<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 33-53855
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 3, 1995)
$25,800,000
DELMARVA POWER & LIGHT COMPANY
FIRST MORTGAGE BONDS, SERIES I
6.95% AMORTIZING BONDS DUE JUNE 1, 2008
----------------
Interest on the First Mortgage Bonds offered hereby (the "Offered Bonds") is
payable semi-annually on June 1 and December 1 of each year, beginning December
1, 1995. Annual principal installments are payable on June 1 of each year,
beginning June 1, 1997. The Offered Bonds will not be subject to redemption
prior to maturity. The Offered Bonds will be represented by a global bond
registered in the name of a nominee of the The Depository Trust Company, as
Depository. Interests in the Offered Bonds will be shown on, and transfers
thereof will be effected only through, records maintained by the Depository
(with respect to participants' interests) and its participants (with respect to
interests of persons other than participants). Except as described in the
accompanying Prospectus, Offered Bonds in certificated form will not be issued
in exchange for the global bond. See "Certain Terms of the Offered Bonds"
herein and "Description of the New Bonds" and "Book-Entry System" in the
accompanying Prospectus.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Bond................................ 100% .65% 99.35%
- --------------------------------------------------------------------------------
Total................................... $25,800,000 $167,700 $25,632,300
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from June 1, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $69,000.
----------------
The Offered Bonds are offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by Reid & Priest LLP, counsel for the Underwriters, and by
counsel for the Company and certain other conditions. The Underwriters reserve
the right to withdraw, cancel or modify such offer and to reject orders in
whole or in part. It is expected that delivery of the Offered Bonds will be
made on or about June 19, 1995, through the book-entry facilities of The
Depository Trust Company against payment therefor in immediately available
funds.
----------------
MERRILL LYNCH & CO. MORGAN STANLEY & CO.
INCORPORATED
----------------
The date of this Prospectus Supplement is June 8, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED BONDS
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Offered
Bonds to fund, in part, the purchase price for Conowingo Power Company and for
other general corporate purposes relating to the Company's utility business,
including the repayment of short-term borrowings incurred for such purposes. To
the extent the proceeds are not immediately so used, they may be temporarily
invested in short-term interest-bearing obligations.
CERTAIN TERMS OF THE OFFERED BONDS
The following information concerning the Offered Bonds should be read in
conjunction with the statements under "Description of the New Bonds" and "Book-
Entry System" in the accompanying Prospectus.
INTEREST AND PAYMENT
Ownership interests in the Offered Bonds will be offered, and transfers and
exchanges thereof may be made, only in denominations of $1,000 and integral
multiples thereof. The Offered Bonds will mature on June 1, 2008 and will bear
interest at the rate shown on the cover of this Prospectus Supplement, payable
semi-annually June 1 and December 1, commencing on December 1, 1995. Except as
otherwise noted, principal and interest will be payable, and transfers and
exchanges of the Offered Bonds may be made, only through The Depository Trust
Company, as depository (the "Depository"), as described under "Book-Entry
System" in the accompanying Prospectus.
Installments of principal on the Offered Bonds will be paid annually on each
June 1, beginning June 1, 1997. The principal installment to be paid on each
payment date for each $1,000 of original principal amount is set forth below:
<TABLE>
<CAPTION>
PRINCIPAL
PAYMENT/
PAYMENT DATE $1,000
------------ ---------
<S> <C>
June 1, 1997.................................................... $ 27
June 1, 1998.................................................... 37
June 1, 1999.................................................... 46
June 1, 2000.................................................... 56
June 1, 2001.................................................... 66
June 1, 2002.................................................... 76
June 1, 2003.................................................... 85
June 1, 2004.................................................... 95
June 1, 2005.................................................... 105
June 1, 2006.................................................... 114
June 1, 2007.................................................... 124
June 1, 2008.................................................... 169
</TABLE>
Except with respect to the final payment of principal, the Offered Bonds need
not be presented for payment of principal.
S-2
<PAGE>
REDEMPTION PROVISIONS
The Offered Bonds will not be subject to redemption prior to maturity.
SINKING OR IMPROVEMENT FUND
There will be no Sinking or Improvement Fund for the benefit of the Offered
Bonds.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated (the "Underwriters"), and the Underwriters have severally agreed
to purchase from the Company, the principal amounts of the Offered Bonds set
forth opposite their names below. The Underwriting Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent,
and that the Underwriters are obligated to purchase all of the Offered Bonds if
any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................... $12,900,000
Morgan Stanley & Co. Incorporated............................... 12,900,000
-----------
Total...................................................... $25,800,000
===========
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Offered Bonds to the public at the public offering price set forth on
the cover page of this Prospectus Supplement and to certain dealers at such
price less a concession not in excess of .4% of the principal amount of the
Offered Bonds. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of .25% of the principal amount of the Offered Bonds to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
The Offered Bonds will not be listed on any securities exchange, and there
can be no assurance that there will be a secondary market for the Offered
Bonds. The Underwriters have advised the Company that they intend to make a
market in the Offered Bonds; however, such market making may be discontinued at
any time. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Offered Bonds.
S-3
<PAGE>
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<PAGE>
PROSPECTUS
- ----------
$250,000,000
DELMARVA POWER & LIGHT COMPANY
COMMON STOCK
MEDIUM TERM NOTES, SERIES C
FIRST MORTGAGE BONDS (SECURED MEDIUM-TERM NOTES)
----------------
Delmarva Power & Light Company (the "Company") may offer from time to time
not more than $250,000,000 in the aggregate of the following securities, at
prices and on terms to be determined at or prior to the time of sale: (i)
shares of Common Stock, par value $2.25 per share (the "New Common Stock");
(ii) unsecured Medium Term Notes, Series C (the "New Notes"), and (iii) First
Mortgage Bonds, which may be designated "Secured Medium-Term Notes" (the "New
Bonds")(the New Notes and the New Bonds are herein collectively called the
"Debt Securities" and the New Common Stock and the Debt Securities are herein
collectively called the "Securities").
