Registration No.333-No. 333-
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SECURITIES AND EXCHANGE COMMISSION
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Baltimore Gas and Electric Company
(Exact Name of Registrant as Specified in its Charter)
Maryland 52-0280210
(State of Incorporation) 52-0280210(I.R.S. Employer Identification No.)
BGE Capital Trust I
(Exact Name of Registrant as Specified in its Charter or Governing Document)
Delaware Applied for
(State of Organization) (I.R.S. Employer Identification No.)
David A. Brune, Vice President
39 W. Lexington Street, Baltimore, Maryland 21201
(410) 234-5511
(Address, including Zip Code, and Telephone Number, including Area Code
of Registrant'sRegistrants' Principal Executive Offices and Agent for Service)
Approximate date of commencement of proposed sale to the public: After the
effective date of this Registration Statement as 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 each Proposed Proposed
class of maximum maximum Amount of
securities Amount to offering aggregate registration
to be registered be registered price per unit offering price fee
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Medium-Term Notes, $200,000,000 100%* $200,000,000 $60,607
Series G
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* Inserted-------------------------------------------
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Offering Registration
Registered Registered per Unit(1) Price(1) Fee
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BGE Capital Trust I
Preferred Securities 10,000,000 shares $25 $250,000,000 $75,758
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Baltimore Gas and
Electric Company
_____% Junior
Subordinated
Debentures, Series A (2)
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Baltimore Gas and
Electric Company
Preferred Securities
Guarantee (2)
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(1) Estimated solely for the purpose of calculating the registration fee. Junior Subordinated
Debentures of Baltimore Gas and Electric Company may be issued and sold to BGE
Capital Trust I , in which event such Junior Subordinated Debentures may later
be distributed to the holders of the Preferred Securities upon a dissolution of
BGE Capital Trust I, and the distribution of the assets thereof.
(2) Includes the rights of the holders of Preferred Securities under the
Preferred Securities Guarantee and back-up undertakings, consisting of
obligations by Baltimore Gas and Electric Company as set forth in the Amended
and Restated Declaration of Trust of BGE Capital Trust I, the Indenture and
supplemental indentures thereto, in each case as further described in the
Registration Statement. No separate consideration will be received for the
Junior Subordinated Debentures or Preferred Securities Guarantee.
The RegistrantRegistrants hereby amendsamend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the RegistrantRegistrants
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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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS $200,000,000DATED ___________, 1998
PROSPECTUS [GRAPHIC OMITTED]
MEDIUM-TERM NOTES
SERIES G$250,000,000
BGE CAPITAL TRUST I
PREFERRED SECURITIES
Baltimore Gas and Electric Company
BGE Capital Trust I
Fully and Unconditionally Guaranteed, 39 W. Lexington Street
based on several obligations, by Baltimore, Maryland 21201
Baltimore Gas and Electric Company (410)234-5000
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TERMS OF SALE
The following terms may applytrust:
- - will sell preferred securities (representing undivided beneficial interests
in the trust) to the notes which we maypublic
- - will sell at one or more
times. The final terms for each notecommon securities to BGE
- - will be included in a pricing supplement.
We will receive between $199,750,000 and $198,500,000 ofuse the proceeds from these sales to buy a series of junior
subordinated debentures from BGE with terms that correspond to the salepreferred
securities
BGE:
- - will pay principal and interest on the junior subordinated debentures,
subject to payment on its more senior debt
- - may choose to distribute these debentures pro-rata to the preferred and
common securities holders if it terminates the trust
- - will fully and unconditionally guarantee the preferred securities based on:
- its obligations to make payments on the junior subordinated debentures;
- its obligations under the preferred securities guarantee (its payment
obligations are subject to payment on all of its general liabilities);
and
- its obligations under the declaration of trust
We urge you to read this prospectus and the prospectus supplement, which will
describe the specific terms of the notes, after payingpreferred securities, carefully before you
make your investment decision.
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Neither the agents commissions of between $250,000Securities and $1,500,000.
- - Mature 9 months to 30 years
- - Fixed or floating interest rate. The floating interest rate formula would be
based 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 option of BGE or holder
- - Not convertible, amortized or subject to a sinking fund
- - Interest paid on fixed rate notes on May 1 and November 1
- - Interest paid on floating rate notes monthly, quarterly, semi-annually, or
annually
- - Minimum denominations of $1,000, increased in multiples of $1,000
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The notes have not been approved by the SEC orExchange Commission nor any state securities
commission nor havehas approved or disapproved of these organizations determined thatsecurities or passed upon
the adequacy or accuracy of this prospectus is accurate or
complete.prospectus. Any representation to the
contrary is a criminal offense.
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LEHMAN BROTHERS GOLDMAN, SACHS & CO.
AGENTS
(Once the registration statement is effective, the date of the prospectus
will be inserted here.)
WHERE YOU CAN FIND
MORE INFORMATION
We fileBGE files annual, quarterly and specialcurrent reports, proxy statements and other
information with the SEC. You may read and copy any document we filethat BGE files at
the SEC's public reference rooms inroom at 450 Fifth Street, N.W. Washington, D.C., New York, New York and
Chicago, Illinois.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Ourroom. The SEC maintains an Internet site at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding issuers (including BGE) that file documents with the SEC
electronically. BGE's SEC filings aremay also available to the publicbe obtained from ourits web site at
htpp://www.bge.com or at the SEC's web site at
http://www.sec.gov.www.bge.com.
The SEC allows usBGE to "incorporate by reference" the information we fileit files with
them, which means that weBGE 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 later information that we fileBGE files
with the SEC will automatically update and supersede this information. We incorporateBGE
incorporates by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sellthe trust sells all of the notes.securities. This
prospectus is part of a registration statement weBGE filed with the SEC.
- - Annual Report on Form 10-K for the year ended December 31, 1996;1997; and
- - Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
- - Registration Statement on Form S-4 of Constellation Energy Corporation, as
amended, effective February 9, 1996 (Registration No. 33-64799). This filing
describes our proposed merger with Potomac Electric Power Company; and
- - Current Reports on Form 8-K dated February 26, 1997, March 7, 1997, April 7,
1997, April 17, 1997 and July 24, 1997.1998.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Shareholder Services
Baltimore Gas and Electric Company
39 W. Lexington Street
Baltimore, Maryland 21201
410-783-5920
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement. We haveBGE has not authorized anyone else to provide
you with different information. We are notNeither BGE nor the trust is making an offer of
these notessecurities 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 COMPANYBGE
BGE is a public utility that has served the central Maryland area for over 175
years. We produce, purchaseBGE produces, purchases and sellsells electricity and purchase, transportpurchases, transports
and sellsells natural gas. WeBGE also jointly ownowns and operateoperates two electric
generating plants and one hydroelectric plant in Pennsylvania.
WeBGE also have severalhas wholly owned subsidiaries that are engaged in several diversified
business activities, including,including:
- - energy marketing activities,
specifically power marketing, natural gas
brokering, energy services and district heating and cooling projects,
- - power generation projects,
outside our service territory,- - home products and commercial building systems,
- - investment activities, and
- - real estate,estate.
THE TRUST
BGE created a Delaware business trust pursuant to a Declaration of Trust
executed by BGE as depositor for the trust and three appointed trustees. BGE
will file an amended and restated Declaration of Trust (Declaration), in the
form filed as an exhibit to the Registration Statement, which will state the
terms and conditions for the trust to issue and sell its preferred and common
securities.
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The trust exists solely to:
- - senior living facilities,issue and sell preferred and common securities;
- - use the proceeds from the sale of the preferred and common securities to
purchase a series of BGE's junior subordinated debentures;
- - maintain its status as a grantor trust for federal income tax purposes; and
- - appliance salesengage in other activities that are necessary or incidental to these
purposes.
BGE will purchase all of the common securities of the trust. The common
securities will represent an aggregate liquidation amount equal to at least 3%
of the trust's total capitalization. The preferred securities will represent the
remaining 97% of the trust's total capitalization. The common securities will
have terms substantially identical to, and service, heatingwill rank equal in priority of
payment with, the preferred securities. However, if BGE defaults on the junior
subordinated debentures, cash distributions and air conditioning salesliquidation, redemption and
service,
and home improvement.
BGE and Potomac Electric Power Company (PEPCO) have agreed to merge to form
Constellation Energy Corporation once all conditionsother amounts on the common securities will be subordinate to the merger are satisfiedpreferred
securities in priority of payment.
BGE has appointed three trustees (collectively, trustees) to conduct the trust's
business and affairs:
- - The Bank of New York (Property Trustee)
- - The Bank of New York, Delaware (Delaware Trustee)
- - A BGE Officer (Administrative Trustee)
As holder of the common securities, BGE can replace or waived. Please see our most recent filingremove any of the
trustees. However, if an event of default occurs and is continuing under the
Securities Exchange ActDeclaration, the Property Trustee and the Delaware Trustee can only be replaced
and removed by the holders of 1934at least a majority in aggregate liquidation
amount of the preferred securities. Only BGE, as owner of the common securities,
can remove or replace the Administrative Trustee.
BGE pays all fees and expenses related to the trust and the offering of the
preferred securities and will pay all ongoing costs and expenses of the trust,
except the trust's obligations under the preferred and common securities.
