<PAGE>
RULE 424(b)2
REGISTRATION NO. 33-57704
PROSPECTUS
$100,000,000
BALTIMORE GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTES, SERIES D
DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
----------------
Baltimore Gas and Electric Company (the "Company") intends to sell from time
to time up to $100,000,000 aggregate principal amount of its unsecured Medium-
Term Notes, Series D (the "Notes"). Each Note will mature from 9 months to 30
years from the date of issue as determined by mutual agreement of the initial
purchasers and the Company. The Notes may be subject to optional redemption
prior to their stated maturity as indicated in an accompanying supplement to
this Prospectus (the "Pricing Supplement") but will not be subject to
conversion, amortization or any sinking fund.
The interest rate, or interest rate formula, for each Note will be
established by the Company at the date of issuance of such Note and will be
indicated in the applicable Pricing Supplement. Each interest-bearing Note will
bear interest at either (a) a fixed rate (a "Fixed Rate Note") or (b) a
variable rate determined by reference to an interest rate formula (a "Floating
Rate Note"), which may be adjusted by adding or subtracting a Spread or
multiplying by a Spread Multiplier, as indicated in the applicable Pricing
Supplement. Unless otherwise indicated in the applicable Pricing Supplement,
the interest rate formula for Floating Rate Notes will be the Commercial Paper
Rate, the Prime Rate, the CD Rate, the Federal Funds Effective Rate, LIBOR, the
Treasury Rate or the CMT Rate. Interest rates, or interest rate formulas, are
subject to change by the Company from time to time, but no such change will
affect any Note previously issued or which the Company has agreed to sell.
Unless otherwise indicated in the applicable Pricing Supplement, the interest
payment dates for Fixed Rate Notes will be each May 1 and November 1; the
interest payment dates for Floating Rate Notes will be specified in the
applicable Pricing Supplement. See "DESCRIPTION OF NOTES."
The Notes will be issued in minimum denominations of $100,000 and integral
multiples of $1,000 in excess thereof. Notes may be issued, as specified in the
applicable Pricing Supplement, in definitive form or may be represented by a
permanent global Note or Notes registered in the name of The Depository Trust
Company, as depositary (the "Depositary"), or a nominee of the Depositary (each
such Note represented by a permanent global Note being referred to herein as a
"Book-Entry Note"). Beneficial interests in Book-Entry Notes will only be
evidenced by, and transfers thereof will only be effected through, records
maintained by the Depositary (with respect to its participants) and the
Depositary's participants (with respect to beneficial owners). Except as
described under "DESCRIPTION OF NOTES--Book-Entry Notes," owners of beneficial
interests in a permanent global Note will not be entitled to receive physical
delivery of Notes in definitive form and will not be considered the holders
thereof.
----------------
THESE SECURITIES 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 REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
- --------------------------------------------------------------------------------
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<TABLE>
<CAPTION>
Price to Agents' Proceeds to
Public (1) Commission (2)(3) Company (2)(4)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note........... 100% .125% - .750% 99.875% - 99.250%
- -------------------------------------------------------------------------------
Total.............. $100,000,000 $125,000 - $750,000 $99,875,000 - $99,250,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Unless otherwise indicated in a Pricing Supplement, Notes will be issued at
100% of their principal amount.
(2) The Company will pay Lehman Brothers, Lehman Brothers Inc. (including its
affiliate Lehman Government Securities Inc.), and Goldman, Sachs & Co. (the
"Agents"), as agents, a commission ranging from .125% to .750% of the
principal amount of any Note, depending on its stated maturity, sold
through any such Agent. The Company also may sell Notes to any Agent at a
discount for resale to one or more purchasers at varying prices related to
prevailing market prices at the time of resale, as determined by such
Agent. In the case of Notes sold directly to investors by the Company, no
discount will be allowed or commission paid.
(3) The Company has agreed to indemnify the Agents against certain civil
liabilities under the Securities Act of 1933.
(4) Before deduction of expenses payable by the Company estimated at $180,000.
----------------
The Notes will be offered on a continuing basis by the Company through the
Agents, each of which has agreed to use all reasonable efforts to solicit
purchases of the Notes. The Company reserves the right to sell Notes directly
to purchasers on its own behalf. The Company also may sell Notes to either
Agent acting as principal for resale to one or more purchasers. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or any Agent may reject any offer to purchase Notes, in
whole or in part. See "PLAN OF DISTRIBUTION OF NOTES."
----------------
LEHMAN BROTHERS GOLDMAN, SACHS & CO.
September 21, 1994
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy and information statements, and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at certain of its Regional Offices at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621-
2511, and 75 Park Place, Room 1228, New York, New York 10007. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Certain
securities of the Company are listed on the New York, Chicago, Pacific and
Philadelphia Stock Exchanges. Reports, proxy and information statements and
other information concerning the Company can be inspected at such exchanges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission under the
1934 Act (File No.1-1910), are incorporated in this Prospectus by reference as
of their respective dates of filing and shall be deemed to be a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (the "1993 Form 10-K").
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994 and June 30, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE
REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS REFERRED TO
ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS THE EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THE PROSPECTUS
INCORPORATES. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO CHARLES W.
SHIVERY, VICE PRESIDENT, BALTIMORE GAS AND ELECTRIC COMPANY, P.O. BOX 1475,
BALTIMORE, MARYLAND 21203, (410) 234-5511.
2
<PAGE>
THE COMPANY
The Company, incorporated under the laws of the State of Maryland on June 20,
1906, is a public utility primarily engaged in the business of producing,
purchasing and selling electricity, and purchasing, transporting and selling
natural gas within the State of Maryland. The Company is qualified to do
business in the Commonwealth of Pennsylvania where it is participating in the
ownership and operation of two electric generating plants and the District of
Columbia where its federal affairs office is located. The Company also owns
two-thirds of the outstanding capital stock, including one-half of the voting
securities, of Safe Harbor Water Power Corporation, a hydroelectric producer on
the Susquehanna River at Safe Harbor, Pennsylvania. BNG, Inc., a wholly owned
subsidiary of the Company, invests in natural gas reserves. BGE Home Products
and Services, Inc. is a wholly owned subsidiary that sells and services gas and
electric appliances.
