<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 1995
Commission file number 1-1910
BALTIMORE GAS AND ELECTRIC COMPANY
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-0280210
- -----------------------------------------------------------------
(State of incorporation) (IRS Employer Identification No.)
Gas and Electric Building, Charles Center,
Baltimore, Maryland 21201
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 410-783-5920
Not Applicable
- -----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
Common Stock, without par value - 147,527,114 shares outstanding
on July 31, 1995.
<PAGE>
<TABLE>
<CAPTION>
BALTIMORE GAS AND ELECTRIC COMPANY
PART I. FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Quarter Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
(In Thousands, Except Per-Share Amounts)
<S> <C> <C> <C> <C>
Revenues
Electric ............................................... $ 504,627 $ 500,177 $ 1,012,451 $ 1,017,325
Gas ....................................................... 67,968 67,885 220,753 273,071
Diversified businesses .................................... 69,905 83,091 127,102 128,443
Total revenues ............................................ 642,500 651,153 1,360,306 1,418,839
Expenses Other Than Interest and Income Taxes
Electric fuel and purchased energy ........................ 133,128 120,960 280,582 247,513
Gas purchased for resale .................................. 29,188 31,582 110,991 158,507
Operations ................................................ 134,593 137,862 266,128 288,001
Maintenance ............................................... 51,362 43,544 88,243 88,991
Diversified businesses - selling, general, and administrati 52,638 68,759 93,746 102,248
Depreciation and amortization ............................. 75,337 67,934 152,015 137,713
Taxes other than income taxes ............................. 45,334 43,734 99,459 96,529
Total expenses other than interest and income taxes ....... 521,580 514,375 1,091,164 1,119,502
Income From Operations ...................................... 120,920 136,778 269,142 299,337
Other Income
Allowance for equity funds used during construction ....... 4,832 5,542 10,201 10,616
Equity in earnings of Safe Harbor Water Power Corporation . 1,108 1,088 2,215 2,178
Net other income and deductions ........................... (3,328) (405) (5,938) 202
Total other income ........................................ 2,612 6,225 6,478 12,996
Income Before Interest and Income Taxes ..................... 123,532 143,003 275,620 312,333
Interest Expense
Interest charges .......................................... 55,333 53,569 110,310 105,769
Capitalized interest ...................................... (3,683) (3,010) (7,167) (5,811)
Allowance for borrowed funds used during construction ..... (2,614) (2,998) (5,519) (5,739)
Net interest expense ...................................... 49,036 47,561 97,624 94,219
Income Before Income Taxes .................................. 74,496 95,442 177,996 218,114
Income Taxes
Current ................................................... 7,946 10,742 4,913 23,886
Deferred .................................................. 17,689 20,033 55,395 49,456
Investment tax credit adjustments ......................... (2,028) (2,041) (4,055) (4,081)
Total income taxes ........................................ 23,607 28,734 56,253 69,261
Net Income .................................................. 50,889 66,708 121,743 148,853
Preferred and Preference Stock Dividends .................... 9,952 10,021 19,904 20,052
Earnings Applicable to Common Stock ...................... $ 40,937 $ 56,687 $ 101,839 $ 128,801
Average Shares of Common Stock Outstanding ................. 147,527 146,947 147,527 146,692
Total Earnings Per Share of Common Stock .................... $0.28 $0.39 $0.69 $0.88
Dividends Declared Per Share of Common Stock ................ $0.3 $0.3 $0.77 $0.75
Certain prior-year amounts have been reclassified to conform with the current year's presentation.
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION (Continued)
CONSOLIDATED BALANCE SHEETS June 30, December 31,
1995 * 1994
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ................................... $ 27,234 $ 38,590
Accounts receivable (net of allowance for uncollectibles).... 330,587 314,842
Fuel stocks ................................................... 64,285 70,627
Materials and supplies ........................................ 150,321 149,614
Prepaid taxes other than income taxes ......................... 2,798 57,740
Other ......................................................... 72,930 47,022
Total current assets .......................................... 648,155 678,435
Investments and Other Assets
Real estate projects .......................................... 477,132 471,435
Power generation systems ...................................... 329,331 311,960
Financial investments ......................................... 206,186 224,340
Nuclear decommissioning trust fund ............................ 77,510 66,891
Safe Harbor Water Power Corporation ........................... 34,183 34,168
Senior living facilities ...................................... 12,749 11,540
Other ........................................................ 58,153 58,824
Total investments and other assets ............................ 1,195,244 1,179,158
Utility Plant
Plant in service
Electric .................................................... 6,217,995 5,929,996
Gas ......................................................... 659,652 616,823
Common ...................................................... 521,035 511,016
Total plant in service ...................................... 7,398,682 7,057,835
Accumulated depreciation ......................................(2,405,132) (2,305,372)
Net plant in service .......................................... 4,993,550 4,752,463
Construction work in progress ................................. 308,861 506,030
Nuclear fuel (net of amortization) ............................ 127,497 134,012
Plant held for future use ..................................... 24,692 24,320
Net utility plant ............................................. 5,454,600 5,416,825
Deferred Charges
Regulatory assets ............................................. 754,457 773,034
Other deferred charges ........................................ 91,129 96,086
Total deferred charges ........................................ 845,586 869,120
TOTAL ASSETS .................................................. $ 8,143,585 $ 8,143,538
</TABLE>
* Unaudited
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION (Continued)
CONSOLIDATED BALANCE SHEETS June 30, December 31,
1995 * 1994
(In Thousands)
<S> <C> <C>
LIABILITIES AND CAPITALIZATION
Current Liabilities
Short-term borrowings ....................................... $ 113,500 $ 63,700
Current portions of long-term debt and preference stock ....... 359,373 323,675
Accounts payable .............................................. 128,786 181,931
Customer deposits ............................................. 25,955 24,891
Accrued taxes ................................................. 2,129 19,585
Accrued interest .............................................. 61,797 60,348
Dividends declared ............................................ 67,487 66,012
Accrued vacation costs ........................................ 33,449 30,917
Other ......................................................... 16,814 30,857
Total current liabilities ..................................... 809,290 801,916
Deferred Credits and Other Liabilities
Deferred income taxes ......................................... 1,218,083 1,156,429
Deferred investment tax credits ............................... 145,409 149,394
Pension and postemployment benefits ........................... 131,218 138,835
Decommissioning of federal uranium enrichment facilities ...... 45,637 45,836
Other ......................................................... 52,095 59,645
Total deferred credits and other liabilities .................. 1,592,442 1,550,139
Capitalization
Long-term Debt
First refunding mortgage bonds of BGE ......................... 1,744,385 1,744,385
Other long-term debt of BGE ................................... 544,550 544,550
Long-term debt of Constellation Companies ..................... 566,008 575,765
Unamortized discount and premium .............................. (16,540) (17,593)
Current portion of long-term debt ............................. (296,373) (262,175)
Total long-term debt .......................................... 2,542,030 2,584,932
Preferred Stock ................................................. 59,185 59,185
Redeemable Preference Stock ..................................... 341,000 341,000
Current portion of redeemable preference stock ................ (63,000) (61,500)
Total redeemable preference stock ............................. 278,000 279,500
Preference Stock Not Subject to Mandatory Redemption ............ 150,000 150,000
Common Shareholders' Equity
Common stock .................................................. 1,425,460 1,425,378
Retained earnings ............................................. 1,300,899 1,312,655
Pension liability adjustment ................................ (16,521) (16,521)
Net unrealized gain/(loss) on available-for-sale securities . 2,800 (3,646)
Total common shareholders' equity ............................. 2,712,638 2,717,866
Total capitalization .......................................... 5,741,853 5,791,483
TOTAL LIABILITIES AND CAPITALIZATION .......................... $ 8,143,585 $ 8,143,538
</TABLE>
* Unaudited
See Notes to Consolidated Financial Statements.