The trust has no separate financial statements. The statements would not be
material to holders of the preferred securities because the trust has no
independent operations. It exists solely for the status of the proposed merger. PEPCO is a neighboring electric
utility serving Washington, D.C.reasons summarized above. The
preferred securities will be fully and major portions of Montgomery and Prince
George's Counties in Maryland. The reasons for the merger and other information
about it are discussed in more detail in the registration 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 terms for that offering. The pricing supplement may also add,
update or change information containedunconditionally guaranteed by BGE as
described later in this prospectus. It is important for
you to consider the information contained in this prospectus and the pricing
supplement in making your investment decision.
USE OF PROCEEDS
The trust will use the proceeds from the sale of the preferred and common
securities to purchase BGE's junior subordinated debentures. BGE will use the
net proceeds from the sale of the notes will be usedjunior subordinated debentures to the trust
for general corporate purposes relating to ourits utility business, including
repayment of commercial paper borrowings used to finance construction, other
capital expenditures and operations.operations and for the redemption of other securities.
If we doBGE does not use the net proceeds immediately, weit will temporarily invest
them in short-term, interest-bearing obligations. For current information on
ourBGE's commercial paper balances and average interest rate, see ourBGE's most recent
Form 10-K and 10-Q. See "WHERE YOU CAN FIND MORE INFORMATION."
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RATIO OF EARNINGS TO FIXED CHARGES AND OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED AND PREFERENCE STOCK DIVIDENDS
The Ratio of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred and Preference Stock Dividends for each of the periods indicated
is as follows:
Twelve Months
Ended March 31 Twelve Months Ended December 31
-------------- ------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ----- ---- ---- ---- ----
Ratio of Earnings
to Fixed Charges 2.81 2.78 3.10 3.21 3.14 3.00
Ratio of Earnings to Combined Fixed
Charges and Preferred and Preference
Stock Dividends 2.40 2.35 2.44 2.52 2.47 2.34
For current information on these ratios, please see BGE's most recent Form 10-K
and 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 Dec. 31,
ended ------------------------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
- -------------- ---- ---- ---- ---- ----
2.88 3.10 3.21 3.14 3.00 2.65
For current information on the Ratio of Earnings to Fixed Charges, please see
our most recent Form 10-K and 10-Q. See Where You Can Find More Information.
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DESCRIPTION OF THE NOTES
General
We will issueSECURITIES
This prospectus contains a summary of the notes under anpreferred securities, the junior
subordinated debentures and the preferred securities guarantee. These summaries
are not meant to be a complete description of each security; however, this
prospectus and the prospectus supplement contain the material terms and
conditions for each security. For more information please refer to (1) the
Declaration, (2) the indenture between usBGE and the Trustee, The Bank of New York, dated July 1, 1985 and supplemented on October 1, 1987 and January
26, 1993. This prospectus briefly outlines someas trustee
(Debenture Trustee), related to the issuance of the indenture provisions. If
you would like more information onjunior subordinated
debentures (Indenture), and (3) the guarantee of the preferred securities by BGE
(Preferred Securities Guarantee). Forms of these provisions, reviewdocuments are filed as exhibits
to the indentureRegistration Statement, which includes this prospectus. Capitalized terms
used in this prospectus that are not defined will have the meanings given them
in these documents.
BGE and its supplements that we filedaffiliates conduct banking transactions with The Bank of New York
who is a trustee under the Declaration, Indenture and Preferred Securities
Guarantee.
DESCRIPTION OF THE PREFERRED SECURITIES
General
The Declaration authorizes the Administrative Trustee to issue on behalf of the
trust one series of preferred securities which will have the terms described in
a prospectus supplement. The proceeds from the sale of the preferred and common
securities will be used by the trust to purchase a series of junior subordinated
debentures. The junior subordinated debentures issued by BGE will be held in
trust by the Property Trustee for the benefit of the holders of the preferred
and common securities.
Under the Preferred Securities Guarantee, BGE will agree to make payments of
distributions and payments on redemption or liquidation with respect to the
preferred securities, but only to the extent the trust holds funds available
therefor and has not made such payments. See "DESCRIPTION OF THE PREFERRED
SECURITIES GUARANTEE."
The assets of the trust available for distribution to the holders of its
preferred securities will be limited to payments from BGE under the junior
subordinated debentures. If BGE fails to make a payment on such junior
subordinated debentures, the trust will not have sufficient funds to make
related payments, including distributions, on the preferred securities.
The Preferred Securities Guarantee, when taken together with BGE's obligations
under the Junior Subordinated Debentures and the Indenture, and BGE's
obligations under the Declaration, including obligations to pay all costs,
expenses, debts and liabilities of the trust (other than with respect to the
preferred securities), will provide a full and unconditional guarantee of
amounts due on the preferred securities issued by the trust.
The Declaration will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (Trust Indenture Act). The Property Trustee will act as
indenture trustee for the preferred securities to be issued by the trust, in
order to comply with the SEC. See Where You Can Find More
Information on howprovisions of the Trust Indenture Act.
The preferred securities will have the terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as described in the Declaration or
made part of the Declaration by the Trust Indenture Act or the Delaware Business
Trust Act. The terms of the preferred securities will mirror the terms of the
junior subordinated debentures held by the trust.
The trust will redeem an amount of preferred securities equal to locate the indentureamount of
any junior subordinated debentures redeemed.
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The prospectus supplement will describe specific terms relating to the preferred
securities, including:
- - the name of the preferred securities;
- - the dollar amount and number of shares issued;
- - the annual distribution rate(s) (or method of determining such rate(s)),
the payment date(s) and the supplements. Yourecord dates used to determine the holders who
are to receive distributions;
- - the date from which distributions shall be cumulative;
- - the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions for which the preferred securities
shall be purchased or redeemed, in whole or in part;
- - the terms and conditions, if any, upon which the junior subordinated
debentures may also
reviewbe distributed to holders of preferred securities;
- - any securities exchange on which the preferred securities shall be listed;
- - whether the preferred securities are to be issued in book-entry form and
represented by one or more global certificates, and if so, the depository
for such global certificates and the specific terms of the depository
arrangements; and
- - any other relevant rights, preferences, privileges, limitations or
restrictions of the preferred securities.
The prospectus supplement will describe certain United States federal income tax
considerations applicable to any offering of preferred securities.
Liquidation Distribution Upon Dissolution
The Declaration states that the trust shall be dissolved on the earliest to
occur of:
- - the expiration of the term of the trust;
- - the bankruptcy, dissolution or liquidation of BGE or an acceleration of
the maturity of the corresponding series of junior subordinated debentures;
- - the distribution of the junior subordinated debentures directly to the
holders of the preferred and common securities. For this distribution, BGE
must give at least 30 days written notice to the trustees;
- - the redemption of all of the common and preferred securities; and
- - a court order for the dissolution of the trust is entered.
If dissolution of the trust occurs as described in the last four bullets above ,
the trustees shall liquidate the trust as quickly as possible. After paying all
amounts owed to creditors, the trustees will distribute to the holders of the
preferred and common securities either:
1) a like amount of junior subordinated debentures; or
2) if the distribution of the junior subordinated debentures is determined by
the Property Trustee not to be practical, cash equal to the aggregate
liquidation amount per preferred and common security specified in an
accompanying prospectus supplement, plus accumulated and unpaid
distributions thereon to the date of payment .
If the trust cannot pay the full amount due on its preferred and common
securities because insufficient assets are available for payment, then the
amounts payable by the
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trust on its preferred and common securities shall be paid pro-rata, except
that if an event of default under the Indenture relating to the junior
subordinated debentures has occurred, the total amounts due on the preferred
securities shall be paid before any distribution on the common securities.
Event of Default
Within 90 days after an event of default under the Indenture relating to the
junior subordinated debentures (a Declaration Event of Default) known to the
Property Trustee, the Property Trustee will notify the holders of the preferred
and common securities, the Administrative Trustee and BGE, unless the event of
default has been cured or waived.
BGE and the Administrative Trustee must file annually with the Property Trustee
a certificate stating whether or not they are in compliance with all the
applicable conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights under the Declaration or the
Indenture to the fullest extent permitted by law and subject to the terms of the
Declaration and the Indenture, any holder of the preferred securities may sue
BGE, or seek other remedies, to enforce the Property Trustee's rights under the
Declaration or the Indenture with respect to junior subordinated debentures
having a principal amount equal to the liquidation amount of the preferred
securities of such holder without first instituting a legal proceeding against
the Property Trustee or any other person.
If any action under the Indenture is entitled to be taken by the holders of at
least a specified percentage of the principal amount of the junior subordinated
debentures, holders of the same percentage of the liquidation amount of
preferred securities may take such action if it is not taken by the Property
Trustee. However, if BGE fails to pay principal, premium or interest on the
junior subordinated debentures, then a holder of preferred securities may sue
BGE, or seek other remedies, to collect its pro-rata share of payments owed.
Removal of Trustees
Unless a Declaration Event of Default has occurred and is continuing, any
trustee may be removed and replaced at any time by the holder of the common
securities. If a Declaration Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed and replaced only
by the holders of at least a majority in aggregate liquidation amount of the
outstanding preferred securities. Only the holder of the common securities has
the right to remove or replace the Administrative Trustee. No resignation or
removal of any of the trustees and no appointment of a successor trustee shall
be effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the Declaration.