The Company's diversified business activities are consolidated under
Constellation Holdings, Inc. Diversified business activities include power
generation projects, financial investments, and real estate projects (including
senior living facilities).
The executive offices of the Company are located in the Gas and Electric
Building, Charles Center, Baltimore, Maryland 21201; its mailing address is P.
O. Box 1475, Baltimore, Maryland 21203; and its telephone number is (410) 234-
5000.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby will be used to
meet capital requirements or for other general corporate purposes relating to
the Company's utility business, which may include the repayment of commercial
paper borrowings incurred primarily to finance, on a temporary basis, the
Company's utility construction, other capital expenditures and operations. The
Company's average commercial paper balances and interest rate for the twelve
months ended July 31, 1994 were $26,627,000 and 4.11%, respectively. To the
extent that the net proceeds from the sale of the Notes are not immediately so
used, they will be temporarily invested in short-term, interest-bearing
obligations. For further information with respect to the Company's utility
construction, other capital expenditures and operations, reference is made to
the information incorporated by reference herein. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-----------------------------------------------------------------------------------------------------
JUNE 30, DECEMBER 31,
-------- --------------------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<C> <C> <C> <C> <C>
3.27 3.00 2.65 2.27 1.78
</TABLE>
The Ratio of Earnings to Fixed Charges for future periods will be included in
the Company's Reports on Forms 10-Q and 10-K. Such Reports are incorporated by
reference into this prospectus at the time they are filed.
DESCRIPTION OF NOTES
GENERAL
The Notes will be issued under an indenture between the Company and
Mercantile-Safe Deposit and Trust Company, Trustee (the "Trustee"), dated as of
July 1, 1985, as supplemented by the Supplemental Indentures dated as of
October 1, 1987, and January 26, 1993, respectively (the "Indenture"), which
are incorporated by reference as Exhibits to the Registration Statement. This
Prospectus includes brief outlines
3
<PAGE>
of certain provisions contained in the Indenture. Such outlines do not purport
to be complete and are qualified in their entirety by express reference to the
Indenture for a complete statement of such provisions, including definitions of
certain terms used. Certain terms used herein without definition are defined in
the "GLOSSARY." The Indenture may be inspected at the offices of the Trustee,
at 2 Hopkins Plaza, Baltimore, Maryland 21201.
The Indenture provides for the issuance from time to time of additional
series of indebtedness (such indebtedness together with the Notes is herein
called "Debt Securities") without limit. Each series may differ as to terms,
including maturity, interest rate, redemption and sinking fund provisions,
covenants, and events of default. The Company has outstanding $283,550,000
aggregate principal amount of Debt Securities under the Indenture.
The Notes constitute a single series of Debt Securities for purposes of the
Indenture and are limited to an aggregate principal amount of $100,000,000 .
The Notes will be unsecured and will rank on a parity with all unsecured
indebtedness of the Company. The terms and conditions set forth herein shall
apply to each Note unless otherwise specified in the applicable Pricing
Supplement and such Note.
The Notes will be issued for a purchase price equal to 100% of the principal
thereof (unless otherwise provided in a Pricing Supplement) in fully registered
form in minimum denominations of $100,000 and integral multiples of $1,000 in
excess thereof. Each Note will mature from nine months to thirty years from its
date of issue, as selected by the initial purchaser(s) and agreed to by the
Company. Reference is made to the relevant Pricing Supplement with respect to
the Notes being offered thereby for the maturity date or dates thereof, the
interest rate or rates thereon and the other terms thereof, if any.
Notes may be issued, as indicated in the applicable Pricing Supplement, in
definitive form ("Definitive Notes") or may be represented by a permanent
global Note or Notes registered in the name of the Depositary or its nominee.
See "Book-Entry Notes" below.
Payments of principal and interest payable at maturity or, if applicable,
upon redemption of any Definitive Note will be made in immediately available
funds, at the request of the holder, at the office of Chemical Bank (the
"Paying Agent") in the Borough of Manhattan, The City of New York, provided
that the Note is presented to the Paying Agent in time for the Paying Agent to
make such payments in such funds in accordance with its normal procedures. The
Notes will be denominated in U.S. dollars and payments of principal of and
interest on the Notes will be made in U.S. dollars. With respect to payments of
Book-Entry Notes at maturity or, if applicable, upon redemption, see "Book-
Entry Notes" below.
The Notes will not be subject to any conversion, amortization or sinking
fund. The applicable Pricing Supplement will indicate either that a Note cannot
be redeemed prior to its maturity date (the "Stated Maturity") or that a Note
will be redeemable at the option of the Company on or after a specified date
prior to its Stated Maturity at a specified price or prices (which may include
a premium) together with accrued interest thereon payable to, but excluding,
the date fixed for redemption. The Notes will be redeemable in whole or in part
in increments of $1,000 (provided that if a Note is redeemed in part, any
remaining principal amount of such Note shall be at least $100,000) on notice
by mail given not more than 60 nor less than 30 days prior to the date fixed
for redemption. The Company may elect to redeem any Note, in whole or in part,
without redeeming any other Note.
The Definitive Notes may be presented for registration of transfer or
exchange at the office of the Paying Agent in the Borough of Manhattan, The
City of New York, and the Paying Agent will perform certain other duties with
respect to redeemable Notes. The Notes may be transferred or exchanged, subject
to the limitations provided in the Indenture, without the payment of any
service charge, other than any tax or other governmental charge payable in
connection therewith. With respect to transfers of Book-Entry Notes and
exchanges of permanent global Notes representing Book-Entry Notes, see "Book-
Entry Notes" below.