Specific terms of each issue of the Securities will be set forth in an
accompanying prospectus supplement and, in the case of Medium-Term Notes, a
pricing supplement (collectively, a "Prospectus Supplement"), together with the
terms of the offering of such issue of the Securities. The applicable
Prospectus Supplement will set forth with regard to the particular Securities,
without limitation, the following: (i) in the case of the New Common Stock, the
number of shares of New Common Stock being issued at such time; and (ii) in the
case of the Debt Securities, the designation or designations, the principal
amount or amounts, the date or dates of maturity, the interest rate or rates,
the interest accrual date or dates, the interest payment dates, any sinking
fund or other redemption provisions and any other specific terms of the Debt
Securities being issued at such time.
The Debt Securities will be represented either by global securities
registered in the name of a nominee of The Depository Trust Company, as
depository, or by certificated securities issued to the registered owners
thereof, as set forth in the applicable Prospectus Supplement. Interests in the
global securities will be shown on, and transfers thereof will be effected only
through, records maintained by The Depository Trust Company (with respect to
its participants' interests) and by its participants or persons that hold
through such participants (with respect to the interest of persons other than
such participants). Except under the circumstances described herein,
certificated securities will not be issued in exchange for global securities.
For further information relating to the New Common Stock, see "Description of
the New Common Stock" herein and the applicable Prospectus Supplement. For
further information relating to the Debt Securities, see "Description of the
New Notes," "Description of the New Bonds" and "Book-Entry System" herein, and
the applicable Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The Company may sell the Securities through underwriters, dealers or agents,
or directly to one or more purchasers. The applicable Prospectus Supplement
will set forth the names of underwriters, dealers or agents, if any, and the
price to the public of such Securities, any applicable commissions or discounts
and the net proceeds to the Company, or the means of determining the same, from
any such sale. See "Plan of Distribution" for possible indemnification
arrangements for underwriters, dealers, agents and purchasers.
Outstanding shares of Common Stock are listed on and the shares of New Common
Stock also will be listed on the New York Stock Exchange (Symbol: DEW) and the
Philadelphia Stock Exchange. The Debt Securities may be listed on one or more
securities exchanges at the Company's discretion.
----------------
The date of this Prospectus is February 3, 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "SEC" or the "Commission"). Such reports, proxy statements and
other information may be inspected and copied at the offices of the Commission
at Room 1204, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.; 14th
Floor, 500 West Madison Street, Chicago, Illinois; and 13th Floor, Seven World
Trade Center, New York, New York. Copies of this material may also be obtained
at prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Certain securities of the Company
are listed on the New York and Philadelphia Stock Exchanges, and reports, proxy
material and other information concerning the Company can also be inspected at
the offices of both Exchanges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the Commission
pursuant to the Exchange Act, are incorporated by reference in this Prospectus
and shall be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1993;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994;
3. The Company's Current Report on Form 8-K dated May 25, 1994;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994;
5. The Company's Current Report on Form 8-K dated October 17, 1994; and
6. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be made a part hereof from
their respective dates of filing; provided, however, that the documents
enumerated above or subsequently filed by the Company pursuant to Section 13 of
the Exchange Act prior to the filing with the Commission of the Company's most
recent Annual Report on Form 10-K shall not be deemed to be incorporated by
reference herein or to be a part hereof from and after the date of the filing
of such Annual Report on Form 10-K. The documents incorporated by reference
herein or in any documents incorporated or deemed to be incorporated by
reference herein are sometimes hereinafter called the "Incorporated Documents."
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for all purposes to the extent that a statement
contained in this Prospectus or in any subsequently filed Incorporated Document
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom this Prospectus has been delivered, on
the request of any such person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference in this
Prospectus, other than exhibits to such Incorporated Documents, except exhibits
that are specifically incorporated by reference into the information that this
Prospectus incorporates. Requests for such copies should be directed to Mr.
Donald P. Connelly, Secretary, Delmarva Power & Light Company, 800 King Street,
P.O. Box 231, Wilmington, Delaware 19899, (302) 429-3011.
2
<PAGE>
THE COMPANY
The Company was incorporated in Delaware on April 22, 1909, and in Virginia
on December 31, 1979. The Company's principal executive offices are located at
800 King Street, P. O. Box 231, Wilmington, Delaware 19899, (302) 429-3011.
The Company is an investor-owned public utility which provides electric
service to approximately 388,500 customers on the Delmarva Peninsula in an area
consisting of about 5,700 square miles with a population of approximately
1,000,000. The Company also provides natural gas service to approximately
93,000 customers in an area consisting of about 275 square miles with a
population of approximately 452,000 in northern Delaware, including the City of
Wilmington.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
Securities will be added to its general funds and used for financing the
capital requirements of the Company, including financing the Company's utility
construction program, financing acquisitions of other entities or facilities,
refunding or redeeming, in whole or in part, certain of the Company's
outstanding securities, and other general corporate purposes relating to the
Company's utility business, including the repayment of short-term borrowings
incurred for any such purposes. To the extent the proceeds are not immediately
so used, they may be temporarily invested in short-term interest-bearing
obligations.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
12 MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------
1994 1993 1992 1991 1990 1989
------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
(SEC Method)...................... 3.43X 3.47X 3.03X 2.58X 2.03X 3.01X
</TABLE>
Under the SEC Method, earnings, including AFUDC, have been computed by adding
the amount of income taxes and fixed charges to Net Income. Fixed charges
include gross interest expense and the estimated interest component of rentals.
Excluding the one-time charge for the Company's voluntary early retirement
offer, the ratio of earnings to fixed charges for the twelve months ended
September 30, 1994, would be 3.68X. Excluding the gain from the Company's share
of a settlement reached in the lawsuit against PECO Energy Company, formerly
known as Philadelphia Electric Company, in connection with the shutdown of the
Peach Bottom Atomic Power Station, the ratio of earnings to fixed charges for
the year ended December 31, 1992, would be 2.78X. Net income and income taxes
related to the cumulative effect of a change in accounting for unbilled
revenues recorded in 1991 are excluded from the computation of this ratio.