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
(In Thousands)
<S> <C> <C>
Cash Flows From Operating Activities
Net income ................................................... $ 121,743 $ 148,853
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization .............................. 180,168 161,641
Deferred income taxes ...................................... 55,440 49,456
Investment tax credit adjustments .......................... (4,055) (4,081)
Deferred fuel costs ........................................ 19,978 (2,972)
Accrued pension and postemployment benefits ................ (11,504) (53,833)
Allowance for equity funds used during construction......... (10,201) (10,616)
Equity in earnings of affiliates and joint ventures (5,579) (1,697)
Changes in current assets, other than sale of accounts receivable ... 23,776 36,880
Changes in current liabilities, other than short-te......... (80,720) (80,522)
Other ...................................................... 15 17,672
Net cash provided by operating activities .................... 289,061 260,781
Cash Flows From Financing Activities
Proceeds from issuance of
Short-term borrowings (net) ................................ 49,800 94,800
Long-term debt ............................................. 10,694 203,018
Common stock ............................................... 83 22,945
Reacquisition of long-term debt .............................. (20,451) (213,319)
Redemption of preference stock ............................... - (1,500)
Common stock dividends paid .................................. (112,120) (108,234)
Preferred and preference stock dividends paid ................ (19,904) (19,964)
Other ........................................................ (810) (36)
Net cash used in financing activities ........................ (92,708) (22,290)
Cash Flows From Investing Activities
Utility construction expenditures ............................ (176,680) (227,091)
Allowance for equity funds used during construction .......... 10,201 10,616
Nuclear fuel expenditures .................................... (16,310) (35,078)
Deferred nuclear expenditures ................................ - (4,066)
Deferred energy conservation expenditures .................... (18,869) (18,661)
Contributions to nuclear decommissioning trust fund .......... (4,890) (4,890)
Purchases of marketable equity securities .................... (6,759) (31,076)
Sales of marketable equity securities ........................ 32,169 20,146
Other financial investments .................................. 3,869 (676)
Real estate projects ......................................... (4,473) 25,090
Power generation systems ..................................... (16,458) (5,066)
Other ........................................................ (9,509) (2,303)
Net cash used in investing activities ........................ (207,709) (273,055)
.........
Net Decrease in Cash and Cash Equivalents ...................... (11,356) (34,564)
Cash and Cash Equivalents at Beginning of Period ...... 38,590 84,236
.........
Cash and Cash Equivalents at End of Period ............ $ 27,234 $ 49,672
Other Cash Flow Information
Cash paid during the period for: .........
Interest (net of amounts capitalized) ...................... $ 95,233 $ 89,395
Income taxes ............................................... $ 45,075 $ 41,025
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Results for interim periods, which can be largely influenced
by weather conditions, are not necessarily indicative of results
to be expected for the year.
The preceding interim financial statements of Baltimore Gas
and Electric Company (BGE) and Subsidiaries (collectively, the
Company) reflect all adjustments which are, in the opinion of
Management, necessary for the fair presentation of the Company's
financial position and results of operations for such interim
periods. These adjustments are of a normal recurring nature.
Statement of Financial Accounting Standards No. 121
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 121
regarding accounting for asset impairments. This statement,
which must be adopted by the Company by January 1, 1996, requires
the Company to review long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Additionally, the
statement requires rate-regulated companies to write-off
regulatory assets against earnings whenever those assets no
longer meet the criteria for recognition of a regulatory asset as
defined by SFAS No. 71, Accounting for the Effects of Certain
Types of Regulation. Adoption of SFAS No. 121 is not expected to
have a material impact on the Company's financial statements.
BGE Financing Activity
No issuances or early redemptions of long-term debt or
preference stock have occurred or have been announced during the
period January 1, 1995 through the date of this Report except for
First Refunding Mortgage Bonds redeemed through operation of the
annual sinking fund as required by BGE's mortgage. Through
August 1, 1995, BGE has redeemed $5,025,000 principal amount of
the 8.40% Series due October 15, 1999, $1,333,000 of the 7-1/2%
Series due January 15, 2007, and $857,000 from various other
series. In addition, on August 28, 1995, BGE will redeem $10,033,000
principal amount of the 7-1/8% Series due January 1, 2002 to
complete the sinking fund.
Diversified Business Financing Matters
See Management's Discussion and Analysis of Financial
Condition and Results of Operations - Diversified Businesses
Capital Requirements for additional information about the debt of
Constellation Holdings, Inc. and its subsidiaries.
Environmental Matters
The Clean Air Act of 1990 (the Act) contains two titles
designed to reduce emissions of sulfur dioxide and nitrogen oxide
<PAGE>
(NOx) from electric generating stations. Title IV contains
provisions for compliance in two separate phases. Phase I of
Title IV became effective January 1, 1995, and Phase II of Title
IV must be implemented by 2000. BGE met the requirements of
Phase I by installing flue gas desulfurization systems and fuel
switching and through unit retirements. BGE is currently
examining what actions will be required in order to comply with
Phase II of the Act. However, BGE anticipates that compliance
will be attained by some combination of fuel switching, flue gas
desulfurization, unit retirements, or allowance trading.
At this time, plans for complying with NOx control
requirements under Title I of the Act are less certain because
all implementation regulations have not yet been finalized by the
government. It is expected that by the year 1999 these
regulations will require additional NOx controls for ozone
attainment at BGE's generating plants and at other BGE
facilities. The controls will result in additional expenditures
that are difficult to predict prior to the issuance of such
regulations. Based on existing and proposed ozone nonattainment
regulations, BGE currently estimates that the NOx controls at
BGE's generating plants will cost approximately $90 million. BGE
is currently unable to predict the cost of compliance with the
additional requirements at other BGE facilities.
BGE has been notified by the Environmental Protection Agency
and several state agencies that it is being considered a
potentially responsible party with respect to the cleanup of
certain environmentally contaminated sites owned and operated by
third parties. In addition, a subsidiary of Constellation
Holdings, Inc. has been named as a defendant in a case concerning
an alleged environmentally contaminated site owned and operated
by a third party. Cleanup costs for these sites cannot be
estimated, except that BGE's 15.79% share of the possible cleanup
costs at one of these sites, Metal Bank of America, a metal
reclaimer in Philadelphia, could exceed amounts recognized by up
to approximately $14 million based on the highest estimate of
costs in the range of reasonably possible alternatives. Although
the cleanup costs for certain of the remaining sites could be
significant, BGE believes that the resolution of these matters
will not have a material effect on its financial position or
results of operations.