4
<PAGE>
INTEREST RATE
General
Each Note will bear interest from its date of issue at the fixed rate per
annum or at the rate per annum determined pursuant to the interest rate
formula, stated therein and in the applicable Pricing Supplement, until the
principal thereof is paid or made available for payment. Interest will be
payable on each Interest Payment Date (as defined below) and at Stated Maturity
or, if applicable, upon redemption. Each payment of interest payable at Stated
Maturity or, if applicable, upon redemption shall include interest accrued to,
but excluding, the date of Stated Maturity or redemption. Interest will be
payable generally to the person (which, in the case of Book-Entry Notes, shall
be the Depositary or its nominee) in whose name a Note (or any predecessor
Note) is registered at the close of business on the Record Date (as defined
below) next preceding each Interest Payment Date; provided, however, that
interest payable at Stated Maturity or, if applicable, upon redemption, will be
payable to the person (which, in the case of Book-Entry Notes, shall be the
Depositary or its nominee) to whom principal shall be payable. The first
payment of interest on any Note originally issued between a Record Date and an
Interest Payment Date or on an Interest Payment Date will be made on the
Interest Payment Date following the next succeeding Record Date to the
registered owner on such Record Date. Interest (other than interest payable at
Stated Maturity or, if applicable, upon redemption) will be paid, at the
Company's option, by check mailed to registered holders or by wire transfer to
any holder of record. For additional information with respect to payments of
interest on Book-Entry Notes, see "Book-Entry Notes" below. Interest rates, or
interest rate formulas, will be subject to change by the Company from time to
time, provided that any change in interest rates, or interest rate formulas,
will not affect any Note previously issued or which the Company has agreed to
sell. The interest rate on the Fixed Rate Notes and the Floating Rate Notes
will in no event be higher than the maximum rate permitted by Maryland law, as
the same may be modified by United States law of general application.
Fixed Rate Notes
The applicable Pricing Supplement relating to a Fixed Rate Note will
designate a fixed rate of interest per annum payable on such Note. Unless
otherwise indicated in the applicable Pricing Supplement, interest with respect
to Fixed Rate Notes will be paid semi-annually each May 1 and November 1 and at
Stated Maturity or, if applicable, upon redemption. If any Interest Payment
Date or the Stated Maturity (or, if applicable, the date of redemption) of a
Fixed Rate Note falls on a day that is not a Business Day, payment of
principal, premium, if any, or interest will be made on the next Business Day
as if it were made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or the Stated Maturity (or the date of redemption), as the case
may be. The Record Dates for such Notes will be the April 15 and October 15
next preceding the May 1 and November 1 Interest Payment Dates. Unless
otherwise indicated in the applicable Pricing Supplement, interest payments for
Fixed Rate Notes shall be the amount of interest accrued to, but excluding, the
relevant Interest Payment Date. Interest on such Notes will be computed on the
basis of a 360-day year of twelve 30-day months.
Floating Rate Notes
The applicable Pricing Supplement relating to a Floating Rate Note will
designate an interest rate formula for such Floating Rate Note. Such formula
may be: (a) the Commercial Paper Rate, in which case such Note will be a
Commercial Paper Rate Note, (b) the Prime Rate, in which case such Note will be
a Prime Rate Note, (c) the CD Rate, in which case such Note will be a CD Rate
Note, (d) the Federal Funds Effective Rate, in which case such Note will be a
Federal Funds Effective Rate Note, (e) LIBOR, in which case such Note will be a
LIBOR Note, (f) the Treasury Rate, in which case such Note will be a Treasury
Rate Note, (g) the CMT Rate, in which case such Note will be a CMT Rate Note,
or (h) such other interest rate formula as is set forth in such Pricing
Supplement. The applicable Pricing Supplement for a Floating Rate Note also
will specify the Spread and/or Spread Multiplier, if any, applicable to each
Note. Any Floating Rate Note may also have either or both of the following: (a)
a maximum numerical interest rate limitation, or ceiling, on the rate of
interest which may accrue during any interest period (the "Maximum Interest
Rate"); and (b) a minimum numerical interest rate limitation, or floor, on the
rate of interest which may
5
<PAGE>
accrue during any interest period (the "Minimum Interest Rate"). In addition,
such Pricing Supplement will define or particularize for each Floating Rate
Note the following terms, if applicable: Calculation Agent, Calculation Dates,
Initial Interest Rate, Interest Payment Dates, Record Dates, Index Maturity,
Interest Determination Dates and Interest Reset Dates with respect to such
Note. See "GLOSSARY."
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually, annually or as specified in the applicable
Pricing Supplement. The Interest Reset Date will be, in the case of Floating
Rate Notes which reset daily, each Business Day; in the case of Floating Rate
Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of
each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday
of each week; in the case of Floating Rate Notes which reset monthly, the third
Wednesday of each month; in the case of Floating Rate Notes which reset
quarterly, the third Wednesday of March, June, September and December; in the
case of Floating Rate Notes which reset semi-annually, the third Wednesday of
two months of each year, as indicated in the applicable Pricing Supplement; and
in the case of Floating Rate Notes which reset annually, the third Wednesday of
one month of each year, as indicated in the applicable Pricing Supplement. The
interest rate in effect on each day shall be (a) if such day is an Interest
Reset Date, the interest rate with respect to the Interest Determination Date
pertaining to such Interest Reset Date or (b) if such day is not an Interest
Reset Date, the interest rate with respect to the Interest Determination Date
pertaining to the next preceding Interest Reset Date; provided, however, that
(a) the interest rate in effect from the date of issue of a Floating Rate Note
(or that of a predecessor Note) to the first Interest Reset Date with respect
of such Floating Rate Note will be the Initial Interest Rate (as set forth in
the applicable Pricing Supplement) and (b) the interest rate in effect for the
ten days immediately prior to Stated Maturity or redemption will be that in
effect on the tenth day preceding the Stated Maturity or redemption date. If
any Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Reset Date will be postponed to the
next day that is a Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), a Prime Rate Note (the "Prime Rate Interest Determination Date"), a CD
Rate Note (the "CD Rate Interest Determination Date"), a Federal Funds
Effective Rate Note (the "Federal Funds Effective Interest Determination
Date"), a LIBOR Note (the "LIBOR Interest Determination Date") or a CMT Rate
Note (the "CMT Interest Determination Date") will be the second Business Day
preceding the Interest Reset Date with respect to such Note. The Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate
Note (the "Treasury Interest Determination Date") will be the day of the week
in which such Interest Reset Date falls on which Treasury bills would normally
be auctioned. Treasury bills are usually sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is usually
held on the following Tuesday, except that such action may be held on the
preceding Friday. If, as the result of a legal holiday, an auction is so held
on the preceding Friday, such Friday will be the Treasury Interest
Determination Date pertaining to the Interest Reset Date occurring in the next
succeeding week. If an auction date shall fall on any Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the first
Business Day immediately following such auction date.