Excluding the write-off of an investment in certain non-regulated subsidiary
projects, the ratio of earnings to fixed charges for the year ended December
31, 1990, would be 2.89X.
DESCRIPTION OF COMMON STOCK
The statements under this heading do not purport to be complete and are
subject to the detailed provisions of the Company's Restated Certificate and
Articles of Incorporation, as amended (the "Charter"), and the Company's
Mortgage and Deed of Trust dated October 1, 1943, as amended and supplemented
(the "Mortgage"), a copy of each of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The shares of the
Company's Common Stock currently outstanding and the New Common Stock are
herein collectively called the "Common Stock."
3
<PAGE>
DIVIDEND RIGHTS
The holders of Common Stock shall be entitled to receive such dividends as
may be declared by the Board of Directors, except that the holders of the
Preferred Stock have a right to receive cumulative dividends at the rates set
forth in the title of each series thereof before any dividends are paid to the
holders of Common Stock.
LIMITATIONS ON PAYMENT OF DIVIDENDS ON COMMON STOCK
The Charter and the Mortgage contain restrictions on the payment of cash
dividends on Common Stock, including restrictions that would become applicable
if Common Stock equity were less than 25% of total capitalization. (At
September 30, 1994, Common Stock equity was approximately 47.6% of total
capitalization, including Variable Rate Demand Bonds.) Retained earnings
available for dividends on Common Stock as of September 30, 1994, were
approximately $238.1 million under the most restrictive of these provisions.
VOTING RIGHTS
The holders of Common Stock have one vote for each share held. Except as
provided by law and as hereinafter set forth, the holders of the Preferred
Stock are not entitled to vote. Upon default in the payment of dividends on the
Preferred Stock in an amount equivalent to or exceeding one year's dividends,
and until all dividends in default shall have been paid or declared and set
apart for payment, the holders of the Preferred Stock are entitled as a class
to elect a majority of the Board of Directors and the holders of the Common
Stock are entitled as a class to elect the remaining directors. The consent of
certain proportions of the Preferred Stock is required to effect a merger,
consolidation or sale or other disposition of all of the Company's assets, to
amend, alter, change or repeal any of the express terms of the Preferred Stock
in a manner prejudicial to its holders, to increase the authorized number of
shares of, or to create or authorize any kind of stock ranking prior to or on
parity with, or any security convertible into, the Preferred Stock and to issue
unsecured debt or additional shares of the Preferred Stock unless certain
capitalization and coverages tests are met. In some cases, the right to vote
only applies in certain circumstances.
OTHER RIGHTS
The holders of Common Stock have no preemptive rights to purchase additional
shares of Common Stock or securities convertible into Common Stock.
The outstanding shares of Common Stock are, and the additional shares offered
by this Prospectus upon issuance will be, fully paid and non-assessable.
Subject to the preferential rights of creditors and the holders of Preferred
Stock, the holders of the Common Stock are entitled to share ratably in the
distribution of all remaining assets in the event of liquidation.
CLASSIFICATION OF THE BOARD OF DIRECTORS
The Board of Directors is divided into three classes, each class consisting,
as nearly as possible, of one-third of the total number of directors
constituting the entire Board.
DESCRIPTION OF THE NEW NOTES
Unless otherwise specified in the applicable Prospectus Supplement, the
following description of the New Notes will apply.
The New Notes will be issued under the Company's Indenture, dated as of
November 1, 1988 (such Indenture, as supplemented and amended, together with
any constituent instruments establishing the terms of particular Notes (as
hereinafter defined), is herein called the "Indenture"), between the Company
and Chemical Bank, successor to Manufacturers Hanover Trust Company, as trustee
(the "Note Trustee"). The
4
<PAGE>
statements under this heading do not purport to be complete and are subject to
the detailed provisions of the Indenture, a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
GENERAL
The Indenture provides that, in addition to the New Notes offered hereby,
additional debt securities (including both interest-bearing and original issue
discount securities) may be issued thereunder without limitation as to the
aggregate principal amount (Indenture, Section 301). The debt securities of all
series under the Indenture are herein collectively called the "Notes." The
Indenture does not limit the amount of other debt, secured or unsecured, that
may be issued by the Company. However, the Charter provides that, so long as
any shares of its Preferred Stock--$100 Par and Preferred Stock--$25 Par are
outstanding, the Company must obtain the consent of the holders of a majority
of the voting power of such Preferred Stock in order to issue or assume any
unsecured debt (other than for refunding or renewing outstanding unsecured
securities of the Company resulting in equal or longer maturities or redeeming
or retiring all outstanding shares of the Company's Preferred Stock) if such
action would cause the total outstanding principal amount of all unsecured debt
to exceed 20% of the Company's secured debt in the aggregate outstanding and
the capital stock, premiums thereon, and surplus of the Company, as stated on
its books at such time.
The New Notes will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company. Substantially all of the properties
of the Company are subject to the lien of the Mortgage securing the Company's
First Mortgage Bonds. (See "Description of the New Bonds.")
Each New Note will have a maturity ranging from nine months to forty years
commencing on its date of original issuance (the "Original Issue Date"). Unless
otherwise specified in the applicable Prospectus Supplement, each New Note will
bear interest from, and including, the Original Issue Date, or, if later, the
most recent date to which interest has been paid or duly provided for, to, but
excluding, the Interest Payment Date (as hereinafter defined), at the rate per
annum stated on the face thereof until the principal amount thereof is paid or
made available for payment. Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months.
