Registration No. 33-
=========================================================================333-
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SECURITIES AND EXCHANGE COMMISSION
________________________--------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________________
Baltimore Gas and Electric CompanyBALTIMORE GAS AND ELECTRIC COMPANY
(Exact Name of Registrant as Specified in its Charter)
MarylandMARYLAND
(State of Incorporation)
52-0280210
(I.R.S. Employer Identification No.)
C. W. Shivery, Vice PresidentSHIVERY, VICE PRESIDENT
39 W. Lexington Street, Baltimore, MarylandLEXINGTON STREET, BALTIMORE, MARYLAND 21201
(410) 234-5511
(Address, including Zip Code, and Telephone Number, including Area Code
of Registrant's Principal Executive Offices and Agent for Service)
Approximate date of commencement of proposed sale to the public:APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After the
effective date of this Registration Statement isas determined by market
conditions.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[X] X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
________________________--------------------
CALCULATION OF REGISTRATION FEE
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Title of | | Proposed | Proposed |
each class | | maximum | maximum |
of securities | Amount | offering | aggregate | Amount of
to be | to be | price | offering | registration
registered | registered | per unit | price | fee **===============================================================================
TITLE OF
EACH CLASS PROPOSED PROPOSED
OF SECURITIES MAXIMUM MAXIMUM AMOUNT OF
TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------------------------------------
Medium-Term | | | |$200,000,000 100%* $200,000,000 $60,607
Notes,
|$125,000,000 | 100% * | $125,000,000 | $43,104
Series D | | | |
=========================================================================E
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* Inserted solely for the purpose of calculating the registration fee.
** $100,000,000 principal amount Medium-Term Notes, Series D, are being
carried forward from Registration No. 33-57704 for which a
registration fee of $31,250 was previously paid.
_______________________
Pursuant to Rule 429 under the Securities Act of 1933, the
Registration Statement also serves as a post-effective amendment of the
Registrant's Registration Statement on Form S-3 (Registration No. 33-
57704).
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. ATHE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT RELATINGON SUCH DATE
OR DATES AS MAY BE NECESSARY TO THESE SECURITIES HAS BEEN FILEDDELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIMEACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFERBECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Prospectus [BGE LOGO GOES HERE]
$200,000,000
MEDIUM-TERM NOTES SERIES E
BALTIMORE GAS AND ELECTRIC COMPANY
39 W. LEXINGTON STREET
BALTIMORE, MARYLAND 21201
(410) 234-5000
________________________________________________________________________________
TERMS OF SALE
THE FOLLOWING TERMS MAY APPLY TO THE NOTES WHICH WE MAY SELL AT ONE OR MORE
TIMES. THE SOLICITATIONFINAL TERMS FOR EACH NOTE WILL BE INCLUDED IN A PRICING SUPPLEMENT.
FOR MORE DETAIL, SEE "DESCRIPTION OF AN OFFER TO BUY NOR SHALL THERE BE ANYNOTES." WE WILL RECEIVE BETWEEN
$199,750,000 AND $198,500,000 OF THE PROCEEDS FROM THE SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWSNOTES, AFTER
PAYING THE AGENTS COMMISSIONS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED
July 25, 1995
_________________________________________________________
$225,000,000
Baltimore Gas and Electric Company
Medium-Term Notes, Series D
Due fromBETWEEN $250,000 AND $1,500,000.
- - Mature 9 months to 30 years
from Date of Issue
______________
Baltimore Gas and Electric Company (the "Company") intends to sell from
time to time up to $225,000,000 aggregate principal amount of its unsecured
Medium-Term Notes, Series D (the "Notes"). Each Note will mature from 9
months to 30 years from the date of issue as determined by mutual agreement
of the initial purchasers and the Company.- - Fixed or floating interest rate. The Notes may be subject to
optional redemption prior to their stated maturity as indicated in an
accompanying supplement to this Prospectus (the "Pricing Supplement") but
will not be subject to conversion, amortization or any sinking fund.
The interest rate, orfloating interest rate formula for each Note willwould
be established by the Companybased on:
- Commercial paper rate
- Prime rate
- CD rate
- Federal Funds effective rate
- LIBOR
- Treasury rate
- CMT rate
- - Remarketing features
- - Certificate or book-entry form
- - Subject to redemption and repurchase at the dateoption of issuance of such Note and will be
indicated in the applicable Pricing Supplement. Each interest-bearing Note
will bear interest at either (a)BGE or holder
- - Not convertible, amortized or subject to a sinking fund
- - Interest paid on fixed rate (a "Fixed Rate Note") or (b)
a variable rate determined by reference to an interest rate formula (a
"Floating Rate Note"), which may be adjusted by adding or subtracting a
Spread or multiplying by a Spread Multiplier, as indicated in the
applicable Pricing Supplement. Unless otherwise indicated in the
applicable Pricing Supplement, the interest rate formula for Floating Rate
Notes will be the Commercial Paper Rate, the Prime Rate, the CD Rate, the
Federal Funds Effective Rate, LIBOR, the Treasury Rate, or the CMT Rate.
Interest rates, or interest rate formulas, are subject to change by the
Company from time to time, but no such change will affect any Note
previously issued or which the Company has agreed to sell. Unless
otherwise indicated in the applicable Pricing Supplement, the interest
payment dates for Fixed Rate Notes will be eachnotes on May 1 and November 1; the
interest payment dates for Floating Rate Notes will be specified in the
applicable Pricing Supplement. See "DESCRIPTION OF NOTES."
The Notes will be issued in minimum1
- - Interest paid on floating rate notes monthly, quarterly, semi-annually, or
annually
- - Minimum denominations of $100,000 and
integral$1,000, increased in multiples of $1,000
in excess thereof. Notes may be issued, as
specified in the applicable Pricing Supplement, in definitive form or may
be represented by a permanent global Note or Notes registered in the name
of The Depository Trust Company, as depositary (the "Depositary"), or a
nominee of the Depositary (each such Note represented by a permanent global
Note being referred to herein as a "Book-Entry Note"). Beneficial
interests in Book-Entry Notes will only be evidenced by, and transfers
thereof will only be effected through, records maintained by the Depositary
(with respect to its participants) and the Depositary's participants (with
respect to beneficial owners). Except as described under "DESCRIPTION OF
NOTES--Book-Entry Notes," owners of beneficial interests in a permanent
global Note will not be entitled to receive physical delivery of Notes in
definitive form and will not be considered the holders thereof.
__________________________
THESE SECURITIES________________________________________________________________________________
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSIONSEC OR ANY STATE SECURITIES COMMISSION,
NOR HAS
THE SECURITIES AND EXCHANGE COMMISSIONHAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR
ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________________________________
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| Price to | Agents' | Proceeds
| Public (1) | Commission (2)(3) | to Company (2)(4)
- ---------------------------------------------------------------------------
Per Note| 100% | .125% - .750%| 99.875%-99.250%
- ---------------------------------------------------------------------------
Total | $225,000,000 |$281,250-$1,687,500 |$224,718,750-$223,312,500
===========================================================================
(1) Unless otherwise indicated in a Pricing Supplement, Notes will be
issued at 100% of their principal amount.
(2) The Company will pay Lehman Brothers, Lehman Brothers Inc. (including
its affiliate Lehman Government Securities Inc.), and Goldman, Sachs &
Co. (the "Agents"), as agents, a commission ranging from .125% to .750%
of the principal amount of any Note, depending on its stated maturity,
sold through any such Agent. The Company also may sell Notes to any
Agent at a discount for resale to one or more purchasers at varying
prices related to prevailing market prices at the time of resale, as
determined by such Agent. In the case of Notes sold directly to
investors by the Company, no discount will be allowed or commission
paid.
(3) The Company has agreed to indemnify the Agents against certain civil
liabilities under the Securities Act of 1933.
(4) Before deduction of expenses payable by the Company estimated at
$330,000.
___________________
The Notes will be offered on a continuing basis by the Company through
the Agents, each of which has agreed to use all reasonable efforts to
solicit purchases of the Notes. The Company reserves the right to sell
Notes directly to purchasers on its own behalf. The Company also may sell
Notes to either Agent acting as principal for resale to one or more
purchasers. The Company reserves the right to withdraw, cancel or modify
the offer made hereby without notice. The Company or any Agent may reject
any offer to purchase Notes, in whole or in part. See "PLAN OF
DISTRIBUTION OF NOTES."
___________________________________________________________________________________________________
LEHMAN BROTHERS GOLDMAN, SACHS & CO.
________________, 1995
AVAILABLE INFORMATION
The CompanyAGENTS
[Once the registration statement is subject toeffective, the informational requirementsdate of the Securities Exchange Act of 1934 (the "1934 Act")prospectus will
be inserted here.]
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and in
accordance therewith filesspecial reports, proxy statements and other
information with the SecuritiesSEC. You may read and Exchange Commission (the "Commission"). Reports,
proxy and information statements, and other information filed by
the Company can be inspected and copiedcopy any document we file at the
SEC's public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W.,rooms in Washington, D.C. 20549; and at certain of its
Regional Offices at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60621-2511, and 7 World
Trade Center, Suite 1300,, New York, New York 10048. Copies of
such material can be obtainedand
Chicago, Illinois. Please call the SEC at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Certain securities of the Company are
listed1-800-SEC-0330 for further information
on the New York, Chicago, Pacificpublic reference rooms. Our SEC filings are also available to the public
from our web site at htpp://www.bge.com or at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and Philadelphia Stock
Exchanges. Reports, proxy andlater information statements and other
information concerning the Company can be inspected at such
exchanges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Companythat we file with the Commission under the 1934 Act (File No. 1-1910), are incorporated
inSEC
will automatically update and supersede this Prospectusinformation. We incorporate by
reference as of their respective dates of
filingthe documents listed below and shall be deemed to be a part hereof:
(a) The Company's Annual Report on Form 10-K forany future filings made with the fiscal
year ended December 31, 1994 (the "1994 Form 10-K").
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.
All documents filed by the Company pursuant to SectionSEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
Act afteruntil we sell all the datenotes. This prospectus is part of this
Prospectusa registration statement
we filed with the SEC.
- - Annual Report on Form 10-K for the year ended December 31, 1995;
- - Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June
30, 1996 and prior to the terminationSeptember 30, 1996;
- - Registration Statement on Form S-4 of the offering of the
securities offered hereby shall be deemed to be incorporated by
reference in this ProspectusConstellation Energy Corporation, as
amended, effective February 9, 1996 (Registration No. 33-64799). This
filing describes our proposed merger with Potomac Electric Power Company;
and
to be a part hereof from the
date of filing of such documents.
The Company hereby undertakes to provide without charge to
each person, including any beneficial owner, to whom this
Prospectus is delivered,- - Current Report on theForm 8-K dated December 30, 1996.
You may request of such person, a copy of any and all ofthese filings, at no cost, by writing or telephoning
us at the information which has been or may be
incorporated in this Prospectus by reference (not including
exhibits to the information that is incorporated by reference,
unless the exhibits are specifically incorporated by reference
into the information that the Prospectus incorporates). Requests
for such copies should be directed to Charles W. Shivery, Vice
President,following address:
Shareholder Services
Baltimore Gas and Electric Company
P.O. Box 1475,39 W. Lexington Street
Baltimore, Maryland 21203, (410) 234-5511.
2
21201
410-783-5920
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement. We have not authorized anyone else to provide
you with different information. We are not making an offer of these notes in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
THE COMPANY
The Company, incorporated under the laws of the State of
Maryland on June 20, 1906,BGE is a public utility primarily engaged
inthat has served the business of producing, purchasingcentral Maryland area for over 175
years. We produce, purchase and sellingsell electricity and purchasing, transportingpurchase, transport and
sellingsell natural gas within the
State of Maryland. The Company is qualified to do business in
the Commonwealth of Pennsylvania where it is participating in the
ownershipgas. We also jointly own and operation ofoperate two electric generating plants
and the
District of Columbia where its federal affairs office is located.
The Company also owns two-thirds of the outstanding capital
stock, including one-half of the voting securities, of Safe
Harbor Water Power Corporation, aone hydroelectric producer on the
Susquehanna River at Safe Harbor,plant in Pennsylvania.
BNG, Inc., aWe have several wholly owned subsidiary of the Company, engages in natural gas
brokering. The Company is engaged in diversified businesses
primarily through two wholly owned subsidiaries,subsidiaries:
- - Constellation Holdings Inc. and its subsidiaries (collectively, the
Constellation Companies) and BGE Home Products & Services, Inc.