Co-Trustees and Separate Property Trustee
Unless a Declaration Event of Default has occurred and is continuing, the holder
of the common securities and the Administrative Trustee shall have the power:
- - to appoint one or more persons approved by the Property Trustee either to
act as co-trustee, jointly with the Property Trustee, of all or any part of
the trust property, or to act as separate trustee of any trust property, in
either case with the powers as may be provided in the instrument of
appointment; and
- - to vest in such person(s) any property, title, right or power deemed
necessary or desirable, subject to the provisions of the Declaration.
If a Declaration Event of Default has occurred and is continuing, only the
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Property Trustee may appoint a co-trustee or separate property trustee.
Merger or Consolidation of Trustees
If any of the trustees merge, convert, or consolidate with or into another
entity or sells its trust operations to another entity, the new entity shall be
the successor of such trustee under the Declaration, provided such corporation
or other entity shall be qualified and eligible to be a trustee.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The trust may not merge with or into, consolidate, amalgamate, or be replaced
by, or transfer or lease all or substantially all of its properties and assets
to any other entity (Merger Event), except as described below. The trust may, at
BGE's request, with the consent of the Administrative Trustee and without the
consent of the holders of its preferred securities, merge with or into,
consolidate, amalgamate or be replaced by another trust provided that:
- - the successor entity either (1) assumes all of the obligations of the
trust relating to the preferred securities or (2) substitutes for the
preferred securities other securities substantially similar to such
preferred securities (successor securities) so long as the successor
securities rank the same as the preferred securities for distributions and
payments upon redemption and liquidation;
- - BGE appoints a trustee of such successor entity who has the same powers
and duties as the Property Trustee with respect to the junior subordinated
debentures;
- - the successor securities are listed on the same national securities exchange
that the preferred securities are listed;
- - the Merger Event does not cause the preferred securities or successor
securities to be downgraded by any national rating agency;
- - the Merger Event does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities or successor
securities in any material way;
- - the successor entity has a purpose substantially similar to that of the
trust;
- - prior to the Merger Event, BGE has received an opinion of counsel stating
that (1) such Merger Event does not adversely affect the rights of the
holders of the preferred securities or any successor securities in any
material way, and (2) following the Merger Event, neither the trust nor the
successor entity will be required to register as an investment company
under the Investment Company Act of 1940, as amended (Investment Company
Act); and
- - BGE owns all of the common securities of the successor entity and
guarantees its obligations under the successor securities in the same
manner as in the Preferred Securities Guarantee and Declaration.
The trust and any successor entity must always be classified as a grantor trust
for federal tax purposes unless all of the holders of the preferred securities
approve otherwise.
Voting Rights; Amendment of Trust Agreement
The holders of the preferred securities have no voting rights except as
discussed under "DESCRIPTION OF THE PREFERRED SECURITIES - Mergers,
Consolidations, Amalgamations or Replacements of the Trust" and "DESCRIPTION OF
THE PREFERRED SECURITIES GUARANTEE -Amendments and Assignment", and as otherwise
required by law and the Declaration.
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BGE and the trustees may amend the Declaration without the consent of the
holders of the preferred securities:
- - to fix any ambiguity, defect or inconsistency; or
- - to make any other change that does not adversely affect in any material
respect the interests of any holder of the preferred securities.
BGE and the trustees may amend the Declaration for any other reason as long as
the holders of at least a majority in aggregate liquidation amount of the
preferred securities agree, except to:
- - change the amount, timing or currency or otherwise adversely affect the
method of payment of any distribution or liquidation amount on the
preferred or common securities;
- - restrict the right of a preferred security holder to institute suit for
enforcement of any distribution or liquidation amount on the preferred or
common securities;
- - change the purpose of the trust;
- - authorize or issue any additional beneficial interests in the trust;
- - change the redemption provisions of the common or preferred securities of the
trust;
- - change the conditions required for BGE to elect to dissolve the trust and
distribute the junior subordinated debentures to the holders of the
preferred or common securities; or
- - affect the limited liability of any holder of the preferred securities.
The changes described above require the approval of each holder of the preferred
securities affected.
In addition, each amendment requires an opinion of counsel stating that it will
not affect the trust's status as a grantor trust for federal income tax purposes
or its exemption from regulation as an investment company under the Investment
Company Act.
The trustees shall not:
- - direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee or executing any trust or power
conferred on the Debenture Trustee with respect to the junior subordinated
debentures held by the trust;
- - waive any past default under Section 513 of the Indenture;
- - cancel an acceleration of the principal of the junior subordinated
debentures; or
- - agree to any change in the Indenture, where its approval is required,
without obtaining the prior approval of the holders of at least a majority
in the aggregate liquidation amount of all outstanding preferred
securities. However, if the Indenture requires the consent of each holder
of junior subordinated debentures, then the Property Trustee must get
approval of all holders of preferred securities.
The trustees cannot change anything previously approved by the preferred
securities holders without getting the holders to approve the change. The
Property Trustee shall notify all preferred securities holders of any notice
received from the Debenture Trustee as a result of the trust being the holder of
the junior subordinated debentures.
In addition, prior to taking any of the foregoing actions, the trustees must
obtain an opinion of counsel stating that the trust will continue to be
classified as a grantor trust for federal income tax purposes.
9
As described in the Declaration, the Property Trustee may hold a meeting to have
the preferred securities holders vote on a change or have them approve the
change by written consent.
If a vote of preferred securities holders is taken or a consent is obtained, any
preferred securities that are owned by BGE, the trustees or any affiliate of any
of them will, for purposes of the vote or consent, be treated as if they were
not outstanding.
Information Concerning the Property Trustee
For matters relating to complying with the Trust Indenture Act, the Property
Trustee will have all of the duties and responsibilities as an indenture trustee
under the Trust Indenture Act. The Property Trustee, other than during the
occurrence and continuance of a Declaration Event of Default, undertakes to
perform only such duties as are specifically set forth in the Declaration and,
upon a Declaration Event of Default, must use the same degree of care and skill
in the exercise thereof as a prudent person would exercise or use in the conduct
of his or her own affairs. Subject to this provision, the Property Trustee is
under no obligation to exercise any of the powers given it by the Declaration at
the Trustee's offices at 101 Barclay Street, New York,
New York.request of any holder of preferred securities unless it is offered
reasonable security or indemnity against the costs, expenses and liabilities
that it might incur.
If no Declaration Event of Default has occurred and is continuing, and the
Property Trustee is required to decide between alternative courses of action,
construe ambiguous provisions in the Declaration or is unsure of the application
of any provisions of the Declaration, and the matter is not one on which holders
of preferred securities are entitled under the Declaration to vote, then the
Property Trustee shall take such action as is directed by BGE and, if not so
directed, may take such action as it deems advisable and in the best interests
of the holders of the common and preferred securities of the trust and will have
no liability except for its own negligent action, negligent failure to act or
willful misconduct.
Miscellaneous
The indentureAdministrative Trustee is authorized and directed to conduct the affairs of
and to operate the trust in such a way that
- - it will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or to be taxed as a corporation
or partnership for federal income tax purposes;
- - it will be classified as a grantor trust for federal income tax purposes; and
- - the junior subordinated debentures held by it will be treated as indebtedness
of BGE for federal income tax purposes.
In this connection, BGE and the Administrative Trustee are authorized to take
any action, not inconsistent with applicable law, the certificate of trust or
the Declaration, that BGE and the Administrative Trustee determine in their
discretion to be necessary or desirable for such purposes.
Holders of the preferred securities have no preemptive or similar rights. The
trust may not borrow money, issue debt, execute mortgages or pledge any of its
assets.
Except as otherwise provided in the Declaration, any action requiring the
consent or vote of the trustees shall be approved by the Administrative Trustee.
Governing Law
The Declaration will be governed by and construed in accordance with the laws of
the State of Delaware.
10
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
General
BGE plans to sell one series of junior subordinated debentures pursuant to this
prospectus.
Below is a description of certain general terms of the junior subordinated
debentures. The particular terms of the junior subordinated debentures will be
described in a prospectus supplement.
BGE will issue the junior subordinated debentures under the Indenture. The
Indenture will be qualified under the Trust Indenture Act. A form of the
Indenture is filed as an exhibit to the registration statement relating this
prospectus.
The junior subordinated debentures will be unsecured and will be subordinate and
junior in priority of payment to certain of BGE's other indebtedness which is
described under "DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES -
Subordination." The Indenture does not limit the amount of notes that may be issued. Each series
of notes may differ as to their terms. For current information on our debt
outstanding see our most recent Form 10-K and 10-Q. See Where You Can Find More
Information.
The notes are unsecured and will rank equally with all our unsecured
indebtedness. The notes will be denominated in U.S. dollars and we will pay
principal and interest in U.S. dollars. The notes will not be subject to any
conversion, amortization, or sinking fund. It is anticipated that the notes will
be "book-entry," represented by a permanent global note registered in the name
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 noteholders.
In the discussion that follows, whenever we talk about paying principal on the
notes, we mean at maturity, redemption or repurchase. 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 in the applicable
pricing supplement and the note.
Redemptions
We may redeem notes at our option. Notes may be redeemable in whole or in part
in increments of $1,000 upon no more than 60, and 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 right to cause us to repurchase the notes. We will
repurchase the notes in whole or in part in increments of $1,000. The method for
repurchases differs for book-entry and certificate notes, and is discussed on
page 6.
Remarketed Notes
Wejunior subordinated
debentures which BGE may issue, notes with remarketing features. The applicable pricingnor does it limit BGE from issuing any other
secured or unsecured debt. BGE may issue junior subordinated debentures under
the Indenture, from time to time, in one or more series.