Reference is made to the applicable Prospectus Supplement for the following
terms and other information with respect to the New Notes being offered hereby
and thereby: (1) the designation or designations and the principal amount or
amounts of such New Notes; (2) the purchase price or prices of such New Notes
(the "Issue Price"); (3) the Original Issue Date; (4) the date or dates on
which such New Notes will mature (the "Maturity Date"); (5) the rate or rates
per annum at which and the initial date or dates from which such New Notes will
bear interest (the "Interest Rate"); (6) the initial date or dates from which
interest will accrue; (7) the date or dates on which such interest will be
payable (each, an "Interest Payment Date"); (8) any sinking fund or other
redemption provisions; (9) whether such New Notes will be issued in global form
and, if so, the minimum denominations of interests therein; and (10) any other
specific terms of such New Notes.
FORM, EXCHANGE AND PAYMENT
The New Notes will be issued in fully registered form in denominations of
$1,000 and integral multiples thereof. The New Notes will be transferable and
exchangeable at the office of the Note Trustee in New York City, without
charge, other than taxes or other governmental charges incident thereto
(Indenture, Section 305). Interest on each Interest Payment Date, except at
maturity or upon redemption, will be paid by check in New York Clearing House
funds mailed to the holder of record as of the close of business on the Record
Date with respect to such Interest Payment Date (unless otherwise specified in
the applicable Prospectus Supplement, the Record Date shall be the 15th day of
the calendar month, whether or not a Business Day (as hereinafter defined),
next preceding such Interest Payment Date); provided, however, that, unless
otherwise specified in the applicable Prospectus Supplement, if the Original
Issue Date of any New Note is after a Record Date and before the corresponding
Interest Payment Date, such New Note will bear interest from
5
<PAGE>
the Original Issue Date but payment of interest shall commence on the second
Interest Payment Date succeeding the Original Issue Date. Payment of the
principal of and premium and interest, if any, on the New Notes at the Maturity
Date or upon redemption will be in immediately available funds upon
presentation of the New Notes at the office of the Note Trustee (Indenture,
Section 307, and Form of New Note). If the Maturity Date or any Interest
Payment Date falls on a day that is not a Business Day, the related payment of
principal, premium, if any, or interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on the amount so payable for the period after the scheduled payment
date. "Business Day" means any day, other than a Saturday or Sunday, that is
not a day on which banking institutions in New York City are generally
authorized or obligated by law or executive order to remain closed.
Notwithstanding the foregoing, if the Company elects to use the book-entry
system through the Depository (as defined in "Book-Entry System"), for so long
as the New Notes shall be held by the Depository or its nominee, owners of
interests in the New Notes will not be entitled to have any individual New
Notes registered in their names, and transfers of interests and payments of
principal, premium, if any, and interest will be made as described herein under
"Book-Entry System."
REDEMPTION
Any terms for the optional or mandatory redemption of New Notes will be set
forth in the applicable Prospectus Supplement. If redeemable, such New Notes
will be redeemed only upon notice, by mail, not less than 30 nor more than 60
days prior to the date fixed for redemption. Any notice of optional redemption
may state that such redemption shall be conditional upon the receipt by the
Note Trustee, on or prior to the date fixed for such redemption, of money
sufficient to pay the principal of and the premium and interest, if any, on the
New Notes to be redeemed and that if such money has not been so received, such
notice will be of no force or effect and the Company will not be required to
redeem such New Notes (Indenture, Section 404).
EVENTS OF DEFAULT
The following constitute Events of Default under the Indenture with respect
to each series of Notes outstanding thereunder:
(a) failure to pay any interest on any Note of such series or any
additional amount payable pursuant to the Indenture within 30 days after
the same becomes due and payable;
(b) failure to pay the principal of, or premium, if any, on, any Note of
such series within 3 Business Days after its maturity;
(c) failure to perform or breach of any covenant or warranty of the
Company in the Indenture (other than a covenant or warranty of the Company
in the Indenture solely for the benefit of one or more series of Notes
other than such series) for 90 days after written notice to the Company by
the Note Trustee or to the Company and the Note Trustee by the Holders of
at least 25% in principal amount of the Notes of such series outstanding
under the Indenture as provided in the Indenture;
(d) default under any bond, debenture, note or other evidence of
indebtedness of the Company for borrowed money (including Notes of other
series issued under the Indenture) or under any mortgage, indenture or
other instrument securing or evidencing any indebtedness of the Company for
borrowed money, which default:
(1) shall constitute a failure to make any payment in excess of
$5,000,000 of the principal of, or interest on, such indebtedness, or
(2) shall have resulted in such indebtedness in an amount in excess
of $10,000,000 becoming or being declared due and payable prior to the
date it would otherwise have become due and payable, without such
payment having been made, such indebtedness having been discharged, or
such acceleration having been rescinded or annulled, within a period of
90 days after written notice
6
<PAGE>
to the Company by the Note Trustee or to the Company and the Note
Trustee by the Holders of at least 25% in principal amount of the Notes
of such series outstanding under the Indenture as provided in the
Indenture;
(e) certain events of bankruptcy, insolvency or reorganization; and
(f) any other Event of Default specified with respect to the Notes of
such series (Indenture, Section 801).
An Event of Default with respect to the New Notes does not necessarily
constitute an Event of Default with respect to the Notes of any other series
issued under the Indenture.
REMEDIES
If an Event of Default with respect to any series of the Notes occurs and is
continuing, then either the Note Trustee or the Holders of not less than 33% in
principal amount of the Notes of such series may declare the principal amount
of all of the Notes of such series to be due and payable immediately; provided,
however, that if any Event of Default occurs and is continuing with respect to
more than one series of Notes, the Note Trustee or the Holders of not less than
33% in aggregate principal amount of the Notes of all such series, considered
as one class, may make such declaration of acceleration and not the Holders of
the Notes of any one of such series.