Unless otherwise indicated in the applicable Pricing Supplement and except as
provided below, interest will be payable, in the case of Floating Rate Notes
which reset daily or weekly, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes which reset
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year (as indicated in the
applicable Pricing Supplement); in the case of Floating Rate Notes which reset
quarterly, on the third Wednesday of March, June, September and December of
each year; in the case of Floating Rate Notes which reset semi-annually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and in the case of Floating Rate Notes which reset
annually,
6
<PAGE>
on the third Wednesday of the month specified in the applicable Pricing
Supplement (each an "Interest Payment Date"), and in each case, at Stated
Maturity and, if applicable, upon redemption. If an Interest Payment Date with
respect to any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date will be postponed to the next day that
is a Business Day, except that in the case of a LIBOR Note, if such day is in
the next succeeding calendar month, such Interest Payment Date shall be the
immediately preceding Business Day. Unless otherwise indicated in the
applicable Pricing Supplement, the Record Date with respect to Floating Rate
Notes shall be the date 15 calendar days prior to each Interest Payment Date,
whether or not such date shall be a Business Day.
Unless otherwise indicated in the applicable Pricing Supplement, the interest
payable on each Interest Payment Date for a Floating Rate Note will be the
amount of interest accrued to, but excluding, the Interest Payment Date;
provided, however, that in the case of a Floating Rate Note the interest on
which resets daily or weekly, interest payable on any Interest Payment Date,
other than the interest payable on any date on which principal on any such Note
is payable, will include interest accrued to and including the Record Date next
preceding such Interest Payment Date unless otherwise indicated in the
applicable Pricing Supplement.
The accrued interest for any period is calculated by multiplying the face
amount of such Floating Rate Note by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in such period to the date for which accrued interest is being calculated.
The interest factor (expressed as a decimal rounded upwards, if necessary, as
described below) for each such day is computed by dividing the interest rate
(expressed as a decimal rounded upwards, if necessary, as described below)
applicable to such date by 360, in the case of Commercial Paper Rate Notes,
Prime Rate Notes, CD Rate Notes, Federal Funds Effective Rate Notes or LIBOR
Notes, or by the actual number of days in the year, in the case of Treasury
Rate Notes or CMT Rate Notes.
Unless otherwise specified in a Pricing Supplement, all percentages resulting
from any calculation of Floating Rate Notes will be rounded, if necessary, to
the nearest one-hundred thousandth of a percentage point, with five one-
millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544)
being rounded to 9.87654% (or .0987654)), and all dollar amounts used in or
resulting from such calculation on Floating Rate Notes will be rounded to the
nearest cent (with one-half cent being rounded upwards).
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent will provide the interest rate then in effect, and, if different, the
interest rate which will become effective as a result of a determination made
on the most recent Interest Determination Date with respect to such Floating
Rate Note.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified on the face of such Commercial Paper Rate
Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on
such date for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement as published in H.15(519) under the heading
"Commercial Paper." In the event that such rate is not published prior to 9:00
A.M., New York City time, on the Calculation Date pertaining to such Commercial
Paper Interest Determination Date, then the Commercial Paper Rate will be the
Money Market Yield of the rate on such Commercial Paper Interest Determination
Date for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement as published in Composite Quotations under the heading
"Commercial Paper." If such rate was neither published in H.15(519) by 9:00
A.M., New York City time, on such Calculation Date nor in Composite Quotations
by 3:00 P.M., New York City time, on such date, the Commercial Paper Rate for
that Commercial Paper Interest Determination Date
7
<PAGE>
will be calculated by the Calculation Agent and will be the Money Market Yield
of the arithmetic mean for the offered rates, as of 11:00 A.M., New York City
time, on that Commercial Paper Interest Determination Date, of three leading
dealers of commercial paper in The City of New York selected by the Calculation
Agent for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement placed for an industrial issuer whose bond rating
is "AA," or the equivalent, from a nationally recognized rating agency;
provided, however, that if fewer than three dealers selected as aforesaid by
the Calculation Agent are quoting as mentioned in this sentence, the rate of
interest in effect for the applicable period will be the same as the rate of
interest in effect for the immediately preceding interest reset period.
"Money Market Yield" shall be a yield (expressed as a percentage rounded
upwards, if necessary, to the next higher one-hundred thousandth of a
percentage point) calculated in accordance with the following formula:
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the period for which interest is being calculated.
Prime Rate Notes
Each Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified on the face of such Prime Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Prime Rate Interest Determination Date, the rate set
forth on such date in H.15(519) under the heading "Bank Prime Loan." In the
event that such rate is not published prior to 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Prime Rate Interest Determination
Date, then the Prime Rate will be the arithmetic mean (rounded upwards, if
necessary, to the next higher one-hundred thousandth of a percentage point) of
the rates of interest publicly announced by each bank that appear on the
Reuters Screen NYMF Page as such bank's prime rate or base lending rate as in
effect for that Prime Rate Interest Determination Date. If fewer than four such
rates but more than one such rate appear on the Reuters Screen NYMF Page for
the Prime Rate Interest Determination Date, the Prime Rate will be the
arithmetic mean of the prime rates (quoted on the basis of the actual number of
days in the year divided by a 360-day year) as of the close of business on such
Prime Rate Interest Determination Date by four major money center banks in The
City of New York selected by the Calculation Agent. If fewer than two
quotations are provided, the Prime Rate shall be determined on the basis of the
rates furnished in The City of New York by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, having total equity capital of at least
$500 million and being subject to supervision or examination by a Federal or
State authority, selected by the Calculation Agent to provide such rate or
rates; provided, however, that if the banks selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the rate of
interest in effect for the applicable period will be the same as the rate of
interest in effect for the immediately preceding interest reset period.
CD Rate Notes
Each CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified on the face of such CD Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Rate Interest Determination Date, the rate on
such date for negotiable certificates of deposit having the
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Index Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 9:00 A.M., New York City time, on the
Calculation Date pertaining to such CD Rate Interest Determination Date, then
the CD Rate will be the rate on such CD Rate Interest Determination Date for
negotiable certificates of deposit having the Index Maturity specified in the
applicable Pricing Supplement as published in Composite Quotations under the
heading "Certificates of Deposit." If such rate was neither published in
H.15(519) by 9:00 A.M., New York City time, on such Calculation Date nor in
Composite Quotations by 3:00 P.M., New York City time, on such date, the CD
Rate for that CD Interest Determination Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the secondary market
offered rates, as of 10:00 A.M., New York City time, on that CD Rate Interest
Determination Date, of three leading nonbank dealers of negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money
market banks with a remaining maturity closest to the Index Maturity specified
in the applicable Pricing Supplement in a denomination of $5,000,000; provided,
however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the rate of
interest in effect for the applicable period will be the same as the rate of
interest in effect for the immediately preceding interest reset period.