(HPS) and its subsidiary Maryland Environmental Systems, Inc.
(MES). HPS and MES businesses include selling and servicing gas
and electric appliances, kitchen remodeling, selling doors and
windows, the installation and servicing of heating and air
conditioning systems, and plumbing. The Constellation Companies'
business activities includeare engaged in power
generation, projects, financial investments, and real estate projects (including
senior living facilities).;
- - BGE Energy Projects & Services and its subsidiaries provide commercial,
industrial and government customers with customized, comprehensive energy
packages;
2
- - BNG brokers natural gas sales; and
- - BGE Home Products and Services and its subsidiaries sell, service and
install appliances and heating and cooling systems to residential and
commercial customers, and offer kitchen remodeling and plumbing services.
In addition, we own a majority interest in a general partnership that provides
district heating and chilled water systems to commercial and government
customers.
BGE and Potomac Electric Power Company (PEPCO) have agreed to merge to form
Constellation Energy.
Corporation. PEPCO is a neighboring electric utility serving Washington, D.C.
and major portions of Montgomery and Prince George's Counties in Maryland. It is
currently anticipated that the merger will be completed in 1997. The executive offices ofreasons for
the Companymerger and other information about it are locateddiscussed in more detail in the
Gasregistration statement on Form S-4. See the section titled WHERE YOU CAN FIND
MORE INFORMATION.
PRICING SUPPLEMENT
The pricing supplement for each offering of notes will contain the specific
information and Electric Building, 39 W. Lexington Street, Baltimore,
Maryland 21201; its mailing addressterms for that offering. The pricing supplement may also add,
update or change information contained in this prospectus. It is P. O. Box 1475,
Baltimore, Maryland 21203;important for
you to consider the information contained in this prospectus and its telephone number is (410) 234-
5000.the pricing
supplement in making your investment decision.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered herebynotes will be used to meet capital requirements or for other general corporate
purposes relating to the Company'sour utility business, which may include theincluding repayment of commercial
paper borrowings incurred primarilyused to finance on a temporary basis, the
Company's utility construction, other capital expenditures, and
operations. The Company's average commercial paper balances and
interest rate for the twelve months ended June 30, 1995 were
$107,062,000 and 5.43%, respectively. To the extent thatIf we do not use the net proceeds from the sale of the Notes are not immediately, so used,
they will bewe temporarily investedinvest
them in short-term, interest-bearing obligations. For furthercurrent information with respect to the
Company's utility construction, other capital expenditureson our
commercial paper balances and operations, reference is made to the information incorporated by
reference herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," and the Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the
Reports on Formsaverage interest rate, see our most recent Form
10-K and 10-Q that are incorporated by
reference.
3
10-Q. See WHERE YOU CAN FIND MORE INFORMATION.
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated is as
follows:
Twelve Months Twelve Months Ended ________________________________________________________________
JuneDec. 31,
ended ----------------------------------------
Sept. 30, December 31,
_________ ____________________________________________________1996 1995 1994 1993 1992 1991
1990
______ ______ ______ ______ ______ ______
2.91- -------------- ---- ---- ---- ---- ----
3.50 3.21 3.14 3.00 2.65 2.27
1.78
TheFor current information on the Ratio of Earnings to Fixed Charges, for future periods
will be included in the Company's Reports on Forms 10-Qplease see
our most recent Form 10-K and 10-K.
Such Reports are incorporated by reference into this prospectus
at the time they are filed.10-Q. SEE WHERE YOU CAN FIND MORE INFORMATION.
3
DESCRIPTION OF THE NOTES
General
The NotesGENERAL
We will be issuedissue the notes under an indenture between us and the Company andTrustee, The Bank
of New York, (successor to Mercantile-Safe
Deposit and Trust Company), Trustee (the "Trustee"), dated as of July 1, 1985 asand supplemented by the Supplemental Indentures
dated as ofon October 1, 1987 and January
26, 1993, respectively
(the "Indenture"), which are incorporated by reference as
Exhibits1993. This prospectus briefly outlines some of the indenture provisions. If
you would like more information on these provisions, review the indenture and
its supplements that we filed with the SEC. See WHERE YOU CAN FIND MORE
INFORMATION on how to locate the Registration Statement. This Prospectus includes
brief outlines of certain provisions contained inindenture and the Indenture.
Such outlines do not purport to be complete and are qualified in
their entirety by express reference tosupplements. You may also
review the Indenture for a
complete statement of such provisions, including definitions of
certain terms used. Certain terms used herein without definition
are defined in the "GLOSSARY." The Indenture may be inspectedindenture at the Trustee's offices of the Trustee, at 101 Barclay Street, New York,
New York 10286.York.
The Indenture provides forindenture does not limit the issuance from time to timeamount of additionalnotes that may be issued. Each series
of indebtedness (such indebtedness together
with the Notes is herein called "Debt Securities") without limit.
Each seriesnotes may differ as to terms, including maturity, interest
rate, redemptiontheir terms. For current information on our debt
outstanding see our most recent Form 10-K and sinking fund provisions, covenants, and
events of default.10-Q. SEE WHERE YOU CAN FIND MORE
INFORMATION.
The Company has outstanding $283,550,000
aggregate principal amount of Debt Securities under the
Indenture.
The Notes constitute a single series of Debt Securities for
purposes of the Indenture andnotes are limited to an aggregate
principal amount of $225,000,000. The Notes will be unsecured and will rank on a parityequally with all our unsecured
indebtedness of the
Company.indebtedness. The terms and conditions set forth herein shall apply
to each Note unless otherwise specified in the applicable Pricing
Supplement and such Note.
4
The Notes will be issued for a purchase price equal to 100%
of the principal thereof (unless otherwise provided in a Pricing
Supplement) in fully registered form in minimum denominations of
$100,000 and integral multiples of $1,000 in excess thereof.
Each Note will mature from nine months to thirty years from its
date of issue, as selected by the initial purchaser(s) and agreed
to by the Company. Reference is made to the relevant Pricing
Supplement with respect to the Notes being offered thereby for
the maturity date or dates thereof, the interest rate or rates
thereon and the other terms thereof, if any.
Notes may be issued, as indicated in the applicable Pricing
Supplement, in definitive form ("Definitive Notes") or may be
represented by a permanent global Note or Notes registered in the
name of the Depositary or its nominee. See "Book-Entry Notes"
below.
Payments of principal and interest payable at maturity or,
if applicable, upon redemption of any Definitive Note will be
made in immediately available funds, at the request of the
holder, at the office of _______________ (the "Paying Agent") in
the Borough of Manhattan, The City of New York, provided that the
Note is presented to the Paying Agent in time for the Paying
Agent to make such payments in such funds in accordance with its
normal procedures. The Notesnotes will be denominated in U.S. dollars and payments ofwe will pay
principal of and interest on the Notes will be
made in U.S. dollars. With respect to payments of Book-Entry
Notes at maturity or, if applicable, upon redemption, see "Book-
Entry Notes" below.
The Notesnotes will not be subject to any
conversion, amortization, or sinking fund. The applicable Pricing Supplement
will indicate eitherIt is anticipated that a Note cannot be redeemed prior to its
maturity date (the "Stated Maturity") or that a Notethe notes will
be redeemable at"book-entry," represented by a permanent global note registered in the optionname
of The Depository Trust Company, or its nominee. However, we reserve the right
to issue notes in certificate form registered in the name of the Companynoteholders.
In the discussion that follows, whenever we talk about paying principal on the
notes, we mean at maturity, redemption or after arepurchase. Also, in discussing the
time for notices and how the different interest rates are calculated, all times
are New York City time, unless otherwise noted.
The following terms may apply to each note as specified date prior to its Stated Maturityin the applicable
pricing supplement and the note.
REDEMPTIONS
We may redeem notes at a specified price or prices
(whichour option. Notes may include a premium) together with accrued interest
thereon payable to, but excluding, the date fixed for redemption.
The Notes will be redeemable in whole or in part
in increments of $1,000 (provided that if a Note is redeemed in part, any
remaining principal amount of such Note shall be at least
$100,000) on notice by mail given notupon no more than 60, norand not less than 30, days prior
notice. If we do not redeem all the notes of a series at one time, the Trustee
selects the notes to be redeemed in a manner it determines to be fair.
REPURCHASES
The noteholder may have the date fixed for redemption. The Company may
electright to redeem any Note,cause us to repurchase the notes. We will
repurchase the notes in whole or in part without redeemingin increments of $1,000. The method for
repurchases differs for book-entry and certificate notes, and is discussed on
page 6.
REMARKETED NOTES
We may issue notes with remarketing features. The applicable pricing supplement
will describe the terms for the notes including: interest rate, remarketing
provisions, our right to redeem notes, the holders' right to tender notes, and
any other Note.provisions.
BOOK-ENTRY NOTES - REGISTRATION, TRANSFER, AND PAYMENT OF INTEREST AND PRINCIPAL
Book-entry notes of a series will be issued in the form of a global note that
will be deposited with The Definitive NotesDepository Trust Company, New York, New York ("DTC").
This means that we will not issue certificates to each holder. One global note
will be issued to DTC who will keep a computerized record of its participants
(for example, your broker) whose clients have purchased the notes. The
participant will then keep a record of its clients who purchased the notes.
Unless it is exchanged in whole or in part for a certificate note, a global
4
note may not be presented for registrationtransferred; except that DTC, its nominees, and their successors
may transfer a global note as a whole to one another.
Beneficial interests in global notes will be shown on, and transfers of transfer or exchange atglobal
notes will be made only through, records maintained by DTC and its participants.
DTC has provided us the officefollowing information: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the Paying AgentNew York Banking Law, a member of the United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also records the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participant's accounts. This eliminates the need
to exchange certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations.
DTC's book-entry system is also used by other organizations such as securities
brokers and dealers, banks and trust companies that work through a Direct
Participant. The rules that apply to DTC and its participants are on file with
the SEC.
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global notes for all
purposes. Accordingly, we, the Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global notes to owners of
beneficial interests in the Boroughglobal notes.
It is DTC's current practice, upon receipt of Manhattan,any payment of principal or
interest, to credit Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global notes as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to Direct Participants whose accounts are credited
with notes on a record date, by using an omnibus proxy. Payments by participants
to owners of beneficial interests in the global notes, and voting by
participants, will be governed by the customary practices between the
participants and owners of beneficial interests, as is the case with notes held
for the account of customers registered in "street name." However, payments will
be the responsibility of the participants and not of DTC, the Trustee or us.
Notes represented by a global note will be exchangeable for certificate notes
with the same terms in authorized denominations only if:
- - DTC notifies us that it is unwilling or unable to continue as depositary or
if DTC ceases to be a clearing agency registered under applicable law and a
successor depositary is not appointed by us within 90 days; or
- - we determine not to require all of the notes of a series to be represented
by a global note and notify the Trustee of our decision.
5
BOOK-ENTRY NOTES - METHOD OF REPURCHASE
Participants, on behalf of the owners of beneficial interests in the global
notes, may exercise the repurchase option by delivering written notice to our
paying agent at least 30, but no more than 60, days prior to the date of
repurchase. The Citypaying agent must receive notice by 5:00 p.m. on the last day
for giving notice. Procedures for the owners of New York,beneficial interests in global
notes to notify their participants of their desire to have their note
repurchased will be governed by the customary practices of the participant. The
written notice to the paying agent must state the principal amount to be
repurchased. It is irrevocable and a duly authorized officer of the Paying Agentparticipant
(with signatures guaranteed) must sign it.
CERTIFICATE NOTES - REGISTRATION, TRANSFER, AND PAYMENT OF INTEREST AND
PRINCIPAL
If we issue certificate notes, they will perform certain other duties with respect to redeemable
Notes.be registered in the name of the
noteholder. The Notesnotes may be transferred or exchanged, subjectpursuant to
the
limitations providedadministrative procedures in the Indenture, without the payment of any service
charge other(other than any tax or other governmental charge
payablecharge) by contacting the
paying agent.
Holders of over $5 million in connection therewith. With respectprincipal amount of notes can request that payment
of principal and interest be wired to transfers of
Book-Entry Notes and exchanges of permanent global Notes
representing Book-Entry Notes, see "Book-Entry Notes" below.
5
Interest Rate
General
Each Note will bear interest from its date of issuethem by contacting the paying agent at the
fixed rate per annumaddress set forth above at least one business day prior to the payment date.
Otherwise, payments will be made by check.