At any time after the declaration of acceleration with respect to the Notes
of any series has been made and before a judgment or decree for payment of the
money due has been obtained, the Holders of a majority in principal amount of
the Notes of such series, by written notice to the Company and the Note
Trustee, may rescind and annul such declaration and its consequences, if:
(a) the Company has paid or deposited with the Note Trustee a sum
sufficient to pay
(1) all overdue interest on all Notes of such series;
(2) the principal of and premium, if any, on any Notes of such series
that have become due otherwise than by such declaration of acceleration
and interest thereon at the rate or rates prescribed therefor in such
Notes;
(3) interest upon overdue interest at the rate or rates prescribed
therefor in such Notes, to the extent that payment of such interest is
lawful; and
(4) all amounts due to the Note Trustee under the Indenture;
and
(b) any other Event or Events of Default with respect to the Notes of
such series, other than the nonpayment of the principal of Notes of such
series which has become due solely by such declaration of acceleration,
have been cured or waived as provided in the Indenture (Indenture, Section
802).
If an Event of Default with respect to the Notes of any series occurs and is
continuing, the Holders of a majority in principal amount of the Notes of such
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Note Trustee, or exercising any
trust or power conferred on the Note Trustee, with respect to the Notes of such
series; provided, however, that if an Event of Default occurs and is continuing
with respect to more than one series of Notes, the Holders of a majority in
aggregate principal amount of the Notes of all such series, considered as one
class, will have the right to make such direction, and not the Holders of the
Notes of any one of such series; and provided, further, that (a) any such
direction will not be in conflict with any rule of law or with the Indenture
and could not involve the Note Trustee in personal liability in circumstances
where indemnity would not, in the Note Trustee's sole discretion, be adequate
and (b) the Note Trustee may take any other action it deems proper which is not
inconsistent with such direction (Indenture, Section 812). The right of a
Holder of any Note of such series to institute a proceeding with respect to the
Indenture is subject to certain conditions precedent, but each Holder has an
absolute right to receive payment of principal and premium and interest, if
any, when
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due and to institute suit for the enforcement of any such payment (Indenture,
Sections 807 and 808). The Indenture provides that the Note Trustee, within 90
days after the occurrence of any default thereunder with respect to the Notes
of a series, is required to give the Holders of the Notes of such series notice
of any default, unless cured or waived; provided, however, that, except in the
case of a default in the payment of principal of or premium or interest, if
any, on any Notes of such series, the Note Trustee may withhold such notice if
the Note Trustee determines that it is in the interest of such Holders to do
so; and provided, further, that in the case of an Event of Default of the
character specified above in clause (c) under "Events of Default," no such
notice shall be given to such Holders until at least 30 days after the
occurrence thereof (Indenture, Section 902).
The Company will be required to furnish annually to the Note Trustee a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance (Indenture,
Section 608).
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
The Company will not consolidate with or merge into any other corporation or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person unless (a) the corporation formed by such consolidation
or into which the Company is merged or the Person that acquires by conveyance
or transfer, or that leases, the property and assets of the Company
substantially as an entirety, is a Person organized and existing under the laws
of the United States of America, any State thereof or the District of Columbia,
and such Person expressly assumes, by supplemental indenture, the due and
punctual payment of the principal of and premium and interest, if any, on all
of the Notes and the performance of all of the covenants of the Company under
the Indenture, (b) immediately after giving effect to such transactions, no
Event of Default, and no event that after notice or lapse of time would become
an Event of Default, will have occurred and be continuing, and (c) the Company
shall have delivered to the Note Trustee an Officers' Certificate and an
Opinion of Counsel confirming that such transaction is in compliance with the
Indenture (Indenture, Section 1101).
MODIFICATION OF INDENTURE
Without the consent of any Holders of Notes, the Company and the Note Trustee
may enter into one or more supplemental indentures for any of the following
purposes:
(a) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company in the
Indenture and the Notes; or
(b) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Notes or Tranche thereof or to surrender any right
or power conferred upon the Company by the Indenture; or
(c) to add any additional Events of Default with respect to all or any
series of Notes; or
(d) to change or eliminate any provision of the Indenture; provided,
however, that if such change or elimination will materially and adversely
affect the interests of the Holders of the Notes of any series or Tranche
thereof, such change or elimination will become effective with respect to
such Notes only when they no longer remain Outstanding; or
(e) to provide collateral security for the Notes; or
(f) to establish the form or terms of Notes of any series or Tranche
thereof as contemplated by the Indenture; or
(g) to evidence and provide for acceptance of the appointment of a
separate or successor trustee under the Indenture with respect to the Notes
of one or more series and to add to or change any of the provisions of the
Indenture as shall be necessary to provide for or to facilitate the
administration of the trusts under the Indenture by more than one Note
Trustee; or
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(h) to provide for the procedures required to permit the utilization of a
noncertificated system of registration for any Notes or Tranche thereof; or
(i) to cure any ambiguity, defect or inconsistency or to make any other
provisions with respect to matters and questions arising under the
Indenture; provided, however, that such action or other provisions shall
not adversely affect the interests of the Holders of Notes of any series or
Tranche thereof in any material respect. (Indenture, Section 1201.)
Other than as stated in the preceding paragraph, the consent of the Holders
of not less than a majority in principal amount of the Notes of all series,
considered as one class, is required for the purpose of adding any provisions
to, or changing in any manner or eliminating any of the provisions of, the
Indenture pursuant to a supplemental indenture; provided, however, that if less
than all of the series of Notes are directly affected by a supplemental
indenture, then the consent only of the Holders of a majority in aggregate
principal amount of the Notes of all series so directly affected, considered as
one class, will be required; and provided, further, that if the Notes of any
series shall have been issued in more than one Tranche and if the proposed
supplemental indenture shall directly affect the rights of the Holders of Notes
of one or more, but less than all, of such Tranches, then the consent only of
the Holders of a majority in aggregate principal amount of the Notes of all
Tranches so directly affected, considered as one class, shall be required; and
provided, further, that no such supplemental indenture shall, without the
consent of the Holder of each Note of each series or Tranche directly affected
thereby, (a) change the stated maturity of, or any installment of principal of
or interest on, any Note, or reduce the principal thereof or the rate of
interest, or redemption premium thereon, or change the method of calculating
the rate of interest thereon, or otherwise change the terms or place of payment
of the principal thereof or interest or redemption premium thereon, (b) reduce
the percentage in principal amount of the Notes of such series or Tranche
thereof required to consent to any supplemental indenture or waiver under the
Indenture or to reduce the requirements for quorum and voting, (c) change any
obligation of the Company to maintain an office or agency at the place or
places where the principal of and premium and interest, if any, on the Notes of
such series are payable, or (d) modify certain of the provisions in the
Indenture relating to supplemental indentures, waivers of certain covenants and
waivers of past defaults (Indenture, Section 1202).