Federal Fund Effective Rate Notes
Each Federal Funds Effective Rate Note will bear interest at the interest
rate (calculated with reference to the Federal Funds Effective Rate and the
Spread and/or Spread Multiplier, if any) specified on the face of such Federal
Funds Effective Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Effective
Interest Determination Date, the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
so published prior to 11:00 A.M., New York City time, on the Calculation Date
pertaining to such Federal Funds Effective Interest Determination Date, then
the Federal Funds Effective Rate will be the rate on such Federal Funds
Effective Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate." If such rate was neither
published in H.15(519) by 11:00 A.M., New York City time, on such Calculation
Date nor in Composite Quotations by 3:00 P.M., New York City time, on such
date, the Federal Funds Effective Rate for that Federal Funds Effective
Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the rates, as of 11:00 A.M., New York City time,
on that Federal Funds Effective Interest Determination Date, for the last
transaction in overnight Federal Funds arranged by three leading brokers of
Federal Funds transaction in The City of New York selected by the Calculation
Agent; provided, however, that if fewer than three brokers selected as
aforesaid by the Calculation Agent are quoting as mentioned in this sentence,
the rate of interest in effect for the applicable period will be the same as
the rate of interest in effect for the immediately preceding interest reset
period.
LIBOR Notes
Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified
on the face of such LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
(a) With respect to any LIBOR Interest Determination Date, LIBOR will be
determined by either (i) the arithmetic mean of the offered rates for
deposits of not less than $1,000,000 having the Index Maturity specified in
the applicable Pricing Supplement, commencing on the second Business Day
immediately following such LIBOR Interest Determination Date, which appear
on the Reuters Screen LIBO Page as of 11:00 A.M., London time, on that
LIBOR Interest Determination Date, if at least two
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such offered rates appear on the Reuters Screen LIBO Page, or (ii) the rate
for deposits in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date, that appears
on the Telerate Page 3750 as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date. If neither Reuters Screen LIBO Page nor
Telerate Page 3750 is specified in the applicable Pricing Supplement, LIBOR
will be determined as if Telerate Page 3750 had been specified. In the case
where (i) above applies, if fewer than two offered rates appear on the
Reuters Screen LIBO Page, or, in the case where (ii) above applies, if no
rate appears on the Telerate Page 3750, as applicable, LIBOR in respect of
that LIBOR Interest Determination Date will be determined as if the parties
had specified the rate described in (b) below.
(b) With respect to a LIBOR Interest Determination Date on which this
provision applies, LIBOR will be determined on the basis of the rates at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date at which deposits in U.S. dollars having the Index Maturity specified
in the applicable Pricing Supplement are offered to prime banks in the
London interbank market by four major banks in the London interbank market
selected by the Calculation Agent commencing on the second Business Day
immediately following such LIBOR Interest Determination Date and in a
principal amount not less than $1,000,000 that in the Calculation Agent's
judgment is representative for a single transaction in such market at such
time (a "Representative Amount"). The Calculation Agent will request the
principal London office of each of such banks to provide a quotation of its
rate. If at least two such quotations are provided, LIBOR for such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time, on such LIBOR Interest
Determination Date by three major banks in The City of New York, selected
by the Calculation Agent, for loans in U.S. dollars to leading European
banks having the specified Index Maturity commencing on the second Business
Day immediately following such LIBOR Interest Determination Date and in a
Representative Amount; provided, however, that if fewer than three banks
selected as aforesaid by the Calculation Agent are quoting as mentioned in
this sentence, the rate of interest in effect for the applicable period
will be the same as the rate of interest in effect for the immediately
preceding interest reset period.
Treasury Rate Notes
Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified on the face of such Treasury Rate Note and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Pricing Supplement as published in H.15(519) under the heading "U.S. Government
Securities/Treasury Bills/Auction Average (Investment)" or, if not so published
by 9:00 A.M., New York City time, on the Calculation Date pertaining to such
Treasury Interest Determination Date, the auction average rate (expressed as a
bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) for such auction as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury bills having the Index Maturity specified in the applicable Pricing
Supplement are neither published in H.15(519) by 9:00 A.M., New York City time,
on such Calculation Date, nor otherwise published or reported as provided above
by 3:00 P.M., New York City time, on such date, or if no such auction is held
in a particular week, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates as of approximately 3:30 P.M., New York City time, on such Treasury
Interest Determination Date, of three leading primary United States government
securities dealers in The City of New York selected by the Calculation Agent
for the issue of
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Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if fewer than three dealers selected as
aforesaid by the Calculation Agent are quoting as mentioned in this sentence,
the rate of interest in effect for the period will be the same as the rate of
interest in effect for the immediately preceding interest reset period.
CMT Rate Notes
Each CMT Rate Note will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any)
specified on the face of such CMT Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Interest Determination Date, the rate displayed
on the Designated CMT Telerate Page under the caption ". . .Treasury Constant
Maturities. . . Federal Reserve Board Release H.15. . . Mondays Approximately
3:45 P.M.," under the column for the Index Maturity designated in the
applicable Pricing Supplement for (i) if the Designated CMT Telerate Page is
7055, the rate for the applicable CMT Interest Determination Date and (ii) if
the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the CMT Interest
Determination Date occurs. If no page is specified in the applicable pricing
supplement and on the face of such CMT Rate Note, the Designated CMT Telerate
Page shall be 7052, for the most recent week. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the Index
Maturity designated in the applicable Pricing Supplement as published in the
relevant H.15 (519). If such rate is no longer published, or if not published
by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT Interest Determination Date will be such Treasury Constant
Maturity rate for the Index Maturity designated in the applicable Pricing
Supplement (or other United States Treasury rate for such Index Maturity for
that CMT Interest Determination Date with respect to such Interest Reset Date)
as may then be published by either the Federal Reserve Board or the United
States Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for that CMT Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market closing offer side prices as of approximately 3:30 P.M.