CERTIFICATE NOTES - METHOD OF REPURCHASE
Noteholders desiring to exercise their repurchase option must notify the paying
agent at least 30 but not more than 45 calendar days prior to the repayment date
by providing the bank:
- - the note, with the section entitled "Option to Elect Repayment" on the
reverse of the note completed; or
- - a fax or letter (first class, postage prepaid) from a member of a national
securities exchange, the National Association of Securities Dealers, or a
bank or trust company in the United States which states the following: (a)
the name of the holder; (b) the principal amount of the note and the amount
to be repurchased; (c) the certificate number or the maturity and a
description of the terms of the note; (d) a statement that you wish to sell
all or a portion of your note; and (e) a guaranty that the note with the
section entitled "Option to Elect Repayment" on the reverse of the note
completed will be received by the paying agent within 5 business days.
The note and form must be received by the paying agent by such 5th business day.
Your notice of repurchase is irrevocable.
If you sell a portion of a note, it will be canceled and a new note for the
remaining principal amount will be issued to you.
INTEREST RATE
GENERAL
We have provided a Glossary at the rate per annum determined pursuantend of this prospectus to define the
capitalized words used in discussing the interest rate formula, stated therein and in the
applicable Pricing Supplement, until the principal thereof is
paid or made available for payment. Interest will berates payable on each Interest Payment Date (as defined below) and at Stated
Maturitythe notes.
The interest rate on the notes will either be fixed or if applicable, upon redemption. Each payment offloating. The interest
payable at Stated Maturity or, if applicable, upon
redemption shallpaid
6
will include interest accrued to, but excluding, the date of Stated Maturitymaturity,
redemption or redemption.repurchase. Interest will beis generally payable
generally to the person (which, in the case of Book-Entry Notes,
shall be the Depositary or its nominee) in whose
name a Note (or
any predecessor Note)the note is registered at the close of business on the Record Date (as defined below) next precedingrecord date before
each Interest
Payment Date; provided, however, thatinterest payment date. However, interest payable at Stated
Maturitymaturity, redemption,
or if applicable, upon redemption,repurchase will be payable to the person (which, in the case of Book-Entry Notes, shall be the
Depositary or its nominee) to whom principal shall beis payable. The
first interest payment of interest on any Notenote originally issued between a Record Daterecord date and
an Interest Payment Dateinterest payment date or on an Interest Payment Dateinterest payment date will be made on the
Interest Payment Date
followinginterest payment date after the next succeeding Record Date to the registered owner
on such Record Date.record date. Interest (otherpayable other than interest payable at
Stated Maturitymaturity, redemption or if applicable, upon redemption)repurchase will be paid, at the Company'sour option, by check mailed to registered holders or by wire
transfer to any holder of record. For additional
information with respect to payments of interest on Book-Entry
Notes, see "Book-Entry Notes" below. Interest rates, or interest
rate formulas, will be subject to change by the Company from time
to time, provided that any change in interest rates, or interest
rate formulas, will not affect any Note previously issued or
which the Company has agreed to sell. The interest rate on the
Fixed Rate Notes and the Floating Rate Notes will in no event be
higher than the maximum rate permitted by Maryland law, as the
same may be modified by United States law of general application.
Fixed Rate Notestransfer.
FIXED RATE NOTES
The applicable Pricing Supplement relating to a Fixed Rate
Notepricing supplement will designate athe fixed rate of interest
per annum payable on such Note. Unless otherwise indicated in the applicable Pricing
Supplement, interest with respect to Fixed Rate Notesa note. Interest will be paid semi-annually each May 1 and November 1, and at Stated
Maturityupon
maturity, redemption or if applicable, upon redemption.repurchase. If any Interest
Payment Date or the Stated Maturity (or, if applicable, thepayment date
of redemption) of a Fixed Rate Note falls on a day that is
not a Business Day, payment of principal, premium, if any, or interest
will be made on the next Business Day as if it were made on the
date such payment was due, and no
additional interest will accrue on the
amount so payable for the period from and after such Interest
Payment Date or the Stated Maturity (or the date of redemption),
as the case may be.be paid. The Record Datesrecord dates for such Notesnotes will be the
6
April
15 (for interest to be paid on May 1) and October 15 next preceding the May 1 and(for interest to be paid on
November 11). Interest Payment Dates. Unless otherwise indicated in the
applicable Pricing Supplement, interest payments for Fixed Rate
Notes shallwill be the amount of interest accrued to, but
excluding, the relevanteach May 1 and November 1. Interest Payment Date. Interest on such Notes will be computed on the basis ofusing a 360-day
year of twelve 30-day months.
Floating Rate Notes
The applicable Pricing Supplement relating to a Floating
Rate NoteFLOATING RATE NOTES
GENERAL
Each floating rate note will designatehave an interest rate formula for such
Floating Rate Note. Suchformula. The formula may be: (a)be
based on:
- - the Commercial
Paper Rate, in which case such Note will be a Commercial Paper
Rate Note, (b)commercial paper rate;
- - the Prime Rate, in which case such Note will be a
Prime Rate Note, (c)prime rate;
- - the CD Rate, in which case such Note will be
a CD Rate Note, (d)rate;
- - the Federal Funds Effective Rate, in which
case such Note will be a Federal Funds Effective Rate Note, (e)
LIBOR, in which case such Note will be a LIBOR Note, (f)federal funds effective rate;
- - the LIBOR;
- - the Treasury Rate, in which case such Note will be a Treasury Rate
Note, (g)rate;
- - the CMT Rate, in which such case such Note will be a
CMT Rate Noterate; or
(h) such other- - another interest rate formula as is set
forth in such Pricing Supplement.index.
The applicable Pricing
Supplement for a Floating Rate Notepricing supplement will also will specifyindicate the Spread and/orand /or
Spread Multiplier, if any. In addition, any applicable to each Note. Any
Floating Rate Notefloating rate note may also have either or both of the following:
(a) a
maximum numericalor minimum interest rate limitation, or ceiling,limitation.
Upon request, the Calculation Agent will provide the current interest rate and,
if different, the interest rate which will become effective on the rate of interest which may accrue during any interest period
(the "Maximumnext Interest
Rate"); and (b) a minimum numericalReset Date.
DATE OF INTEREST RATE CHANGE
The interest rate limitation, or floor, on the rate of interest which
may accrue during any interest period (the "Minimum Interest
Rate"). In addition, such Pricing Supplement will define or
particularize for each Floating Rate Note the following terms, if
applicable: Calculation Agent, Calculation Dates, Initial
Interest Rate, Interest Payment Dates, Record Dates, Index
Maturity, Interest Determination Dates and Interest Reset Dates
with respect to such Note. See "GLOSSARY."
The rate of interest on each Floating Rate Note willfloating rate note may be reset daily, weekly,
monthly, quarterly, semi-annually, annually
or as specified in the applicable Pricing Supplement.annually. The Interest Reset Date will be, in the case of Floating Rate Notesbe:
- - for notes which reset daily, each Business Day;
in the case of Floating
Rate Notes- - for notes (other than Treasury Rate Notes)rate notes) which reset weekly, the
Wednesday of each week;
in the case of- - for Treasury Rate Notesrate notes which reset weekly, the Tuesday of each week;
in the case of
Floating Rate Notes- - for notes which reset monthly, the third Wednesday of each month;
in the case of Floating Rate Notes- - for notes which reset quarterly, the third Wednesday of March, June,
September and December;
in the case of Floating Rate Notes- - for notes which reset semi-
annually,semi-annually, the third Wednesday of the two months
of each year as
indicated in the applicable Pricing Supplement;pricing supplement; and
in the case
of Floating Rate Notes- - for notes which reset annually, the third Wednesday of onethe month of each
year as indicated in the applicable Pricing
Supplement.pricing supplement.
The initial interest rate in effector interest rate formula on each day shall be (a)
if such day is an Interest Reset Date, the interest rate with
respect to the Interest Determination Date pertaining to such
7
Interest Reset Date or (b)if such day is not an Interest Reset
Date, the interest rate with respect to the Interest
Determination Date pertaining to the next preceding Interest
Reset Date; provided, however, that (a) the interest rate in
effect from the date of issue of a Floating Rate Note (or that of
a predecessor Note) tonote effective until
the first Interest Reset Date with respect
of such Floating Rate Notewill be indicated in the applicable pricing
supplement. Thereafter, the interest rate will be the Initialrate determined on the
next Interest Rate (as
set forthDetermination Date, as explained below. Each time a new interest
rate is determined, it will become effective on the subsequent Interest Reset
Date.
7
However, no changes will be made in the applicable Pricing Supplement) and (b) the interest rate in effect forduring the ten days immediately prior
to Stated Maturitythe date of maturity, redemption or redemption will be that in effect on the tenth
day preceding the Stated Maturity or redemption date.repurchase. If any Interest Reset Date for any Floating Rate Note would otherwise be
a day that is
not a Business Day, suchthen the Interest Reset Date will be postponed to the next
day that is a Business Day, except thatDay. However, in the case of a LIBOR Note,note, if suchthe next Business Day is
in the next succeeding calendar month, suchthe Interest Reset Date shallwill be the immediately
preceding Business Day.
WHEN INTEREST RATE IS DETERMINED
The Interest Determination Date pertaining to an Interest
Reset Date for a Commercial Paper Rate Note (the "Commercial
Paper Interest Determination Date"), a Prime Rate Note (the
"Prime Rate Interest Determination Date"), a CD Rate Note (the
"CD Rate Interest Determination Date"), a Federal Funds Effective
Rate Note (the "Federal Funds Effective Interest Determination
Date"), a LIBOR Note (the "LIBOR Interest Determination Date") or
a CMT Rate Note ( the "CMT Interest Determination Date") will beall notes (except Treasury rate notes) is
the second Business Day precedingbefore the Interest Reset Date with
respect to such Note.Date.
The Interest Determination Date pertaining
to an Interest Reset Date for a Treasury Rate Note (the "Treasury
Interest Determination Date")rate notes will be the day of the
week in which suchthe Interest Reset Date falls on which Treasury bills would
normally be auctioned. Treasury bills are usually sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
usually held on Tuesday. However, the following Tuesday, except that such actionauction may be held on the preceding
Friday. If as the result of a legal holiday, an auction is so held on the preceding Friday, such Fridaythat day will be the Treasury
Interest Determination Date pertaining to the Interest Reset Date occurring in
the next succeeding week. If an auction date shall fallfalls on any Interest Reset Date for a Treasury
Rate Note, then suchthe
Interest Reset Date shallwill instead be the first Business Day immediately following
suchthe auction date.
Unless otherwise indicated in the applicable Pricing
Supplement and exceptWHEN INTEREST IS PAID
Interest is paid as provided below, interest will be
payable, in the case of Floating Rate Notesfollows:
- - for notes which reset daily or weekly, on the third Wednesday of March,
June, September and December of each year; in the case of Floating Rate NotesDecember;
- - for notes which reset monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each
year (as indicated in
the applicable Pricing Supplement)pricing supplement);
in the
case of Floating Rate Notes- - for notes which reset quarterly, on the third Wednesday of March, June,
September, and December of each year; in
the case of Floating Rate NotesDecember;
- - for notes which reset semi-annually, on the third Wednesday of the two
months of each year specified in the applicable Pricing Supplement; and in the case of Floating Rate
Notespricing supplement;
- - for notes which reset annually, on the third Wednesday of the month
8
specified in the applicable Pricing Supplement (each an "Interest
Payment Date"),pricing supplement; and
in each case,- - at Stated Maturity and, if
applicable, upon redemption.maturity, redemption or repurchase.
If an Interest Payment Date with
respect to any Floating Rate Note would otherwise beinterest is payable on a day thatwhich is not a Business Day, such Interest Payment Datepayment will be
postponed to the next day that is aBusiness Day. However, for LIBOR notes, if the next
Business Day except that in
the case of a LIBOR Note, if such day is in the next succeeding
calendar month, such Interest Payment Date shallinterest will be paid on the
immediately
preceding Business Day.
Unless otherwise indicated
in the applicable Pricing Supplement, the Record Date with
respect to Floating Rate Notes shallThe record date will be the date 15 calendar days prior to each Interest Payment Date,day interest is paid,
whether or not such date
shall beday is a Business Day.
Unless otherwise indicated in the applicable Pricing
Supplement, theThe interest payable on each Interest Payment Date
for a Floating Rate Note will be the amount of interest accrued to, but excluding,
the Interest Payment Date; provided, however,
that ininterest payment date. However, for notes on which the case of a Floating Rate Note the interest on which resets daily
or weekly, interest payable on any Interest Payment
Date, other than the interest payable on any date on which
principal on any such Note is payable will include interest accrued to and including
the Record Date next preceding such
Interest Payment Date unless otherwise indicated inrecord date prior to the applicable Pricing Supplement.interest payment date. If the interest payment date
is also a day that principal is due, the interest payable will include interest
accrued to, but exclude, the date of maturity, redemption or repurchase.