Also, BGE is coordinating investigation of several former gas
manufacturing plant sites, including exploration of corrective
action options to remove tar. However, no formal legal
proceedings have been instituted against BGE. BGE has recognized
estimated environmental costs at these sites totaling $38.6
million as of March 31, 1995. These costs, net of accumulated
amortization, have been deferred as a regulatory asset. The
technology for cleaning up such sites is still developing, and
potential remedies for these sites have not been identified.
Cleanup costs in excess of the amounts recognized, which could be
significant in total, cannot presently be estimated.
<PAGE>
Nuclear Insurance
An accident or an extended outage at either unit of the
Calvert Cliffs Nuclear Power Plant could have a substantial
adverse effect on BGE. The primary contingencies resulting from
an incident at the Calvert Cliffs plant would involve the
physical damage to the plant, the recoverability of replacement
power costs, and BGE's liability to third parties for property
damage and bodily injury. BGE maintains various insurance
policies for these contingencies. The costs that could result
from a major accident or an extended outage at either of the
Calvert Cliffs units could exceed the coverage limits.
In addition, in the event of an incident at any commercial
nuclear power plant in the country, BGE could be assessed for a
portion of any third party claims associated with the incident.
Under the provisions of the Price Anderson Act, the limit for
third party claims from a nuclear incident is $8.92 billion. If
third party claims relating to such an incident exceed $200
million (the amount of primary insurance), BGE's share of the
total liability for third party claims could be up to $159
million per incident, that would be payable at a rate of $20
million per year.
BGE and other operators of commercial nuclear power plants
in the United States are required to purchase insurance to cover
claims of certain nuclear workers. Other non-governmental
commercial nuclear facilities may also purchase such insurance.
Coverage of up to $400 million is provided for claims against BGE
or others insured by these policies for radiation injuries. If
certain claims were made under these policies, BGE and all
policyholders could be assessed, with BGE's share being up to
$6.08 million in any one year.
For physical damage to Calvert Cliffs, BGE has $2.75
billion of property insurance, including $1.9 billion from
industry mutual insurance companies.
If an outage at Calvert Cliffs is caused by an insured
physical damage loss and lasts more than 21 weeks, BGE has up to
$473.2 million per unit of insurance, provided by the same
industry mutual insurance company, for replacement power costs.
This amount can be reduced by up to $94.6 million per unit if an
outage to both units at Calvert Cliffs is caused by a singular
insured physical damage loss.
If accidents at any insured plants cause a shortfall of
funds at the industry mutual, BGE and all policyholders could be
assessed, with BGE's share being up to $32.89 million.
<PAGE>
Recoverability of Electric Fuel Costs
By statute, actual electric fuel costs are recoverable so
long as the Public Service Commission of Maryland (PSC) finds
that BGE demonstrates that, among other things, it has maintained
the productive capacity of its generating plants at a reasonable
level. The PSC and Maryland's highest appellate court have
interpreted this as permitting a subjective evaluation of each
unplanned outage at BGE's generating plants to determine whether
or not BGE had implemented all reasonable and cost-effective
maintenance and operating control procedures appropriate for
preventing the outage. Effective January 1, 1987, the PSC
authorized the establishment of a Generating Unit Performance
Program (GUPP) to measure, annually, utility compliance with
maintaining the productive capacity of generating plants at
reasonable levels by establishing a system-wide generating
performance target and individual performance targets for each
base load generating unit. In future fuel rate hearings, actual
generating performance after adjustment for planned outages will
be compared to the system-wide target and, if met, should signify
that BGE has complied with the requirements of Maryland law.
Failure to meet the system-wide target will result in review of
each unit's adjusted actual generating performance versus its
performance target in determining compliance with the law and the
basis for possibly imposing a penalty on BGE. Parties to fuel
rate hearings may still question the prudence of BGE's actions or
inactions with respect to any given generating plant outage,
which could result in the disallowance of replacement energy
costs by the PSC.
Since the two units at BGE's Calvert Cliffs Nuclear Power
Plant utilize BGE's lowest cost fuel, replacement energy costs
associated with outages at these units can be significant. BGE
cannot estimate the amount of replacement energy costs that could
be challenged or disallowed in future fuel rate proceedings, but
such amounts could be material.
In October 1988, BGE filed its first fuel rate application
for a change in its electric fuel rate under GUPP. The resultant
case before the PSC covers BGE's operating performance in
calendar year 1987, and BGE's filing demonstrated that it met the
system-wide and individual nuclear plant performance targets for
1987. In November 1989, testimony was filed on behalf of the
Maryland People's Counsel (People's Counsel) alleging that seven
outages at the Calvert Cliffs plant in 1987 were due to
management imprudence and that the replacement energy costs
associated with those outages should be disallowed by the
Commission. Total replacement energy costs associated with the
1987 outages were approximately $33 million.
In May 1989, BGE filed its fuel rate case in which 1988
performance was examined. BGE met the system-wide and nuclear
plant performance targets in 1988. People's Counsel alleged that
BGE imprudently managed several outages at Calvert Cliffs, and
BGE estimates that the total replacement energy costs associated
with these 1988 outages were approximately $2 million. On
<PAGE>
November 14, 1991, a Hearing Examiner at the PSC issued a
proposed Order, which became final on December 17, 1991 and
concluded that no disallowance was warranted. The Hearing
Examiner found that BGE maintained the productive capacity of the
Plant at a reasonable level, noting that it produced a near
record amount of power and exceeded the GUPP standard. Based on
this record, the Order concluded there was sufficient cause to
excuse any avoidable failures to maintain productive capacity at
higher levels.
During 1989, 1990, and 1991, BGE experienced extended
outages at its Calvert Cliffs Nuclear Power Plant. In the Spring
of 1989, a leak was discovered around the Unit 2 pressurizer
heater sleeves during a refueling outage. BGE shut down Unit 1
as a precautionary measure on May 6, 1989, to inspect for similar
leaks and none were found. However, Unit 1 was out of service
for the remainder of 1989 and 285 days of 1990 to undergo
maintenance and modification work to enhance the reliability of
various safety systems, to repair equipment, and to perform
required periodic surveillance tests. Unit 2, which returned to
service on May 4, 1991, remained out of service for the remainder
of 1989, 1990, and the first part of 1991 to repair the
pressurizer, perform maintenance and modification work, and
complete the refueling. The replacement energy costs associated
with these extended outages for both units at Calvert Cliffs,
concluding with the return to service of Unit 2, are estimated to
be $458 million.