A prospectus supplement will describe the following terms forrelating to the notes including: interest rate, remarketing
provisions, our right to redeem notes,junior
subordinated debentures:
- - the holders' right to tender notes, andtitle;
- - any other provisions.
Book-Entry Noteslimit on the amount that may be issued;
- Registration, Transfer, and Payment of Interest and Principal
Book-entry notes of a series- whether or not the junior subordinated debentures will be issued in global
form, the form of a global note thatterms and who the depository will be;
- - the maturity date(s);
- - the annual interest rate(s) (which may be fixed or variable) or the method
for determining the rate(s) and the date(s) interest will begin to accrue,
the date(s) interest will be deposited with The Depository Trust Company, New York, New York ("DTC").
This means that we will not issue certificatespayable and the Regular Record Dates for
Interest Payment Dates or the method for determining such date(s);
- - the place(s) where payments shall be payable;
- - BGE's right, if any, to each holder. One global notedefer payment of interest and the maximum length of
any such deferral period;
- - the date, if any, after which, and the price(s) at which, the junior
subordinated debentures may, pursuant to any optional redemption
provisions, be redeemed at BGE's option and other related terms and
provisions;
- - the date(s), if any, on which, and the price(s) at which BGE is obligated,
pursuant to any mandatory sinking fund provisions or otherwise, to redeem,
or at the Holder's option to purchase, the junior subordinated debentures
and other related terms and provisions;
- - the denominations in which the junior subordinated debentures will be
issued, to DTC who will keep a computerized recordif other than denominations of its participants
(for example, your broker) whose clients have purchased$1,000 and any integral multiple
thereof;
- - additional events of default, if any, other than those described in 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 note
4
may not be transferred; 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 global
notes will be made only through, records maintained by DTC and its participants.
DTC has provided us the following information: 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 United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered underIndenture;
- - whether 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 transfersrelating to defeasance 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 global notes.
It is DTC's current practice, upon receipt of 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, willcovenant defeasance shall
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 paying agent must receive notice by 5:00 p.m. on the last day
for giving notice. Procedures for the owners of 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 participant
(with signatures guaranteed) must sign it.
Certificate Notes-Registration, Transfer, and Payment of Interest and Principal
If we issue certificate notes, they will be registered in the name of the
noteholder. The notes may be transferred or exchanged, pursuant to
administrative procedures in the Indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent.
Holders of over $5 million in principal amount of notes can request that payment
of principal and interest be wired to them by contacting the paying agent at the
address 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:applicable;
- - the note, withcurrency in which the section entitled "Option to Elect Repayment"junior subordinated debentures shall be
denominated, and in which payments of principal of, and any premium and
interest on, the reverse
of the note completed; orsuch junior subordinated debentures will be payable, if other
than U.S. dollars;
11
- - 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 companyadditional covenants, if any, other than those set forth in the United States which states the following:Indenture;
- - the nameidentity of the holder;Registrar or any Paying Agent, if other than the Trustee;
- - the principal amount of the note and the amountany exceptions to be repurchased;
- - the certificate numberprovisions relating to legal holidays or the maturity and a descriptiondefinition of
the terms of the
note;
- - a statement that you wish to sell all or a portion of your note;"Business Day;" and
- - a guaranty that the noteany other terms (which terms shall not be inconsistent with the section entitled "OptionIndenture).
Consolidation, Merger or Sale
The Indenture provides that BGE may not consolidate or merge with or into any
other corporation (whether or not BGE is the surviving corporation), or sell,
assign, transfer or lease all or substantially all of its properties and assets
as an entirety or substantially as an entirety to Elect Repayment"
onany entity or group of
affiliated entities, in one transaction or a series of related transactions,
unless:
- - BGE shall be the reverse ofcontinuing entity, or the note completed will be received by the paying agent
within 5 business days.
The note and form must be received by the paying agententity (if other than BGE)
formed by such 5th business day.
Your noticeconsolidation or with which or into which BGE is merged or
the entities (or group of repurchase is irrevocable.
If you sell a portionaffiliated entities) to which all or
substantially all of a note, the old note will be canceledBGE's properties and a new note
for the remaining principal amount will be issued to you.
Interest Rate
General
We have provided a Glossary at the end of this prospectus to define the
capitalized words used in discussing the interest rates payable on the notes.
The interest rate on the notes will either be fixedassets are sold, assigned,
transferred or floating. The interest
paid will include interest accrued to, but excluding, the date of maturity,
6
redemption or repurchase. Interest is generally payable to the person in whose
name the note is registered at the close of business on the record date before
each interest payment date. Interest payable at maturity, redemption, or
repurchase, however, will be payable to the person to whom principal is payable.
The first interest payment on any note originally issued between a record date
and interest payment date or on an interest payment date will be made on the
interest payment date after the next record date. Interest payments, other than
those payable at maturity, redemption or repurchase will be paid, at our option,
by check or wire transfer.
Fixed Rate Notes
Each pricing supplement will designate the fixed rate of interest payable on a
note. Interest will be paid May 1 and November 1, and upon maturity, redemption
or repurchase. If any payment date falls on a day that is not a Business Day,
payment will be made on the next Business Day and no additional interest will be
paid. The record dates for such notes will be April 15 (for interest to be paid
on May 1) and October 15 (for interest to be paid on November 1). Interest
payments will be the amount of interest accrued to, but excluding, each May 1
and November 1. Interest will be computed using a 360-day year of twelve 30-day
months.
Floating Rate Notes
General
Each floating rate note will have an interest rate formula. The formula may be
based on:
- - the commercial paper rate;
- - the prime rate;
- - the CD rate;
- - the federal funds effective rate;
- - the LIBOR;
- - the Treasury rate;
- - the CMT rate; or
- - another interest rate index.
The applicable pricing supplement will also indicate the Spread and/or Spread
Multiplier, if any. In addition, any floating rate note may have a maximum or
minimum interest rate limitation.
Upon request, the Calculation Agent will provide the current interest rate and,
if different, the interest rate which will become effective on the next Interest
Reset Date.
Date of Interest Rate Change
The interest rate on each floating rate note may be reset daily, weekly,
monthly, quarterly, semi-annually, or annually. The Interest Reset Date will be:
- - for notes which reset daily, each Business Day;
- - for notes (other than Treasury rate notes) which reset weekly, the Wednesday
of each week;
- - for Treasury rate notes which reset weekly, the Tuesday of each week;
- - for notes which reset monthly, the third Wednesday of each month;
- - for notes which reset quarterly, the third Wednesday of March, June, September
and December;
- - for notes which reset semi-annually, the third Wednesday of the two months of
each year indicated in the applicable pricing supplement; and
- - for notes which reset annually, the third Wednesday of the month of each
year indicated in the applicable pricing supplement.
The initial interest rate or interest rate formula on each note effective until
the first Interest Reset Date will be indicated in the applicable pricing
supplement. Thereafter, the interest rate will be the rate determined on the
next Interest Determination Date, as explained below. Each time a new interest
rate is determined, it will become effective on the subsequent Interest Reset
Date. If
7
any Interest Reset Date is not a Business Day, then the Interest Reset
Date will be postponed to the next Business Day. However, in the case of a LIBOR
note, if the next Business Day is in the next calendar month, the Interest Reset
Date will be the immediately preceding Business Day.
When Interest Rate Is Determined
The Interest Determination Date for all notes (except Treasury rate notes) is
the second Business Day before the Interest Reset Date.
The Interest Determination Date for Treasury rate notes will be the day of the
week in which the 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 dayleased is a legal holiday, in which case the auction is
usually held on Tuesday. However, the auction may be held on the preceding
Friday. If an auction is held on the preceding Friday, that day will be the
Interest Determination Date pertaining to the Interest Reset Date occurring in
the next week. If an auction date falls on any Interest Reset Date then the
Interest Reset Date will instead be the first Business Day immediately following
the auction date.
When Interest Is Paid
Interest is paid as follows:
- - for notes which reset daily or weekly, on the third Wednesday of March, June,
September and December;
- - for notes which reset monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December (as indicated in
the applicable pricing supplement);
- - for notes which reset quarterly, on the third Wednesday of March, June,
September, and December;
- - for notes which reset semi-annually, on the third Wednesday of the two
months specified in the applicable pricing supplement;
- - for notes which reset annually, on the third Wednesday of the month specified
in the applicable pricing supplement; and
- - at maturity, redemption or repurchase.
If interest is payable on a day which is not a Business Day, payment will be
postponed to the next Business Day. However, for LIBOR notes, if the next
Business Day is in the next calendar month, interest will be paid on the
preceding Business Day.
The record date will be 15 calendar days prior to each day interest is paid,
whether or not such day is a Business Day.
The interest payable will be the amount of interest accrued to, but excluding,
the interest payment date. However, for notes on which the interest resets daily
or weekly, the interest payable will include interest accrued to and including
the record date prior to the 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 principal
amount of a note by an accrued interest factor. The accrued interest factor is
computed by adding the interest factor calculated for each day in the 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) is
computed by dividing the interest rate (expressed as a decimal rounded upwards
if necessary) applicable to such date by 360, unless the notes are Treasury rate
notes or CMT rate notes in which case it will be
8
divided by the actual number of days in the year.
