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Registration No.333-
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Constellation Energy Corporation
(Exact Name of Registrant as Specified in its Charter)
Maryland and Virginia
(States of Incorporation)
52-1964611
(I.R.S. Employer Identification No.)
David A. Brune, Vice President and Secretary
39 W. Lexington Street, Baltimore, Maryland 21201
(410) 234-5685
(Address, including Zip Code, and Telephone Number, including Area Code
of Registrant's Principal Executive Offices and Agent for Service)
Approximate date of commencement of proposed sale to the public: 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. [X]
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.[ ]
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
- - --------------------------------------------------------------------------------
Title of each Proposed Proposed
class of maximum maximum Amount of
securities to Amount to offering price aggregate registration
be registered be registered per unit offering price fee
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Common Stock 10,000,000 Shares $26 -3/4 * $267,500,000 $81,061
(without par value)
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* Inserted solely for the purpose of calculating the registration fee; computed
pursuant to Rule 457(c) on the basis of the average of the reported high and low
sales prices for Baltimore Gas and Electric Company (BGE) on the New York Stock
Exchange-Composite Transactions on March 31, 1997, as reported in The Wall
Street Journal. BGE and Potomac Electric Power Company (PEPCO) will merge into
the Registrant. The average price of BGE's Common Stock on March 31, 1997 was
higher than PEPCO's.
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[Constellation Energy Corporation Logo]
COMMON STOCK
SHAREHOLDER INVESTMENT PLAN
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P R O S P E C T U S
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Baltimore Gas and Electric Company and Potomac Electric Power Company have
merged into Constellation Energy Corporation. This plan is being offered to
shareholders of Constellation Energy. IF YOU WERE ENROLLED IN THE BGE OR PEPCO
DIVIDEND REINVESTMENT PLANS AT THE TIME OF THE MERGER, YOU WILL BE AUTOMATICALLY
ENROLLED IN THE CONSTELLATION ENERGY PLAN UNLESS YOU TELL US OTHERWISE. Some of
the features of this plan differ from the features of the BGE and PEPCO dividend
reinvestment plans.
The key features of the plan allow you to:
- - - reinvest all, or part, of your common stock dividends in additional shares
of common stock
- - - purchase additional shares of common stock up to $100,000 per year minimum
investment is $25
- - - deposit common stock into the plan
- - - sell shares held in the plan
- - - transfer shares held in the plan to other accounts
THE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT
THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
April 7, 1997
CONSTELLATION ENERGY CORPORATION
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TABLE OF CONTENTS
Who Administers the Plan ..................... 3
Common Questions About The Plan............... 3
Who Pays the Plan's Costs..................... 6
Automatic Rollover from BGE
or PEPCO Plan................................6
How to Enroll in the Plan..................... 6
Reinvesting Dividends......................... 7
Reinvest All or Part of Your Dividends..... 7
When Are Dividends Reinvested.............. 7
Changing Your Reinvestment Election........... 8
Optional Cash Investments..................... 8
How to Make................................ 8
Investments of Less Than $25
or More Than $100,000..................... 8
One Time Exception to the $25
Minimum Investment..........................8
When Investments Are Made.................. 9
Returns.................................... 9
Purchases and Sales of Shares................. 9
Source of Purchased Shares...................9
No Control Over Prices for Shares
Bought or Sold........................... 9
Independent Agent.......................... 9
Price for Shares Purchased From Us........ 10
Price For Shares Bought or Sold on
the Open Market......................... 10
Custody of Shares............................ 10
At the Time of the BGE and PEPCO
Merger Share Exchange................... 10
After the Exchange........................ 10
Other Provisions of the Custody Feature... 11
Withdrawals from the Plan.................... 11
For Cash or a Stock Certificate........... 11
To Transfer Shares........................ 12
Effect of Withdrawals and Transfers.......... 12
Terminating Participation.................... 12
By You.................................... 12
By Us..................................... 13
Plan Reports................................. 13
Costs........................................ 13
Federal Income Tax Consequences............. 14
Dividends................................. 14
Sale of Shares............................ 14
Miscellaneous................................ 14
Assignment of Shares....................... 14
Stock Dividends and Stock Splits........... 14
Voting..................................... 15
Limitation of Liability to Plan Participants 15
Modification or Termination of the Plan.... 15
Where You Can Find More Information.......... 15
The Company.................................. 16
Use of Proceeds.............................. 17
Legal Opinion................................ 17
Experts...................................... 17
Limitation of Director and Officer Liability. 17
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WHO ADMINISTERS THE PLAN
We administer the plan, keep the records and send statements. However, we may
appoint someone else to administer the plan. If we do, we will notify you. An
independent agent, selected by us, buys and sells shares on the open market on
your behalf. The telephone numbers and addresses for the plan are:
U.S. MAIL CORRESPONDENCE TO:
SHAREHOLDER SERVICES
CONSTELLATION ENERGY CORPORATION
P.O. BOX 98295
WASHINGTON, DC 20090-8295
OVERNIGHT DELIVERY PACKAGES TO:
SHAREHOLDER SERVICES
CONSTELLATION ENERGY CORPORATION
1900 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, DC 20068
YOU MAY CALL US BETWEEN 8:00 A.M. AND 4:45 P.M., EASTERN TIME, AT:
WITHIN THE WASHINGTON, DC AREA: (202) 872-3183
OUTSIDE THE WASHINGTON, DC AREA: 1-800-527-3726
PLEASE INCLUDE YOUR ACCOUNT NUMBER ON ALL CHECKS AND MONEY ORDERS AND ON ALL
CORRESPONDENCE, AS WELL AS A TELEPHONE NUMBER WHERE YOU CAN BE REACHED DURING
THE DAY.
COMMON QUESTIONS ABOUT THE PLAN
As you review this prospectus, you will notice that this plan offers a
convenient and economical way to increase your ownership of Constellation Energy
common stock. The plan also allows a convenient way for you to keep your shares
with us under a custodial (safekeeping) agreement. Below are some questions and
answers about the key features of our Shareholder Investment Plan:
1. WHO IS ELIGIBLE TO PARTICIPATE IN THE SHAREHOLDER INVESTMENT PLAN?
Any owner of our common stock.
2. DO I HAVE TO REINVEST ALL THE DIVIDENDS ON MY COMMON STOCK IF I ENROLL IN
THE PLAN?
No. You may reinvest all, part or none of your common stock dividends.
3. MAY I PURCHASE ADDITIONAL SHARES OF COMMON STOCK THROUGH THE PLAN FROM TIME
TO TIME?
Yes. You may invest up to $100,000 in additional shares of common stock in
any calendar year. The minimum investment is $25.
4. MAY I DEPOSIT MY STOCK IN THE PLAN?
You may deposit, free of any service charges, your common stock to be held
by us as custodian.
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5. WILL MY DIVIDENDS AND OPTIONAL CASH INVESTMENTS BE FULLY INVESTED IN COMMON
STOCK?
Yes. Both dividends and optional cash investments will be used in full to
purchase additional common stock. As a result, your plan account will be
credited with whole shares and a fractional share. However, if you close
your plan account, any fractional share held will be paid out to you in
cash.
6. HOW ARE SHARES PURCHASED FOR MY PLAN ACCOUNT?
At our option, shares for your plan account are purchased either on the
open market or directly from Constellation Energy.
7. HOW IS THE PRICE OF SHARES BOUGHT OR SOLD DETERMINED?
Prices are calculated differently for shares:
- bought in the open market,
- bought directly from Constellation Energy, and
- sold.
Shares Bought on the Open Market
--------------------------------
For shares bought on the open market, the price will be calculated as the
weighted average price of all shares bought for the investment date. The
price will include any brokerage commission and fees.
Shares Bought Directly From Us
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For shares bought directly from Constellation Energy, we average the high
and low sale prices of our common stock on the investment date. If our
common stock is not traded on the investment date, we use the prices from
the previous trading day. There are no brokerage commissions or fees when
shares are purchased from us.
For Shares Sold
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For shares sold, the price will be calculated as the weighted average price
of all plan shares sold on the sale date. The price will include any
brokerage commission and fees.
8. WHEN ARE DIVIDENDS REINVESTED?
We reinvest dividends on the first business days of January, April, July
and October.
9. WHEN ARE OPTIONAL CASH INVESTMENTS CREDITED TO MY PLAN ACCOUNT?
Optional cash investments are credited to your plan account on the first
business day of the month after we receive them.
10. ARE THERE BROKERAGE COMMISSIONS AND FEES FOR BUYING OR SELLING SHARES
THROUGH THE PLAN?
Yes. Brokerage commissions and fees are charged on shares bought or sold in
the open market. These fees are based on the number of shares bought or
sold and the price per share. Brokerage commissions and fees are expected
to be no more than 4 cents per share. When the plan buys shares directly
from Constellation Energy, there are no commissions or fees.
11. ARE THERE ANY OTHER FEES FOR BUYING AND SELLING SHARES THROUGH THE PLAN?
Yes. We charge a $5 processing fee for each sale of plan shares for your
plan account. There are no additional fees for buying shares for your plan
account.
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12. WHEN WILL I RECEIVE AN ACCOUNT STATEMENT?
We will send you a statement for every month in which there is activity in
your plan account. Activity in your plan account includes when:
- we reinvest a dividend for you,
- you remit an optional cash investment,
- you deposit shares under the custodial feature of the plan,
- you withdraw or transfer shares, or
- you terminate your participation.
In addition, we will send you an annual statement in January detailing all
account activity during the prior year. PLEASE KEEP YOUR STATEMENTS. YOU
WILL NEED THEM FOR TAX PURPOSES.