The accrued interest for any period is calculated by multiplying the faceprincipal
amount of such Floating Rate Notea note by an accrued interest factor. SuchThe accrued interest factor is
computed by adding the interest factor calculated for each day in suchthe period to
the date for which accrued interest is being calculated. The interest factor
(expressed as a decimal rounded upwards if necessary, as described below) for each such day is
computed by dividing the interest rate (expressed as a decimal rounded upwards
if necessary, as described below)necessary) applicable to such date by 360, unless
8
the notes are Treasury rate notes or CMT rate notes in thewhich case of Commercial Paper Rate Notes,
Prime Rate Notes, CD Rate Notes, Federal Funds Effective Rate
Notes or LIBOR Notes, orit will be
divided by the actual number of days in the year, in the case of Treasury Rate Notes or CMT Rate Notes.
Unless otherwise specified in a Pricing Supplement, allyear.
All percentages resulting from any calculation of Floating Rate Notesfloating rate notes will be
rounded, if necessary, to the nearest one-hundred thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544%
(or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts
used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest cent
(with one-half cent being rounded upwards).
Upon the request of the Holder of any Floating Rate Note,
the Calculation Agent will provide the interestCOMMERCIAL PAPER RATE NOTES
Each commercial paper rate then in
effect, and, if different, the interest rate which will become
effective as a result of a determination made on the most recent
Interest Determination Date with respect to such Floating Rate
Note.
9
Commercial Paper Rate Notes
Each Commercial Paper Rate Notenote will bear interest at the
interest rate (calculated
with reference to the Commercial Paper Rate and the Spread and/orand /or Spread
Multiplier, if any) specified on the face of such Commercial Paper Rate Notecommercial paper rate note and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement,pricing supplement.
"Commercial Paper Rate" means, with respect to any Commercial Paper Interest
Determination Date, the Money Market Yield (calculated as described below) of
the rate on such date for commercial paper having the Index Maturity specified
in the applicable Pricing Supplementpricing supplement as published in H.15(519) under the heading
"Commercial Paper."
InThe following procedures will occur if the eventrate cannot be set as described
above:
(a) If that such rate is not published in H.15(519) prior to 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest
Determination Date, then the Commercial Paper Rate will be the Money Market Yield
of the rate on suchthe Commercial Paper Interest Determination Date for commercial
paper having the Index Maturity specified in the applicable Pricing Supplementpricing supplement
as published in Composite Quotations under the heading "Commercial Paper."
(b) If suchthe rate was neitheris not published in H.15(519) by 9:00 A.M., New
York City time, on such Calculation Date noror in Composite Quotations by 3:00 P.M., New York City time, on such date,the
Calculation Date, the Commercial Paper Rate for that Commercial Paper Interest
Determination Date will then be calculated by the Calculation Agent andin the
following manner.
The Commercial Paper Rate will be calculated as the Money Market Yield of the
arithmetic meanaverage for the offered rates, as of 11:00 A.M., New York City time, on that Commercial Paper Interest Determination Date,date, of three leading
dealers of commercial paper in The City of New York selected by
the Calculation Agent for commercial paper having the
applicable Index Maturity specified in the applicable Pricing Supplement placed for an industrial issuer whose bond rating is
"AA," or the equivalent, from a nationally recognized rating agency; provided,
however, thatagency.
(c) Finally, if fewer than three dealers selected as aforesaid
by the Calculation Agent are quoting as mentioned, in this
sentence, the rate of
interest in effect for the applicable period will be the same as the rate of
interest in effect for the immediately precedingprior interest reset period.
"Money Market Yield"PRIME RATE NOTES
Each prime rate note will bear interest at the rate (calculated with reference
to the Prime Rate and the Spread and/or Spread Multiplier, if any) specified on
the prime rate note and in the applicable pricing supplement.
"Prime Rate" means, with respect to any Prime Rate Interest Determination Date,
the rate set forth on such date in H.15(519) under the heading "Bank Prime
Loan."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) prior to 9:00 A.M. on the
Calculation Date, then the Prime Rate will be the average (rounded upwards, if
9
necessary, to the next higher one-hundred thousandth of a percentage point) of
the rates of interest publicly announced by each bank that appear on the Reuters
Screen NYMF Page as its prime rate or base lending rate as in effect for that
Prime Rate Interest Determination Date.
(b) If fewer than four, but more than one, rates appear on the Reuters Screen
NYMF Page, the Prime Rate will be the average of the prime rates (quoted on the
basis of the actual number of days in the year divided by a 360-day year) as of
the close of business on the Prime Rate Interest Determination Date by four
major money center banks in New York selected by the Calculation Agent.
(c) If fewer than two rates appear, the Prime Rate shall be determined on the
basis of the rates furnished in New York by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, having total equity capital of at least
$500 million and being subject to supervision or examination by a Federal or
State authority, as selected by the Calculation Agent.
(d) Finally, if the banks are not quoting as mentioned above, the rate of
interest in effect for the applicable period will be the same as the rate of
interest in effect for the prior interest reset period.
CD RATE NOTES
Each CD rate note will bear interest at the rate (calculated with reference to
the CD Rate and the Spread and/or Spread Multiplier, if any) specified on the CD
rate note and in the applicable pricing supplement.
"CD Rate" means, with respect to any CD Rate Interest Determination Date, the
rate on that date for negotiable certificates of deposit having the Index
Maturity specified in the applicable pricing supplement as published in
H.15(519) under the heading "CDs (Secondary Market)."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) prior to 9:00 A.M. on the
Calculation Date, then the CD Rate will be the rate on that CD Rate Interest
Determination Date for negotiable certificates of deposit having the applicable
Index Maturity as published in Composite Quotations under the heading
"Certificates of Deposit."
(b) If that rate is not published in Composite Quotations by 3:00 P.M. on that
Calculation Date, the CD Rate for that CD Interest Determination Date shall be
calculated by the Calculation Agent as follows:
The CD Rate will be calculated as the average of the secondary market offered
rates, as of 10:00 A.M., of three leading nonbank dealers of negotiable U.S.
dollar certificates of deposit in New York selected by the Calculation Agent for
negotiable certificates of deposit of major United States money market banks
with a remaining maturity closest to the Index Maturity specified in the
applicable pricing supplement in a denomination of $5,000,000.
(c) Finally, if fewer than three dealers are quoting as mentioned, the rate of
interest in effect for the applicable period will be the same as the rate of
interest in effect for the prior interest reset period.
FEDERAL FUNDS EFFECTIVE RATE NOTES
Each federal funds effective rate note will bear interest at the rate
(calculated with reference to the Federal Funds Effective Rate and the Spread
and/or Spread Multiplier, if any) specified on
10
the federal funds effective rate note and in the applicable pricing supplement.
"Federal Funds Effective Rate" means, with respect to any Federal Funds
Effective Interest Determination Date, the rate on such date for Federal Funds
as published in H.15(519) prior to 11:00 A.M. under the heading "Federal Funds
(Effective)."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) prior to 11:00 A.M. on the
Calculation Date, then the Federal Funds Effective Rate will be the rate on that
Federal Funds Effective Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate."
(b) If that rate is not published in Composite Quotations by 3:00 P.M. on the
Calculation Date, the Federal Funds Effective Rate for that Federal Funds
Effective Interest Determination Date will be calculated by the Calculation
Agent as follows:
The Federal Funds Effective Rate will be the average of the rates, as of 11:00
A.M. on that date, for the last transaction in overnight Federal Funds arranged
by three leading brokers of federal funds transaction in New York selected by
the Calculation Agent.
(c) Finally, if fewer than three brokers are quoting as mentioned above, the
rate of interest in effect for the applicable period will be the same as the
rate of interest in effect for the prior interest reset period.
LIBOR NOTES
Each LIBOR note will bear interest at the rate (calculated with reference to
LIBOR and the Spread and/or Spread Multiplier, if any) specified on the LIBOR
note and in the applicable pricing supplement.
LIBOR will be determined by the Calculation Agent as follows:
(a) With respect to any LIBOR Interest Determination Date, LIBOR will be
determined by either:
(1) the average of the offered rates for deposits of not less than
$1,000,000 in U.S. dollars having the Index Maturity specified in the applicable
pricing supplement, beginning on the second Business Day immediately after that
date, that appear on the Reuters Screen LIBO Page as of 11:00 A.M., London time,
on that date, if at least two offered rates appear on the Reuters Screen LIBO
Page; or
(2) the rate for deposits in U.S. dollars having the Index Maturity
designated in the applicable pricing supplement, beginning on the second London
Business Day immediately after such date, that appears on the Telerate Page 3750
as of 11:00 A.M., London time, on that date.
If neither Reuters Screen LIBO Page nor Telerate Page 3750 is specified in the
applicable pricing supplement, LIBOR will be determined as if Telerate Page 3750
had been specified.
In the case where (1) above applies, if fewer than two offered rates appear on
the Reuters Screen LIBO Page, or, in the case where (2) above applies, if no
rate appears on the Telerate Page 3750, LIBOR for that date will be determined
as follows:
(b) LIBOR will be determined based on the rates at approximately 11:00
A.M., London time, on that LIBOR Interest Determination Date at which deposits
of not less than $1,000,000 in U.S. dollars having the applicable Index Maturity
are offered to prime banks in the London interbank
11
market by four major banks in the London interbank market selected by the
Calculation Agent that in the Calculation Agent's judgment is representative for
a single transaction in such market at such time (a "Representative Amount").
The offered rates must begin on the second Business Day immediately after that
LIBOR Interest Determination Date.
The Calculation Agent will request the principal London office of each such bank
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR for such date will be the average of such quotations.
(c) If fewer than two quotations are provided, LIBOR for that date will be the
average of the rates quoted at approximately 11:00 A.M., New York City time, on
such date by three major banks in New York, selected by the Calculation Agent.
The rates will be for loans in U.S. dollars to leading European banks having the
specified Index Maturity beginning on the second Business Day after that date
and in a Representative Amount.
(d) Finally, if fewer than three banks are quoting as mentioned, the rate of
interest in effect for the applicable period will be the same as the rate of
interest in effect for the prior interest reset period.
TREASURY RATE NOTES
Each Treasury rate note will bear interest at the rate (calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any)
specified on the Treasury rate note and in the applicable pricing supplement.
"Treasury Rate" means, with respect to any Treasury Interest Determination Date,
the rate for the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable pricing
supplement as published in H.15(519) under the heading "U.S. Government
Securities/Treasury Bills/Auction Average (Investment)."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) by 9:00 A.M. on the applicable
Calculation Date, the rate will be the auction average rate (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) for such auction as otherwise announced by the United
States Department of the Treasury.
(b) If the results of the auction of Treasury bills having the applicable Index
Maturity are not published in H.15(519) by 9:00 A.M., or otherwise published or
reported as provided above by 3:00 P.M., on the Calculation Date, or if no
auction is held in a particular week, then the Treasury Rate shall be calculated
by the Calculation Agent as follows:
The rate will be calculated as a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the average of the secondary market bid rates as of
approximately 3:30 P.M. on the Treasury Interest Determination Date, of three
leading primary United States government securities dealers in New York selected
by the Calculation Agent for the issue of Treasury bills with a remaining
maturity closest to the specified Index Maturity.
(c) Finally, if fewer than three dealers are quoting as mentioned, the rate of
interest in effect for the period will be the same as the rate of interest in
effect for the prior interest reset period.
CMT RATE NOTES
Each CMT rate note will bear interest at the rate (calculated with reference to
the
12
CMT Rate and the Spread or Spread Multiplier, if any) specified on such CMT rate
note and in the applicable pricing supplement.
"CMT Rate" means, with respect to any CMT Interest Determination Date, the rate
displayed on the Designated CMT Telerate Page under the caption "... Treasury
Constant Maturities.. Federal Reserve Board Release H.15... Mondays
Approximately 3:45 P.M.," under the column for the applicable Index Maturity
designated in the applicable pricing supplement for:
(1) if the Designated CMT Telerate Page is 7055, the rate for the
applicable CMT Interest Determination Date; or
(2) if the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the CMT Interest
Determination Date occurs.