In a December 1990 order issued by the PSC in a BGE base
rate proceeding, the PSC found that certain operations and
maintenance expenses incurred at Calvert Cliffs during the test
year should not be recovered from ratepayers. The PSC found that
this work, which was performed during the 1989-1990 Unit 1 outage
and fell within the test year, was avoidable and caused by BGE
actions which were deficient.
The PSC noted in the order that its review and findings on
these issues pertain to the reasonableness of BGE's test-year
operations and maintenance expenses for purposes of setting base
rates and not to the responsibility for replacement power costs
associated with the outages at Calvert Cliffs. The PSC stated
that its decision in the base rate case will have no res judicata
(binding) effect in the fuel rate proceeding examining the 1989-
1991 outages. The work characterized as avoidable significantly
increased the duration of the Unit 1 outage. Despite the PSC's
statement regarding no binding effect, BGE recognizes that the
views expressed by the PSC make the full recovery of all of the
replacement energy costs associated with the Unit 1 outage
doubtful. Therefore, in December 1990, BGE recorded a provision
of $35 million against the possible disallowance of such costs.
BGE cannot determine whether replacement energy costs may be
disallowed in the present fuel rate proceeding in excess of the
provision, but such amounts could be material.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The financial condition and results of operations of
Baltimore Gas and Electric Company (BGE) and its subsidiaries
(collectively, the Company) are set forth in the Consolidated
Financial Statements and Notes to Consolidated Financial
Statements (Notes) sections of this Report. Factors significantly
affecting results of operations, liquidity, and capital resources
are discussed below.
RESULTS OF OPERATIONS FOR THE QUARTER AND SIX MONTHS ENDED JUNE
30, 1995 COMPARED WITH THE CORRESPONDING PERIOD OF 1994
Earnings per Share of Common Stock
Consolidated earnings per share for the quarter and six
months ended June 30, 1995 were $.28 and $.69, respectively,
which represent decreases of $.11 and $.19 compared to the
earnings for the corresponding periods of 1994. These decreases
in earnings per share reflect a lower level of earnings
applicable to common stock. The earnings per share are summarized
as follows:
Quarter Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
Utility operations $.25 $.38 $.63 $.86
Diversified businesses .03 .01 .06 .02
Total $.28 $.39 $.69 $.88
Earnings Applicable to Common Stock
Earnings applicable to common stock decreased $15.8 million
during the quarter and $27.0 million during the six months ended
June 30, 1995. These decreases reflect lower earnings from
utility operations, partially offset by higher earnings from
diversified businesses.
Earnings from utility operations decreased during the second
quarter of 1995 primarily due to lower electric system sales
resulting from the mild weather in 1995 in contrast to the
extremely hot spring and early summer weather experienced last
year. The effect of weather on utility sales is discussed on
pages 12 and 13. Depreciation and amortization expense also
increased during 1995.
Earnings from utility operations decreased during the six
months ended June 30, 1995 primarily due to lower electric and
gas sales resulting from substantially milder winter weather in
the first quarter of 1995 as compared to 1994. Depreciation and
amortization expense also increased during the six months ended
<PAGE>
June 30, 1995, offset partially by lower operations and
maintenance expenses.
The following factors influence BGE's utility operations
earnings: regulation by the Public Service Commission of Maryland
(PSC), the effect of weather and economic conditions on sales,
and competition in the generation and sale of electricity.
Several electric fuel rate cases now pending before the PSC
discussed in Notes 1 and 13 of the Form 10-K for the year ended
December 31, 1994 (Form 10-K) could also affect future years'
earnings.
Electric utilities presently face competition in the
construction of generating units to meet future load growth and
in the sale of electricity in the bulk power markets. Electric
utilities also face the future prospect of competition for
electric sales to retail customers. It is not possible to
predict currently the ultimate effect competition will have on
BGE's earnings in future years. In response to the competitive
forces and regulatory changes, as discussed in Part 1 of the Form
10-K under the heading Regulatory Matters and Competition, BGE
from time to time will consider various strategies designed to
enhance its competitive position and to increase its ability to
adapt to and anticipate regulatory changes in its utility
business. These strategies may include internal restructurings
involving the complete or partial separation of its generation,
transmission and distribution businesses, acquisitions of related
or unrelated businesses, business combinations, and additions to
or dispositions of portions of its franchised service
territories. BGE may from time to time be engaged in preliminary
discussions, either internally or with third parties, regarding
one or more of these potential strategies. No assurances can be
given as to whether any potential transaction of the type
described above may actually occur, or as to the ultimate effect
thereof on the financial condition or competitive position of
BGE.
Earnings from diversified businesses, which primarily
represent the operations of Constellation Holdings, Inc. and its
subsidiaries (collectively, the Constellation Companies) and BGE
Home Products & Services, Inc. (HPS) and its subsidiary were
higher during the quarter and six months ended June 30, 1995
compared to the corresponding periods of 1994. Diversified
businesses' earnings are discussed on pages 19 through 21.
Effect of Weather on Utility Sales
Weather conditions affect BGE's utility sales. BGE measures
weather conditions using degree days. A degree day is the
difference between the average daily actual temperature and the
baseline temperature of 65 degrees. Colder weather during the
winter, as measured by greater heating degree days, results in
greater demand for electricity and gas to operate heating
systems. Conversely, warmer weather during the winter, measured
<PAGE>
by fewer heating degree days, results in less demand for
electricity and gas to operate heating systems. Hotter weather
during the summer, measured by more cooling degree days, results
in greater demand for electricity to operate cooling systems.
Conversely, cooler weather during the summer, measured by fewer
cooling degree days, results in less demand for electricity to
operate cooling systems. The degree-days chart below presents
information regarding heating and cooling degree days for the
quarter and six months ended June 30, 1995 and 1994.
Quarter Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
Heating degree days............ 479 444 2,719 3,196
Percent change compared to
prior period.................. 7.9% (14.9)%
Cooling degree days............ 252 320 252 320
Percent change compared to
prior period.................. (21.0)% (21.0)%
BGE Utility Revenues and Sales
Electric revenues changed for the quarter and six months
ended June 30, 1995 because of the following factors:
Quarter Ended Six Months Ended
June 30 June 30
1995 vs. 1994 1995 vs. 1994
(In millions)
System sales volumes $(11.6) $(35.8)
Base rates 2.4 3.8
Fuel rates (6.9) (15.6)
Revenues from system sales (16.1) (47.6)
Interchange and other sales 18.5 42.7
Other revenues 2.0 0.0
Total $ 4.4 $ (4.9)
Electric system sales represent volumes sold to customers
within BGE's service territory at rates determined by the PSC.
These amounts exclude interchange sales and sales to other
utilities, which are discussed separately. Below is a comparison
of the changes in electric system sales volumes:
<PAGE>
Quarter Ended Six Months Ended
June 30 June 30
1995 vs. 1994 1995 vs. 1994
Residential (2.2)% (7.5)%
Commercial (1.6) (1.8)
Industrial (6.6) 2.3
Total (2.7) (3.4)
The decrease in sales to the residential and commercial
classes of electric customers during the second quarter of 1995
is primarily attributable to the mild weather in 1995 as compared
to the extremely hot spring and early summer weather conditions
experienced during the second quarter of 1994. The decrease in industrial
sales was primarily due to lower usage-per-customer. These
decreases were offset partially by moderate customer growth
in all classes.