13. MAY I TRANSFER SHARES FROM ONE ACCOUNT TO ANOTHER?
Yes. We will send the required form upon request.
14. WILL CONSTELLATION ENERGY ISSUE A STOCK CERTIFICATE FOR THE SHARES IN MY
ACCOUNT?
If you send us a written request, we will issue you a stock certificate. We
do not issue a certificate for a fractional share.
15. IF MY SHARES ARE HELD IN "STREET NAME" BY A STOCKBROKER, MAY I PARTICIPATE
IN THE PLAN?
Yes. You may request your broker to participate on your behalf. However, by
participating in this manner, you'll only be able to reinvest dividends.
You won't be able to participate in any other plan feature. Alternatively,
you may ask your broker to transfer shares into your name so you can
participate directly with us and take advantage of ALL the plan features.
Different brokers have different conditions and procedures for
participating in the plan on your behalf or for transferring shares into
your name. You should contact your broker if you have questions about this.
16. ARE CONSTELLATION ENERGY DIVIDENDS TAXABLE INCOME?
Yes. Dividends are taxable income whether reinvested or paid in cash. We
will send you an IRS Form 1099-DIV each January showing your dividend
income for the previous year.
17. MAY I RECEIVE DIVIDENDS IN CASH FOR SHARES I HOLD IN STOCK CERTIFICATE
FORM?
Yes. You do not have to reinvest dividends on shares you hold in
certificate form.
18. MAY I RECEIVE DIVIDENDS IN CASH FOR SHARES HELD IN MY PLAN ACCOUNT?
Yes. You are not required to reinvest dividends on the shares held in your
plan account.
19. IS INTEREST PAID ON ANY CASH HELD BY THE PLAN PRIOR TO INVESTMENT?
No. We do not pay interest on any funds held by us prior to investment in
additional common stock. If you send in an optional cash investment early
in the month, it is not invested in your account until the first business
day of the following month.
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20. MAY I DETERMINE AT WHAT PRICE SHARES ARE BOUGHT AND SOLD ON MY BEHALF?
No. You will have no control over the price at which stock is bought
whether on the open market or from us. Likewise, you will have no control
over the price at which shares are sold by the independent agent. You will
bear the market risk associated with fluctuations in the price of our
common stock.
21. MAY I ASK TO HAVE MY MONEY RETURNED?
Yes. If you have sent money for an optional cash investment, that money can
be returned to you if we receive a written request no later than the close
of business on the last business day of the month.
WHO PAYS THE PLAN'S COSTS
We pay all of the administrative costs of the plan. You will pay a brokerage
commission when the common stock is bought or sold on the open market. When the
plan buys the common stock directly from us, you pay no brokerage commission. In
addition, you will pay a $5 processing fee each time you request that we sell
shares on your behalf.
AUTOMATIC ROLLOVER FROM BGE OR PEPCO PLAN
If you participate in either BGE's or PEPCO's dividend reinvestment plan at the
time of the merger, you will be automatically enrolled in Constellation Energy's
plan with no changes from how you are enrolled in BGE's or PEPCO's dividend
reinvestment plan. Your BGE or PEPCO plan shares will be automatically converted
to Constellation Energy common stock. BGE shares will be converted at a ratio of
1 for 1. PEPCO shares will be converted at a ratio of .997 for 1. If you decide
to deposit your Constellation common stock with us (see CUSTODY OF SHARES
ON PAGE 10) the dividends on those shares will be paid out or reinvested as you
have instructed us on your most recently executed BGE, PEPCO or Constellation
Energy enrollment form. To change those instructions, simply send in a new
Constellation Energy enrollment form. See CHANGING YOUR REINVESTMENT ELECTION on
page 8.
HOW TO ENROLL IN THE PLAN
You may join the Constellation Energy plan at any time by completing and
returning an enrollment form and/or a custody form. You may request these forms
from Shareholder Services, at the appropriate number listed on page 3.
To join the plan you may choose one or more of the following:
- - - Full or partial dividend reinvestment;
- - - Making optional cash investments of up to $100,000 per calendar year (the
minimum is $25 per investment) to purchase additional common stock for your
plan account; and/or
- - - Depositing your common stock certificates with us.
If you have more than one account, for example accounts registered "John Smith"
and "John Q. Smith," you must complete a separate authorization for each account
that you wish to enroll in the plan.
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YOU ARE NOT REQUIRED TO REINVEST DIVIDENDS IN ORDER TO MAKE OPTIONAL CASH
INVESTMENTS OR DEPOSIT YOUR SHARES WITH US. YOU MAY REINVEST DIVIDENDS ON ALL,
SOME OR NONE OF YOUR SHARES.
If your Constellation Energy common stock is held for you in "street name" by
your bank or broker, you may be able to participate by asking your broker to
join the plan on your behalf to reinvest dividends. If you participate in the
plan through your broker, you will only be able to take advantage of the
dividend reinvestment feature of the plan. You will not be able to participate
in any of the other plan features. Alternatively, you may ask your broker to
have your shares transfer into your own name, so you may participate in the
plan directly and take advantage of all the plan features.
Contact your broker to find out what you must do for them to participate on your
behalf or to have them transfer shares into your name.
REINVESTING DIVIDENDS
REINVEST ALL OR PART OF YOUR DIVIDENDS
You may reinvest all or part of the common stock dividends on the shares you
hold in certificate form and/or on the shares we hold in your plan account. Any
dividends not reinvested will be paid to you by check, or if you have
authorized, electronically deposited into your bank account. To obtain a direct
deposit form, please contact us at the appropriate number listed on page 3.
If you would like to reinvest only a portion of your dividends, you have several
options. You may elect to:
- - - reinvest dividends only on the shares you hold in certificate form; or
- - - reinvest dividends only on the shares held in your plan account.
You may also:
- - - reinvest dividends only on a specific number of shares;
- - - reinvest only a specific percentage of your dividends; or
- - - reinvest only a specific dollar amount of your dividends.
You are not required to reinvest any of your dividends in order to participate
in the plan. You may change your election as described in CHANGING YOUR
REINVESTMENT ELECTION on page 8.
WHEN ARE DIVIDENDS REINVESTED
When our Board of Directors declares dividends they also set the record dates
and payment dates. Both BGE and PEPCO historically have paid dividends
quarterly. The record dates are typically the 10th day of the month before the
dividend payment date.
In order for you to begin reinvesting your dividends by one of the dividend
payment dates, we must receive your enrollment form by the record date. If we do
not receive your enrollment form by the record date, you will receive your
dividend payment for that quarter in the usual manner (either by check or
electronically deposited in your bank account). Your dividends then will be
reinvested beginning with the following dividend payment. Please note that the
amount of any dividends reinvested will be reduced by any amount which is
required to be withheld under apllicable tax or other law.
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Dividends are used to purchase additional shares of common stock beginning on
the payment date. Dividends are held in an escrow account with a bank separate
from our other money, until we pay for the shares purchased. The method for
determining the price of the common stock purchased with reinvested dividends is
explained under PURCHASES AND SALES OF SHARES on page 9.
CHANGING YOUR REINVESTMENT ELECTION
You may change your reinvestment election by giving us written instructions, or
filling out a new enrollment form or the tear-off portion of your account
statement. In order for a change to be effective for a particular dividend
payment date, we must receive your instructions on or before the record date
relating to the dividend payment. If we do not receive your instructions by that
record date, your instructions will not become effective until the next dividend
payment.
OPTIONAL CASH INVESTMENTS
HOW TO MAKE
Whether or not you reinvest dividends, you may purchase additional shares of
common stock by making optional cash investments in any amount within the
following guidelines:
Minimum Investment - $25
Maximum Investment - $100,000 per calendar year
You can make optional cash investments by sending us a check or money order
payable to Constellation Energy Corporation. All checks are subject to
collection by us and must be in United States dollars. DO NOT SEND CASH.
You may make your first optional cash investment by enclosing it with your
enrollment form. If you are already a participant, optional cash investments may
be sent in with the tear-off portion of your account statement, or with written
instructions. Send investments to us at the address listed on page 3. There is
no obligation to make optional cash investments, nor do you have to make the
same size investment each time you invest.
INVESTMENTS OF LESS THAN $25 OR MORE THAN $100,000
If you send in an optional cash investment for less than $25 it will be returned
to you without interest as soon as practicable. Likewise, if you send in an
optional cash investment for more than $100,000 in any calendar year, the excess
will be refunded to you without interest as soon as practicable.
ONE TIME EXCEPTION TO THE $25 MINIMUM INVESTMENT
For former BGE and PEPCO shareholders, there is A ONE TIME EXCEPTION to the
requirement that optional cash investments be in an amount of at least $25. When
BGE and PEPCO shareholders exchange their common stock certificates for
Constellation Energy shares, they can choose to have any cash payout due them
from the exchange invested in the plan as an optional cash investment. The
choice to have these payouts invested in the plan can only be made on the Letter
of Transmittal received from the exchange agent. The pqyouts eligible for this
one time exception include:
- - - any fractional share payment due a PEPCO shareholder,
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- - - any refund in connection with the buy-up option due a PEPCO shareholder, and
- - - any dividends held pending exchange due a BGE or PEPCO shareholder.
To take advantage of this one time option, you must either be a participant in
the BGE or PEPCO dividend reinvestment plan, or must elect at the time of the
exchange to have your Constellation Energy common stock shares held by the plan
as custodian.