A supplemental indenture that changes or eliminates any covenant or other
provision of the Indenture which has expressly been included solely for the
benefit of one or more particular series of Notes or Tranche thereof, or that
modifies the rights of the holders of Notes of such series or Tranche thereof
with respect to such covenants or other provisions, shall be deemed not to
affect the rights under the Indenture of the Holders of any Notes of any other
series or Tranche thereof (Indenture, Section 1202).
DEFEASANCE
The New Notes, or any portion of the principal amount thereof, will, prior to
the maturity thereof, be deemed to have been paid for purposes of the Indenture
(except as to certain rights such as rights of registrations of transfer or
exchange expressly provided for in the Indenture), and the entire indebtedness
of the Company in respect thereof will be deemed to have been satisfied and
discharged, if there shall have been irrevocably deposited with the Note
Trustee, in trust (a) money in an amount that will be sufficient, or (b)
Government Obligations (as hereinafter defined), that do not contain provisions
permitting the redemption or other prepayment thereof at the option of the
issuer thereof, the principal of and the interest on which when due, without
any regard to reinvestment thereof, will provide monies that, together with the
money, if any, deposited with or held by the Note Trustee, will be sufficient,
or (c) a combination of (a) and (b) that will be sufficient to pay when due the
principal of and premium and interest, if any, due and to become due on the New
Notes or such portion thereof on and prior to the maturity thereof. For this
purpose, "Government Obligations" include direct obligations of, or obligations
unconditionally guaranteed by, the United States of America entitled to the
benefit of the full faith and credit thereof and certificates, depository
receipts or other instruments which evidence a direct ownership interest in
such obligations or in any specific interest or principal payments due in
respect thereof (Indenture, Section 701).
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DESCRIPTION OF THE NEW BONDS
The New Bonds will be issued under the Mortgage, to which Chemical Bank is
the successor trustee (the "Bond Trustee"). The statements under this heading
do not purport to be complete and are subject to the detailed provisions of the
Mortgage. The bonds of all series under the Mortgage are herein collectively
called the "Bonds".
GENERAL
The New Bonds will have maturities ranging from nine months to forty years.
Each New Bond will bear interest from, and including, the date specified in the
applicable Prospectus Supplement, or, if later, the most recent date to which
interest has been paid or duly provided for, at the rate per annum stated on
the face thereof until the principal amount thereof is paid or made available
for payment. Interest on the New Bonds will be computed on the basis of a 360-
day year consisting of twelve 30-day months.
Reference is made to the applicable Prospectus Supplement for the following
terms and other information with respect to the New Bonds being offered hereby
and thereby: (1) the designation or designations and the principal amount or
amounts of such New Bonds; (2) the purchase price or prices of such New Bonds;
(3) the original issue date of such New Bonds; (4) the date or dates on which
such New Bonds will mature; (5) the rate or rates per annum at which and the
initial date or dates from which such New Bonds will bear interest; (6) the
initial date or dates from which interest will accrue; (7) the date or dates on
which such interest will be payable; (8) any sinking fund or other redemption
provisions; (9) whether such New Bonds will be issued in global form and, if
so, the minimum denominations of interests therein; and (10) any other specific
terms of such New Bonds.
FORM, EXCHANGE AND PAYMENT
The New Bonds will be issued in fully registered form in denominations of
$1,000 and integral multiples thereof. The New Bonds will be transferable and
exchangeable at the office of the Bond Trustee in New York City, without charge
other than taxes or other governmental charges incident thereto. Principal,
premium, if any, and interest will be payable at such office. Notwithstanding
the foregoing, if the Company elects to use the book-entry system through the
Depository, for so long as the New Bonds shall be held by the Depository or its
nominee, owners of interests in the New Bonds will not be entitled to have any
individual New Bonds registered in their names, and transfers of interests and
payments of principal, premium, if any, and interest will be made as described
herein under "Book-Entry System."
MAINTENANCE FUND
If the amount expended by the Company for certain property additions does not
at the end of each calendar year equal the minimum provision for property
retirements or depreciation (as defined in the Mortgage), computed cumulatively
at the end of each such year, the Company is required to deposit with the Bond
Trustee cash, to the extent of the difference less certain credits, on or
before the next succeeding April 30. The Company may not satisfy the
maintenance requirement by the deposit of cash with the Bond Trustee so long as
property additions remain available as a maintenance fund credit.
Minimum provision for property retirements or depreciation means the greater
of (a) an amount equal to 1/12 of 2 1/2% (2 1/4% prior to September 1, 1967) of
the mathematical average of depreciable fixed property on the books of the
Company on the first and last days of any period, multiplied by the number of
full calendar months included in such period, or (b) the remainder of (i) 15%
of the gross operating revenues of the Company during such period arising from
the operation of bondable property after deducting the cost of electrical
energy and gas purchased for resale in connection with such operation, less
(ii) the charges of operating expenses for current repairs and maintenance of
bondable property.
For the calendar year 1993, the Company applied $66,300,000 of property
additions to satisfy the maintenance requirement.