In addition to the factors noted above for the second
quarter of 1995, electric system sales for the six months ended
June 30, 1995 reflect milder winter weather during 1995 compared
to the extremely cold weather conditions experienced last year.
Sales to industrial customers primarily reflect an increase in
the sale of electricity to Bethlehem Steel, which has been
purchasing its full electricity requirements from BGE since March
of 1994. Bethlehem Steel is still producing power with its own
generating facility, but is now selling the output from this
facility to BGE rather than using the power to reduce its
requirements.
Base rates are affected by two principal items: rate orders
by the PSC and recovery of eligible electric conservation program
costs through the energy conservation surcharge. Base rates
increased for the quarter and six months ended June 30, 1995 due
to the deferral in 1994 of the portion of conservation surcharge
billings subject to refund, as described below.
Under the energy conservation surcharge, if the PSC
determines that BGE is earning in excess of its authorized rate
of return, BGE will have to refund (by means of lowering future
surcharges) a portion of energy conservation surcharge revenues
to its customers. The portion subject to the refund is
compensation for foregone sales from conservation programs and
incentives for achieving conservation goals and will be refunded
to customers with interest beginning in the ensuing July when the
annual resetting of the conservation surcharge rates occur. BGE
earned in excess of its authorized rate of return on electric
operations for the period July 1, 1993 through June 30, 1994. As
a result, BGE deferred the portion of electric energy
conservation revenues subject to refund for the period December
1993 through November 1994. The deferral of these billings
totaled $20.1 million, of which $3.9 million occurred during the
quarter ended June 30, 1994 and a total of $8.5 million
occurred during the six months ended June 30, 1994.
<PAGE>
Changes in fuel rate revenues result from the operation of
the electric fuel rate formula. The fuel rate formula is designed
to recover the actual cost of fuel, net of revenues from
interchange sales and sales to other utilities. (See Notes 1 and
13 of the Form 10-K.) Changes in fuel rate revenues and
interchange and other sales normally do not affect earnings.
However, if the PSC were to disallow recovery of any part of
these costs, earnings would be reduced as discussed in Note 13 of
the Form 10-K.
Fuel rate revenues were lower for the quarter and six months
ended June 30, 1995 as compared to the same periods in 1994 as a
result of decreased electric system sales volumes and a lower
fuel rate. The fuel rate was lower because of a less costly
twenty-four month generation mix due to greater generation in
1995 at the Calvert Cliffs Nuclear Power Plant and the Brandon
Shores Power Plant. BGE expects electric fuel rate revenues to
decrease slightly during the remainder of 1995 due to a lower
fuel rate.
Interchange and other sales represent sales of BGE's energy
to the Pennsylvania - New Jersey - Maryland Interconnection
(PJM), a regional power pool of eight member companies including
BGE, and sales to other non-PJM utilities. These sales occur
after BGE has satisfied the demand for its own system sales of
electricity, if BGE's available generation is the least costly
available. Interchange and other sales increased for the quarter
and six months ended June 30, 1995 because of 1995 sales to other
utilities and because BGE had a less costly generation mix than
other PJM utilities. This less costly generation mix was due to
greater generation from the Brandon Shores Power Plant and
continued operation of the Calvert Cliffs Nuclear Power Plant.
Gas revenues changed for the quarter and six months ended June
30, 1995 because of the following factors:
Quarter Ended Six Months Ended
June 30 June 30
1995 vs. 1994 1995 vs. 1994
(In millions)
Sales volumes $ 2.3 $ (5.4)
Base rates 0.6 2.0
Gas cost adjustment revenues (2.6) (48.6)
Other revenues (0.2) (0.3)
Total $ 0.1 $(52.3)
<PAGE>
Below is a comparison of the changes in gas sales volumes:
Quarter Ended Six Months Ended
June 30 June 30
1995 vs. 1994 1995 vs. 1994
Residential (1.3)% (11.2)%
Commercial 3.0 (5.3)
Industrial 18.9 16.5
Total 8.5 (1.8)
Total gas sales for the second quarter of 1995 increased
compared to last year primarily as a result of higher sales to
commercial and industrial customers. Sales to residential
customers decreased slightly during the second quarter as the
favorable impacts on sales of cooler early spring weather and
moderate customer growth were offset by lower usage-per-customer.
Sales to commercial customers increased slightly during the
second quarter due to the cooler early spring
weather and moderate customer growth, offset partially by lower
usage. Sales to industrial customers increased during the second
quarter due to greater usage of gas by interruptible customers,
including Bethlehem Steel. These customers maintain alternate
fuel sources and pay reduced rates in exchange for BGE's right to
interrupt service during periods of peak demand.
Total gas sales for the six months ended June 30, 1995
decreased slightly as a result of lower sales to residential and
commercial customers, offset partially by an increase in sales to
industrial customers. Sales to residential and commercial
customers decreased due to milder winter weather in 1995 and
lower usage-per-customer, offset partially by an increase in the
number of customers. Sales to industrial customers increased
compared to last year due to greater usage of gas per customer,
including Bethlehem Steel, and fewer customer interruptions in
the first quarter of 1995 due to the milder weather as compared
to the same period last year.
Base rates increased slightly during 1995 due to an
increased recovery of eligible gas conservation program costs
through the energy conservation surcharge. Future gas base rate
revenues may be impacted positively by the Maryland Commission's
anticipated November 1995 order in response to BGE's April 21,
1995 application for $29 million of increased gas base rates.
Changes in gas cost adjustment revenues result primarily
from the operation of the purchased gas adjustment clause,
commodity charge adjustment clause, and the actual cost
adjustment clause which are designed to recover actual gas costs.
(See Note 1 of the Form 10-K.) Changes in gas cost adjustment
revenues normally do not affect earnings.
Gas cost adjustment revenues decreased for the quarter ended
June 30, 1995 because of lower prices for purchased gas, offset
partially by slightly higher sales volumes subject to gas cost
adjustment clauses. Delivery service sales volumes are not
subject to gas cost adjustment clauses because these customers
purchase their gas directly from third parties. Gas cost
adjustment revenues decreased for the six months ended June 30,
1995 because of lower prices for purchased gas and lower sales
volumes subject to gas cost adjustment clauses.
<PAGE>
BGE Utility Fuel and Energy Expenses
Electric fuel and purchased energy expenses were as follows:
Quarter Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(In millions)
Actual costs $124.9 $119.9 $263.5 $273.2
Net (deferral) recovery of
costs under electric fuel
rate clause (see Note 1 of
the Form 10-K) 8.2 1.1 17.1 (25.7)
Total $133.1 $121.0 $280.6 $247.5
Total electric fuel and purchased energy expenses increased
during the quarter and six months ended June 30, 1995 primarily
as a result of the operation of the electric fuel rate clause.