WHEN INVESTMENTS ARE MADE
Common stock is purchased and allocated to your plan account as of the first
business day of the month after we receive your optional cash investment. If we
receive your investment on or after the first business day of a month, it will
be held and invested the first business day of the following month. WE WILL NOT
PAY INTEREST ON FUNDS PENDING INVESTMENT. Please allow sufficient time for us to
receive your optional cash investment through the mail. We need to receive it at
least one business day before the first day of a month so that your payment will
be invested timely. Optional cash investments are held in an escrow account with
a bank separate from our other money, until we pay for the shares purchased.
RETURNS
If you decide you do not want us to invest the optional cash investment you sent
us, you must notify us in writing by the last business day of the month before
the investment date. We then will refund your optional cash investment. However,
we will not refund the money until we have actually collected it from your bank.
Accordingly, refunds may be significantly delayed. Once an optional cash
investment has been invested in common stock, no refunds will be made. See
WITHDRAWALS FROM THE PLAN on page 11, or TERMINATING PARTICIPATION on page 12.
PURCHASES AND SALES OF SHARES
SOURCE OF PURCHASED SHARES
We may use either shares purchased from Constellation Energy (new issue shares)
or shares purchased in the open market through the independent agent.
NO CONTROL OVER PRICES FOR SHARES BOUGHT OR SOLD
No one has the ability to determine the price at which shares are bought or
sold. The price of our common stock may fluctuate daily depending on market
conditions, and we have no control over this. You will bear the market risk
associated with fluctuations in the price of our common stock. The independent
agent will purchase or sell shares in the open market.
INDEPENDENT AGENT
An independent agent:
- - - is generally a bank or broker separate from the company,
- - - is selected by the company to purchase and sell shares of our common stock
in the open market for plan participants, and
- - - can be replaced at any time by written notification from the company
explaining the termination of their contract and the selection of a new
independent agent.
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For open market transactions, the independent agent determines the market on
which the shares are bought or sold (for example, on any stock exchange, in the
over-the-counter market, or in negotiated transactions) and the selection of the
broker or dealer through or from whom purchases and sales are made.
Even though we are currently the administrator of the plan, it is possible for
us to have someone else act as the plan administrator. If that were to happen,
that person could also be the independent agent who would purchase and sell
shares for plan participants.
PRICE FOR SHARES PURCHASED FROM US
Purchases of common stock from us will be made on the relevant investment date.
The price of the shares will be calculated as the average of the high and low
sales prices for shares of our common stock. In making the calculation we use
the prices reported by the "New York Stock Exchange Composite Transactions" in
the Eastern Edition of THE WALL STREET JOURNAL for:
- - - the investment date, or
- - - the previous trading day if the investment date is not a day on which our
common stock was traded.
PRICE FOR SHARES BOUGHT OR SOLD ON THE OPEN MARKET
PURCHASE PRICE. The purchase price will be the weighted average price per share
(plus brokerage commissions and fees) of the total number of shares purchased
either with reinvested dividends or with optional cash investments for that
investment date. Currently, the brokerage commissions and fees are expected to
be no higher than 4 cents per share.
The number of shares of common stock credited to your plan account on a
particular investment date (including a fractional share rounded to three
decimal places) will be determined by dividing the total amount of your
dividends or optional cash investments by the purchase price per share.
SALES PRICE. The sales price will be the weighted average price per share (less
brokerage commissions and fees) of the total number of shares sold. Usually we
process sale transactions twice a week. Currently, the brokerage commissions and
fees are expected to be no higher than 4 cents per share. In addition, you will
be charged a $5 processing fee for each sale you request from your plan account.
The shares held in your plan account, together with all other shares held in the
plan, are represented by one or more global certificates registered in our name
as administrator of the plan.
CUSTODY OF SHARES
AT THE TIME OF THE BGE AND PEPCO MERGER SHARE EXCHANGE
You may tell us on the Letter of Transmittal received from the exchange agent
that you want to deposit your Constellation Energy common stock into the plan
rather than receive certificates for those shares.
AFTER THE EXCHANGE
You may take advantage of the free custodial feature of the plan at any time. To
deposit your common stock certificates into the plan send us the certificates,
together with:
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- - - a completed custody form, which you may obtain from us at the appropriate
number listed on page 3; or
- - - your own letter of instruction.
Your letter of instruction should include:
- - - your shareholder account number,
- - - a list showing the certificate numbers and number of shares being
deposited, and
- - - the signatures of all the owners, which must be identical to the names on
your stock certificates and the plan account into which the shares are
being deposited.
The certificates you send to us for deposit should be sent UNSIGNED. Send them
to the address shown on page 3. SINCE YOUR STOCK CERTIFICATES ARE VALUABLE WE
URGE YOU TO USE REGISTERED, INSURED MAIL WHEN MAILING YOUR CERTIFICATES.
Replacing lost certificates may require you to purchase a surety bond which can
be expensive, generally 2% of the value of the lost shares.
OTHER PROVISIONS OF THE CUSTODY FEATURE
When you use the custody feature of the plan, you join the plan and may elect to
use any of its features. For example, we can reinvest all, part or none of your
dividends on the common stock held in your plan account as you direct us on your
enrollment form. You can get an enrollment form by contacting us at the
appropriate number indicated on page 3.
The certificates you deposit with us will be transferred into our name as
custodian, and the number of shares represented by those certificates will be
credited to your plan account. Thereafter, those shares will be treated in the
same manner as any other shares held in your plan account.
The certificate(s) you deposit will be canceled. Therefore, WE STRONGLY
RECOMMEND THAT BEFORE YOU SEND US YOUR CERTIFICATE(S) FOR DEPOSIT, YOU MAKE A
PERMANENT RECORD OF EACH CERTIFICATE NUMBER, THE DATE ISSUED AND THE NUMBER OF
SHARES REPRESENTED BY THE CERTIFICATE. If you decide to sell the shares, this
information may become important for tax purposes. We are not responsible for
providing this information once the shares are deposited with us.
WITHDRAWALS FROM THE PLAN
FOR CASH OR A STOCK CERTIFICATE
To withdraw all or a portion of the whole shares held in your plan account at
any time:
- - - prepare written instructions; or
- - - complete the tear-off portion of your account statement; or
- - - complete a withdrawal request form which you can get by contacting us at
the appropriate number listed on page 3.
Send the request to us at the address shown on page 3. You may elect to receive
either a stock certificate for the whole shares withdrawn or the net proceeds
from the sale of the shares. See PURCHASES AND SALES OF SHARES on page 9.
We generally process withdrawals twice a week and send you, normally within two
weeks, a certificate for the shares withdrawn, or a check for the net sale
proceeds, in accordance with your instructions. Please remember that the
withdrawal of shares requires the signatures of all account owners.
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TO TRANSFER SHARES
We will transfer all or part of your shares for you at no cost. You may:
- - - transfer shares to an existing plan account; or
- - - establish a new plan account; or
- - - have a stock certificate issued in another person's name.
To request a transfer of shares either:
- - - prepare written instructions, providing the name, address and tax
identification number of the person to whom the shares are being
transferred; or
- - - complete a withdrawal request form which you can get by contacting us at
the appropriate number listed on page 3.
Send the request to us at the address shown on page 3. We cannot issue a
certificate for a fractional share. Your request must be accompanied by an
executed stock assignment form (or a stock power). All owners of the stock must
sign the stock assignment form and each signature must be guaranteed by a bank
or broker who has a membership in an approved Signature Guarantee Medallion
Program. We can provide you with a stock assignment form, or they are available
from your bank or broker.
If you transfer shares to an existing plan account, we will reinvest dividends
on the transferred shares in accordance with the reinvestment instructions
previously given to us by the transferee. If we have no reinvestment
instructions, we will pay the dividends by check until the transferee makes a
reinvestment election. If you transfer shares to a new plan account that you
have established for someone, we will provide the new participant with an
enrollment form. Until the completed enrollment form is returned to us, all
dividends on the transferred shares will be paid out by check.
EFFECT OF WITHDRAWALS AND TRANSFERS
Withdrawals or transfers from the plan do not affect your participation, unless
you specifically elect to make a change. See CHANGING YOUR REINVESTMENT ELECTION
on page 8.
If you reinvest dividends on only a portion of your plan shares and you elect to
withdraw or transfer a portion of your plan shares, dividends on the plan shares
remaining (up to the number of shares you previously had designated for
reinvestment) will continue to be reinvested, unless you tell us otherwise. For
example, if you had elected to reinvest dividends on 50 of the 100 shares held
in your plan account and you withdraw 25 shares, the dividends reinvested after
the withdrawal will still be on 50 of the 75 remaining shares. Or, if you
withdraw 75 shares, the dividends reinvested after the withdrawal will be on the
25 remaining shares held in your plan account.
TERMINATING PARTICIPATION
BY YOU
You may terminate your plan participation at any time by:
- - - preparing a written request; or
- - - completing the tear-off portion of your account statement; or
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<PAGE>
- - - completing a withdrawal request form which you can get by contacting us at
the appropriate number listed on page 3.
Send the request to us at the address shown on page 3. You will need to indicate
whether you would like a stock certificate for the whole shares in your plan or
would like your shares sold. Generally, we process termination requests twice a
week. We send you, normally within two weeks, a check for the net sale proceeds,
or a stock certificate for the whole shares and a check for the fractional share
held in your plan account. See PURCHASES AND SALES OF SHARES on page 9.
When you terminate participation in the plan, we pay all future dividends to you
by check or, if you have authorized, electronically deposit them into your bank
account.