The following procedures will occur if the rate cannot be set as described
above:
(a) If no page is specified in the applicable pricing supplement and on the face
of such CMT Rate Note, the Designated CMT Telerate Page shall be 7052, for the
most recent week. If such rate is no longer displayed on the relevant page, or
if it is not displayed by 3:00 P.M. on the related Calculation Date, then the
CMT Rate will be the Treasury constant maturity rate for the applicable Index
Maturity as published in the relevant H.15 (519).
(b) If that rate is no longer published in H.15(519), or is not published by
3:00 P.M. on the related Calculation Date, then the CMT Rate for such CMT
Interest Determination Date will be the Treasury constant maturity rate for the
applicable Index Maturity (or other United States Treasury rate for such Index
Maturity for that CMT Interest Determination Date with respect to such Interest
Reset Date) as may then be published by either the Federal Reserve Board or the
United States Department of the Treasury that the Calculation Agent determines
to be comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519).
(c) If that information is not provided by 3:00 P.M. on the related Calculation
Date, then the CMT Rate for that CMT Interest Determination Date will be
calculated by the Calculation Agent as follows:
The rate will be calculated as a yield to maturity, based on the average of the
secondary market closing offer side prices as of approximately 3:30 P.M. on that
CMT Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in New York selected by the Calculation Agent. These dealers
will be selected from five such Reference Dealers.
The Calculation Agent will eliminate the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury Note") with an original
maturity of approximately the applicable Index Maturity and a remaining term to
maturity of not less than such Index Maturity minus one year.
If two Treasury Notes with an original maturity as described in the preceding
sentence have remaining terms to maturity equally close to the applicable Index
Maturity, the quotes for the Treasury Note with the shorter remaining term to
maturity will be used.
(d) If the Calculation Agent cannot obtain three such Treasury Note quotations,
the CMT Rate for that CMT
13
Interest Determination Date will be calculated by the Calculation Agent as
follows:
The rate will be calculated as a yield to maturity based on the average of the
secondary market offer side prices as of approximately 3:30 P.M. on that CMT
Interest Determination Date of three Reference Dealers in New York selected by
the Calculation Agent using the same method described above, for Treasury Notes
with an original maturity of the number of years that is the next highest to the
applicable Index Maturity with a remaining term to maturity closest to such
Index Maturity and in an amount of at least $100 million.
If three or four (and not five) of the Reference Dealers are quoting as
described above, then the CMT Rate will be based on the average of the offer
prices obtained and neither the highest nor the lowest of such quotes will be
eliminated.
(e) Finally, if fewer than three Reference Dealers are quoting as mentioned, the
rate of interest in effect for the applicable period will be the same as the
rate of interest in effect for the prior interest reset period.
EVENT OF DEFAULT
"Event of Default" means any of the following:
- - failure to pay the principal of (or premium, if any, on) any note of a
series when due and payable;
- - failure to pay for 30 days any interest on any note of any series;
- - failure to perform any other requirements in the notes, or in the indenture
in regard to such notes, for 60 days after notice; or
- - certain events of insolvency.
An Event of Default for a particular series of notes does not necessarily mean
that an Event of Default has occurred for any other series of notes issued under
the indenture. If an Event of Default shall have occurred and be continuing the
Trustee or the holders of at least 25% of the principal amount of the notes of
the series affected by an Event of Default may require us to repay the entire
principal of the notes of such series immediately. Subject to certain
conditions, this requirement may be rescinded by the holders of at least a
majority in aggregate principal amount of the notes of the series.
The Trustee must within 90 days after a default occurs, notify the holders of
the notes of the series of the default if we have not remedied it (default is
defined to include the events specified above without the grace periods or
notice). The Trustee may withhold notice to the holders of such notes of any
default (except in the payment of principal or interest) if it in good faith
considers such withholding in the interest of the holders. We are required to
file an annual certificate with the Trustee, signed by an officer, about any
default by us under any provisions of the indenture.
Subject to the provisions of the indenture relating to its duties in case of
default, the Trustee shall be under no obligation to exercise any of its rights
or powers under the indenture at the request, order or direction of any holders
unless such holders offer the Trustee reasonable indemnity. Subject to the
provisions for indemnification, the holders of a majority in principal amount of
the notes of any series may direct the time, method and place of conducting any
proceedings for any remedy available to, or exercising any trust or power
conferred on, the Trustee with respect to such notes.
14
MODIFICATION OF INDENTURE
Under the indenture, our rights and obligations and the rights of the holders of
any notes may be changed. Any change requires the consent of the holders of not
less than 66 2/3% in aggregate principal amount of the outstanding notes of all
series to be affected, voting as one class. However, no changes to the terms of
payment of principal or interest, or reducing the percentage required for
changes, is effective against any holder without its consent.
CONSOLIDATION, MERGER OR SALE
We may not merge or consolidate with any corporation or sell substantially all
of our assets as an entirety unless:
- - we are the continuing corporation or the successor corporation expressly
assumes the payment of principal, and premium, if any, and interest on the
notes and the performance and observance of all the covenants and
conditions of the indenture binding on us (our proposed merger with Potomac
Electric Power Company will satisfy this requirement); and
- - we, or the successor corporation, are not immediately after the merger,
consolidation, or sale in default in the performance of a covenant or
condition in the indenture.
PLAN OF DISTRIBUTION
We may sell the notes (a) through agents; (b) through underwriters or dealers;
or (c) directly to one or more purchasers.
BY AGENTS
Notes may be sold on a continuing basis through agents designated by us. The
agents agree to use their reasonable efforts to solicit purchases for the period
of their appointment.
The notes will be sold to the public at 100% of their principal amount. Agents
will receive commissions from .125% to .75% of the principal amount per note
depending on the maturity of the note they sell. We will receive from 99.875% to
99.25% of the principal amount of each note, before deducting expenses of
approximately $310,000.
BY UNDERWRITERS
If underwriters are used in the sale, the notes will be acquired by the
underwriters for their own account. The underwriters may resell the notes in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the notes will be subject to certain
conditions. The underwriters will be obligated to purchase all the notes of the
series offered if any of the notes are purchased. Any initial public offering
price and any discounts or concessions allowed or re-allowed or paid to dealers
may be changed from time to time.
DIRECT SALES
Notes may also be sold directly by us. In this case, no underwriters or agents
would be involved.
GENERAL INFORMATION
Underwriters, dealers, and agents that participate in the distribution of the
notes may be underwriters as defined in the Securities Act of 1933 (the "Act"),
and any discounts or commissions received by them from us and any profit on the
resale of the notes by them may be treated as underwriting discounts and
commissions under the Act.
We may have agreements with the underwriters, dealers and agents to indemnify
them against certain civil
15
liabilities, including liabilities under the Act, or to contribute with respect
to payments which the underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, us or our subsidiaries in the ordinary course of their businesses.
LEGAL OPINIONS
David A. Brune, Esq., our General Counsel, Susan Wolf, our Associate General
Counsel - Corporate, or another of our lawyers, will issue an opinion about the
legality of the notes for us. Cahill Gordon & Reindel, New York, NY will issue
an opinion for the agents or underwriters. Cahill Gordon & Reindel will rely on
the opinion of our lawyer as to matters of Maryland law and the applicability of
the Public Utility Holding Company Act of 1935.
EXPERTS
Coopers & Lybrand, L.L.P., independent accountants, audited our financial
statements and schedules incorporated by reference in this prospectus and
elsewhere in the registration statement. These documents are incorporated by
reference herein in reliance upon the authority of Coopers & Lybrand as experts
in accounting and auditing in giving the report.
16
GLOSSARY
Set forth below are definitions of some of the terms used in this
Prospectus.
"BUSINESS DAY" means any day other than a Saturday or Sunday that (a) is
not a day on which banking institutions in Baltimore, Maryland, or in New York,
New York, are authorized or obligated by law or executive order to be closed,
and (b) with respect to LIBOR Notes only, is a day on which dealings in deposits
in U.S. dollars are transacted in the London interbank market.
"CALCULATION AGENT" means the entity chosen by the Company to perform the
duties related to interest rate calculations and resets for floating rate notes.
"CALCULATION DATE" means the date on which the Calculation Agent calculates
an interest rate for a floating rate note, which will be one of the following:
"PRIME RATE" - tenth day after the related Prime Rate Interest
Determination Date or, if such day is not a Business Day, the next Business
Day.
"CD RATE" - tenth day after the related CD Rate Interest
Determination Date or, if such day is not a Business Day, the next
Business Day.
"CMT RATE" - tenth day after the related CMT Rate Interest
Determination Date or, if such day is not a Business Day, the next
Business Day.
"COMMERCIAL PAPER RATE" - tenth day after the related Commercial
Paper Rate Interest Determination Date or, if such day is not a
Business Day, the next Business Day.
"LIBOR" - the LIBOR Interest Determination Date.
"TREASURY RATE" - tenth day after the related Treasury Rate
Interest Determination Date or, if such day is not a Business Day, the
next Business Day.
"FEDERAL FUNDS EFFECTIVE RATE" - tenth day after the related
Federal Funds Effective Rate Interest Determination Date or, if such
day is not a Business Day, the next Business Day.
"COMPOSITE QUOTATIONS" means the daily statistical release entitled
"Composite 3:30 P.M. Quotations for U.S. Government Securities," or any
successor publication, published by The Federal Reserve Bank of New York.
"DESIGNATED CMT TELERATE PAGE" means the display on the Dow Jones Telerate
Service on the page designated in the applicable pricing supplement and on the
face of such CMT Rate Note (or any other page as may replace such page on that
service) for the purpose of displaying Treasury Constant Maturities as reported
in H.15(519).
17
"H.15(519)" means the weekly statistical release entitled "Statistical
Release H.15(519), Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System.
"INDEX MATURITY" means, with respect to a floating rate note, the period to
maturity of the note on which the interest rate formula is based, as indicated
in the applicable pricing supplement.
"INTEREST DETERMINATION DATE" means the date as of which the interest rate
for a floating rate note is to be calculated, to be effective as of the
following Interest Reset Date and calculated on the related Calculation Date
(except in the case of LIBOR which is calculated on the related LIBOR Interest
Determination Date). The Interest Determination Dates will be indicated in the
applicable pricing supplement and in the note.
"INTEREST RESET DATE" means the date on which a floating rate note will
begin to bear interest at the variable interest rate determined on any Interest
Determination Date. The Interest Reset Dates will be indicated in the applicable
pricing supplement and in the note.
"MONEY MARKET YIELD" is the yield (expressed as a percentage rounded
upwards, if necessary, to the next higher one-
hundredone-hundred thousandth of a percentage
point) calculated in accordance with the following formula:
D X 360
Money Market Yield = ___________________ X 100
360 - (D X M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the period for which interest is being calculated.
10
Prime Rate Notes
Each Prime Rate Note will bear interest at the interest rate
(calculated with reference to the Prime Rate and the Spread
and/or Spread Multiplier, if any) specified on the face of such
Prime Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Prime Rate
Interest Determination Date, the rate set forth on such date in
H.15(519) under the heading "Bank Prime Loan." In the event that
such rate is not published prior to 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Prime Rate
Interest Determination Date, then the Prime Rate will be the
arithmetic mean (rounded upwards, if necessary, to the next
higher one-hundred thousandth of a percentage point) of the rates
of interest publicly announced by each bank that appear on the
Reuters Screen NYMF Page as such bank's prime rate or base
lending rate as in effect for that Prime Rate Interest
Determination Date. If fewer than four such rates but more than
one such rate appear on the Reuters Screen NYMF Page for the
Prime Rate Interest Determination Date, the Prime Rate will be
the arithmetic mean of the prime rates (quoted on the basis of
the actual number of days in the year divided by a 360-day year)
as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks in The City
of New York selected by the Calculation Agent. If fewer than two
quotations are provided, the Prime Rate shall be determined on
the basis of the rates furnished in The City of New York by the
appropriate number of substitute banks or trust companies
organized and doing business under the laws of the United States,
or any State thereof, having total equity capital of at least
$500 million and being subject to supervision or examination by a
Federal or State authority, selected by the Calculation Agent to
provide such rate or rates; provided, however, that if the banks
selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the rate of interest in
effect for the immediately preceding interest reset period.