All percentages resulting from any calculation of floating 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%corporation (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 will be rounded to the nearest cent
(with one-half cent being rounded upwards).
Commercial Paper Rate Notes
Each commercial paper rate note will bear interest at the rate (calculated with
reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier,
if any) specified on the commercial paper rate note and in the applicable
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 supplement as published in H.15(519) under the heading
"Commercial Paper."
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 Commercial Paper Rate will be the Money Market Yield
of the rate on the Commercial Paper Interest Determination Date for commercial
paper having the Index Maturity specified in the applicable pricing supplement
as published in Composite Quotations under the heading "Commercial Paper."
(b) If the rate is not published or in Composite Quotations by 3:00 P.M. on the
Calculation Date, the Commercial Paper Rate for that Commercial Paper Interest
Determination Date will then be calculated by the Calculation Agent in the
following manner.
The Commercial Paper Rate will be calculated as the Money Market Yield of the
average for the offered rates, as of 11:00 A.M., on that date, of three leading
dealers of commercial paper in New York selected for commercial paper having the
applicable Index Maturity placed for an industrial issuer whose bond rating is
"AA," or the equivalent, from a nationally recognized rating agency.
(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.
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
necessary, to the next higher one-
9
hundred thousandth of a percentage point) of the rates of interest publicly
announced by each bank that appear on the Reuters Screen USPRIMEONE 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
USPRIMEONE 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 companiesconstitute corporations)
organized and doing business under the laws of the United States or any State thereof, having total equity capitalor the District
of at least
$500 millionColumbia and being subjectexpressly assumes, by an indenture supplemental to supervisionthe
Indenture, all of BGE's obligations under the junior subordinated
debentures and the Indenture executed and delivered to the Debenture
Trustee in form satisfactory to the Debenture Trustee;
- - immediately before and after the transaction no event of default, and no
default, under the Indenture shall have occurred and be continuing;
- - BGE shall have delivered to the Debenture Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
examination by a Federal or
State authority,transfer and such supplemental indenture complies with the Indenture and
such other conditions as selected bymay be established in connection with the Calculation Agent.
(d) Finally, if the banks are not quoting as mentioned above, the rateissuance
of
interest in effect for the applicable period will bejunior subordinated debentures.
Events of Default
The following are events of default under 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,Indenture with respect to any
CD Rate Interest Determination Date, the
rate on that dateseries of junior subordinated debentures issued:
- - failure to pay interest when due and such failure continues 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 Rate30 days and
the Spread
and/time for payment has not been extended or Spread Multiplier, if any) specified on the federal funds effective rate
note and in the applicable pricing supplement.
10
"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 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
11
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 CMT Rate and the Spread or Spread Multiplier, if any) specified on such CMT
12
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 Interest Determination Date will be
13
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:deferred;
- - failure to pay the principal of (or premium, if any, on) any note of a seriesany) when due, and payable;excluding
BGE's failure to deposit money for a redemption at BGE's option;
- - failure to pay for 30 days any interest on any note of any series;
- - failure toobserve or perform any other requirementscovenant, warranty or agreement
contained in the notes,junior subordinated debentures or in the indentureIndenture (other
than a covenant, agreement or warranty included in regard tothe Indenture solely for
the benefit of another series of junior subordinated debentures), and such
notes,failure continues for a period of 60 days after notice;BGE receives notice from
the Debenture Trustee or holders of at least 25% in aggregate principal
amount of the outstanding junior subordinated debentures of that series;
- - certain events of insolvency.
An Eventbankruptcy, insolvency or reorganization; and
- - any other event of Default fordefault with respect to a particularspecific series of notes does not necessarily meanjunior
subordinated debentures.
The Indenture provides that the Debenture Trustee shall, within 30 days after
the occurrence of any default or event of default
12
relating to any series, give the holders of junior subordinated debentures of
that series notice of all uncured defaults or events of default known to it
(the term "default" includes any event which after notice or passage of time
or both would be an Eventevent of Default has occurred fordefault). However, except in the case of an event
of default or a default in payment of the principal, premium or interest on any
otherjunior subordinated debentures of any series, or payment of notes issued underany sinking fund
installment, the indenture.Debenture Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or directors
or Responsible Officers of the Debenture Trustee in good faith determine that
the withholding of notice is in the interest of the holders of junior
subordinated debentures of the affected series.
If an Eventevent of Default shall have occurreddefault with respect to junior subordinated debentures of any
series (other than due to events of bankruptcy, insolvency or reorganization)
occurs and beis continuing, the Debenture Trustee or the holders of at least 25%
of thein aggregate principal amount of the notesoutstanding junior subordinated debentures
of that series, by notice in writing to BGE (and to the Debenture Trustee if
notice is given by such holders), may declare the unpaid principal of and
accrued interest, if any, to the date of acceleration on all the outstanding
junior subordinated debentures of that series to be due and payable immediately
and, upon any such declaration, the junior subordinated debentures of that
series shall become immediately due and payable.
If an event of default occurs due to bankruptcy, insolvency or reorganization,
all unpaid principal of and accrued interest on the outstanding junior
subordinated debentures of all series will become immediately due and payable
without any declaration or other act on the part of the series affected by an EventDebenture Trustee or any
holder of Default may require us to repay the entireany junior subordinated debenture.
The holders of a majority in principal amount of the notesoutstanding junior
subordinated debentures of an affected series (or if such series immediately. Subject to certain
conditions, this requirement may be rescindeddebentures are held by
the trust, the holders of at least a majority in aggregate principalliquidation amount of
the notestrust's preferred securities) may waive any default or event of default with
respect to such series and its consequences, except:
1) defaults or events of default regarding payment of principal, premium or
interest; or
2) provisions of the series.
The Trustee must within 90 days after a default occurs, notifyIndenture that cannot be modified without the consent of
all the holders of the notesaffected series.
Any such waiver shall cure such default or event of default.
If the junior subordinated debentures of any series are held by the trust, each
holder of the seriespreferred securities of the default if we have not remedied it (default is
definedtrust may sue BGE, or seek other
remedies, to includeforce payment to the events specified above withoutholder of a principal amount of junior
subordinated debentures equal to the grace periods or
notice). The Trustee may withhold notice toaggregate liquidation amount of the
preferred securities held by the holder.
All 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 interestpreferred securities of the holders. We are requiredtrust must consent to file an annual certificate with the Trustee, signed by an officer, about any
default by us under any provisions of the indenture.supplemental indenture that would adversely affect their interests.
Subject to the provisionsterms of the indenture relating to its duties in caseIndenture, if an event of default shall occur and be
continuing, the Debenture Trustee shallwill be under no obligation to exercise any of
its rights or powers under the indentureIndenture at the request order or direction of any of
the holders, unless such holders offerhave offered the Debenture Trustee reasonable
indemnity. Subject to the
provisions for indemnification, theThe holders of a majority in principal amount of the notesoutstanding
junior subordinated debentures of any series maywill have the right to direct the
time, method and place of conducting any proceedingsproceeding for any remedy available to
the Debenture Trustee, or exercising any trust or power conferred on the
Debenture Trustee, with respect to the junior subordinated debentures of that
series, provided that:
13
- - it is not in conflict with any law or the Indenture;
- - the Debenture Trustee may take any other action deemed proper by it which is
not inconsistent with such notes.
14
direction; and
- - subject to its duties under the Trust Indenture Act, the Debenture Trustee
need not take any action that might involve the Debenture Trustee in
personal liability or might be unduly prejudicial to the holders not
involved in the proceeding.
No holder of the junior subordinated debentures of any series will have any
right to institute a proceeding under the Indenture or to appoint a receiver or
trustee, or to seek other remedies unless:
- - the holder has given to the Debenture Trustee written notice of a continuing
event of default with respect to that series;
- - the holders of at least 25% in aggregate principal amount of the outstanding
junior subordinated debentures of that series have made written request, and
the holder(s) have offered reasonable indemnity to the Debenture Trustee to
institute such proceedings as trustee; and
- - the Debenture Trustee has failed to institute such proceeding, and has not
received from the holders of a majority in aggregate principal amount of
the outstanding junior subordinated debentures of that series other
conflicting directions within 60 days after such notice, request and offer.
These limitations do not apply to a suit instituted by a holder of a junior
subordinated debenture if BGE defaults in the payment of the principal, premium
or interest on the junior subordinated debenture.
The Indenture requires that BGE periodically file statements with the Debenture
Trustee regarding its compliance with certain of the covenants in the Indenture.
BGE must report any event of default or default with respect to any junior
subordinated debentures that it knows of.
Modification of Subordinated Indenture; Waiver
BGE and the Debenture Trustee may change the Indenture Underwithout the indenture, ourconsent of
any holders with respect to certain matters, including:
- - to fix any ambiguity, defect or inconsistency or to change any provision
which may be inconsistent with any other provision of the Indenture; and
- - to change anything that does not materially adversely affect the interests
of any holder of junior subordinated debentures of any series.