BY US
If you do not have at least one whole share of stock in your plan account and
(1) you are not reinvesting dividends on the stock you hold in certificate form,
or (2) you no longer own shares registered in your name, your account may be
terminated. We will notify you in writing of the impending termination. You will
then have 30 days to make changes needed to keep your account open by either
electing to reinvest dividends, making an optional cash investment or depositing
shares under the custody feature of the plan. Otherwise, we will terminate your
plan account.
PLAN REPORTS
We will mail you an account statement after any month in which there has been
activity in your account. Activity in your plan account includes when:
- - - we reinvest a dividend for you,
- - - you remit an optional cash investment,
- - - you deposit shares under the custodial feature of the plan,
- - - you withdraw or transfer shares, or
- - - you terminate your participation.
The statement will show all activity for the current calendar year to date and
the total shares you hold in the plan. In addition, you will receive an annual
account statement each January that summarizes all your plan transactions in the
prior year.
Be sure to keep all of your annual statements. They provide the necessary
information about the cost of your stock for tax purposes. We will charge you a
$5 fee to replace an old statement.
You will receive copies of all communications we send to our common stock
shareholders including our annual report, any interim reports, notice of annual
meeting and proxy statement, and certain income tax information.
COSTS
We will pay all administrative costs and expenses associated with the plan,
except that you will pay brokerage commissions and fees on all purchases and
sales of common stock in the open market, which is expected to be no more than 4
cents per share. You will also pay a $5 processing fee per request to sell
shares. You do not pay any brokerage commissions and fees on shares of common
stock purchased directly from us.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
DIVIDENDS
Dividends are taxed as income whether you reinvest them or receive them in cash.
Each January we will send you a Form 1099-DIV reporting dividends we paid you in
the prior year including dividends you reinvest and any federal income tax we
withheld from the dividends. We will also file this form with the IRS.
Your dividends are subject to income tax withholding if you do not provide a
Form W-9 certifying (1) the accuracy of your taxpayer identification number or
social security number and (2) that you either have not received a notice from
the IRS stating that you are subject to income tax withholding, or that you are
exempt from income tax withholding. Your dividends will also be subject to
income tax withholding if for any reason we are instructed by the IRS to
withhold taxes. If you are a foreign shareholder, your dividends are generally
subject to U.S. tax withholding at a rate determined under tax law and treaty.
SALE OF SHARES
The tax basis of shares purchased under the plan is generally the purchase price
per share including any brokerage commissions and fees. See PURCHASES AND SALES
OF SHARES on page 9. The holding period for shares usually begins the day after
the investment date.
You may recognize a gain or loss when you sell shares from your plan account,
including the fractional share. The amount of your gain or loss will be the
difference between the amount you received for the shares when you sold them and
the tax basis of the shares. We will send to you and the IRS each January a Form
1099-B that reports the proceeds from the sale of any shares (including a
fractional share) and any federal income tax withheld.
Your sale proceeds will be subject to income tax withholding if you do not
provide a Form W-9 indicating your taxpayer identification number or social
security number, or we are instructed by the IRS to withhold taxes.
You will not recognize any taxable income when you receive certificates for
whole shares of stock. You will only recognize a gain or loss when you sell
those shares.
THIS GENERAL TAX DISCUSSION IS BASED UPON OUR UNDERSTANDING OF THE TAX LAWS
CURRENTLY IN EFFECT. IT IS NOT INTENDED TO BE A COMPREHENSIVE EXPLANATION OF ALL
POSSIBLE INCOME TAX CONSEQUENCES RELATED TO YOUR PARTICIPATION IN THE PLAN. YOU
SHOULD CONSULT YOUR TAX ADVISOR FOR INFORMATION THAT MAY AFFECT YOUR INDIVIDUAL
SITUATION.
MISCELLANEOUS
ASSIGNMENT OF SHARES
If you want to assign or pledge any shares held in your plan account to a
creditor or use them as security for a loan you must withdraw them from the
plan. See WITHDRAWALS FROM THE PLAN on page 11.
STOCK DIVIDENDS AND STOCK SPLITS
We will add to your plan account any shares of common stock we distribute as a
result of a stock
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<PAGE>
dividend or stock split on shares of common stock in your plan account.
VOTING
You will receive one proxy card to vote both the shares you hold in certificate
form and those you hold in your plan account. Your shares will be voted in
accordance with your instructions on your proxy card. If no instructions are
given, your shares will not be voted.
LIMITATION OF LIABILITY TO PLAN PARTICIPANTS
Neither we nor any of our officers, directors, or employees, the administrator
(if it is not us) or the independent agent will be liable to you for any act or
omission of any act. This limitation of liability applies to, among other
things, the prices at which your shares are bought and sold, when purchases or
sales are made, and any changes in the market price.
You should be aware that this plan does not guarantee future dividends.
Dividends depend upon Constellation Energy's earnings, financial requirements,
governmental regulations and other factors. You must recognize that neither we
nor the independent agent can assure you of a profit or protect you against a
loss on shares of common stock purchased or sold through the plan.
We have no obligation to repurchase any shares of common stock issued to you
under the plan.
MODIFICATION OR TERMINATION OF THE PLAN
We may suspend, modify, or terminate the plan or any part of the plan at any
time. We also have the right to interpret and regulate the plan as may be
necessary or desirable in connection with its operation.
If we terminate the plan, you will receive a stock certificate for all of the
whole shares held in your account and a check for the net proceeds of the sale
of any fractional share.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D. C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from our web site at constellation.com or at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate 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 sell all the securities. We incorporate by reference also any
future filings made with the SEC by BGE and PEPCO between the date of this
prospectus and the effective time of the merger of BGE and PEPCO
15
<PAGE>
into Constellation Energy under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934. This prospectus is part of a registration
statement we filed with the SEC.
- - - BGE's Annual Report on Form 10-K for the year ended December 31, 1996
- - - PEPCO's Annual Report on Form 10-K for the year ended December 31, 1996
- - - BGE's Current Reports on Form 8-K dated February 26, 1997, March 7, 1997,
and April 7, 1997
- - - PEPCO's Current Report on Form 8-K dated April 7, 1997
- - - The description of Constellation Energy's common stock in our Registration
Statement on Form 8-B dated April 4, 1997, including any future amendments
for the purpose of updating the description.
You may request a copy of these filings, at no cost, by writing us at:
Shareholder Services
Constellation Energy Corporation
P.O. Box 98295
Washington, DC 20090-8295
or faxing us at: (202) 331-6874
or telephoning us at:
Within Washington, DC (202) 872-3183
Outside Washington, DC 1-800-527-3726
You should rely only on the information incorporated by reference or provided in
this prospectus. We have not authorized anyone else to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of this prospectus.
THE COMPANY
Baltimore Gas and Electric Company and Potomac Electric Power Company have
merged into Constellation Energy Corporation. As a public utility, Constellation
Energy and its predecessors have, combined, served the Baltimore and Washington
metropolitan areas, including the City of Baltimore and the District of
Columbia, for over a century. We produce, purchase, transmit, distribute and
sell electricity, and purchase, transport and sell natural gas. We jointly own
and operate two electric generating plants and one hydro electric plant in
Pennsylvania. In addition, we supply, at wholesale, electric energy to the
Southern Maryland Electric Cooperative, Inc.
We also have several wholly owned subsidiaries that are engaged in several
diversified business activities, 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,
- - - investment activities (including leveraged leases of generating plants and
aircraft),
- - - real estate,
- - - senior living facilities, and
- - - appliance sales and service, heating and air conditioning sales and
service, and home improvements.
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<PAGE>
The principal offices of the company will be located in Annapolis, Maryland.
However, until the offices are constructed our principal offices will be
temporarily located at 39 W. Lexington Street, Baltimore, MD 21201; our mailing
address is P.O. Box 1475, Baltimore, MD 21203-1475; and our telephone number is
(410) 234-5000.
USE OF PROCEEDS
Net proceeds from the sale of shares of common stock by us will be used for
general corporate purposes relating to our utility business, including repayment
of commercial paper borrowings used to finance construction, other capital
expenditures, and operations. If we do not use the net proceeds immediately, we
temporarily invest them in short term, interest-bearing obligations. For current
information on our commercial paper balances, see our most recent Form 10-K and
10-Q. Please also refer to the BGE and PEPCO Annual Reports on Forms 10-K for
the year ended December 31, 1996 and any other filings made by BGE and PEPCO
prior to effectiveness of the merger of BGE and PEPCO into Constellation Energy.
See WHERE YOU CAN FIND MORE INFORMATION on page 15. We receive no proceeds from
shares of common stock purchased on the open market.
LEGAL OPINIONS
Either a BGE or PEPCO lawyer will issue an opinion regarding certain legal
matters in connection with the stock offered hereby. That lawyer will rely upon
the opinion of Piper & Marbury L.L.P. as to matters of Virginia law.
EXPERTS
Coopers & Lybrand, L.L.P., independent accountants, audited BGE's annual
financial statements and schedules incorporated by reference in this prospectus
and elsewhere in the registration statement and Price Waterhouse LLP audited
PEPCO'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, L.L.P. and Price Waterhouse LLP as experts in accounting and auditing
in giving their respective reports.
LIMITATION OF DIRECTOR AND OFFICER LIABILITY
Our charter and by-laws say we shall indemnify our directors, officers and
employees to the fullest extent permitted by law, including the advance of
expenses. In addition, our charter provides, to the extent permitted by law,
that no director or officer shall be personally liable to Constellation Energy
or its shareholders for money damages.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling
Constellation Energy, pursuant to the above paragraph, we have been informed
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Act and is unenforceable.
