Agreement shall be governed by the laws of
Maryland.

        11.    Successors and Assigns.    

        (a)  This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.

        (b)  This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

        (c)  The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.

        12.    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.

        13.    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
the Executive has filed in writing with the Company, or in the case of the
Company, to its principal offices.

        14.    Severability.    The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.

        15.    Withholding.    Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this Agreement
all federal, state, local and foreign taxes that are required to be withheld by
applicable laws or regulations.

        16.    Entire Agreement.    Unless otherwise specifically provided in
this Agreement, the Executive and the Company acknowledge that this Agreement
supersedes any other agreement between them or between the Executive and the
Company or a Subsidiary, concerning the subject matter hereof; provided,
however, that this Agreement shall not supersede the Employment Agreement made
December 20, 2001 referenced in Section 4 of this Agreement but such agreements
shall be coordinated as set forth in Section 4 of this Agreement.

        17.    Alienability.    The rights and benefits of the Executive under
this Agreement may not be anticipated, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process except as
required by law. Any attempt by the Executive to anticipate, alienate, assign,
sell, transfer, pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.

        18.    Counterparts.    This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument.

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        IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of the Board, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written.

    CONSTELLATION ENERGY GROUP, INC.
 
 
By:
 
        

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Michael J. Wallace

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