In addition, under the Indenture, BGE's rights and obligations and the rights of
the holders of any notesthe junior subordinated debentures may be changed. Any change requireschanged by BGE and the
Debenture Trustee with the written consent of the holders of not
less than 66 2/3%at least a majority
in aggregate principal amount of the outstanding notesjunior subordinated debentures
of alleach series that is affected. However, the following changes may not be made
without the consent of each holder of any outstanding junior subordinated
debentures affected:
- - change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any such junior subordinated debentures;
- - reduce the principal amount, or the rate of interest, or any premium payable
upon the redemption of any such junior subordinated debentures;
14
- - change the Place of Payment, or currency, for payment of principal of (or
premium, if any) or interest;
- - impair the right to be affected, voting as one class. However, no changesinstitute suit for the enforcement of any payment;
- - change any of the provisions discussed above or provisions relating to the
waiver of certain past defaults or certain covenants;
- - change the provisions of the Indenture relating to the subordination of the
junior subordinated debentures in a manner adverse to the holders;
- - reduce the percentage in principal amount of outstanding junior
subordinated debentures of any series necessary to change the Indenture, or
to waive compliance with certain provisions or defaults or events of
default under the Indenture and their consequences; or
- - change the redemption provisions of any junior subordinated debenture in a
manner adverse to the holder.
The Indenture provides that if any of the junior subordinated debentures are
held by the trust, BGE and the Debenture Trustee shall not enter into any
supplemental indenture for the purposes of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, the Indenture, that
adversely affects the holders of the preferred securities of the trust without
the prior consent of the holders of each preferred security.
Defeasance
BGE may terminate its substantive obligations in respect of junior subordinated
debentures of any series (except for its obligations to pay the principal of
(and premium, if any, on) and the interest on the junior subordinated debentures
of that series) by:
- - depositing with the Debenture Trustee, under the terms of paymentan irrevocable
trust agreement, money or U.S.-Government Obligations sufficient to pay all
remaining indebtedness on the junior subordinated debentures 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:that
series;
- - we aredelivering to the continuing corporationDebenture Trustee either an opinion of counsel or a
ruling directed to the successor corporation expressly
assumesDebenture Trustee from the Internal Revenue Service
to the effect that the holders of the junior subordinated debentures of
that series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and termination of obligations; and
- - complying with certain other Indenture requirements.
Subordination
"Senior Indebtedness" shall mean the principal, premium, and interest BGE owes
on:
- - obligations for money borrowed (including Capital Lease Obligations and
purchase money obligations with an original maturity in excess of one year)
or evidenced by debentures (other than junior subordinated debentures
issued under the Indenture), bonds, notes, bankers acceptances or other
corporate debt securities or similar instruments issued by BGE;
- - letters of credit;
- - guarantees or assumptions of indebtedness of others including through
an agreement to purchase, contingent or otherwise;
- - dividends of others for the payment of which BGE is responsible or liable as
obligor, guarantor or otherwise;
- - obligations of others secured by any property or asset of BGE (whether or
not such obligation is assumed by
15
BGE), the amount of such obligation being the lesser of the value of such
property or assets or the amount of the secured obligation; or
- - renewals, extensions or refundings of any of the obligations referred to
above unless, in the case of any particular obligation or renewal,
extension or refunding thereof, under the express provisions of the
instrument creating or evidencing the same, or pursuant to which the same
is outstanding, the obligation or renewal, extension or refunding thereof
is not superior in right of payment to, or is equal with, the junior
subordinated debentures.
The term "Capital Lease Obligations" means any obligation that is required to be
classified and accounted for as a capital lease on the face of a balance sheet
prepared in accordance with generally accepted accounting principals.
The payment of the principal of and premium, if any, and any interest on the
notesjunior subordinated debentures (including making any deposit pursuant to the
provisions described under "Defeasance" or repurchasing, redeeming or otherwise
retiring any junior subordinated debentures) will to the extent set forth in the
Indenture be subordinated in right of payment to the prior payment in full of
all of BGE's Senior Indebtedness.
Upon any payment or distribution of assets or securities to creditors upon BGE's
dissolution, winding up, or total or partial liquidation or reorganization
whether voluntary or involuntary or in bankruptcy, insolvency, receivorship or
similar proceedings, the holders of all BGE's Senior Indebtedness will first be
entitled to receive payment in full in cash or cash equivalents of the
principal, premium or interest due before the holders of the junior subordinated
debentures will be entitled to receive any payment or distribution.
In addition, if the Debenture Trustee under the Indenture or the holder of any
junior subordinated debenture receives any payment or distribution of assets
before all of BGE's Senior Indebtedness is paid in full, or effective provision
is made for its payment, then such payment or distribution will be required to
be paid or delivered to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other person making payment or
distribution of BGE's assets for application to the payment of all BGE's Senior
Indebtedness then due.
No direct or indirect payment by or on behalf of BGE of principal, premium or
interest on the junior subordinated debentures, shall be made if, at the time of
such payment, there exists:
(1) a default in the payment of all or any portion of any Senior Indebtedness
or any other default pursuant to which the maturity of any Senior
Indebtedness has been accelerated; and
(2) in either case, requisite notice has been given to the Debenture Trustee
and such default shall not have been cured or waived by the Debenture
Trustee or the holders of such Senior Indebtedness.
Subject to the payment in full of all of BGE's Senior Indebtedness, the holders
of the junior subordinated debentures shall be subrogated to the rights of
holders of BGE's Senior Indebtedness to receive payments or distributions of
assets from BGE applicable to its Senior Indebtedness until the junior
subordinated debentures are paid in full. As a result of these subordination
provisions, in the event of BGE's insolvency, holders of the junior subordinated
debentures may recover ratably less than holders of BGE's Senior Indebtedness.
BGE may, however, make a sinking fund payment with junior subordinated
debentures acquired prior to the maturity of Senior Indebtedness or, in the case
of default, prior to such default and notice thereof.
16
Form, Exchange, and Transfer
The junior subordinated debentures of each series will be issuable only in fully
registered form without coupons and, unless otherwise specified in the
applicable prospectus supplement, in denominations of $1,000 and any integral
multiple thereof.
At the option of the holder, subject to the terms of the Indenture and the
performance and observancelimitations applicable to global securities described in the applicable
prospectus supplement, junior subordinated debentures of all the covenants and conditionsany series will be
exchangeable for other junior subordinated debentures of the same series, in any
authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of the Indenture and the limitations applicable to global
securities set forth in the applicable prospectus supplement, junior
subordinated debentures may be presented for exchange or for registration of
transfer (duly endorsed or with the form of transfer endorsed thereon duly
executed if so required by BGE or the Debenture Trustee) at the office of the
Security Registrar or at the office of any transfer agent designated by BGE for
such purpose. Unless otherwise provided in the junior subordinated debentures to
be transferred or exchanged, no service charge will be made for any registration
of transfer or exchange , but BGE may require payment of any taxes or other
governmental charges. BGE has appointed the Debenture Trustee as Security
Registrar. Any transfer agent (in addition to the Security Registrar) initially
designated by BGE for any junior subordinated debentures will be named in the
applicable prospectus supplement. BGE may at any time designate additional
transfer agents or rescind the designation of any transfer agent or approve a
change in the office through which any transfer agent acts, except that BGE will
be required to maintain a transfer agent in each place of payment for the junior
subordinated debentures of each series.
If the junior subordinated debentures of any series are to be redeemed, BGE will
not be required to:
- - issue, register the transfer of, or exchange any junior subordinated
debentures of that series during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of any
such junior subordinated debentures that may be selected for redemption and
ending at the close of business on the day of such mailing; or
- - register the transfer of or exchange any junior subordinated debentures so
selected for redemption, in whole or in part, except the unredeemed portion
of any such junior subordinated debentures being redeemed in part.
Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus supplement, payment of
the interest on any junior subordinated debentures on any Interest Payment Date
will be made to the person in whose name such junior subordinated debentures (or
one or more predecessor securities) is registered at the close of business on
the Regular Record Date for such interest.
Principal of and any premium and interest on the junior subordinated debentures
of a particular series will be payable at the office of the paying agents
designated by BGE, except that unless otherwise indicated in the prospectus
supplement, interest payments may be made by check mailed to the holder. Unless
otherwise indicated in the prospectus supplement, the corporate trust office of
the Debenture Trustee in The City of New York will be designated as BGE's sole
paying agent for payments with respect to junior subordinated debentures of each
series. Any other paying agents initially designated by BGE for the junior
subordinated debentures of a particular series will be named in the applicable
prospectus supplement. BGE will be required to
17
maintain a paying agent in each place of payment for the junior subordinated
debentures of a particular series.
All moneys paid by BGE to a paying agent for the payment of the principal of or
any premium or interest on any junior subordinated debenture which remains
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to BGE, and the holder of the security
thereafter may look only to BGE for payment thereof.
Governing Law
The Indenture will be governed by and construed in accordance with the laws of
the State of New York except to the extent that the Trust Indenture Act shall be
applicable.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
General
BGE will execute the Preferred Securities Guarantee, which benefits the holders
of the preferred securities, at the same time that the trust issues the
preferred securities. The Preferred Securities Guarantee will be qualified as an
indenture bindingunder the Trust Indenture Act. The Bank of New York will act as
indenture trustee (Preferred Guarantee Trustee) under the Preferred Securities
Guarantee for the purposes of compliance with the Trust Indenture Act. The
Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the
benefit of the preferred securities holders.