17
<PAGE>
[Constellation Energy Corporation Logo]
COMMON STOCK
SHAREHOLDER
INVESTMENT PLAN
- - ----------
PROSPECTUS
- - ----------
April 7, 1997
CONSTELLATION ENERGY CORPORATION
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission Registration Fee $ 81,061
Listing Fees 40,000*
Services of Independent Accountants 12,000*
Printing Expenses 15,000*
Initial Postage and Mailing 20,000*
Blue Sky and Legal Fees and Expenses 20,000*
Miscellaneous Expenses 21,939*
---------
Total $210,000*
---------
_____________
* Estimated
Item 15. Indemnification of Directors and Officers.
Article Seventh of the Corporation's Charter and Article VI
of the Corporation's By-laws provide that to the fullest extent
permitted by applicable statutory or decisional law, as amended
or interpreted, no director or officer of the Corporation will be
personally liable to the Corporation or its shareholders for
monetary damages.
Under Section 2-418 of the Maryland General Corporation Law
("MGCL"), 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"). Under Section 2-418(b)(1)(i)-(iii), a corporation
may indemnify any director made a party to any proceeding by
reason of service in that capacity, unless it is established
that: (i) the act or omission of the director was material to
the matter giving rise to the proceeding and (1) was committed in
bad faith; or (2) was the result of active and deliberate
dishonesty; (ii) the director actually received an improper
personal benefit in money, property, or services; or (iii) in the
case of any criminal proceeding, the director had reasonable
cause to believe that the act or omission was unlawful.
A Maryland 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
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<PAGE>
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
benefits to the Director in which the Director was adjudged to be
liable on the basis that personal benefit was improperly
received. Notwithstanding the above provisions, a court of
appropriate jurisdiction, upon application of the Director or
officer, may order indemnification if it determines that in view
of all the relevant circumstances, the Director or officer is
fairly and reasonably entitled to indemnification; however,
indemnification with respect to any Proceeding by or in the right
of the corporation or in which liability was adjudged on the
basis that personal benefit was improperly received shall be
limited to expenses. A corporation may advance reasonable
expenses to a Director under certain circumstances, including a
written undertaking by or on behalf of such Director to repay the
amount if it shall ultimately be determined that the standard of
conduct necessary for indemnification by the corporation has not
been met. A corporation may indemnify and advance expenses to an
officer of the corporation to the same extent that it may
indemnify Directors under the statute. The indemnification and
advancement of expenses provided or authorized by this statute
may not be deemed exclusive of any other rights, by
indemnification or otherwise, to which a Director or officer may
be entitled under the charter, by-laws, a resolution of
shareholders or directors, an agreement or otherwise.
Under Section 13.1-697 of the Virginia Stock Corporation Act
("VSCA"), a Virginia corporation may indemnify a Director who
was, is, or is threatened to be made a party to any Proceeding if
the Director acted in good faith and (i) he believed, in the case
of conduct in his official capacity with the corporation, that
his conduct was in the best interests of the corporation or, in
the case of other conduct, that his conduct was at least not
opposed to the best interests of the corporation, or (ii) in the
case of a criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful. A corporation may not
indemnify a Director in connection with (i) a Proceeding by or in
the right of the corporation in which the Director was found
liable to the corporation or (ii) any other proceeding charging
improper personal benefit to him, whether or not involving action
in his official capacity, in which he was adjudged liable on the
basis that personal benefit was improperly received.
Indemnification permitted under this section of the VSCA in
connection with a Proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in
connection with the Proceeding.
Under Section 13.1-698, unless limited by its Articles of
Incorporation, a corporation must indemnify against reasonable
expenses a Director who entirely prevails in the defense of any
Proceeding to which he was a party because he is or was a
Director of the corporation.
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<PAGE>
Under Section 13.1-700.1, a court of appropriate
jurisdiction, upon the application of a Director, may order a
corporation to advance or reimburse expenses or provide
indemnification if the court determines that the Director is so
entitled. With respect to a Proceeding by or in the right of the
corporation, a court may order indemnification of the Director to
the extent of his reasonable expenses even though he was adjudged
liable to the corporation.
Under Section 13.1-699, a corporation may advance reasonable
expenses to a Director made a party to a Proceeding under certain
circumstances, including the furnishing by the Director of (i) a
written statement of his good faith belief that he has met the
standard of conduct necessary to obtain indemnification and (ii)
a written undertaking to repay the advance if it is ultimately
determined that he did not meet that standard. Under Section
13.1-702, a corporation may indemnify an officer, employee or
agent of a corporation to the same extent as a Director. Under
Section 13.1-704, a corporation may provide indemnification in
addition to that provided by statute if authorized by its
Articles of Incorporation, a bylaw made by the shareholders, or
any resolution adopted by the shareholders, except
indemnification against willful misconduct or a knowing violation
of the criminal law.
Pursuant to Section 7.5 of the merger agreement regarding
the merger of Baltimore Gas and Electric Company (BGE) and
Potomac Electric Power Company (PEPCO) into the Corporation, the
Corporation will, to the fullest extent not prohibited by
applicable law, indemnify, defend and hold harmless the present
and former directors, officers and employees of each of the
Corporation, BGE, PEPCO, and their respective subsidiaries
against (i) all losses, expenses (including reasonable attorneys'
fees and expenses), claims, damages, costs, liabilities,
judgments or amounts that are paid in settlement of or in
connection with any claim, action, suit, proceeding or
investigation (a) based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a
director, officer or employee of such party or any subsidiary
thereof, and (b) pertaining to any matter existing or occurring
at or prior to the effective time of the merger of BGE and PEPCO
into the Corporation (the "Effective Time"), whether asserted or
claimed prior to, at or after the Effective Time, and (ii) all
losses, expenses (including reasonable attorney's fees and
expenses), claims, damages, costs, liabilities, judgments, or
amounts that are paid in settlement of or in connection with any
claim, action, suit, proceeding or investigation based in whole
or in part on, or arising in whole or in part out of, or
pertaining to the merger agreement or the transactions
contemplated thereby.
Further, the Corporation will for a period of six years
after the Effective Time, cause to be maintained in effect the
policies of directors' and officers' liability insurance
maintained by BGE and PEPCO; provided that the Corporation may
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<PAGE>
substitute therefor policies of at least the same coverage
containing terms that are no less advantageous with respect to
matters occurring prior to the Effective Time to the extent such
liability insurance can be maintained annually at a cost to the
Corporation not greater than 200% of the current aggregate annual
premiums for the policies currently maintained by BGE and PEPCO
for their directors' and officers' liability insurance; provided,
further, that if such insurance cannot be so maintained or
obtained at such cost, the Corporation will maintain or obtain as
much of such insurance for each of BGE and PEPCO as can be so
maintained or obtained at a cost equal to 200% of the respective
current annual premiums of each of BGE and PEPCO for their
directors' and officers' liability insurance.
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-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration
Statement;
II-4
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement is on
Form S-3, Form S-8, or Form F-3 and the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or
furnished to the Securities and Exchange Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Constellation Energy Corporation, 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 7th day of April, 1997.
CONSTELLATION ENERGY CORPORATION
(Registrant)
By: /s/ David 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:
* Charles W. Shivery Chairman of the April 7, 1997
Board, Chief
Executive Officer
and Director
Principal financial
and accounting officer
and director:
/s/ David A. Brune Vice President April 7, 1997
- - -------------------- and Secretary
David A. Brune
* Dennis R. Wraase Director April 7, 1997
* By: /s/ David A. Brune
--------------------
David A. Brune
Attorney-in-Fact
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<PAGE>
EXHIBIT INDEX
Exhibit
Number
3 * - Articles of Incorporation of Constellation Energy Corporation
(Designated as Exhibit (3)-1 in Form S-4 File No. 33-64799
filed February 9, 1996)
4 - Form of Common Stock Certificate.
5(a) - Opinion of Counsel of the Corporation as to the legality of
the shares of Common Stock.
5(b) - Opinion of Piper & Marbury L.L.P. as to the legality of the
shares of Common Stock.
23(a) - Consent of Counsel of the Corporation (included in Exhibit
5(a)).
23(b) - Consent of Piper & Marbury L.L.P. (included in Exhibit 5(b)).
23(c) - Consent of Coopers & Lybrand, L.L.P., Independent Accountants.
23(d) - Consent of Price Waterhouse, LLP, Independent Accountants.
24 - Power of Attorney.
99(a) - Corporations and Associations Article, Section 2-418 of the
Annotated Code of Maryland
99(b) - Article 10 of the Virginia Stock Corporations Act.
__________________
* Incorporated by reference.
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<PAGE>
Exhibit 4
(Form of Common Stock Certificate)
(Form of Face of Certificate)
NUMBER SHARES
CEN _________ _________
COMMON COMMON
CONSTELLATION ENERGY CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND AND THE
COMMONWEALTH OF VIRGINIA. THIS CERTIFICATE MAY BE PRESENTED FOR
TRANSFER IN NEW YORK CITY OR WASHINGTON, D.C.
CUSIP ______________
(SEE REVERSE FOR KEY TO ABBREVIATIONS)
This Certifies that _____________________ is the owner of ____________
SHARES WITHOUT PAR VALUE OF THE COMMON STOCK OF Constellation Energy
Corporation, full-paid and non-assessable, transferable in person or
by attorney on surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and shall be
held subject to all the provisions of the Charter of the corporation
as amended and supplemented, a copy of which is on file with the
Transfer Agent. This certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar.