(New York City time) on that CMT Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Note") with
an original maturity of approximately the Index Maturity designated in the
applicable Pricing Supplement and a remaining term to maturity of not less than
such Index Maturity minus one year. If two Treasury Notes with an original
maturity as described in the preceding sentence have remaining terms to
maturity equally close to the Index Maturity designated in the applicable
Pricing Supplement, the quotes for the Treasury Note with the shorter remaining
term to maturity will be used. If the Calculation Agent cannot obtain three
such Treasury Note quotations, the CMT Rate for that CMT Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market offer side prices
as of approximately 3:30 P.M. (New York City time) on that CMT Interest
Determination Date of three Reference Dealers in the City of New York (from
five such Reference Dealers selected by the Calculation Agent and eliminating
the highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the
next highest to the Index Maturity designated in the applicable Pricing
Supplement and a remaining term to maturity closest to such Index Maturity and
in
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an amount of at least $100 million. If three or four (and not five) of such
Reference Dealers are quoting as described above, then the CMT Rate will be
based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers selected by the Calculation Agent
are quoting as described herein, the rate of interest in effect for the
applicable period will be the same as the rate of interest in effect for the
immediately preceding interest reset period.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes of like tenor and having the same date of
issue will be represented by a single permanent global Note. Each permanent
global Note representing Book-Entry Notes will be deposited with, or on behalf
of, the Depositary and registered in the name of the Depositary or its nominee.
Book-Entry Notes will not be exchangeable for Definitive Notes at the option of
the holder and, except as set forth below, will not otherwise be issuable in
definitive form. Unless otherwise specified in the applicable Pricing
Supplement, DTC will be the Depositary.
DTC has advised the Company and the Agents as follows: DTC is a limited-
purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. "Direct
Participants" include securities brokers and dealers (including the Agents),
banks, trust companies, clearing corporations, and certain other organizations.
Access to the DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The Rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the DTC system must be made by or through
Direct Participants. Upon the issuance by the Company of Book-Entry Notes
represented by a permanent global Note, the Depositary will credit, on its
book-entry system, the respective principal amounts of the Book-Entry Notes
represented by such permanent global Note to the accounts of Participants. The
accounts to be credited shall be designated by the Agents or underwriters of
such Book-Entry Notes, by certain other agents of the Company or by the Company
if such Book-Entry Notes are offered and sold directly by the Company. The
ownership interest of each actual purchaser of each Note (a "Beneficial Owner")
will be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Notes are
expected to be effected by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Notes, except as set forth below. To
facilitate subsequent transfers, all Notes deposited by Participants with DTC
will be registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of Notes with DTC and their registration in the name of Cede & Co. will
not effect any change in beneficial ownership. The laws of some states require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer beneficial
interests in Book-Entry Notes represented by a permanent global Note.
So long as the Depositary for a permanent global Note, or its nominee, is the
registered owner of such permanent global Note, the Depositary or its nominee,
as the case may be, will be considered the sole owner or holder of the Book-
Entry Notes represented by such permanent global Note for all purposes under
the
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Indenture. Except as provided below, owners of beneficial interests in Book-
Entry Notes will not be entitled to have Book-Entry Notes registered in their
names, will not receive or be entitled to receive physical delivery of Book-
Entry Notes and will not be considered the owners or holders thereof under the
Indenture unless and until it is exchanged in whole or in part for Definitive
Notes. A permanent global Note may not be transferred except as a whole by the
Depositary for such permanent global Note to a nominee of such Depositary or by
a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
The Company expects that conveyance of notices and other communications by
DTC to Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangement among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. In addition, neither DTC
nor Cede & Co. will consent or vote with respect to Notes. The Company has been
advised that DTC's usual procedure is to mail an omnibus proxy to the Company
as soon as possible after the record date with respect to such consent or vote.
The omnibus proxy would assign Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Notes are credited on such
record date (identified in a listing attached to the omnibus proxy).
Payments of principal of and interest, if any, on the Book-Entry Notes
represented by a permanent global Note registered in the name of the Depositary
or its nominee will be made by the Company through the Paying Agent to the
Depositary or its nominee, as the case may be, as the registered owner of such
permanent global Note. Neither the Company, the Trustee, any Paying Agent nor
the registrar for the Notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a permanent global Note or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
The Company has been advised that DTC will credit the accounts of Direct
Participants with payment in amounts proportionate to their respective holdings
in principal amount of interest in any permanent global Note as shown on the
records of DTC. The Company has been advised that DTC's practice is to credit
Direct Participants' accounts on the applicable payment date unless DTC has
reason to believe that it will not receive payment on such date. The Company
expects that payments by Participants to Beneficial Owners will be governed by
standing customer instructions and customary practices, as is now the case with
securities held for the accounts of customers. Such payments will be the
responsibility of such Participants.
If the Depositary with respect to any permanent global Note is at any time
unwilling or unable to continue as Depositary and a successor Depositary is not
appointed by the Company within 90 days, the Company will issue Definitive
Notes in exchange for the Book-Entry Notes represented by such permanent global
Note. In addition, the Company may at any time and in its sole discretion
determine not to use the Depositary's book-entry system, and, in such event,
will issue Definitive Notes in exchange for the Book-Entry Notes represented by
such permanent global Note.
DEFAULTS AND WAIVER THEREOF
The Indenture provides that the happening of one or more of the following
events shall constitute an Event of Default with respect to the Notes: (i)
default for 30 days in the payment of any installment of interest on the Notes;
(ii) default in the payment, when due at maturity or otherwise, of the
principal of (or premium, if any, on) the Notes; (iii) default, for 60 days
after appropriate written notice, in the observance or performance of any other
of the covenants or agreements of the Company contained in the Notes or
contained in the Indenture for the benefit of the Notes; and (iv) certain
events of insolvency. In case an Event of Default shall have occurred and be
continuing with respect to the Notes, the Trustee or the holders of at least
25% in aggregate principal amount of the Notes which are then outstanding may
declare the principal of the Notes to be due and payable immediately, but such
declaration may be annulled, and certain past defaults waived, by the holders
of not less than a majority in aggregate principal amount of the Notes, upon
the conditions provided in the Indenture.