BGE will irrevocably agree, as described in the Preferred Securities Guarantee,
to pay in full, to the holders of the preferred securities issued by the trust,
the Preferred Securities Guarantee Payments (as defined below) (except to the
extent previously paid), when and as due, regardless of any defense, right of
set-off or counterclaim which the trust may have or assert. The following
payments, to the extent not paid by the trust (Preferred Securities Guarantee
Payments), will be covered by the Preferred Securities Guarantee:
- - any accumulated and unpaid distributions required to be paid on us (our proposed merger with Potomac Electric
Power Company will satisfy this requirement);the
preferred securities, to the extent that the trust has funds available to
make the payment;
- - the redemption price and all accrued and unpaid distributions to the date
of redemption to the extent that the trust has funds available to make the
payment; and
- - we,upon a voluntary or involuntary dissolution and liquidation of the trust
(other than in connection with a distribution of junior subordinated
debentures to holders of such preferred securities or the successor corporation, are not immediately afterredemption of all
such preferred securities), the merger,
consolidation, or sale in defaultlesser of
(1) the aggregate of the liquidation amount specified in the performanceprospectus
supplement for each preferred security plus all accrued and unpaid
distributions on the preferred securities to the date of payment, to
the extent the trust has funds available to make the payment; and
(2) the amount of assets of the trust remaining available for distribution
to holders of preferred securities upon a dissolution and liquidation
of the trust (Liquidation Payment).
BGE's obligation to make a Preferred Securities Guarantee Payment may be
satisfied by directly paying the required amounts to the holders of the
preferred securities or by causing the trust to pay the amounts to the holders.
While BGE's assets will not be available pursuant to the Preferred Securities
Guarantee to pay any distribution, Liquidation Payment or redemption price on
any preferred securities if the trust does not have funds available, BGE has
agreed under the Declaration to pay all expenses of the trust except the
18
trust's obligations under its preferred securities.
No single document executed by BGE related to the issuance of the preferred
securities will provide for its full, irrevocable and unconditional guarantee of
the preferred securities. It is only the combined operation of BGE's obligations
under the Preferred Securities Guarantee, the Declaration, the corresponding
series of junior subordinated debentures and the Indenture that has the effect
of providing a full, irrevocable and unconditional guarantee of the trust's
obligations under its preferred securities.
Status of the Preferred Securities Guarantee
The Preferred Securities Guarantee will constitute an unsecured obligation of
BGE and will rank:
- - subordinate and junior in right of payment to all of BGE's general
liabilities;
- - equal with BGE's senior most preferred or preference stock now or
hereafter issued by BGE, and with any guarantee now or hereafter issued by
it in respect of preferred stock of any of its affiliates; and
- - senior to BGE's common stock.
The Declaration requires that the holder of preferred securities accept the
subordination provisions and other terms of the Preferred Securities Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of payment and
not of collection (in other words the holder of the guaranteed security may sue
BGE, or seek other remedies, to enforce its rights under the Preferred
Securities Guarantee without first suing any other person or entity). The
Preferred Securities Guarantee will not be discharged except by payment of the
Preferred Securities Guarantee Payments in full to the extent not previously
paid or upon distribution to the holders of the Preferred Securities of the
corresponding series of junior subordinated debentures pursuant to the
Declaration.
Amendments and Assignment
Except with respect to any changes which do not adversely affect the rights of
the preferred securities holders in any material respect (in which case no
consent of the holders will be required), the Preferred Securities Guarantee may
only be amended with the prior approval of the holders of at least a majority in
aggregate liquidation amount of the preferred securities (excluding any
preferred securities held by BGE or one of its affiliates). A description of the
way to obtain any approval is described under "DESCRIPTION OF THE PREFERRED
SECURITIES -Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in the Preferred Securities Guarantee will be binding on
BGE's successors, assigns, receivers, trustees and representatives and shall
inure to the benefit of the holders of the preferred securities.
Preferred Securities Guarantee Events of Default
An event of default under the Preferred Securities Guarantee (Preferred
Securities Guarantee Event of Default) occurs if BGE fails to make any of its
required payments or perform its obligations under the Preferred Securities
Guarantee, provided that BGE shall have received notice of such default from the
Preferred Guarantee Trustee and has not cured such default within 60 days after
it receives the notice. However, these notice and cure provisions do not apply
to an event of default resulting from BGE's failure to make any of the Preferred
Securities Guarantee Payments.
The holders of at least a majority in aggregate liquidation amount of the
preferred securities (excluding any preferred securities held by BGE or one of
its affiliates) will have the right to direct the
19
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee relating to the Preferred Securities Guarantee
or to direct the exercise of any trust or power given to the Preferred Guarantee
Trustee under the Preferred Securities Guarantee.
Information Concerning the Preferred Guarantee Trustee
The Preferred Guarantee Trustee, other than during the occurrence and
continuance of a covenant or
conditionPreferred Securities Guarantee Event of Default, will only
perform the duties that are specifically described in the indenture.Preferred Securities
Guarantee. After a Preferred Securities Guarantee Event of Default, the
Preferred Guarantee Trustee will exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the Preferred Guarantee Trustee is under no
obligation to exercise any of its powers as described in the Preferred
Securities Guarantee at the request of any preferred securities holder unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
it might incur.
Termination of the Preferred Securities Guarantee
The Preferred Securities Guarantee will terminate once the Preferred Securities
are paid in full or upon distribution of the corresponding series of junior
subordinated debentures to the holders of the preferred securities. The
Preferred Securities Guarantee will continue to be effective or will be
reinstated if at any time any holder of the preferred securities must restore
payment of any sums paid under the preferred securities or the Preferred
Securities Guarantee.
Governing Law
The Preferred Securities Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE PREFERRED SECURITIES GUARANTEE
AND THE JUNIOR SUBORDINATED DEBENTURES HELD BY THE TRUST
Payments of distributions and redemption and liquidation payments due on the
preferred securities (to the extent the trust has funds available for the
payments) will be guaranteed by BGE to the extent described under "DESCRIPTION
OF THE PREFERRED SECURITIES GUARANTEE." No single document executed by BGE in
connection with the issuance of the preferred securities will provide for its
full, irrevocable and unconditional guarantee of the preferred securities. It is
only the combined operation of BGE's obligations under the Preferred Securities
Guarantee, the Declaration, the corresponding series of junior subordinated
debentures and the Indenture that has the effect of providing a full,
irrevocable and unconditional guarantee of the trust's obligations under its
preferred securities.
A holder of any preferred security may sue BGE, or seek other remedies, to
enforce its rights under the Preferred Securities Guarantee without first
instituting a legal proceeding against the Preferred Guarantee Trustee, the
trust or any other person or entity.
As long as BGE makes payments of interest and other payments when due on the
junior subordinated debentures held by the trust, such payments will be
sufficient to cover the payment of distributions and redemption and liquidation
payments due on the preferred securities, primarily because:
- - the aggregate principal amount of the junior subordinated debentures will
be equal to the sum of the aggregate liquidation amount of the preferred
and common securities;
- - the interest rate and interest and other payment dates on the junior
20
subordinated debentures will match the distribution rate and distribution
and other payment dates for the preferred securities;
- - the Declaration provides that BGE shall pay for any and all costs,
expenses and liabilities of the trust except the trust's obligations under
the preferred securities; and
- - the Declaration provides that the trust will not engage in any activity
that is not consistent with the limited purposes of the trust.
If and to the extent that BGE does not make payments on such junior subordinated
debentures, the trust will not have funds available to make payments of
distributions or other amounts due on the preferred securities.
A principal difference between the rights of a holder of a preferred security
(which represents an undivided beneficial interest in the assets of the trust)
and a holder of a junior subordinated debenture is that a holder of a junior
subordinated debenture will accrue, and (subject to any permissible extension of
the interest payment period) is entitled to receive, interest on the principal
amount of junior subordinated debentures held, while a holder of preferred
securities is entitled to receive distributions only if and to the extent the
trust has funds available for the payment of such distributions.
Upon any voluntary or involuntary dissolution or liquidation of the trust not
involving a distribution of the junior subordinated debentures held by the
trust, after satisfaction of liabilities to creditors of the trust, the holders
of the preferred securities will be entitled to receive, out of assets held by
the trust, the Liquidation Distribution in cash. See "DESCRIPTION OF THE
PREFERRED SECURITIES-Liquidation Distribution Upon Dissolution." Upon any
voluntary liquidation or bankruptcy of BGE, the trust, as holder of the junior
subordinated debentures, would be a creditor of BGE, subordinated in right of
payment to all Senior Indebtedness, but entitled to receive payment in full of
principal, premium, if any, and interest, before any of BGE's common
stockholders receive payments or distributions.
A default or event of default under any Senior Indebtedness would not constitute
an Event of Default under the Indenture. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness, the subordination
provisions of the junior subordinated debentures provide that no payments may be
made in respect of the junior subordinated debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on any series of junior
subordinated debentures would constitute an Event of Default under the junior
subordinated debentures.
PLAN OF DISTRIBUTION
WeThe trust may sell the notespreferred securities (a) through agents; (b) through underwriters or dealers;dealers,
(b) through agents or (c) directly to one or more purchasers. By Agents
NotesThe prospectus
supplement will include the terms of the preferred securities including:
- - the names of any underwriters, agents or dealers;
- - the purchase price of the preferred securities and proceeds to the trust
from the sale;
- - any underwriting commissions or agency fees;
- - the initial public offering price;
- - any concession or discounts allowed or reallowed or paid to dealers; and
- - any securities exchange on which the preferred securities 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.
The Agents will not be obligated to make a market in the notes. We cannot
predict the amount of trading or liquidity of the notes.listed.