CD Rate Notes
Each CD Rate Note will bear interest at the interest rate
(calculated with reference to the CD Rate and the Spread and/or
Spread Multiplier, if any) specified on the face of such CD Rate
Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "CD Rate" means, with respect to any CD Rate Interest
Determination Date, the rate on such date for negotiable
certificates of deposit having the Index Maturity specified in
the applicable Pricing Supplement as published in H.15(519) under
the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 9:00 A.M., New York City time, on
the Calculation Date pertaining to such CD Rate Interest
Determination Date, then the CD Rate will be the rate on such CD
Rate Interest Determination Date for negotiable certificates of
11
deposit having the Index Maturity specified in the applicable
Pricing Supplement as published in Composite Quotations under the
heading "Certificates of Deposit." If such rate was neither
published in H.15(519) by 9:00 A.M., New York City time, on such
Calculation Date nor in Composite Quotations by 3:00 P.M., New
York City time, on such date, the CD Rate for that CD Interest
Determination Date shall be calculated by the Calculation Agent
and shall be the arithmetic mean of the secondary market offered
rates, as of 10:00 A.M., New York City time, on that CD Rate
Interest Determination Date, of three leading nonbank dealers of
negotiable U.S. dollar certificates of deposit in The City of New
York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money market banks
with a remaining maturity closest to the Index Maturity specified
in the applicable Pricing Supplement in a denomination of
$5,000,000; provided, however, that if fewer than three dealers
selected as aforesaid by the Calculation Agent are quoting as
mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the rate of interest in
effect for the immediately preceding interest reset period.
Federal Fund Effective Rate Notes
Each Federal Funds Effective Rate Note will bear interest at
the interest rate (calculated with reference to the Federal Funds
Effective Rate and the Spread and/or Spread Multiplier, if any)
specified on the face of such Federal Funds Effective Rate Note
and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "Federal Funds Effective Rate" means, with respect to
any Federal Funds Effective Interest Determination Date, the rate
on such date for Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)" or, if not so published
prior to 11:00 A.M., New York City time, on the Calculation Date
pertaining to such Federal Funds Effective Interest Determination
Date, then the Federal Funds Effective Rate will be the rate on
such Federal Funds Effective Interest Determination Date as
published in Composite Quotations under the heading "Federal
Funds/Effective Rate." If such rate was neither published in
H.15(519) by 11:00 A.M., New York City time, on such Calculation
Date nor in Composite Quotations by 3:00 P.M., New York City
time, on such date, the Federal Funds Effective Rate for that
Federal Funds Effective Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic
mean of the rates, as of 11:00 A.M., New York City time, on that
Federal Funds Effective Interest Determination Date, for the last
transaction in overnight Federal Funds arranged by three leading
brokers of Federal Funds transaction in The City of New York
selected by the Calculation Agent; provided, however, that if
fewer than three brokers selected as aforesaid by the Calculation
Agent are quoting as mentioned in this sentence, the rate of
interest in effect for the applicable period will be the same as
the rate of interest in effect the immediately preceding interest
reset period.
12
LIBOR Notes
Each LIBOR Note will bear interest at the interest rate
(calculated with reference to LIBOR and the Spread and/or Spread
Multiplier, if any) specified on the face of such LIBOR Note and
in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, LIBOR will be determined by the Calculation Agent in
accordance with the following provisions:
(a) With respect to any LIBOR Interest Determination
Date, LIBOR will be determined by either (i) the arithmetic
mean of the offered rates for deposits in U.S. dollars
having the Index Maturity specified in the applicable
Pricing Supplement, commencing on the second Business Day
immediately following such LIBOR Interest Determination
Date, that appear on the Reuters Screen"REUTERS SCREEN LIBO Page as of
11:00 A.M., London time, on that LIBOR Interest
Determination Date, if at least two such offered rates
appear on the Reuters Screen LIBO Page, or (ii) the rate for
deposits in U.S. dollars having the Index Maturity
designated in the applicable Pricing Supplement, commencing
on the second London Business Day immediately following such
LIBOR Interest Determination Date, that appears on the
Telerate Page 3750 as of 11:00 A.M., London time, on such
LIBOR Interest Determination Date. If neither Reuters
Screen LIBO Page nor Telerate Page 3750 is specified in the
applicable Pricing Supplement, LIBOR will be determined as
if Telerate Page 3750 had been specified. In the case where
(i) above applies, if fewer than two offered rates appear on
the Reuters Screen LIBO Page, or, in the case where (ii)
above applies, if no rate appears on the Telerate Page 3750,
as applicable, LIBOR in respect of that LIBOR Interest
Determination Date will be determined as if the parties had
specified the rate described in (b) below.
(b) With respect to a LIBOR Interest Determination Date
on which this provision applies, LIBOR will be determined on
the basis of the rates at approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date at which
deposits in U.S. dollars having the Index Maturity specified
in the applicable Pricing Supplement are offered to prime
banks in the London interbank market by four major banks in
the London interbank market selected by the Calculation
Agent commencing on the second Business Day immediately
following such LIBOR Interest Determination Date and in a
principal amount not less than $1,000,000 that in the
Calculation Agent's judgment is representative for a single
transaction in such market at such time (a "Representative
Amount"). The Calculation Agent will request the principal
London office of each of such banks to provide a quotation
of its rate. If at least two such quotations are provided,
LIBOR for such LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean of the rates
13
quoted at approximately 11:00 A.M., New York City time, on
such LIBOR Interest Determination Date by three major banks
in The City of New York, selected by the Calculation Agent,
for loans in U.S. dollars to leading European banks having
the specified Index Maturity commencing on the second
Business Day immediately following such LIBOR Interest
Determination Date and in a Representative Amount; provided,
however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting as mentioned
in this sentence, the rate of interest in effect for the
applicable period will be the same as the rate of interest
in effect for the immediately preceding interest reset
period.
Treasury Rate Notes
Each Treasury Rate Note will bear interest at the interest
rate (calculated with reference to the Treasury Rate and the
Spread and/or Spread Multiplier, if any) specified on the face of
such Treasury Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Treasury
Interest Determination Date, the rate for the most recent auction
of direct obligations of the United States ("Treasury bills")
having the Index Maturity specified in the applicable Pricing
Supplement as published in H.15(519) under the heading "U.S.
Government Securities/Treasury Bills/Auction Average
(Investment)" or, if not so published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Treasury
Interest Determination Date, the auction average rate (expressed
as a bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) for such auction as
otherwise announced by the United States Department of the
Treasury. In the event that the results of the auction of
Treasury bills having the Index Maturity specified in the
applicable Pricing Supplement are neither published in H.15(519)
by 9:00 A.M., New York City time, on such Calculation Date, nor
otherwise published or reported as provided above by 3:00 P.M.,
New York City time, on such date, or if no such auction is held
in a particular week, then the Treasury Rate shall be calculated
by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates as of
approximately 3:30 P.M., New York City time, on such Treasury
Interest Determination Date, of three leading primary United
States government securities dealers in The City of New York
selected by the Calculation Agent for the issue of Treasury bills
with a remaining maturity closest to the specified Index
Maturity; provided, however, that if fewer than three dealers
selected as aforesaid by the Calculation Agent are quoting as
mentioned in this sentence, the rate of interest in effect for
the period will be the same as the rate of interest in effect for
the immediately preceding interest reset period.
14
CMT Rate Notes
Each CMT Rate Note will bear interest at the interest rate
(calculated with reference to the CMT Rate and the Spread or
Spread Multiplier, if any) specified on the face of such CMT Rate
Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "CMT Rate" means, with respect to any CMT Interest
Determination Date, the rate displayed on the Designated CMT
Telerate Page under the caption "... Treasury Constant
Maturities.. Federal Reserve Board Release H.15... Mondays
Approximately 3:45 P.M.," under the column for the Index Maturity
designated in the applicable Pricing Supplement for (i) if the
Designated CMT Telerate Page is 7055, the rate for the applicable
CMT Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the week, or the month, as applicable,
ended immediately preceding the week in which the CMT Interest
Determination Date occurs. If no page is specified in the
applicable pricing supplement and on the face of such CMT Rate
Note, the Designated CMT Telerate Page shall be 7052, for the
most recent week. If such rate is no longer displayed on the
relevant page, or if not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant
Maturity rate for the Index Maturity designated in the applicable
Pricing Supplement as published in the relevant H.15 (519). If
such rate is no longer published, or if not published by 3:00
P.M., New York City time, on the related Calculation Date, then
the CMT Rate for such CMT Interest Determination Date will be
such Treasury Constant Maturity rate for the Index Maturity
designated in the applicable Pricing Supplement (or other United
States Treasury rate for such Index Maturity for that CMT
Interest Determination Date with respect to such Interest Reset
Date) as may then be published by either the Federal Reserve
Board or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and
published in the relevant H.15(519). If such information is not
provided by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for that CMT Interest
Determination Date will be calculated by the Calculation Agent
and will be a yield to maturity, based on the arithmetic mean of
the secondary market closing offer side prices as of
approximately 3:30 P.M. (New York City time) on that CMT Interest
Determination Date reported, according to their written records,
by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York
selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality,
one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States
("Treasury Note") with an original maturity of approximately the
Index Maturity designated in the applicable Pricing Supplement
and a remaining term to maturity of not less than such Index
15
Maturity minus one year. If two Treasury Notes with an original
maturity as described in the preceding sentence have remaining
terms to maturity equally close to the Index Maturity designated
in the applicable Pricing Supplement, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for that CMT Interest Determination Date
will be calculated by the Calculation Agent and will be a yield
to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M. (New York City
time) on that CMT Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the
number of years that is the next highest to the Index Maturity
designated in the applicable Pricing Supplement and a remaining
term to maturity closest to such Index Maturity and in an amount
of at least $100 million. If three or four (and not five) of
such Reference Dealers are quoting as described above, then the
CMT Rate will be based on the arithmetic mean of the offer prices
obtained and neither the highest nor the lowest of such quotes
will be eliminated; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting
as described herein, the rate of interest in effect for the
applicable period will be the same as the rate of interest in
effect for the immediately preceding interest reset period.
Book-Entry Notes
Upon issuance, all Book-Entry Notes of like tenor and having
the same date of issue will be represented by a single permanent
global Note. Each permanent global Note representing Book-Entry
Notes will be deposited with, or on behalf of, the Depositary and
registered in the name of the Depositary or its nominee. Book-
Entry Notes will not be exchangeable for Definitive Notes at the
option of the holder and, except as set forth below, will not
otherwise be issuable in definitive form. Unless otherwise
specified in the applicable Pricing Supplement, DTC will be the
Depositary.
DTC has advised the Company and the Agents as follows: DTC
is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities
certificates. "Direct Participants" include securities brokers
and dealers (including the Agents), banks, trust companies,
16
clearing corporations, and certain other organizations. Access
to the DTC system is also available to others such as securities
brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the DTC system must be
made by or through Direct Participants. Upon the issuance by the
Company of Book-Entry Notes represented by a permanent global
Note, the Depositary will credit, on its book-entry system, the
respective principal amounts of the Book-Entry Notes represented
by such permanent global Note to the accounts of Participants.
The accounts to be credited shall be designated by the Agents or
underwriters of such Book-Entry Notes, by certain other agents of
the Company or by the Company if such Book-Entry Notes are
offered and sold directly by the Company. The ownership interest
of each actual purchaser of each Note (a "Beneficial Owner") will
be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC
of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or
Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the
Notes are expected to be effected by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership
interests in Notes, except as set forth below. To facilitate
subsequent transfers, all Notes deposited by Participants with
DTC will be registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Notes with DTC and their registration
in the name of Cede & Co. will not effect any change in
beneficial ownership. The laws of some states require that
certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in Book-Entry Notes represented
by a permanent global Note.
So long as the Depositary for a permanent global Note, or
its nominee, is the registered owner of such permanent global
Nore, the Depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the Book-Entry Notes
represented by such permanent global Note for all purposes under
the Indenture. Except as provided below, owners of beneficial
interests in Book-Entry Notes will not be entitled to have Book-
Entry Notes registered in their names, will not receive or be
entitled to receive physical delivery of Book-Entry Notes and
will not be considered the owners or holders thereof under the
Indenture unless and until it is exchanged in whole or in part
for Definitive Notes. A permanent global Note may not be
transferred except as a whole by the Depositary for such
permanent global Note to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee
of such Depositary or by the Depositary or any nominee to a
successor Depositary or any nominee of such successor.
17
The Company expects that conveyance of notices and other
communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners will be governed
by arrangement among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. In addition,
neither DTC nor Cede & Co. will consent or vote with respect to
Notes. The Company has been advised that DTC's usual procedure
is to mail an omnibus proxy to the Company as soon as possible
after the record date with respect to such consent or vote. The
omnibus proxy would assign Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Notes
are credited on such record date (identified in a listing
attached to the omnibus proxy).