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SECURITY
The New Bonds will be secured equally with all other Bonds outstanding or
hereinafter issued under the Mortgage (except as any sinking fund may afford
additional security for a particular series) by the lien of the Mortgage which
constitutes a first lien on substantially all of the Company's properties
consisting principally of electric generating stations, electric transmission
and distribution lines and substations, gas transmission and distribution
facilities and general office and service buildings, and including its
undivided fractional interest in certain properties, but not including certain
properties to the extent specifically excepted from such lien, such as cash,
securities, judgments, contracts, accounts receivable, choses in action and
goods, wares, merchandise, equipment, materials or supplies held or acquired
for sale or consumption.
Such lien is subject to (a) the conditions and limitations in the instruments
through which the Company claims title to its properties, (b) "excepted
encumbrances" (as defined in the Mortgage), and (c) the prior lien of the Bond
Trustee for its compensation, expenses and liability, and subject further to
the qualification that where payments for rights-of-way on or under private
property for transmission and distribution lines and mains were minor in
amount, no examination of underlying titles as to rights-of-way have been made.
After-acquired property may also be subject to prior liens and to possible
rights of others which may attach prior to recordation of a supplemental
indenture conveying such property to the Bond Trustee after its acquisition.
ISSUANCE OF ADDITIONAL BONDS
Subject to certain conditions and restrictions, additional Bonds may be
issued under the Mortgage to the extent of: (a) 60% of the bondable value of
property additions; (b) the aggregate principal amount of refundable prior lien
Bonds theretofore or then retired; (c) the aggregate principal amount of any
Bonds theretofore issued and thereafter or then retired; or (d) the amount of
cash deposited with the Bond Trustee against the issuance of Bonds, which cash
may be withdrawn to the extent of 60% of the bondable value of property
additions or of the aggregate principal amount of retired Bonds. As of July 31,
1994, the Company's property additions available for the issuance of additional
Bonds and other purposes, excluding retired Bonds and other credits available
for the issuance of additional Bonds, were $580,700,000. Bonds may be issued
pursuant to (a) and (d) above (and in certain cases (b) and (c) above) only if
"net earnings" (as defined in the Mortgage) shall be at least two times the
annual interest requirement on the first mortgage bonds and prior lien bonds to
be outstanding.
RELEASE AND SUBSTITUTION OF PROPERTY
Generally, mortgaged property may be released upon the deposit, pledge with
or certification to the Bond Trustee of the consideration received therefor,
but at not less than the fair value thereof.
DIVIDEND RESTRICTIONS ON COMMON STOCK
The Mortgage prohibits the payment of cash dividends on Common Stock unless
thereafter there remains earned surplus of the Company accumulated on or after
October 15, 1943, in an amount equivalent to any deficiency in the property
retirement and depreciation requirement computed in accordance with the
Mortgage. There is no such deficiency at this time.
MODIFICATION OF MORTGAGE
The Mortgage may be modified with the consent of the Company and of the
holders of 75% in principal amount of the Bonds then outstanding which are
affected by such modification; provided, however, that no such modification
shall change the terms of payment of the Bonds without the consent of the
bondholders affected, or reduce the percentage of consent required for
modification without the consent of all the bondholders.
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DEFAULT
The Mortgage provides that the following events will constitute "completed
defaults" thereunder: failure to pay principal; failure for 60 days to pay
interest; failure to pay principal, premium, or interest upon any outstanding
prior lien bonds beyond the period of grace specified; certain events in
involuntary bankruptcy or insolvency proceedings which continue for a period of
60 days after a court order or decree in such proceedings; certain events in
voluntary bankruptcy or insolvency proceedings; an assignment for benefit of
creditors; and failure to perform any other provisions of the Mortgage for 60
days after written notice shall have been given to the Company by the Bond
Trustee or to the Company and the Bond Trustee by the holders of at least 25%
in principal amount of the Bonds then outstanding. If a completed default
exists, the holders of not less than a majority in principal amount of the
Bonds then outstanding may in writing require the Bond Trustee to take such
action to enforce payment of the Bonds then outstanding and to foreclose the
Mortgage and sell the property. The Bond Trustee is not obligated to take the
aforesaid action unless the Bond Trustee has been reasonably indemnified. Under
the Mortgage, no periodic evidences are required to be furnished to the Bond
Trustee as to the absence of a completed default or as to compliance with the
terms of the Mortgage.
BOOK-ENTRY SYSTEM
The Debt Securities, at the option of the Company, may be issued as either
certificated securities or global securities. If, as described in the
applicable Prospectus Supplement, the Company shall elect to use a book-entry
system with respect to any issue of the Debt Securities, upon issuance, all of
such Debt Securities will be represented by one fully-registered global
security (the "Global Security"). The Global Security will be deposited with,
or on behalf of, The Depository Trust Company ("DTC") or such other depository
as may be subsequently designated (the "Depository") and registered in the name
of the Depository or a nominee thereof.
So long as the Depository, or its nominee, is the registered owner of a
Global Security, such Depository or such nominee, as the case may be, will be
considered the owner of such Global Security for all purposes under the
Indenture or the Mortgage, as the case may be, including notices and voting.
Payments of principal of, and premium, if any, and interest on, the Global
Security will be made to the Depository or its nominee, as the case may be, as
the registered owner of such Global Security. Except as set forth below, the
owners of beneficial interests in a Global Security will not be entitled to
have any individual Debt Securities registered in their names, will not receive
or be entitled to receive physical delivery of any such Debt Securities and
will not be considered the owners of Debt Securities under the Indenture or the
Mortgage, as the case may be. Accordingly, each person holding a beneficial
interest in a Global Security must rely on the procedures of the Depository
and, if such person is not a Direct Participant (as hereinafter defined), on
procedures of the Direct Participant through which such person holds its
interest, to exercise any of the rights of the registered owner of such Debt
Security.
The following is based solely on information furnished by DTC:
DTC will act as securities depository for the Global Securities. The Global
Securities will be issued as fully-registered securities registered in the name
of CEDE & Co. (DTC's partnership nominee).