Witness the seal of the corporation and the facsimile signatures
of its duly authorized officers.
Dated: ____________
/s/ William T. Torgerson /s/ John M. Derrick
_________________________ __________________________
SECRETARY PRESIDENT
CONSTELLATION ENERGY CORPORATION
CORPORATE SEAL 1995
VIRGINIA AND MARYLAND
COUNTERSIGNED AND REGISTERED:
ChaseMellon Shareholder Services, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY __________________________ AUTHORIZED SIGNATURE
<PAGE>
(Form of Reverse of Certificate)
CONSTELLATION ENERGY CORPORATION
The corporation will furnish to any shareholder upon request and
without charge a full statement of the designations, preferences,
limitations, and relative rights of the shares of each class of stock
authorized to be issued and, with respect to the classes of stock
which may be issued in series, the variations in the relative rights
and preferences between the shares of each such series, so far as the
same have been fixed and determined, and the authority of the Board of
Directors to fix and determine the relative rights and preferences of
subsequent series. Such request may be made to the Treasurer of the
Corporation at its principal office or to the Transfer Agent.
____________
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR
DESTROYED THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A
CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
______________
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants common
TOD - transfer on death
UNIF GIFT MIN ACT - ___________ Custodian _________
(Cust) (Minor)
under Uniform Gifts to Minors Act ______________
(State)
UNIF TRF MIN ACT - ___________ Custodian __________
(Cust) (Minor)
(until age _____ )
under Uniform Transfers to Minor Act ___________
(State)
Additional abbreviations may also be used though not in the above
list.
- 2 -
<PAGE>
For value received, ___________ hereby sell, assign and transfer unto
[please insert social security or other
identifying number of assignee]
_______________________________
______________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
______________________________________________________________________
_______________________________________________________________shares
of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint ___________________________
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated _______________
_________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE
WHATEVER.
Signature(s)Guaranteed
By _________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
- 3 -
<PAGE>
Exhibit 5(a)
DONNA M. LEVY
Counsel
Baltimore Gas and Electric Company
P.O. Box 1475
Baltimore, Maryland 21203-1475
410 234-5598
April 3, 1997
[Baltimore Gas and Electric Company Logo]
Constellation Energy Corporation
c/o David A. Brune
Baltimore Gas and Electric Company
39 W. Lexington Street
Baltimore, Maryland 21201
Gentlemen:
This opinion is provided in connection with the registration statement
(the "Registration Statement") being filed by Constellation Energy Corporation
("CEC") with the Securities and Exchange Commission ("SEC") under the Securities
Act of 1933, regarding the proposed issuance of up to 10 million shares of
common stock, no par value, under the CEC Shareholder Investment Plan (the
"Plan"). Pursuant to an Agreement and Plan of Merger dated September 22, 1995,
among CEC (formerly RH Acquisition Corp), Baltimore Gas and Electric Company
(BGE) and Potomac Electric Power Company (PEPCO), upon the occurrence of certain
events BGE and PEPCO will merge into CEC. In anticipation of the consummation of
the merger, CEC is filing this Registration Statement in regard to the common
stock to be offered to its shareholders pursuant to the Plan upon effectiveness
of the merger.
I am an attorney in the Corporate Unit of the legal department of BGE, a
Maryland corporation. BGE is a shareholder of CEC, and CEC has requested that I
provide this opinion. I am licensed to practice law in the State of Maryland. I
have relied upon the opinion of Piper & Marbury L.L.P. as to matters of Virginia
law. In connection with this opinion I, together with other attorneys assisting
me have considered, among other things (1) the current articles of incorporation
of CEC, as amended, and a form of amended and restated articles of incorporation
of CEC (the "Charter") to be filed and effective upon consummation of the
merger; (2) the current by-laws of CEC, and a form of by-laws of CEC to be
adopted effective upon consummation of the merger; (3) CEC's application to the
Public Service Commission of Maryland ("Maryland Commission") to be filed soon
requesting authorization for the issuance and sale of the common stock; (4)
CEC's application to the Public Service Commission of the District of Columbia
("District of Columbia Commission") filed February 14, 1997 requesting
authorization for the issuance and sale of the common
<PAGE>
April 3, 1997
Page 2
stock; (5) the Registration Statement; (6) the Plan; (7) the provisions of the
Public Utility Holding Company Act of 1935 (the "1935 Act"); (8) the opinion of
Piper & Marbury L.L.P. dated April 3, 1997 concerning the applicability and
effect of Virginia law to the matters covered in this opinion; and (9) such
other documents, transactions, and matters of law as we deemed necessary in
order to render this opinion.
This opinion is subject to: (1) the merger becoming effective and the
filing with the appropriate State authorities, and effectiveness of, CEC's
Charter; (2) the Registration Statement becoming effective under the Securities
Act of 1933; (3) issuance by the Maryland Commission and the District of
Columbia Commission of orders authorizing the issuance and sale by CEC of the
common stock under the Plan; and (4) appropriate resolutions being adopted by
the CEC Board of Directors in regard to the issuance of the common stock.
Based on the foregoing, I am of the opinion that the common stock, when
issued and delivered upon receipt of the purchase price pursuant to the Plan,
will constitute legally issued, fully paid and nonassessable shares of common
stock of CEC.
The opinion expressed herein concerns only the effect of the law
(excluding the principles of conflicts of law) of the State of Maryland and the
United States of America as currently in effect and, to the extent covered in
the Piper & Marbury L.L.P. opinion, the law of the Commonwealth of Virginia.
This opinion is provided solely for your benefit and may not be relied
upon by, or quoted to, any other person or entity, in whole or in part, without
my prior written consent.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. I am the in-house attorney referred to in the
Registration Statement and I consent to the references to me in the Registration
Statement (and any amendments thereto) or the prospectus constituting a part of
the Registration Statement (and any amendments or supplements thereto).
Very truly yours,
/s/ Donna M. Levy
<PAGE>
Exhibit 5(b)
PIPER & MARBURY
L.L.P.
1200 NINETEENTH STREET, N.W.
Washington, D.C. 20036-2430
202-861-3900
FAX: 202-223-2085 BALTIMORE
NEW YORK
PHILADELPHIA
EASTON
April 3, 1997
Constellation Energy Corporation
c/o David A. Brune
Baltimore Gas and Electric Company
39 West Lexington Street
Baltimore, Maryland 2l201
Re: Registration Statement on Form S-3
----------------------------------
Dear Sirs:
We have acted as counsel to Constellation Energy
Corporation, (the "Company"), in connection with the registration
under the Securities Act of 1933, as amended (the "Act") of 10
million shares of the Company's Common Stock, no par value (the
"Common Shares"). The Common Shares will be issued in connection
with and pursuant to the Company's Common Stock Shareholder
Investment Plan (the "Plan). The Common Shares are being
registered on Registration Statement on Form S-3 (the
"Registration Statement") to be filed by the Company with the
Securities and Exchange Commission (the "Commission"). The Plan
is filed as part of the Registration Statement.
We have reviewed the Company's Amended and Restated Articles
of Incorporation (the "Charter"), and its by-laws (the "By-
Laws"), which we have been advised will be effective as of the
effective time of the merger among Baltimore Gas and Electric
Company, Potomac Electric Power Company and the Company. We have
reviewed the Registration Statement and the Plan and have
examined and relied upon such corporate records of the Company
and other documents and certificates as to factual matters as we
have deemed necessary or appropriate for the purpose of rendering
the opinion expressed herein. We have assumed, without
independent verification, the genuineness of the signatures on
and the authenticity of all documents furnished to us by the
Company.
Based upon the foregoing, we are of the opinion and advise
you that the Common Shares have been duly authorized and, when
issued and paid for pursuant to the Plan in the manner
<PAGE>
Constellation Energy Corporation
April 3, 1997
Page 2
contemplated by the Registration Statement, will have been
validly and legally issued and will be fully paid and non-
assessable.
The opinion expressed herein concerns only the effect of the
law (excluding the principles of conflicts of law) of the
Commonwealth of Virginia and the United States of America.
This opinion is provided solely for your benefit and may not
be relied upon by, or quoted to, any other person or entity, in
whole or in part, without our prior written consent except that
Donna M. Levy may rely upon this opinion in rendering her opinion
to you dated today regarding the Common Shares.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an Exhibit to the
Registration Statement and to the use of our name under the
caption "Legal Matters" in the Prospectus and any amendments
thereto.
Very truly yours,
/s/ PIPER & MARBURY L.L.P.
<PAGE>
Exhibit 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
__________________________________
We consent to the incorporation by reference in this Registration
Statement on Form S-3 covering 10,000,000 shares of Constellation
Energy Corporation common stock (without par value) (the
"Registration Statement") of our report dated January 17, 1997,
on our audits of the consolidated financial statements and
financial statement schedule included on Form 10-K of Baltimore
Gas and Electric Company and Subsidiaries as of December 31, 1996
and 1995 and for the three years ended December 31, 1996.
We also consent to the reference to our firm under the caption
"Experts" in this Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
April 2, 1997
<PAGE>
Exhibit 23(d)
Consent of Independent Accountants
__________________________________
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on
Form S-3 of our report dated January 17, 1997, which appears on
page 32 of the 1996 Annual Report to Shareholders of Potomac
Electric Power Company, which is incorporated by reference in
Potomac Electric Power Company's Annual Report on Form 10-K for
the year ended December 31, 1996. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 66 of such Annual
Report on Form 10-K. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Washington, D.C.
