Exhibit 10(w)

Attachment 1

May 22,
2001

Ms. E.
Follin Smith
409 Sickman's Mill Road
Conestoga, PA 17516

Dear
Follin:

Confirming
our previous discussions, we are pleased to offer you the position of Sr. Vice PresidentFinance of Constellation Energy Group ("CEG"). You will be named Chief
Financial Officer on or about July 1, 2001. At spin-off you will become Sr. Vice President and Chief Financial Officer of the new Constellation Energy Group ("New CEG"). In each of
the forgoing positions, you will have all the authorities and responsibilities customarily exercised by a person in such position at CEG. Your annual starting salary will be $350,000 ($29,167 per
month). In addition, you will be eligible to participate in CEG's annual incentive plan, which currently provides for a bonus based on individual and overall company performance, and, after the
spin-off, in a corresponding annual incentive plan at New CEG. You are guaranteed a minimum annual cash bonus of $350,000 for 2001 (prorated for service) and for 2002 (assuming your
employment continues through December 31, 2002). Your bonus compensation will be paid not later than the date on which other senior executives are paid.

In
addition to the above cash compensation, you will receive a target award of 10,000 shares of current CEG restricted stock from the CEG 2000-2002 Long-Term
Incentive Plan, a description of which is attached. It is intended that this Plan be terminated prior to the spin-off. These shares will not be
prorated when they are distributed immediately prior to the spin-off. Pursuant to the Plan, the number of shares delivered will vary depending upon the stock price at the time they are
distributed.

You
will receive a stock option grant from New CEG as of the effective date of the spin-off ("New CEG Option Plan"). Such grant will cover no less than 150,000 shares of New
CEG, assuming the spin-off takes the form of a distribution of one share of New CEG for each current share of CEG, with the number of New CEG shares to be appropriately adjusted if the
spin-off takes another form. The strike price of the option will be the fair market value of a New CEG share immediately after the spin-off. The options will have a ten year
exercise period and will vest in three equal annual installments beginning from the earlier of grant date or November 22, 2001. Once vested, the options will not be subject to forfeiture except
in the event of termination for cause as defined in Section 1.4 of the Severance Agreement. These options will otherwise be on terms and conditions no less favorable to you than the terms and
conditions applying to options granted to your peer executives. It is possible the New CEG Option Plan may be altered to include restricted stock in New CEG that would be granted immediately upon the
spin-off. Should that occur, you will receive one share of new CEG restricted stock for each three options after the spin-off with vesting on the same schedule as for the
options, and otherwise on terms and conditions no less favorable to you than those that apply to restricted stock awarded to your peer executives. If New CEG has not been spun off from CEG by
May 22, 2002, in lieu of the aforementioned grant, you will be granted stock options and/or restricted stock in CEG, vesting and, in the case of stock options, becoming and remaining
exercisable on the same schedule that would have applied to the New CEG options. Such stock options and/or restricted stock will be granted as of May 22, 2002 and will be worth an aggregate of
$1.5 million, with restricted stock valued at the closing market price on the date granted and with options valued on a Black-Scholes basis using the closing market price on the date granted
and otherwise using the Black-Scholes assumptions set forth in the most recent CEG filing with the SEC that discloses such assumptions.

If
an event (such as a termination of your employment) occurs that causes, or may cause, any option that is granted pursuant to the preceding paragraph to expire prior to the expiration
of the ten-year exercise period that would otherwise apply ("Early Expiration"), then you will be entitled to a payment (the "Payment") not to exceed $1,500,000 in cash paid within
30 days of such Early

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Expiration. The Payment shall be calculated to be the excess (if any) of (x) the Black-Scholes value as of the date of such Early Expiration over (y) the difference between the closing
price of the stock underlying the option at Early Expiration and the strike price of the option (the "Spread"), in each case determined as if no exercise of the option had occurred after the
occurrence of the event that caused the expiration of the option to accelerate. For purposes of the foregoing sentence, Black-Scholes value shall be determined based on the maximum remaining life of
the option in question (assuming no acceleration of expiration had occurred), and on the fair market value of the shares that are subject to the option, and otherwise shall be based on the
Black-Scholes assumptions for options on such shares set forth in the most recent SEC filing that discloses such assumptions,providedthat if no such
SEC filing has been made as of such date (as could be the case for New CEG option), then the assumptions used shall be those set forth in the first SEC filing that discloses such assumptions that is
filed within
180 days following such date, andprovided, further, that if no such filing is made within such 180 days, then the assumptions used shall
be as reasonably agreed upon by you and the grantor of the option. No Payment shall be made if the aggregate value of the Spread at Early Expiration is greater than or equal to $3,000,000 or if you
become employed by a direct competitor of the issuer of the option prior to the expiration date.