Actual electric fuel and purchased energy costs increased
slightly for the quarter ended June 30, 1995 as a result of
higher net output of electricity generated and higher purchased
energy costs, offset partially by a less costly generation mix.
Actual electric fuel and purchased energy costs decreased
during the six months ended June 30, 1995 primarily due to a less
costly generation mix resulting primarily from refueling and
maintenance outages at the Calvert Cliffs Nuclear Power Plant
during the first quarter of 1994. This was offset partially by
higher purchased energy and capacity costs during the first six
months of 1995.
Purchased gas expenses were as follows:
Quarter Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(In millions)
Actual costs $31.4 $30.5 $118.7 $153.2
Net (deferral) recovery of costs
under purchased gas adjustment
clause (see Note 1 of the
Form 10-K) (2.2) 1.1 (7.7) 5.3
Total $29.2 $31.6 $111.0 $158.5
Total purchased gas expenses decreased slightly for the
quarter ended June 30, 1995 compared to last year primarily due
to the operation of the purchased gas adjustment clause, offset
partially by a small increase in actual gas costs. The slight
increase in actual gas costs reflects $6.5 million of take-or-pay
refunds received during the second quarter of 1994 from Columbia
<PAGE>
Gas Transmission Corporation, offset substantially by lower gas
prices during the second quarter of 1995.
Total purchased gas expenses decreased during the six months
ended June 30, 1995 due to significantly lower actual purchased
gas costs and due to the operation of the purchased gas
adjustment clause. Actual purchased gas costs decreased during
the six months ended June 30, 1995 due to the lower output
associated with the decreased demand for BGE gas and lower gas
prices. The decreased demand for BGE gas and the lower gas
prices reflect the significantly milder weather experienced
during the first quarter of 1995 compared to the first quarter of
1994. This decrease is offset partially by the $6.5 million of
take-or-pay refunds received in the second quarter of 1994.
Purchased gas costs exclude gas purchased by delivery
service customers, including Bethlehem Steel, who obtain gas
directly from third parties. Future purchased gas costs are
expected to be increased by transition costs incurred by BGE gas
pipeline suppliers in implementing FERC Order No. 636. These
transition costs, if approved by FERC, will be passed on to BGE
customers through the purchased gas adjustment clause.
Other Operating Expenses
Operations expense decreased for the quarter ended June 30,
1995 due primarily to continuing labor and other savings in 1995
resulting from the Company's ongoing cost control efforts.
In addition to the ongoing cost control efforts noted above,
operations expense for the six months ended June 30, 1995
decreased due to a $10.0 million one-time bonus paid to employees
in the first quarter of 1994 in lieu of a general wage increase
and higher expenses attributable to the winter storms in the
first quarter of 1994. Operations expense is expected to
continue to decline during 1995 due to ongoing cost control
efforts of the Company.
Maintenance expense increased during the quarter ended June
30, 1995 due primarily to higher costs at the Calvert Cliffs
Nuclear Power Plant related to the second quarter 1995 outage.
Maintenance expense for the six months ended June 30, 1995 was
essentially unchanged compared to the prior year.
Depreciation and amortization expense increased during the
quarter and six months ended June 30, 1995 because of higher
depreciable plant in service and the completion of a facility-
specific study of the cost to decommission the Calvert Cliffs
Nuclear Power Plant. This study generated a higher
decommissioning cost than the prior estimate which will increase
depreciation expense by $9 million annually, $4.5 million of
which occurred during the six months ended June 30, 1995. The
increase in depreciable plant in service resulted primarily from
<PAGE>
certain capital additions at the Calvert Cliffs Nuclear Power
Plant during 1995.
Other Income and Expenses
Net other income and deductions decreased for the quarter
and six months ended June 30, 1995 due primarily to lower other
interest, dividend and finance charge income.
Interest expense increased for the quarter and six months
ended June 30, 1995 due to a higher level of outstanding debt and
an increase in the level of interest rates, offset partially by
more capitalized interest.
Income tax expense decreased for the quarter and six months
ended June 30, 1995 because of lower taxable income.
Diversified Businesses Earnings
Earnings per share from diversified businesses were:
Quarter Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
Constellation Holdings, Inc.
Power generation systems $.01 $.00 $.03 $.01
Financial investments .02 .01 .04 .02
Real estate development and
senior living facilities .00 .00 (.01) (.01)
Total Constellation Holdings, Inc..03 .01 .06 .02
BGE Home Products & Services, Inc .00 .00 .00 .00
Total diversified businesses $.03 $.01 $.06 $.02
The Constellation Companies' power generation systems
business includes the development, ownership, management, and
operation of wholesale power generating projects in which the
Constellation Companies hold ownership interests, as well as the
provision of services to power generation projects under
operation and maintenance contracts. Power generation systems
earnings increased for both periods of 1995 due primarily to
higher equity earnings from Constellation Companies' energy
projects.
The Constellation Companies' investment in wholesale power
generating projects includes $180 million representing ownership
interests in 16 projects that sell electricity in California
under Interim Standard Offer No. 4 power purchase agreements.
Under these agreements, the projects supply electricity to
purchasing utilities at a fixed rate for the first ten years of
the agreements and at variable rates based on the utilities'
<PAGE>
avoided cost for the remaining term of the agreements. Avoided
cost generally represents a utility's next lowest cost generation
to service the demands on its system. These power generation
projects are scheduled to convert to supplying electricity at
avoided cost rates in various years beginning in late 1996
through the end of 2000. As a result of declines in purchasing
utilities' avoided costs subsequent to the inception of these
agreements, revenues at these projects based on current avoided
cost levels would be substantially lower than revenues presently
being realized under the fixed price terms of the agreements. If
current avoided cost levels were to continue into 1996 and
beyond, the Constellation Companies could experience reduced
earnings or incur losses associated with these projects, which
could be significant. The Constellation Companies are
investigating and pursuing alternatives for certain of these
power generation projects including, but not limited to,
repowering the projects to reduce operating costs, renegotiating
the power purchase agreements, and selling its ownership
interests in the projects. Two of these wholesale power
generating projects, in which the Constellation Companies'
investment totals $26 million, have executed agreements with
Pacific Gas & Electric (PG&E) providing for the curtailment of
output through the end of the fixed price period in return for
payments from PG&E. The payments from PG&E during the
curtailment period will be sufficient to fully amortize the
existing project finance debt. However, following the
curtailment period, the projects remain contractually obligated
to commence production of electricity at the avoided cost rates,
which could result in reduced earnings or losses for the reasons
described above. The Company cannot predict the impact that
these matters regarding any of the 16 projects may have on the
Constellation Companies or the Company, but the impact could be
material.
Earnings from the Constellation Companies' portfolio of
financial investments include capital gains and losses,
dividends, income from financial limited partnerships, and income
from financial guaranty insurance companies. Financial
investment earnings were higher for the quarter and six months
ended June 30, 1995 due to favorable earnings on the Companies'
investment portfolio and realized gains from a financial
partnership.