April 3, 1997
<PAGE>
Exhibit 24
CONSTELLATION ENERGY CORPORATION
POWER OF ATTORNEY
_________________
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
directors and officers of Constellation Energy Corporation hereby
constitute and appoint David A. Brune their true and lawful
attorney and agent to do any and all acts and things and to
execute, in their name any and all instruments which said
attorney and agent may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof in
connection with the registration under said Act of not exceeding
10,000,000 shares of Common Stock (without par value) of
Constellation Energy Corporation including specifically, but
without limiting the generality of the foregoing, power and
authority to sign the names of the undersigned directors and
officers in the capacities indicated below, to any registration
statements to be filed with the Securities and Exchange
Commission in respect to said Common Stock, to any and all
amendments to any registration statement in respect to said
Common Stock and to any instruments or documents filed as part of
or in connection with said registration statements or amendments
thereto; and each of the undersigned hereby ratifies and confirms
all that said attorney and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed,
or caused to be subscribed, these presents this 3rd day of April
1997.
Signature
Principal Executive Officer /s/ Charles W. Shivery
and Director ___________________________
Charles W. Shivery
Chairman of the Board, Chief
Executive Officer and Director
Director /s/ Dennis R. Wraase
___________________________
Dennis R. Wraase
<PAGE>
Exhibit 99(a)
ANNOTATED CODE OF MARYLAND
SECTIONS 2-418. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS.
(a) DEFINITIONS. - In this section the following words have the
meanings indicated.
(1) "Director" means any person who is or was a director of a
corporation and any person who, while a director of a
corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, other enterprise, or employee benefit plan.
(2) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger, consolidation, or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director, the office of
director in the corporation; and
(ii) When used with respect to a person other than a
director as contemplated in subsection (j), the elective or
appointive office in the corporation held by the officer, or the
employment or agency relationship undertaken by the employee or
agent in behalf of the corporation.
(iii) "Official capacity" does not include service for
any other foreign or domestic corporation or any partnership,
joint venture, trust, other enterprise, or employee benefit plan.
(5) "Party" includes a person who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative, or investigative.
(b) PERMITTED INDEMNIFICATION OF DIRECTOR.-(1) A corporation may
indemnify any director made a party too any proceeding by reason
of service in that capacity unless it is established that:
(i) The act or omission of the director was material to the
matter giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
<PAGE>
(ii) The director actually received an improper personal
benefit in money, property, or services; or
(iii) In the case of any criminal proceeding, the
director had reasonable cause to believe that the act or omission
was unlawful.
(2) (i) Indemnification may be against judgements,
penalties, fines, settlements, and reasonable expenses actually
incurred by the director in connection with the proceeding.
(ii) However, if the proceeding was one by or in the right
of the corporation, indemnification may not be made in respect of
any proceeding in which the director shall have been adjudged to
be liable to the corporation.
(3) (i) The termination of any proceeding by judgement,
order or settlement does not create a presumption that the
director did not meet the requisite standard of conduct set forth
in this subsection.
(ii) The termination of any proceeding by conviction, or a
plea of nolo contendere or its equivalent, or an entry of an
order of probation prior to judgement, creates a rebuttable
presumption that the director did not meet that standard of
conduct.
(c) NO INDEMNIFICATION OF DIRECTOR LIABLE FOR IMPROPER PERSONAL
BENEFIT.- A director may not be indemnified under subsection (b)
of this section in respect of any proceeding charging improper
personal benefit to the director, whether or not involving action
in the director's official capacity, in which the director was
adjudged to be liable on the basis that personal benefit was
improperly received.
(d) REQEQUIRED INDEMNIFICATION AGAINST EXPENSES INCURRED IN
SUCCESSFUL DEFENSE. - Unless limited by the charter:
(1) A director who has been successful, on the merits or
otherwise, in the defense of any proceeding referred to in
subsection (b) of this section shall be indemnified against
reasonable expenses incurred by the director in connection with
the proceeding.
(2) A court of appropriate jurisdiction, upon application of a
director and such notice as the court shall require, may order
indemnification in the following circumstances:
(i) If it determines a director is entitled to
reimbursement under paragraph (1) of this subsection, the court
shall order indemnification, in which case the director shall be
entitled to recover the expenses of securing such reimbursement;
or
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<PAGE>
(ii) If it determines that the director is fairly and
reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not the director has met the
standards of conduct set forth in subsection (b) of this section
or has been adjudged liable under the circumstances described in
subsection (c) of this section, the court may order such
indemnification as the court shall deem proper. However,
indemnification with respect to any proceeding by or in the right
of the corporation or in which liability shall have been adjudged
in the circumstances described in subsection (c) shall be limited
to expenses.
(3) A court of appropriate jurisdiction may be the same court
in which the proceeding involving the director's liability took
place.
(e) DETERMINATION THAT INDEMNIFICATION IS PROPER. - (1)
Indemnification under subsection (b) of this section may not be
made by the corporation unless authorized for a specific
proceeding after a determination has been made that
indemnification of the director is permissible in the
circumstances because the director has met the standard of
conduct set forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a
quorum consisting of directors not, at the time, parties to the
proceeding, or, if such a quorum cannot be obtained, then by a
majority vote of a committee of the board consisting solely of
two or more directors not, at the time, parties to such
proceeding and who were duly designated to act in the matter by a
majority vote of the full board in which the designated directors
who are parties may participate;
(ii) By special legal counsel selected by the board of
directors or a committee of the board by vote as set forth in
subparagraph (i) of this paragraph, or, if the requisite quorum
of the full board cannot be obtained therefor and the committee
cannot be established, by a majority vote of the full board in
which directors who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and determination as to
reasonableness of expenses shall be made in the same manner as
the determination that indemnification is permissible. However,
if the determination that indemnification is permissible is made
by special legal counsel, authorization of indemnification and
determination as to reasonableness of expenses shall be made in
the manner specified in subparagraph (ii) of paragraph (2) of
this subsection for selection of such counsel.
- 3 -
<PAGE>
(4) Shares held by directors who are parties to the proceeding
may not be voted on the subject matter under this subsection.
(f) PAYMENT OF EXPENSES IN ADVANCE OF FINAL DISPOSITION OF
action.-(1) Reasonable expenses incurred by a director who is a
party to a proceeding may be paid or reimbursed by the
corporation in advance of the final disposition of the proceeding
upon receipt by the corporation of:
(i) A written affirmation by the director of the director's
good faith belief that the standard of conduct necessary for
indemnification by the corporation as authorized in this section
has been met; and
(ii) A written undertaking by or on behalf of the director
to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
(2) The undertaking required by subparagraph (ii) of paragraph
(1) of this subsection shall be an unlimited general obligation
of the director but need not be secured and may be accepted
without reference to financial ability to make the repayment.
(3) Payments under this subsection shall be made as provided
by the charter, bylaws, or contract or as specified in subsection
(e) of this section.
(g) VALIDITY OF INDEMNIFICATION PROVISION.-The indemnification
and advancement of expenses provided or authorized by this
section may not be deemed exclusive of any other rights, by
indemnification or otherwise, to which a director may be entitled
under the charter, the bylaws, a resolution of stockholders or
directors, an agreement or otherwise, both as to action in an
official capacity and as to action in another capacity while
holding such office.
(h) REIMBURSEMENT OF DIRECTOR'S EXPENSES INCURRED WHILE
APPEARING AS WITNESS.- This section does not limit the
corporation's power to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a
proceeding at a time when the director has not been made a named
defendant or respondent in the proceeding.
(i) DIRECTOR'S SERVICE TO EMPLOYEE BENEFIT PLAN.-For purposes of
this section:
(1) The corporation shall be deemed to have requested a
director to serve an employee benefit plan where the performance
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<PAGE>
of the director's duties to the corporation also imposes duties
on, or otherwise involves services by, the director to the plan
or participants or beneficiaries of the plan;
(2) Excise taxes assessed on a director with respect to an
employee benefit plan pursuant to applicable law shall be deemed
fines; and
(3) Action taken or omitted by the director with respect to an
employee benefit plan in the performance of the director's duties
for a purpose reasonably believed by the director to be in the
interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
(j) OFFICER, EMPLOYEE OR AGENT. - Unless limited by the charter:
(1) An officer of the corporation shall be indemnified as and
to the extent provided in subsection (d) of this section for a
director and shall be entitled, to the same extent as a director,
to seek indemnification pursuant to the provisions of subsection
(d);
(2) A corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same extent
that it may indemnify directors under this section; and
(3) A corporation, in addition, may indemnify and advance
expenses to an officer, employee, or agent who is not a director
to such further extent, consistent with law, as may be provided
by its charter, bylaws, general or specific action of its board
of directors, or contract.
(k) INSURANCE OR SIMILAR PROTECTION.-(1) A corporation may
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of the corporation,
or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, other enterprise, or employee benefit plan
against any liability asserted against and incurred by such
person in any such capacity or arising out of such person's
position, whether or not the corporation would have the power to
indemnify against liability under the provisions of this section.
(2) A corporation may provide similar protection, including a
trust fund, letter of credit, or surety bond, not inconsistent
with this section.
(3) The insurance or similar protection may be provided by a
subsidiary or an affiliate of the corporation.
- 5 -
<PAGE>
(l) REPORT OF INDEMNIFICATION TO STOCKHOLDERS. - Any
indemnification of, or advance of expenses to, a director in
accordance with this section, if arising out of a proceeding by
or in the right of the corporation, shall be reported in writing
to the stockholders with the notice of the next stockholders'
meeting or prior to the meeting. (1981, ch. 737; 1988, chs. 3, 4;
1989, ch. 450.)