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
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Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by The
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of the Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for such purchases of
Debt Securities on DTC's records. The ownership interest of each actual
purchaser of each Debt Security ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmation providing details of the
transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interest in the Debt Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Debt Securities, except in the event that use
of the book-entry system for the Debt Securities is discontinued.
To facilitate subsequent transfers, all Debt Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
CEDE & Co. The deposit of Debt Securities with DTC and their registration in
the name of CEDE & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Debt Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Debt Securities are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
If the Debt Securities are redeemable prior to the maturity date, redemption
notices shall be sent to CEDE & Co. If less than all of the Debt Securities are
being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor CEDE & Co. will consent or vote with respect to the Debt
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Company as soon as possible after the record date. The Omnibus Proxy assigns
CEDE & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Debt Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Debt Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the date on which
interest is payable in accordance with their respective holdings shown on DTC's
records, unless DTC has reason to believe that it will not receive payment on
such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, the Note Trustee, the Bond Trustee, or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the Company
and the Note Trustee or the Bond Trustee, as the case may be. Disbursement of
such payments to Direct Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
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DTC may discontinue providing services as securities depository with respect
to the Debt Securities at any time by giving reasonable notice to the Company,
the Note Trustee, and the Bond Trustee. The Company may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
securities depository). Under such circumstances, in the event that a successor
securities depository is not obtained, Debt Securities in certificated form
will be printed and delivered.
* * * * *
Neither the Company nor the Note Trustee nor the Bond Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interest in the Debt Securities or for
maintaining, supervising, or reviewing any records relating to such beneficial
interests.
VALIDITY OF THE SECURITIES
The validity of the Securities will be passed upon for the Company by Dale G.
Stoodley, General Counsel for the Company, and for any underwriters or agents
by Reid & Priest LLP, 40 West 57th Street, New York, New York. Reid & Priest
LLP may rely as to matters of all laws, other than New York and Federal laws,
upon the opinion of Mr. Stoodley. Mr. Stoodley may rely as to matters of
Virginia law upon the opinion of Peter F. Clark, Assistant General Counsel for
the Company, as to matters of Maryland, New Jersey, and Pennsylvania law upon
the opinions of counsel admitted in such jurisdictions, and as to matters of
New York law upon the opinion of Reid & Priest LLP. All matters pertaining to
titles, the lien and enforceability of the Mortgage and franchises will be
passed upon only by Mr. Stoodley, relying as to Virginia law upon the opinion
of Mr. Clark, and as to matters of Maryland, New Jersey, and Pennsylvania law
upon the opinions of counsel admitted in such jurisdictions. From time to time,
Reid & Priest LLP has represented the Company with respect to matters unrelated
to the Securities.
As of December 31, 1994, Mr. Stoodley held, in the form of stock and share
equivalents in the Company's employee benefit plans, approximately 2,241 shares
of the Company's Common Stock and had been granted 1,780 performance shares as
to which full rights will not vest, if at all, until a future date. On such
date, Mr. Stoodley's shares, including the performance shares, had a fair
market value of approximately $72,944.
EXPERTS
The consolidated financial statements and related schedules incorporated by
reference in this Prospectus from the Company's Annual Report on Form 10-K for
the year ended December 31, 1993, have been audited by Coopers & Lybrand LLP,
independent public accountants, as indicated in their reports with respect
thereto, which reports include an explanatory paragraph regarding the Company's
changes in its methods of accounting in 1991, for unbilled revenues, and in
1993, for income taxes and postretirement benefits other than pensions, and are
incorporated by reference herein in reliance upon such reports given upon the
authority of that firm as experts in accounting and auditing.
Dale G. Stoodley, General Counsel for the Company, has reviewed the
statements as to matters of law and legal conclusions under "Description of the
Common Stock," "Description of the New Notes" and "Description of the New
Bonds" and in the Incorporated Documents and such statements are included
herein and therein upon his authority as an expert.
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PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of purchasers or to
a single purchaser; or (iii) through agents. The applicable Prospectus
Supplement will set forth the terms of the offering of the Securities offered
thereby, the purchase price of such Securities and the proceeds to the Company
from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be sold from time to time in one or
more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of the sale. The
Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters as may be designated by the
Company, or directly by one or more of such firms. The underwriter or
underwriters with respect to a particular underwritten offering of Securities
will be named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will
be set forth on the cover page of such Prospectus Supplement. Unless otherwise
set forth in the applicable Prospectus Supplement, the obligations of the
underwriters to purchase the Securities offered thereby will be subject to
certain conditions precedent, and the underwriters will be obligated to
purchase all such Securities if any are purchased.
Securities may be sold directly by the Company or through agents designated
by the Company from time to time. The applicable Prospectus Supplement will set
forth the name of any agent involved in the offer or sale of the Securities in
respect of which such Prospectus Supplement is delivered as well as any
commissions payable by the Company to such agent. Unless otherwise indicated in
the applicable Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject to any conditions set forth in such
Prospectus Supplement and the commission payable for solicitation of such
contracts will be set forth therein.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended.
15
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPEC-
TUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RE-
LIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IM-
PLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTI-
TUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SO-
LICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
[C] [C]
Use of Proceeds....................................................... S-2
Certain Terms of the Offered Bonds.................................... S-2
Underwriting.......................................................... S-3
PROSPECTUS
Available Information................................................. 2
Incorporation of Certain Documents by Reference....................... 2
The Company........................................................... 3
Use of Proceeds....................................................... 3
Ratio of Earnings to Fixed Charges.................................... 3
Description of Common Stock........................................... 3
Description of the New Notes.......................................... 4
Description of the New Bonds.......................................... 10
Book-Entry System..................................................... 12
Validity of the Securities............................................ 14
Experts............................................................... 14
Plan of Distribution.................................................. 15
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$25,800,000
LOGO
DELMARVA POWER
FIRST MORTGAGE BONDS, SERIES I
6.95% AMORTIZING BONDS DUE JUNE 1, 2008
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
JUNE 8, 1995
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