The Constellation Companies' real estate development
business includes land under development; office buildings;
retail projects; commercial projects; an entertainment, dining
and retail complex in Orlando, Florida; a mixed-use planned-unit-
development; and senior living facilities. The majority of these
projects are in the Baltimore-Washington corridor. They have been
affected adversely by the depressed real estate market and
economic conditions, resulting in reduced demand for the purchase
or lease of available land, office, and retail space. Earnings
from real estate development and senior living facilities for the
<PAGE>
quarter and six months ended June 30, 1995 are essentially
unchanged from the prior year.
The Constellation Companies' real estate portfolio has
experienced continuing carrying costs and depreciation.
Additionally, the Constellation Companies have been expensing
rather than capitalizing interest on certain undeveloped land
where development activities were at minimal levels. These
factors have affected earnings negatively and are expected to
continue to do so until the levels of undeveloped land are
reduced. Cash flow from real estate operations has been
insufficient to cover the debt service requirements of certain of
these projects. Resulting cash shortfalls have been satisfied
through cash infusions from Constellation Holdings, Inc., which
obtained the funds through a combination of cash flow generated
by other Constellation Companies and its corporate borrowings.
To the extent the real estate market continues to improve,
earnings from real estate activities are expected to improve
also.
The Constellation Companies continued investment in real
estate projects is a function of market demand, interest rates,
credit availability, and the strength of the economy in general.
The Constellation Companies' Management believes that although
the real estate market has improved, until the economy reflects
sustained growth and the excess inventory in the market in the
Baltimore-Washington corridor goes down, real estate values will
not improve significantly. If the Constellation Companies were to
sell their real estate projects in the current depressed market,
losses would occur in amounts difficult to determine. Depending
upon market conditions, future sales could also result in losses.
In addition, were the Constellation Companies to change their
intent about any project from an intent to hold until market
conditions improve to an intent to sell, applicable accounting
rules would require a write-down of the project to market value
at the time of such change in intent if market value is below
book value.
Environmental Matters
The Company is subject to increasingly stringent federal,
state, and local laws and regulations relating to improving or
maintaining the quality of the environment. These laws and
regulations require the Company to remove or remedy the effect on
the environment of the disposal or release of specified
substances at ongoing and former operating sites, including
Environmental Protection Agency Superfund sites. Details
regarding these matters, including financial information, are
presented in the Environmental Matters section on pages 6, 7 and
25 of this Report.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
For the twelve months ended June 30, 1995, the Company's
ratio of earnings to fixed charges and ratio of earnings to
combined fixed charges and preferred and preference dividend
requirements were 2.91 and 2.30, respectively.
Capital Requirements
The Company's capital requirements reflect the capital-
intensive nature of the utility business. Actual capital
requirements for the six months ended June 30, 1995, along with
estimated annual amounts for the years 1995 through 1997, are
reflected below.
Six Months Ended
June 30 Calendar Year Estimate
1995 1995 1996 1997
(In millions)
Utility Business:
Construction expenditures
(excluding AFC)
Electric $111 $233 $219 $206
Gas 28 61 71 84
Common 22 56 50 35
Total construction expenditures 161 350 340 325
AFC 16 24 13 10
Nuclear fuel (uranium purchases
and processing charges) 16 48 50 52
Deferred energy conservation
expenditures 19 40 34 25
Retirement of long-term debt
and redemption of preference
stock - 268 98 164
Total utility business 212 730 535 576
Diversified Businesses:
Retirement of long-term debt 10 62 67 118
Investment requirements 36 84 70 40
Total diversified businesses 46 146 137 158
Total $258 $876 $672 $734
BGE Utility Capital Requirements
BGE's construction program is subject to continuous review
and modification, and actual expenditures may vary from the
estimates above. Electric construction expenditures include the
<PAGE>
installation of two 5,000 kilowatt diesel generators at Calvert
Cliffs Nuclear Power Plant, one of which was placed in service in
June, 1995 and the second is scheduled to be placed in service in
1996; the construction of a 140-megawatt combustion turbine at
Perryman, which was placed in service in June, 1995; and
improvements in BGE's existing generating plants and its
transmission and distribution facilities. Future electric
construction expenditures do not include additional generating
units.
During the twelve months ended June 30, 1995, the internal
generation of cash from utility operations provided 88% of the
funds required for BGE's capital requirements exclusive of
retirements and redemptions of debt and preference stock. During
the three-year period 1995 through 1997, the Company expects to
provide through utility operations 100% of the funds required for
BGE's capital requirements, exclusive of retirements and
redemptions.
Utility capital requirements not met through the internal
generation of cash are met through the issuance of debt and
equity securities. The amount and timing of issuances and
redemptions depends upon market conditions and BGE's actual
capital requirements. From January 1, 1995 through the date of
this Report, BGE has not issued or redeemed any long-term debt or
equity securities except for the following principal amounts of
First Refunding Mortgage Bonds totaling $17,248,000 that were, or
will be, redeemed through operation of the annual sinking fund as
required by BGE's mortgage: $10,259,000 of the 7-1/8% Series due
January 1, 2002, $5,025,000 of the 8.40% Series due October 15,
1999, $1,333,000 of the 7-1/2% Series due January 15, 2007, and
$631,000 from various other series.
The Constellation Companies' capital requirements are
discussed below in the section titled "Diversified Businesses
Capital Requirements - Debt and Liquidity." The Constellation
Companies are exploring expansion of their energy, real estate
service, and senior living facility businesses. Expansion may be
achieved in a variety of ways, including without limitation
increased investment activity and acquisitions. The Constellation
Companies plan to meet their capital requirements with a
combination of debt and internal generation of cash from their
operations. Additionally, from time to time, BGE may make loans
to Constellation Holdings, Inc., or contribute equity to enhance
the capital structure of Constellation Holdings, Inc.
Historically, Constellation's energy projects have been in
the United States. Recently one of the Constellation Companies
has invested about $9 million for an investment in Bolivia.
<PAGE>
Constellation's energy business expansion may include domestic
and international projects.
Diversified Businesses Capital Requirements
Debt and Liquidity
The Constellation Companies intend to meet capital
requirements by refinancing debt as it comes due and through
internally generated cash. These internal sources include cash
that may be generated from operations, sale of assets, and cash
generated by tax benefits earned by the Constellation Companies.
In the event the Constellation Companies can obtain reasonable
value for real estate properties, additional cash may become
available through the sale of projects (for additional
information see the discussion of the real estate business and
market on pages 19 to 21 under the heading "Diversified
Businesses Earnings"). The ability of the Constellation
Companies to sell or liquidate assets described above will depend
on market conditions, and no assurances can be given that such
sales or liquidations can be made. Also, to provide additional
liquidity to meet interim financial needs, CHI has a $50 million
revolving credit agreement.
Investment Requirements
The investment requirements of the Constellation Companies
include its portion of equity funding to committed projects under
development, as well as net loans made to project partnerships.