<PAGE>
Exhibit 99(b)
VIRGINIA STOCK CORPORATIONS ACT
Article 10.
INDEMNIFICATION.
SECTION 13.1-696. DEFINITIONS. - In this article:
"Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger or other transaction in which
the predecessor's existence ceased upon consummation of the
transaction.
"Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a
corporation, is or was serving at the corporation's request as a
director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise. A
director is considered to be serving an employee benefit plan at
the corporation's request if his duties to the corporation also
impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires otherwise, the
estate or personal representative of a director.
"Expenses" includes counsel fees.
"Liability" means the obligation to pay a judgment, settlement,
penalty, fine, including any excise tax assessed with respect to
an employee benefit plan, or reasonable expenses incurred with
respect to a proceeding.
"Official capacity" means, (i) when used with respect to a
director, the office of director in a corporation; or (ii) when
used with respect to an individual other than a director, as
contemplated in Section 13.1-702, the office in a corporation
held by the officer or the employment or agency relationship
undertaken by the employee or agent on behalf of the corporation.
"Official capacity" does not include service for any other
foreign or domestic corporation or any partnership, joint
venture, trust, employee benefit plan, or other enterprise.
<PAGE>
"Party" includes an individual who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
"Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal.
(Code 1950, Section 13.1-3.1; 1968, c.570; 1975, c.500; 1979,
c.99; 1985, c.522.)
SECTION 13.1-697. AURHORITY TO INDEMNIFY.-A. Except as provided
in subsection D of this section, a corporation may indemnify an
individual made a party to a proceeding because he is or was a
director against liability incurred in the proceeding if:
1. He conducted himself in good faith; and
2. He believed:
a. In the case of conduct in his official capacity with
the corporation, that his conduct was in its best interests; and
b. In all other cases, that his conduct was at least not
opposed to its best interests; and
3. In the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
B. A director's conduct with respect to an employee benefit
plan for a purpose he believed to be in the interests of the
participants in and beneficiaries of the plan is conduct that
satisfies the requirement of subdivision 2b of subsection A of
this section.
C. The termination of a proceeding by judgment, order,
settlement or conviction is not, of itself, determinative that
the director did not meet the standard of conduct described in
this section.
D. A corporation may not indemnify a director under this
section:
1. In connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the
corporation; or
2. In connection with any other proceeding charging
improper personal benefit to him, whether or not involving action
in his official capacity, in which he was adjudged liable on the
basis that personal benefit was improperly received by him.
E. Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the
proceeding. (Code 1950, Section 13.1-3.1; 1968, c.570; 1975,
c.500; 1979, c.99; 1985, c.522.)
- 2 -
<PAGE>
SECTION 13.1-698. MANDATORY INDEMNIFICATION.-Unless limited by
its articles of incorporation, a corporation shall indemnify a
director who entirely prevails in the defense of any proceeding
to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in
connection with the proceeding. (Code 1950, Section 13.1-3.1;
1968, c.570; 1975, c.500; 1979, c.99; 1985, c.522.)
SECTION 13.1-699. ADVANCE FOR EXPENSES.-A. A corporation may
pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding in advance of final
disposition of the proceeding if:
1. The director furnishes the corporation a written
statement of his good faith belief that he has met the standard
of conduct described in Section 13.1-697;
2. The director furnishes the corporation a written
undertaking, executed personally or on his behalf, to repay the
advance if it is ultimately determined that he did not meet the
standard of conduct; and
3. A determination is made that the facts then known to
those making the determination would not preclude indemnification
under this article.
B. The undertaking required by subdivision 2 of subsection A of
this section shall be an unlimited general obligation of the
director but need not be secured and may be accepted without
reference to financial ability to make repayment.
C. Determinations and authorizations of payments under this
section shall be made in the manner specified in Section 13.1-
701. (Code 1950, Section 13.1-3.1; 1968, c.570; 1975, c.500;
1979, c.99; 1985, c.522.)
SECTION 13.1-700: Repealed by Acts 1987, cc.59, 257.
SECTION 13.1-700.1. COURT ORDERS FOR ADVANCES, REIMBURSEMENT OR
INDEMNIFICATION.- A. An individual who is made a party to a
proceeding because he is or was a director of a corporation may
apply to a court for an order directing the corporation to make
advances or reimbursement for expenses or to provide
indemnification. Such application may be made to the court
conducting the proceeding or to another court of competent
jurisdiction.
B. The court shall order the corporation to make advances
and/or reimbursement for expenses or to provide indemnification
if it determines that the director is entitled to such advances,
reimbursement or indemnification and shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain the order.
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C. With respect to a proceeding by or in the right of the
corporation, the court may (i) order indemnification of the
director to the extent of his reasonable expenses if it
determines that, considering all the relevant circumstances, the
director is entitled to indemnification even though he was
adjudged liable to the corporation and (ii) also order the
corporation to pay the director's reasonable expenses incurred to
obtain the order of indemnification.
D. Neither (i) the failure of the corporation, including its
board of directors, its independent legal counsel and its
shareholders, to have made an independent determination prior to
the commencement of any action permitted by this section that the
applying director is entitled to receive advances and/or
reimbursement nor (ii) the determination by the corporation,
including its board of directors, its independent legal counsel
and its shareholders, that the applying director is not entitled
to receive advances and/or reimbursement or indemnification shall
create a presumption to that effect or otherwise of itself be a
defense to that director's application for advances for expenses,
reimbursement or indemnification. (1987, cc.59, 257.)
SECTION 13.1-701. DETERMINATION AND AUTHORIZATION OF
INDEMNIFICATION.-A. A corporation may not indemnify a director
under Section 13.1-697 unless authorized in the specific case
after a determination has been made that indemnification of the
director is permissible in the circumstances because he has met
the standard of conduct set forth in Section 13.1-697.
B. The determination shall be made:
1. By the board of directors by a majority vote of a
quorum consisting of directors not at the time parties to the
proceeding;
2. If a quorum cannot be obtained under subdivision 1 of
this subsection, by majority vote of a committee duly designated
by the board of directors (in which designation directors who are
parties may participate), consisting solely of two or more
directors not at the time parties to the proceeding;
3. By special legal counsel:
a. Selected by the board of directors or its committee in
the manner prescribed in subdivisions 1 and 2 of this subsection;
or
b. If a quorum of the board of directors cannot be
obtained under subdivision 1 of this subsection and a committee
cannot be designated under subdivision 2 of this subsection,
selected by majority vote of the full board of directors, in
which selection directors who are parties may participate; or
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4. By the shareholders, but shares owned by or voted under
the control of directors who are at the time parties to the
proceeding may not be voted on the determination.
C. Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as
the determination that indemnification is permissible except that
if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under
subdivision 3 of subsection B of this section to select counsel.
(Code 1950, Section 13.1-3.1; 1968, c.570; 1975, c.500; 1979,
c.99; 1985, c.522.)
SECTION 13.1-702. INDEMNIFICATION OF OFFICERS, EMPLOYEES AND
AGENTS. - Unless limited by a corporation's articles of
incorporation,
1. An officer of the corporation is entitled to mandatory
indemnification under Section 13.1-698, and is entitled to apply
for court-ordered indemnification under Section 13.1-700.1, in
each case to the same extent as a director; and
2. The corporation may indemnify and advance expenses
under this article to an officer, employee, or agent of the
corporation to the same extent as to a director. (Code 1950,
Section 13.1-3.1; 1968, c.570; 1975, c.500; 1979, c.99; 1985,
c.522.)
SECTION 13.1-703. INSURANCE.-A corporation may purchase and
maintain insurance on behalf of an individual who is or was a
director, officer, employee, or agent of the corporation, or who,
while a director, officer, employee, or agent of the corporation,
is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise,
against liability asserted against or incurred by him in that
capacity or arising from his status as a director, officer,
employee, or agent whether or not the corporation would have
power to indemnify him against the same liability under Section
13.1-697 or Section 13.1-698. (Code 1950, Section 13.1-3.1; 1968,
c.570; 1975, c.500; 1979, c.99; 1985, c.522.)
SECTION 13.1-704. APPLICATION OF ARTICLE.-A. Unless the articles
of incorporation or bylaws expressly provide otherwise, any
authorization of indemnification in the articles of incorporation
or bylaws shall not be deemed to prevent the corporation from
providing the indemnity permitted or mandated by this article.
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B. Any corporation shall have power to make any further
indemnity, including indemnity with respect to a proceeding by or
in the right of the corporation, and to make additional provision
for advances and reimbursement of expenses, to any director,
officer, employee or agent that may be authorized by the articles
of incorporation or any bylaw made by the shareholders or any
resolution adopted, before or after the event, by the
shareholders, except an indemnity against (i) his willful
misconduct, or (ii) a knowing violation of the criminal law.
Unless the articles of incorporation, or any such bylaw or
resolution expressly provide otherwise, any determination as to
the right to any further indemnity shall be made in accordance
with Section 13.1-701 B. Each such indemnity may continue as to
a person who has ceased to have the capacity referred to above
and may inure to the benefit of the heirs, executors and
administrators of such a person.
C. No right provided to any person pursuant to this section may
be reduced or eliminated by any amendment of the articles of
incorporation or bylaws with respect to any act or omission
occurring before such amendment. (Code 1950, Section 13.1-3.1;
1968, c.570; 1975, c.500; 1979, c.99; 1985, c.522; 1987, cc.59,
257; 1988, c.561.)