Payments of principal of and interest, if any, on the Book-
Entry Notes represented by a permanent global Note registered in
the name of the Depositary or its nominee will be made by the
Company through the Paying Agent to the Depositary or its
nominee, as the case may be, as the registered owner of such
permanent global Note. Neither the Company, the Trustee, any
Paying Agent nor the registrar for the Notes will have any
responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership
interests in a permanent global Note or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
The Company has been advised that DTC will credit the
accounts of Direct Participants with payment in amounts
proportionate to their respective holdings in principal amount of
interest in any permanent global Note as shown on the records of
DTC. The Company has been advised that DTC's practice is to
credit Direct Participants' accounts on the applicable payment
date unless DTC has reason to believe that it will not receive
payment on such date. The Company expects that payments by
Participants to Beneficial Owners will be governed by standing
customer instructions and customary practices, as is now the case
with securities held for the accounts of customers. Such
payments will be the responsibility of such Participants.
If the Depositary with respect to any permanent global Note
is at any time unwilling or unable to continue as Depositary and
a successor Depositary is not appointed by the Company within 90
days, the Company will issue Definitive Notes in exchange for the
Book-Entry Notes represented by such permanent global Note. In
addition, the Company may at any time and in its sole discretion
determine not to use the Depositary's book-entry system, and, in
such event, will issue Definitive Notes in exchange for the Book-
Entry Notes represented by such permanent global Note.
Defaults and Waiver Thereof
The Indenture provides that the happening of one or more of
the following events shall constitute an Event of Default with
respect to the Notes: (i) default for 30 days in the payment of
18
any installment of interest on the Notes; (ii) default in the
payment, when due at maturity or otherwise, of the principal of
(or premium, if any, on) the Notes; (iii) default, for 60 days
after appropriate written notice, in the observance or
performance of any other of the covenants or agreements of the
Company contained in the Notes or contained in the Indenture for
the benefit of the Notes; and (iv) certain events of insolvency.
In case an Event of Default shall have occurred and be continuing
with respect to the Notes, the Trustee or the holders of at least
25% in aggregate principal amount of the Notes which are then
outstanding may declare the principal of the Notes to be due and
payable immediately, but such declaration may be annulled, and
certain past defaults waived, by the holders of not less than a
majority in aggregate principal amount of the Notes, upon the
conditions provided in the Indenture.
The Indenture provides that the Trustee shall, within ninety
days after the occurrence of a default with respect to the Notes,
give to the holders of the Notes notice of all uncured defaults
known to it (the term "default" being defined to include the
events specified above without grace periods or notice); provided
that, except in the case of default in the payment of principal
(or premium, if any) or interest, if any, in respect of the
Notes, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee
or a trust committee of directors or responsible officers or
both, of the Trustee, in good faith determines that the
withholding of such notice is in the interest of such holders.
The Company will be required to furnish to the Trustee annually
an officers' certificate to the effect that the Company is not in
default under any provisions of the Indenture.
Subject to the provisions of the Indenture relating to the
duties of the Trustee, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the holders of the Notes,
unless such holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for indemnification, the
holders of a majority in principal amount of the Notes then
outstanding under the Indenture will have the right to direct the
time, method and place of conducting any proceedings for any
remedy available to, or exercising any trust or power conferred
on, the Trustee with respect to the Notes.
Modification of the Indenture
The Indenture provides that, with the consent of the holders
of not less than 66 2/3% in aggregate principal amount of the
Debt Securities of all series to be affected (including the
Notes) which are then outstanding under the Indenture (voting as
one class), modifications and alterations of the Indenture may be
made which affect the rights of the holders of the Debt
Securities of each such series, but no such modification or
alteration may be made which, among other things, would (i)
extend the fixed maturity of any Debt Security (including any
Note) or reduce the principal amount thereof or reduce the rate
or change the method of establishing the rate or extend the time
19
or payment of any interest thereon, or reduce any premium payable
upon the redemption thereof or (ii) reduce the above-stated
percentage of holders required to modify or alter the Indenture,
without the consent of all holders of the Debt Securities
(including the Notes) then outstanding under the Indenture to be
affected thereby. The Indenture also permits the Company and the
Trustee to enter into supplemental indentures without the consent
of the holders of Debt Securities of any series (including the
Notes) for certain purposes specified in the Indenture, including
the making of such other provisions in regard to matters arising
under the Indenture which shall not adversely affect the interest
of the holders of such Debt Securities.
Consolidations, Mergers and Sales of Assets
The Indenture provides that the Company may not merge or
consolidate with any other corporation or sell or convey all or
substantially all of its assets as an entirety to any other
corporation, unless (i) either the Company shall be the
continuing corporation or the successor corporation shall
expressly assume the payment of the principal of (and premium, if
any) and interest, if any, on the Debt Securities (including the
Notes) and the performance and observance of all of the covenants
and conditions of the Indenture binding upon the Company, and
(ii) the Company or such successor corporation shall not,
immediately after such merger or consolidation, or such sale or
conveyance, be in default in performance of any such covenant or
condition.
The Indenture does not contain any covenant or other
provision that specifically is intended to afford holders of the
Notes special protection in the event of a highly leveraged
transaction.
PLAN OF DISTRIBUTION OF NOTES
Under the terms of an Agency Agreement, to be executed
between the Company and each Agent (the "Agency Agreement"), the
Notes will be offered on a continuing basis by the Company
through the Agents, each of which has agreed to use all
reasonable efforts to solicit purchases of the Notes. The
Company will pay each Agent a commission of from .125% to .750%
of the principal amount of each Note, depending on its maturity,
sold through such Agent. The Company has reserved the right to
appoint other agents from time to time, which will be named in
the appropriate Pricing Supplement. The Company will have the
sole right to accept offers to purchase Notes and may reject any
such offer, in whole or in part. Each Agent shall have the
right, in its discretion reasonably exercised, without notice to
the Company, to reject any offer to purchase Notes received by
it, in whole or in part.
The Company also may sell Notes to any Agent, acting as
principal, at a discount to be agreed upon at the time of sale,
for resale to one or more investors or to another broker/dealer
(acting as principal for purposes of resale) at a fixed price or
20
at varying prices related to prevailing market prices at the time
of such resale, as determined by such Agent.
The Notes may also be sold by the Company directly to
purchasers.
Payment of the purchase price of Notes will be required to be
made in funds immediately available in The City of New York.
The Agents may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 (the "Act"). The Company
has agreed to indemnify the Agents against and contribute toward
certain liabilities, including liabilities under the Act. The
Company has agreed to reimburse the Agents for certain expenses.
The Agents will not be obligated to make a market in the
Notes. The Company cannot predict the activity of trading in, or
liquidity of, the Notes.
Each of the Agents in the past has performed, and in the
future may perform, various services for the Company in the
ordinary course of business.
LEGAL OPINIONS
Certain legal matters in connection with the Notes will be
passed upon for the Company by David A. Brune, Esq., General
Counsel or Susan Wolf, Esq., Associate General Counsel of the
Company, and for the Agents by Cahill Gordon & Reindel (a
partnership including a professional corporation), New York, N.Y.
Cahill Gordon & Reindel will rely upon the opinion of Mr. Brune
or Miss Wolf as to matters of Maryland law and the applicability
of the Public Utility Holding Company Act of 1935.
EXPERTS
The consolidated balance sheets and statements of
capitalization as of December 31, 1994 and 1993 and the
consolidated statements of income, cash flows, common
shareholders' equity and taxes for each of the three years in the
period ended December 31, 1994, and the consolidated financial
statements schedules listed in Item 14 (a)(1) and (2) of the 1994
Form 10-K incorporated by reference in this Prospectus from the
1994 Form 10-K have been incorporated herein in reliance on the
report of Coopers & Lybrand, independent accountants, given on
the authority of that firm as experts in accounting and auditing.
Such report includes an explanatory paragraph related to the
recoverability of replacement energy costs.
21
GLOSSARY
Set forth below are definitions, or the locations elsewhere
of definitions, of some of the terms used in this Prospectus.
"Business Day" means any day other than a Saturday or Sunday
that (a) is not a day on which banking institutions in Baltimore,
Maryland, or in New York, New York, are authorized or obligated
by law or executive order to be closed, and (b) with respect to
LIBOR Notes only, is a day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Calculation Agent" means the agent appointed by the
Company to calculate interest rates for Floating Rate Notes.
Unless otherwise provided in a Pricing Supplement, the
Calculation Agent will be _____________.
"Calculation Date" means the date on which the Calculation
Agent is to calculate an interest rate for a Floating Rate Note,
which is the applicable date set forth below, unless otherwise
indicated in the applicable Pricing Supplement:
Prime Rate - Tenth day after the related Prime Rate
Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day.
CD Rate - Tenth day after the related CD Rate Interest
Determination Date or, if such day is not a Business Day,
the next succeeding Business Day.
CMT Rate - Tenth day after the related CMT Interest
Determination Date or, if such day is not a Business Day,
the next succeeding Business Day.
Commercial Paper Rate - Tenth day after the related
Commercial Paper Rate Interest Determination Date or, if
such day is not a Business Day, the next succeeding Business
Day.
LIBOR - The LIBOR Interest Determination Date.
Treasury Rate - Tenth day after the related Treasury
Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day.
Federal Funds Effective Rate - Tenth day after the
related Federal Funds Effective Interest Determination Date
or, if such day is not a Business Day, the next succeeding
Business Day.
"CD Rate" means the rate calculated as set forth under the
heading "Description of Notes - Floating Rate Notes - CD Rate
Notes," unless otherwise indicated in the applicable Pricing
Supplement.
"CMT Rate" means the rate calculated as set forth under the
heading "Description of Notes - Floating Rate Notes - CMT Rate
22
Notes," unless otherwise indicated in the applicable pricing
supplement.
"Commercial Paper Rate" means the rate calculated as set
forth under the heading "Description of Notes - Floating Rate
Notes - Commercial Paper Rate Notes," unless otherwise indicated
in the applicable Pricing Supplement.
"Composite Quotations" means the daily statistical release
entitled "Composite 3:30 P.M. Quotations for U.S. Government
Securities," or any successor publication, published by The
Federal Reserve Bank of New York.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service on the page designated in the applicable
Pricing Supplement and on the face of such CMT Rate Note (or any
other page as may replace such page on that service) for the
purpose of displaying Treasury Constant Maturities as reported in
H.15(519).
"Federal Funds Effective Rate" means the rate calculated as
set forth under the heading "Description of Notes - Floating Rate
Notes - Federal Funds Effective Rate Notes," unless otherwise
indicated in the applicable Pricing Supplement.
"Fixed Rate Note" shall have the meaning set forth under
the heading "Description of Notes - Interest."
"Floating Rate Notes" shall have the meaning set forth
under the heading "Description of Notes - Interest."
"H.15(519)" means the weekly statistical release entitled
"Statistical Release H.15(519), Selected Interest Rates," or any
successor publication, published by the Board of Governors of the
Federal Reserve System.
"Index Maturity" means, with respect to a Floating Rate
Note, the period to maturity of the instrument of obligation on
which the interest rate formula is based, as indicated in the
applicable Pricing Supplement.
"Initial Interest Rate" means the rate at which a Floating
Rate Note will bear interest from its date of issue (or that of a
predecessor Note) to the first Interest Reset Date, as indicated
in the applicable Pricing Supplement.
"Interest Determination Date" means the date as of which
the interest rate for a Floating Rate Note is to be calculated,
to be effective as of the following Interest Reset Date and
calculated on the related Calculation Date (except in the case of
LIBOR which is calculated on the related LIBOR Interest
Determination Date). See the third paragraph under the heading
"Description of Notes - Floating Rate Notes" for the Interest
Determination Dates for Floating Rate Notes. The Interest
Determination Dates for any Floating Rate Note will also be
indicated in the applicable Pricing Supplement.
23
"Interest Reset Date" means the date on which a Floating
Rate Note will begin to bear interest at the variable interest
rate determined as of any Interest Determination Date. See the
second paragraph under the heading "Description of Notes -
Floating Rate Notes" for the applicable Interest Reset Dates for
such Notes. The Interest Reset Dates with respect to any
Floating Rate Note will also be set forth in the applicable
Pricing Supplement and in such Note.
"LIBOR" means the rate calculated as set forth under the
heading "Description of Notes - Floating Rate Notes - LIBOR
Notes," unless otherwise indicated in the applicable Pricing
Supplement.
"Prime Rate" means the rate calculated as set forth under
the heading "Description of Notes - Floating Rate Notes - Prime
Rate Notes," unless otherwise indicated in the applicable Pricing
Supplement.