While
the compensation structure and form of delivery for the new company has not yet been developed, we expect your total direct annual compensation (cash salary, annual cash bonus,
annualized target value of any long-term cash incentive plan, restricted stock valued at market as of the grant date, options valued on a Black-Scholes basis as of the grant date, etc) at
CEG and New CEG to be at the 75th percentile for CFO's of similar companies with revenues between $1 and $3 billion (based on the annual Towers Perrin survey or its equivalent),
subject to personal and company performance against objectives set for you and the company.

As
a member of senior management, you are also entitled to certain supplemental benefits and perquisites, shown on the attached summary. These include an $800 per month car allowance.
These benefits and perquisites are subject to change at any time, at management's discretion. In addition, you will be entitled to indemnification, and advancement of legal expenses (including
reasonable attorneys' fees) in connection with your services for CEG and New CEG to the fullest extent permitted by the laws of Maryland.

Also
enclosed is a severance agreement which provides benefits you would receive if you are terminated without cause or you resign with good reason prior to December 31, 2005.

You
acknowledge that we are in the process of designing the compensation structure for New CEG including, but not limited to such features as salary, annual cash bonus,
long-term equity incentives, executive benefits and perquisites and severance/change of control agreements. Such programs, when adopted for other senior managers of CEG or New CEG, will be
made available to you. You agree to participate in such programs to the extent you are not disadvantaged relative to the terms and conditions of this letter.

We
will reimburse you on an after-tax basis for your reasonable travel and temporary living expenses for up to three months after you commence employment. We will also
reimburse you on an after-tax basis for any reasonable expenses related to your travel or professional advice, including legal advice, in connection with the discussions leading up to this
agreement, such reimbursement (under this sentence) not to exceed $17,500.

We
have also enclosed general information about CEG's employee benefit programs. Your employment, subject to the provisions of the Severance Agreement, is at will. This offer is
contingent upon your acceptance of the terms and conditions of this letter indicated by you countersigning and returning by facsimile or otherwise. We also require that you countersign and return the
enclosed confidentiality agreement covering your employment with CEG.

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We
are looking forward to your joining Constellation Energy Group. If you have any questions, feel free to contact me or Elaine Johnston.

| |  | Very truly yours,
| |  | -----------------
| |  | Eric P. Grubman  

I
acknowledge and accept the terms and conditions set forth in this offer letter.

|E. Follin Smith |  | Date
|--------------- |  | ----

Enclosures
(Description of CEG 2000-2002 LTIP Summary of Benefits, general information about CEG benefits, Severance Agreement and Confidentiality Agreement)

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Exhibit 10(w)

Attachment 2

SEVERANCE AGREEMENT

This Agreement is made the 22nd day of May, 2001, by and between CONSTELLATION ENERGY GROUP, INC. (the "Company") and E. Follin Smith (the "Executive").

WHEREAS,
the Company desires to establish a severance benefit for the Executive covering the period from May 22, 2001 until December 31, 2005; 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 by financial security concerns in connection
with employment termination.

NOW,
THEREFORE, the parties agree as follows:

1.Definitions.



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2.Severance Benefits.Upon the occurrence of a Qualifying Termination, Executive shall
receive a cash severance payment on the following schedule: If between May 22, 2001-December 31, 2003 then $1,400,000; if between January 1,
2004-December 31, 2004 then $1,000,000; if between January 1, 2005-December 31, 2005 then $700,000, which will be paid in 24 equal monthly installments.
Additionally, if such Qualifying Termination occurs pursuant to 1.2(a)(i)at any time or 1.2(a)(ii) after December 31, 2002, all unvested equity including awards due to be made pursuant
to the Offer Letter will continue to vest on schedule. For avoidance of doubt, the parties acknowledge that the benefits described in this Section 2 shall apply to any resignation, after
December 31, 2002 for Good Reason that is based on events described in Section 1.3 that occur at any time before December 31, 2002.

3.Termination of Agreement.This Agreement shall remain in effect from May 22, 2001until December 31,
2005, provided, however, that prior to such termination all obligations, if any, arising under it shall
have been satisfied, unless terminated earlier by the mutual written agreement of the parties.

4.Amendment of Agreement.This Agreement may not be amended in any respect without the
mutual written agreement of the parties.

5.Construction.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.

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

7.Successors and Assigns.



8.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

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the last address she has filed in writing with the Company, or in the case of the Company, to its principal offices.

9.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.

10.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.

11.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 an Affiliate, concerning the subject matter hereof,
other than the Offer Letter that is being executed concurrently herewith.

12.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.

13.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. Signatures delivered by facsimile shall be effective for all purposes.

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:                             
| |  | E. Follin Smith                 

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