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The Indenture provides that the Trustee shall, within ninety days after the
occurrence of a default with respect to the Notes, give to the holders of the
Notes notice of all uncured defaults known to it (the term "default" being
defined to include the events specified above without grace periods or notice);
provided that, except in the case of default in the payment of principal (or
premium, if any) or interest, if any, in respect of the Notes, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors or
responsible officers or both, of the Trustee, in good faith determines that the
withholding of such notice is in the interest of such holders. The Company will
be required to furnish to the Trustee annually an officers' certificate to the
effect that the Company is not in default under any provisions of the
Indenture.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
holders of the Notes, unless such holders shall have offered to the Trustee
reasonable indemnity. Subject to such provisions for indemnification, the
holders of a majority in principal amount of the Notes then outstanding under
the Indenture will have the right to direct the time, method and place of
conducting any proceedings for any remedy available to, or exercising any trust
or power conferred on, the Trustee with respect to the Notes.
MODIFICATION OF THE INDENTURE
The Indenture provides that, with the consent of the holders of not less than
66 2/3% in aggregate principal amount of the Debt Securities of all series to
be affected (including the Notes) which are then outstanding under the
Indenture (voting as one class), modifications and alterations of the Indenture
may be made which affect the rights of the holders of the Debt Securities of
each such series, but no such modification or alteration may be made which,
among other things, would (i) extend the fixed maturity of any Debt Security
(including any Note) or reduce the principal amount thereof or reduce the rate
or change the method of establishing the rate or extend the time or payment of
any interest thereon, or reduce any premium payable upon the redemption thereof
or (ii) reduce the above-stated percentage of holders required to modify or
alter the Indenture, without the consent of all holders of the Debt Securities
(including the Notes) then outstanding under the Indenture to be affected
thereby. The Indenture also permits the Company and the Trustee to enter into
supplemental indentures without the consent of the holders of Debt Securities
of any series (including the Notes) for certain purposes specified in the
Indenture, including the making of such other provisions in regard to matters
arising under the Indenture which shall not adversely affect the interest of
the holders of such Debt Securities.
CONSOLIDATIONS, MERGERS AND SALES OF ASSETS
The Indenture provides that the Company may not merge or consolidate with any
other corporation or sell or convey all or substantially all of its assets as
an entirety to any other corporation, unless (i) either the Company shall be
the continuing corporation or the successor corporation shall expressly assume
the payment of the principal of (and premium, if any) and interest, if any, on
the Debt Securities (including the Notes) and the performance and observance of
all of the covenants and conditions of the Indenture binding upon the Company,
and (ii) the Company or such successor corporation shall not, immediately after
such merger or consolidation, or such sale or conveyance, be in default in
performance of any such covenant or condition.
The Indenture does not contain any covenant or other provision that
specifically is intended to afford holders of the Notes special protection in
the event of a highly leveraged transaction.
INFORMATION CONCERNING THE TRUSTEE
H. Furlong Baldwin, a member of the Board of Directors of the Company, is
Chairman of the Board and Chief Executive Officer of the Trustee. Christian H.
Poindexter, Chief Executive Officer and Chairman of the Board of Directors of
the Company, is also a member of the Board of Directors of the Trustee. The
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Company has a revolving credit agreement and a bank line of credit with the
Trustee. As of July 31, 1994 there were no borrowings outstanding under either
the revolving credit agreement or the bank line of credit. The Company also
maintains depository and other normal banking relationships with the Trustee.
In addition, subsidiaries of the Company maintain normal banking relationships
and have outstanding loans, as of July 31, 1994 of approximately $11,800,000
with the Trustee.
PLAN OF DISTRIBUTION OF NOTES
Under the terms of an Agency Agreement, to be executed between the Company
and each Agent (the "Agency Agreement"), the Notes will be offered on a
continuing basis by the Company through the Agents, each of which has agreed to
use all reasonable efforts to solicit purchases of the Notes. The Company will
pay each Agent a commission of from .125% to .750% of the principal amount of
each Note, depending on its maturity, sold through such Agent. The Company has
reserved the right to appoint other agents from time to time, which will be
named in the appropriate Pricing Supplement. The Company will have the sole
right to accept offers to purchase Notes and may reject any such offer, in
whole or in part. Each Agent shall have the right, in its discretion reasonably
exercised, without notice to the Company, to reject any offer to purchase Notes
received by it, in whole or in part.
The Company also may sell Notes to any Agent, acting as principal, at a
discount to be agreed upon at the time of sale, for resale to one or more
investors or to another broker/dealer (acting as principal for purposes of
resale) at a fixed price or at varying prices related to prevailing market
prices at the time of such resale, as determined by such Agent.
The Notes may also be sold by the Company directly to purchasers.
Payment of the purchase price of Notes will be required to be made in funds
immediately available in The City of New York.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Act"). The Company has agreed to indemnify the
Agents against and contribute toward certain liabilities, including liabilities
under the Act. The Company has agreed to reimburse the Agents for certain
expenses.
The Agents will not be obligated to make a market in the Notes. The Company
cannot predict the activity of trading in, or liquidity of, the Notes.
Each of the Agents in the past has performed, and in the future may perform,
various services for the Company in the ordinary course of business.
LEGAL OPINIONS
Certain legal matters in connection with the Notes will be passed upon for
the Company by David A. Brune, Esq., General Counsel or Susan Wolf, Esq.,
Associate General Counsel of the Company, and for the Agents by Cahill Gordon &
Reindel (a partnership including a professional corporation), New York, N.Y.
Cahill Gordon & Reindel will rely upon the opinion of Mr. Brune or Ms. Wolf as
to matters of Maryland law and the applicability of the Public Utility Holding
Company Act of 1935.
EXPERTS
The consolidated balance sheets and statements of capitalization as of
December 31, 1993 and 1992 and the consolidated statements of income, cash
flows, common shareholders' equity and taxes for each of the three years in the
period ended December 31, 1993, and the consolidated financial statements
schedules listed in Item 14 (a)(1) and (2) of the 1993 Form 10-K incorporated
by reference in this Prospectus from the 1993 Form 10-K have been incorporated
herein in reliance on the report of Coopers & Lybrand, independent accountants,
given on the authority of that firm as experts in accounting and auditing. Such
report includes explanatory paragraphs related to the recoverability of
replacement energy costs and change in accounting method.