"Reuters Screen LIBO Page"PAGE" means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Reuters Screen"REUTERS SCREEN NYMF Page"PAGE" means the display designated as page "NYMF" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
NYMF page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
"Spread""SPREAD" means the number of basis points specified in the applicable
Pricing Supplementpricing supplement as being applicable to the interest rate for a particular Floating Rate Note.
"Spread Multiplier"floating rate
note.
"SPREAD MULTIPLIER" means the percentage specified in the applicable
Pricing Supplementpricing supplement as being applicable to the interest rate for a particular Floating Rate Note.
"Telerate Pagefloating rate
note.
"TELERATE PAGE 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers Association for the purpose of displaying London interbank offered rates
for U.S. dollar deposits).
"Treasury Rate" means the interest rate calculated as set
forth under the heading "Description18
================================================================================
Table of Contents
Page
----
WHERE YOU CAN FIND MORE INFORMATION ..................................... 2
THE COMPANY ............................................................. 2
PRICING SUPPLEMENT ...................................................... 3
USE OF PROCEEDS ......................................................... 3
RATIO OF EARNINGS TO FIXED CHARGES ...................................... 3
DESCRIPTION OF THE NOTES ................................................ 4
General ............................................................. 4
Redemptions ......................................................... 4
Repurchases ......................................................... 4
Remarketed Notes .................................................... 4
Book-Entry Notes - Registration, Transfer,
and Payment of Interest and Principal ............................. 4
Book-Entry Notes - Method of Repurchase ............................. 6
Certificate Notes - Registration, Transfer,
and Payment of Interest and Principal ............................. 6
Certificate Notes- Method of Repurchase ............................. 6
Interest Rate ....................................................... 6
General ...................................................... 6
Fixed Rate Notes ............................................. 7
Floating Rate Notes -.......................................... 7
General ...................................................... 7
Date of Interest Rate Change ................................. 7
When Interest Rate Is Determined ............................. 8
When Interest Is Paid ........................................ 8
Commercial Paper Rate Notes .................................. 9
Prime Rate Notes ............................................. 9
CD Rate Notes ................................................ 10
Federal Funds Effective Rate Notes ........................... 10
LIBOR Notes .................................................. 11
Treasury Rate Notes" unless otherwise indicated in the
applicable Pricing Supplement.
24
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS INCLUDING ANY PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER, OR AGENT. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION .......................................... 12
CMT Rate Notes ............................................... 12
Event of Default ................................................. 14
Modification of Indenture ........................................ 15
Consolidation, Merger or Sale .................................... 15
PLAN OF AN OFFER TO BUY ANY OF THESE SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
______________________________
TABLE OF CONTENTS
Page
Available Information...... 2
Incorporation of Certain
Documents by Reference..... 2
The Company................ 3
Use of Proceeds............ 3
Ratio of Earnings
to Fixed Charges........ 4
Description of Notes....... 4
Plan of Distribution
of Notes................20
Legal Opinions.............21
Experts....................21
Glossary...................22
$225,000,000
[Company logo goes here]DISTRIBUTION .................................................... 15
LEGAL OPINIONS .......................................................... 16
EXPERTS ................................................................. 16
GLOSSARY ................................................................ 17
===============================================================================
$200,000,000
[BGE LOGO GOES HERE]
Medium-Term Notes
Series DE
--------------------
PROSPECTUS
[Once the registration statement
is effective, the date of the
prospectus will be inserted here.]
--------------------
LEHMAN BROTHERS
GOLDMAN, SACHS & CO.
===============================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission Registration Fee.. $ 74,354Fee $60,607
Services of Independent Accountants.................. 40,000*Accountants 65,000*
Trustee Fees and Expenses............................Expenses 15,000*
Legal Fees and Expenses.............................. 30,000*Expenses 35,000*
Debt Securities Rating Fees.......................... 140,000*Fees 108,500*
Printing and Delivery Expenses.......................Expenses 15,000*
Miscellaneous Expenses............................... 15,646*
Total................................................Expenses 10,893*
-----------
Total $ 330,000*310,000*
______________
* Estimated
Item 15. Indemnification of Directors and Officers.
The following description of indemnification allowed under
Maryland statutory law is a summary rather than a complete
description. Reference is made to Section 2-418 of the
Corporations and Associations Article of the Maryland Annotated
Code, which is incorporated herein by reference, and the
following summary is qualified in its entirety by such reference.
By a Maryland statute, a Maryland corporation may indemnify
any director who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative ("Proceeding") by reason of the fact that he is a
present or former director of the corporation and any person who,
while a director of the corporation, is or was serving at the
request of the corporation as a director, officer, partner,
trustee, employee, or agent of another corporation, partnership,
joint venture, trust, other enterprise, or employee benefit plan
("Director"). Such indemnification may be against judgments,
penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with the Proceeding unless it is
proven that (a) the act or omission of the Director was material
to the matter giving rise to the Proceeding and (i) was committed
in bad faith, or (ii) was the result of active and deliberate
dishonesty; or (b) the Director actually received an improper
personal benefit in money, property, or services; or (c) in the
case of any criminal action or proceeding, the Director had
reasonable cause to believe his act or omission was unlawful.
However, the corporation may not indemnify any Director in
connection with a Proceeding by or in the right of the
corporation if the Director has been adjudged to be liable to the
corporation. A Director or officer who has been successful in
the defense of any Proceeding described above shall be
II-1
indemnified against reasonable expenses incurred in connection
II-1
with the Proceeding. The corporation may not indemnify a
Director in respect of any Proceeding charging improper personal
benefits to the Director in which the Director was adjudged to be
liable on the basis that personal benefit was improperly
received. Notwithstanding the above provisions, a court of
appropriate jurisdiction, upon application of the Director or
officer, may order indemnification if it determines that in
view of all the relevant circumstances, the Director or officer
is fairly and reasonably entitled to indemnification; however,
indemnification with respect to any Proceeding by or in the right
of the corporation or in which liability was adjudged on the
basis that personal benefit was improperly received shall be
limited to expenses. A corporation may advance reasonable
expenses to a Director under certain circumstances, including a
written undertaking by or on behalf of such Director to repay the
amount if it shall ultimately be determined that the standard of
conduct necessary for indemnification by the corporation has not
been met.
A corporation may indemnify and advance expenses to an
officer of the corporation to the same extent that it may
indemnify Directors under the statute.
The indemnification and advancement of expenses provided or
authorized by this statute may not be deemed exclusive of any
other rights, by indemnification or otherwise, to which a
Director or officer may be entitled under the charter, by-laws, a
resolution of shareholders or directors, an agreement or
otherwise.
A corporation may purchase and maintain insurance on behalf
of any person who is or was a Director or officer, whether or not
the corporation would have the power to indemnify a Director or
officer against liability under the provision of this section of
Maryland law. Further, a corporation may provide similar
protection, including a trust fund, letter of credit or surety
bond, not inconsistent with the statute.
Article V of the Company's Charter reads as follows:
"A director or officer of the corporation shall not be
personally liable to the corporation or its stockholders for
monetary damages except (i) to the extent that it is proved
that the person actually received an improper benefit or
profit in money, property, or services for the amount of the
benefit or profit in money, property or services actually
received or (ii) to the extent that a judgment or other
final adjudication adverse to the person is entered in a
proceeding based on a finding in the proceeding that the
person's action or failure to act was the result of active
and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. It is the intent of
this Article that the liability of directors and officers
II-2
shall be limited to the fullest extent permitted by the
II-2
Maryland General Corporation Law, as amended from time to
time.
Any repeal or modification of the foregoing paragraph by the
stockholders of the corporation shall not adversely affect
any right or protection of a director or officer of the
corporation existing at the time of such repeal or
modification."
Article IV of the Company's By-Laws reads as follows:
"Each person made or threatened to be made a party to
an action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that
such person is or was a director or officer of the Company,
or, at its request, is or was a director or officer of
another corporation, shall be indemnified by the Company (to
the extent indemnification is not otherwise provided by
insurance) against the liabilities, costs and expenses of
every kind actually and reasonably incurred by him as a
result of such action, suit or proceeding, or any threat
thereof or any appeal thereon, but in each case only if and
to the extent permissible under applicable common or
statutory law, state or federal. The foregoing indemnity
shall not be inclusive of other rights to which such person
may be entitled."
The Directors and officers of the Registrant are covered by
insurance indemnifying them against certain liabilities which
might be incurred by them in their capacities as such, including
certain liabilities arising under the Securities Act of 1933.
The premium for this insurance is paid by the Registrant.
Also, see indemnification provisions in the Form of Agency
Agreement and the Standard Purchase Provisions, both included in
Exhibit 1(a) to this Registration Statement.
Item 16. Exhibits.
Reference is made to the Exhibit Index filed as a part of
this Registration Statement.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
II-3
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement is on
Form S-3, Form S-8, or Form F-3 and the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or
furnished to the Securities and Exchange Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
II-4
Registration Statement shall be deemed to be a new Registration
II-4
Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Directors, officers
and controlling persons of the Registrant pursuant to the
provisions described under Item 15 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Baltimore Gas and Electric Company, the Registrant, certifies
that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Baltimore,
State of Maryland on the 25th3rd day of July, 1995.January, 1997.
BALTIMORE GAS AND ELECTRIC COMPANY
(Registrant)
By: /s/ C. W. Shivery
-----------------------------
C. W. Shivery, Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- --------------- ---------- ----------
Principal executive
officer and director:
*C. H. Poindexter Chairman of the July 25, 1995January 3, 1997
Board and Director
Principal financial and
accounting officer:
/s/ C. W. Shivery Vice President July 25, 1995January 3, 1997
- -------------------
C. W. Shivery
Directors:
* H. Furlong BaldwinBeverly B. Byron
* J. Owen Cole
* Dan A. Colussy
* Edward A. Crooke
* James R. Curtiss Directors July 25, 1995January 3, 1997
* Jerome W. Geckle
* Martin L. Grass
* Freeman A. Hrabowski III
* Nancy Lampton
* George V. McGowan
* George L. Russell, Jr.
* Michael D. Sullivan
*By: /s/ C. W. Shivery
-------------------------------
C. W. Shivery, Attorney-in-Fact
II-6
EXHIBIT INDEX
Exhibit
Number
1(a) - Form of Agency Agreement, including
Administrative Procedures; and Form of
Purchase Agreement, including Standard
Purchase Provisions.
1(b) - Form of Agreement to Maintain Agency.
1(c) - Form of Authentication Agency Agreement.
1(d) - Form of Interest Calculation Agency
Agreement.
1(e)* - Form of Letter of Representations (Designated
as Exhibit 1(e) to Form S-3 Registration No.
33-57704).
4(a)* - Indenture dated as of July 1, 1985 between
the Company and The Bank of New York
(successor to Mercantile-Safe Deposit and
Trust Company), Trustee (Designated as
Exhibit 4(a) in File No. 2-98443 Registration
Statement).
4(b)* - Supplemental Indenture dated as of October 1,
1987 between the Company and The Bank of New
York (successor to Mercantile-Safe Deposit
and Trust Company), Trustee (Designated as
Exhibit 4(b) in Form 8-K dated November 13,
1987, File No. 1-1910).
4(c)* - Supplemental Indenture dated as of January
26, 1993 between the Company and The Bank of
New York (successor to Mercantile-Safe
Deposit and Trust Company), Trustee
(Designated as Exhibit 4(c) in Form 8-K dated
January 29, 1993, File No. 1-1910).
4(d) - Form of Medium-Term Note, Series DE (Fixed
Rate).
4(e) - Form of Medium-Term Note, Series DE (Floating
Rate).
5 - Opinion of Susan Wolf, Esq., Associate
General Counsel of the Company.
1212* - Computation of Ratio of Earnings to Fixed
Charges.
Charges (Designated as Exhibit 12 in Form
10-Q for the quarterly period ended September
30, 1996, filed November 14, 1996, File No.
1-1910).
23(a) - Consent of Susan Wolf, Esq., Associate
General Counsel of the Company (included in
Exhibit 5).
23(b) - Consent of Coopers & Lybrand, Independent
Certified Public
Accountants.
24 - Power of Attorney.
25 - Statement of Eligibility and Qualification
under the Trust Indenture Act of 1939 (Form
T-1) of The Bank of New York (successor to
Mercantile-Safe Deposit and Trust Company),
Trustee.
99* - Corporations and Associations Article,
Section 2-418 of the Annotated Code of
Maryland (Designated as Exhibit 28(b) to the
Annual Report on Form 10-K for the year ended
December 31, 1987, File No. 1-1910).
__________________
* Incorporated by reference.