-21-
By Underwriters
If underwriters are used infor the sale, the notespreferred securities will be acquired
by the underwriters for their own account. The underwriters may resell the
notespreferred securities 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
notespreferred securities will be subject to certain conditions. The underwriters
will be obligated to purchase all the notes of the
seriespreferred securities offered if any of the
notespreferred securities 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.
In connection with an underwritten offering, the SEC rules permit the
underwriters to engage in transactions that stabilize the price of the notes.preferred
securities. These transactions may include purchases for the purpose of fixing
or maintaining the price of the notes.preferred securities.
The underwriters may create a short position in the notespreferred securities in
connection with the offering. That means they sell a larger principal amount of
the notespreferred securities than is shown on the cover page of the prospectus or
the applicable pricingprospectus supplement. If they create a short position, the
underwriters may purchase 15
notespreferred securities in the open market to reduce the
short position.
If the underwriters purchase the notespreferred securities to stabilize the price or
to reduce their short position, the price of the notespreferred securities could be
higher than it might be if they had not made such purchases. The underwriters
make no representation or prediction about any effect that the purchases may
have on the price of the notes.
Direct Sales
We may also sell notes directly. In this case, no underwriters or agents would
be involved.preferred securities.
General Information
Underwriters, dealers, and agents that participate in the distribution of the
notespreferred securities may be underwriters as defined in the Securities Act of
1933 (the "Act"), and any discounts or commissions received by them from usBGE and
any profit on the resale of the notespreferred securities by them may be treated as
underwriting discounts and commissions under the Act.
WeBGE and/or the trust may have agreements with the underwriters, dealers and
agents to indemnify them against certain civil 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, usBGE or ourits subsidiaries in the ordinary course of their
businesses.
LEGAL OPINIONS
One of our lawyers, will issue an opinion about the legalityThe validity of the notesjunior subordinated debentures, preferred securities and
Preferred Securities Guarantee will be passed on for us.BGE by an Associate General
Counsel of BGE. Certain legal matters in connection with the junior subordinated
debentures, preferred securities and Preferred Securities Guarantee will be
passed on for the underwriters by Cahill Gordon & Reindel, a partnership
including a professional corporation, New York, NYNY. Certain matters of Delaware
law relating to the validity of the preferred securities will issue an opinionbe passed on for
the agents
or underwriters.trust by Richards, Layton & Finger, P.A., Wilmington, DE, special Delaware
counsel to the trust. Certain United States federal income taxation matters will
be passed upon for BGE and the trust by Winthrop, Stimson, Putnam & Roberts,
special tax counsel to BGE and the trust. Cahill Gordon & Reindel and Winthrop,
Stimson, Putnam & Roberts from time to time perform legal services for BGE.
22
Cahill Gordon & Reindel will rely on the opinion of ourBGE's lawyer as to matters
of Maryland law, andas well as the applicability of the Public Utility Holding
Company Act of 1935.1935, and will rely on the opinion of Richards, Layton & Finger,
P.A. as to certain matters of Delaware law. BGE's Associate General Counsel
will rely on the opinion of Richards, Layton & Finger, P.A. as to certain
matters of Delaware law.
EXPERTS
Coopers & Lybrand, L.L.P., independent accountants, audited ourBGE's annual
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 calculation 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).
"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.
17
"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-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.
"Reuters Screen LIBO 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 USPRIMEONE Page" means the display designated as page
USPRIMEONE on the Reuters Monitor Money Rates Service (or such other page as may
replace the USPRIMEONE page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
"Spread" means the number of basis points specified in the applicable
pricing supplement as being applicable to the interest rate for a floating rate
note.
"Spread Multiplier" means the percentage specified in the applicable
pricing supplement as being applicable to the interest rate for a floating 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).
18
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 ............. 12
CMT Rate Notes .................. 12
Event of Default ............................ 14
Modification of Indenture ................... 15
Consolidation, Merger or Sale ............... 15
PLAN OF DISTRIBUTION ............................. 15
LEGAL OPINIONS ................................... 16
EXPERTS .......................................... 16
GLOSSARY ......................................... 17
$200,000,000
[GRAPHIC OMITTED]
Medium-Term Notes
Series G
- --------------------------------------------------------------------------------
PROSPECTUS
(Once the registration statement is effective, the date of the Prospectus will
be inserted here)
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
GOLDMAN, SACHS & CO.auditing.
23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission Registration Fee $60,607Fee............. $75,758
Services of Independent Accountants 65,000*Accountants............................. 25,000*
Trustee Fees and Expenses 15,000*Expenses....................................... 25,000*
Legal Fees and Expenses 35,000*
Debt SecuritiesExpenses......................................... 100,000*
Rating Fees 108,500*Agency Fees.............................................. 104,000*
Printing and Delivery Expenses 15,000*Expenses.................................. 90,000*
Listing Fees.................................................... 86,000*
Miscellaneous Expenses 10,893*
----------
Total $ 310,000*
______________Expenses.......................................... 19,242*
-----------
Total........................................................... $525,000*
===========
--------------
* 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 indemnified against reasonable expenses incurred in connection with the
Proceeding. The corporation may not indemnify a Director in respect of any
Proceeding charging improper personal
II-1
benefits to the Director in which the Director was adjudged to be liable on the
basis that personal benefit was improperly
II-1
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 shall be limited to the fullest extent permitted
by the 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
II-2
any right or protection of a director or officer of the corporation
existing at the time of such repeal or modification."
II-2
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 RegistrantCompany 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.Company.
Also, see indemnification provisions in the Form of AgencyPurchase Agreement
and the Standard Purchase Provisions, both included inwhich is 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) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-
effectivepost-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
II-3
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
II-3
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-
effectivepost-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
Registration Statement 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.
(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
II-4
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
II-4
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.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
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 29th28th day of July, 1997.May, 1998.
BALTIMORE GAS AND ELECTRIC COMPANY
(Registrant)
By: /s/ DavidDavid. A. Brune
------------------------------
David A. Brune, 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 29, 1997May 28, 1998
Board and Director
Principal financial and accounting officer:
/s/ David A. Brune Vice President July 29, 1997May 28, 1998
- ----------------------
David A. Brune
Directors:
* H. Furlong Baldwin
* Beverly B. Byron
* J. Owen Cole
* Dan A. Colussy
* Edward A. Crooke
* James R. Curtiss Directors May 28, 1998
* Jerome W. Geckle Directors July 29, 1997
* Freeman A. Hrabowski III
* Nancy Lampton
* George V. McGowan
* George L. Russell, Jr.
* Michael D. Sullivan
*By: /s/ David A. Brune
----------------------------------
David A. Brune, Attorney-in-Fact
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, BGE Capital
Trust I 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 28th day of
May, 1998.
BGE CAPITAL TRUST I
(Registrant)
By: /s/ David. A. Brune
--------------------
Trustee
II-7
EXHIBIT INDEX
Exhibit
Number
1(a) - Form of Agency Agreement, including Administrative
Procedures; and Form of Purchase Agreement including
Standard Purchase Provisions.
1(b)for the Preferred Securities.
4(a) - Certificate of Trust of BGE Capital Trust I.
4(b) - Declaration of Trust of BGE Capital Trust I.
4(c) - Form of Interest Calculation Agency Agreement.
4(a)*Amended and Restated Declaration of Trust to be
used in connection with the issuance of the Preferred
Securities.
4(d) - Indenture dated asForm of July 1, 1985Subordinated Indenture between the Company and The
Bank of New York, (successor to Mercantile-Safe
Deposit and Trust Company),as Trustee (Designated as
Exhibit 4(a) in File No. 2-98443 Registration Statement).
4(b)*inconnection with the
issuance of the Junior Subordinated Debentures.
4(e) - Form of 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),as Trustee (Designated as Exhibit 4(b) in Form 8-K dated November 13,
1987, File No. 1-1910).
4(c)* - Supplemental Indenture dated asconnection with the
issuance 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)Junior Subordinated Debentures.
4(f) - Form of Medium-Term Note, Series G (Fixed Rate).
4(e)Preferred Securities Guarantee.
4(g) - Form of Medium-Term Note, Series G (Floating Rate)Preferred Security (included in Exhibit 4(c).
54(h) - Form of Junior Subordinated Debenture (included in
Exhibit 4(e)).
5(a) - Opinion of CompanyBGE Counsel.
5(b) - Opinion of Richards, Layton and Finger, P.A.
8** - Tax Opinion of Winthrop, Stimson, Putnam & Roberts.
12* - Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Preferred
and Preference Dividend Requirements (Designated as
Exhibit 12 in Form 10-Q for the quarterly period ended March
31, 19971998 filed, May 14, 1997 File1998 (File No. 1-1910).
23(a) - Consent of Company Counsel (included in Exhibit 5)5(a)).
23(b) - Consent of Richards, Layton and Finger (included in
Exhibit 5(b)).
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23(c) - Consent of Coopers & Lybrand, Independent Accountants.
24 - Power of Attorney.
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2525(a) - Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 (Form T-1) of The Bank of New York,
(successoras Trustee with respect to Mercantile-Safe Depositthe Subordinated Indenture.
25(b) - Statement of Eligibility and Qualification under the Trust
Company),
Trustee.Indenture Act of 1939 (Form T-1) of The Bank of New York, as
Property Trustee with respect to the Trust.
25(c) - Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 (Form T-1) of The Bank of New York,
as Trustee with respect to the Preferred Securities
Guarantee.
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).
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* Incorporated by reference.
II-8** To be filed by amendment
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