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GLOSSARY
Set forth below are definitions, or the locations elsewhere of definitions,
of some of the terms used in this Prospectus.
"Business Day" means any day other than a Saturday or Sunday that (a) is not
a day on which banking institutions in Baltimore, Maryland, or in New York, New
York, are authorized or obligated by law or executive order to be closed, and
(b) with respect to LIBOR Notes only, is a day on which dealings in deposits in
U.S. dollars are transacted in the London interbank market.
"Calculation Agent" means the agent appointed by the Company to calculate
interest rates for Floating Rate Notes. Unless otherwise provided in a Pricing
Supplement, the Calculation Agent will be Chemical Bank.
"Calculation Date" means the date on which the Calculation Agent is to
calculate an interest rate for a Floating Rate Note, which is the applicable
date set forth below, unless otherwise indicated in the applicable Pricing
Supplement:
Prime Rate--Tenth day after the related Prime Rate Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business
Day.
CD Rate--Tenth day after the related CD Rate Interest Determination Date
or, if such day is not a Business Day, the next succeeding Business Day.
CMT Rate--Tenth day after the related CMT Interest Determination Date or,
if such day is not a Business Day, the next succeeding Business Day.
Commercial Paper Rate--Tenth day after the related Commercial Paper Rate
Interest Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
LIBOR--The LIBOR Interest Determination Date.
Treasury Rate--Tenth day after the related Treasury Interest
Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Federal Funds Effective Rate--Tenth day after the related Federal Funds
Effective Interest Determination Date or, if such day is not a Business
Day, the next succeeding Business Day.
"CD Rate" means the rate calculated as set forth under the heading
"Description of Notes--Floating Rate Notes--CD Rate Notes," unless otherwise
indicated in the applicable Pricing Supplement.
"CMT Rate" means the rate calculated as set forth under the heading
"Description of Notes--Floating Rate Notes--CMT Rate Notes," unless otherwise
indicated in the applicable Pricing Supplement.
"Commercial Paper Rate" means the rate calculated as set forth under the
heading "Description of Notes--Floating Rate Notes--Commercial Paper Rate
Notes," unless otherwise indicated in the applicable Pricing Supplement.
"Composite Quotations" means the daily statistical release entitled
"Composite 3:30 P.M. Quotations for U.S. Government Securities," or any
successor publication, published by The Federal Reserve Bank of New York.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement and on the
face of such CMT Rate Note (or any other page as may replace such page on that
service) for the purpose of displaying Treasury Constant Maturities as reported
in H.15(519).
16
<PAGE>
"Federal Funds Effective Rate" means the rate calculated as set forth under
the heading "Description of Notes--Floating Rate Notes--Federal Funds Effective
Rate Notes," unless otherwise indicated in the applicable Pricing Supplement.
"Fixed Rate Note" shall have the meaning set forth under the heading
"Description of Notes--Interest."
"Floating Rate Notes" shall have the meaning set forth under the heading
"Description of Notes--Interest."
"H.15(519)" means the weekly statistical release entitled "Statistical
Release H.15(519), Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument of obligation on which the interest rate formula is
based, as indicated in the applicable Pricing Supplement.
"Initial Interest Rate" means the rate at which a Floating Rate Note will
bear interest from its date of issue (or that of a predecessor Note) to the
first Interest Reset Date, as indicated in the applicable Pricing Supplement.
"Interest Determination Date" means the date as of which the interest rate
for a Floating Rate Note is to be calculated, to be effective as of the
following Interest Reset Date and calculated on the related Calculation Date
(except in the case of LIBOR which is calculated on the related LIBOR Interest
Determination Date). See the third paragraph under the heading "Description of
Notes--Floating Rate Notes" for the Interest Determination Dates for Floating
Rate Notes. The Interest Determination Dates for any Floating Rate Note will
also be indicated in the applicable Pricing Supplement.
"Interest Reset Date" means the date on which a Floating Rate Note will begin
to bear interest at the variable interest rate determined as of any Interest
Determination Date. See the second paragraph under the heading "Description of
Notes--Floating Rate Notes" for the applicable Interest Reset Dates for such
Notes. The Interest Reset Dates with respect to any Floating Rate Note will
also be set forth in the applicable Pricing Supplement and in such Note.
"LIBOR" means the rate calculated as set forth under the heading "Description
of Notes--Floating Rate Notes--LIBOR Notes," unless otherwise indicated in the
applicable Pricing Supplement.
"Prime Rate" means the rate calculated as set forth under the heading
"Description of Notes--Floating Rate Notes--Prime Rate Notes," unless otherwise
indicated in the applicable Pricing Supplement.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Reuters Screen NYMF Page" means the display designated as page "NYMF" on the
Reuters Monitor Money Rates Service (or such other page as may replace the NYMF
page on that service for the purpose of displaying prime rates or base lending
rates of major United States banks).
"Spread" means the number of basis points specified in the applicable Pricing
Supplement as being applicable to the interest rate for a particular Floating
Rate Note.
"Spread Multiplier" means the percentage specified in the applicable Pricing
Supplement as being applicable to the interest rate for a particular Floating
Rate Note.
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other services or services as may be nominated by the British
Bankers Association for the purpose of displaying London interbank offered
rates for U.S. dollar deposits).
"Treasury Rate" means the interest rate calculated as set forth under the
heading "Description of Notes--Floating Rate Notes--Treasury Rate Notes,"
unless otherwise indicated in the applicable Pricing Supplement.
17
<PAGE>
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NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS INCLUDING ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRE-
SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
ANY UNDERWRITER, DEALER, OR AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OF-
FER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THESE SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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 Notes....................................................... 3
Plan of Distribution of Notes.............................................. 15
Legal Opinions............................................................. 15
Experts.................................................................... 15
Glossary................................................................... 16
</TABLE>
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$100,000,000
[LOGO OF BALTIMORE GAS & ELECTRIC]
MEDIUM-TERM NOTES
SERIES D
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PROSPECTUS
SEPTEMBER 21, 1994
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LEHMAN BROTHERS
GOLDMAN, SACHS & CO.
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