Investment requirements for the years 1995 through 1997 reflect
the Constellation Companies' estimate of funding for ongoing and
anticipated projects and are subject to continuous review and
modification. Actual investment requirements may vary
significantly from the estimates on page 22 because of the type
and number of projects selected for development, the impact of
market conditions on those projects, the ability to obtain
financing, and the availability of internally generated cash.
The Constellation Companies have met their investment
requirements in the past through the internal generation of cash
and through borrowings from institutional lenders.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Asbestos
During 1993 and 1994, BGE was served in several actions
concerning asbestos. The actions are collectively titled In re
Baltimore City Personal Injuries Asbestos Cases in the Circuit
Court for Baltimore City, Maryland. The actions are based upon
the theory of "premises liability," alleging that BGE knew of and
exposed individuals to an asbestos hazard. The actions relate to
two types of claims.
The first type, direct claims by individuals exposed to
asbestos, were described in a Report on Form 8-K filed August 20,
1993. BGE and approximately 70 other defendants are involved.
Approximately 482 non-employee plaintiffs each claim $6 million
in damages ($2 million compensatory and $4 million punitive).
BGE does not know the specific facts necessary for BGE to assess
its potential liability for these type claims, such as the
identity of the BGE facilities at which the plaintiffs allegedly
worked as contractors, the names of the plaintiffs' employers,
and the date on which the exposure allegedly occurred.
The second type are claims by two manufacturers - Owens
Corning Fiberglas and Pittsburgh Corning Corp. - against BGE and
approximately eight others, as third-party defendants. These
relate to approximately 1,500 individual plaintiffs. BGE does
not know the specific facts necessary for BGE to assess its
potential liability for these type claims, such as the identity
of BGE facilities containing asbestos manufactured by the two
manufacturers, the relationship (if any) of each of the
individual plaintiffs to BGE, the settlement amounts for any
individual plaintiffs who are shown to have had a relationship to
BGE, and the dates on which/places at which the exposure
allegedly occurred.
Until the relevant facts for both type claims are
determined, BGE is unable to estimate what its liability, if any,
might be. Although insurance and hold harmless agreements from
contractors who employed the plaintiffs may cover a portion of
any ultimate awards in the actions, BGE's potential liability
could be material.
Environmental Matters
The Company's potential environmental liabilities and pending
environmental actions are listed in Item 1. Business -
Environmental Matters of the Form 10-K.
<PAGE>
PART II. OTHER INFORMATION (Continued)
ITEM 4. Submission of Matters to a Vote of Security Holders
On April 18, 1995, BGE held its annual meeting of shareholders.
At that meeting, the following matters were voted upon:
1. All of the Directors nominated by BGE were selected as
follows:
COMMON SHARES CAST:
For Against Abstain
H. Furlong Baldwin 122,615,841 1,009,297 2,041,581
Beverly B. Byron 122,247,281 1,383,975 2,041,581
J. Owen Cole 122,760,885 870,772 2,041,581
Dan A. Colussy 122,937,955 693,552 2,041,581
Edward A. Crooke 122,526,564 1,099,173 2,041,581
James R. Curtiss 122,703,605 927,651 2,041,581
Jerome W. Geckle 122,753,494 878,162 2,041,581
Martin L. Grass 122,721,831 909,695 2,041,581
Freeman A. Hrabowski 122,421,604 1,205,603 2,041,581
Nancy Lampton 122,742,838 888,419 2,041,581
George V. McGowan 122,483,298 1,148,358 2,041,581
Christian H. Poindexter 121,875,308 1,756,199 2,041,581
George L. Russell, Jr. 122,114,706 1,512,501 2,041,581
Michael D. Sullivan 121,905,351 1,725,905 2,041,581
2. Coopers and Lybrand was reelected as auditor, and with respect
to holders of common stock, the number of affirmative votes
cast were 123,619,072. The number of negative votes cast were
1,069,269, and the number of abstentions were 1,115,462.
3. BGE's implementation of the 1995 Long-Term Incentive Plan was
approved. With respect to holders of common stock, the number
of affirmative votes cast for the proposal was 106,571,348,
the number of negative votes cast for the proposal was
16,210,671, and the number of abstentions was 3,022,172.
<PAGE>
PART II. OTHER INFORMATION (Continued)
4. The amendment to BGE's Charter to allow for uncertificated
securities was approved. With respect to holders of common
stock, the number of affirmative votes cast for the amendment
was 100,443,914 the number of negative votes cast for the
amendment was 7,343,275, and the number of abstentions was
3,435,234. With respect to holders of preferred stock, the
number of affirmative votes cast for the amendment was
9,853,560, the number of negative votes cast for the amendment
was 1,057,800, and the number of abstentions was 209,112.
5. The amendment to BGE's Charter to allow for Preference Stock
with variable terms was approved. With respect to holders of
common stock, the number of affirmative votes cast for the
amendment was 98,512,153 the number of negative votes cast for
the amendment was 9,170,662, and the number of abstentions was
3,522,275. With respect to holders of preferred stock, the
number of affirmative votes cast for the amendment was
9,875,976, the number of negative votes cast for the amendment
was 1,002,144, and the number of abstentions was 242,352.
With respect to holders of preference stock, the number of
affirmative votes cast for the amendment was 3,435,570, the
number of negative votes cast for the amendment was 509,061,
and the number of abstentions was 13,234.
6. The shareholder proposal requesting that the Board of
Directors refrain from providing retirement benefits to non-
employee directors, unless the benefits are submitted for
shareholder approval was defeated. With respect to holders of
common stock, the number of affirmative votes cast for the
proposal was 38,436,952, the number of negative votes cast for
the proposal was 67,025,435, and the number of abstentions was
4,636,104.
<PAGE>
PART II. OTHER INFORMATION (Continued)
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. 4 Supplemental Indenture between BGE
and Bankers Trust Company, as
Trustee, dated as of June 20, 1995.
Exhibit No. 10 Baltimore Gas and Electric Company
Executive Benefits Plan, as amended
and restated.
Exhibit No. 12 Computation of Ratio of Earnings to
Fixed Charges and Computation of
Ratio of Earnings to Combined Fixed
Charges and Preferred and
Preference Dividend Requirements.
Exhibit No. 27 Financial Data Schedule.
(b) Form 8-K None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
BALTIMORE GAS AND ELECTRIC COMPANY
(Registrant)
Date August 11, 1995 /s/ C. W. Shivery
C. W. Shivery, Vice President
on behalf of the Registrant and
as Principal Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number
4 Supplemental Indenture between BGE and
Bankers Trust Company, as Trustee, dated
as of June 20, 1995.
10 Baltimore Gas and Electric Company
Executive Benefits Plan, as amended and
restated.
12 Computation of Ratio of Earnings to
Fixed Charges and Computation of Ratio
of Earnings to Combined Fixed Charges
and Preferred and Preference Dividend
Requirements.
27 Financial Data Schedule.
<PAGE>
EXHIBIT NO. 4
BALTIMORE GAS AND ELECTRIC COMPANY
TO
BANKERS TRUST COMPANY, Trustee
SUPPLEMENTAL INDENTURE
Supplementing, Amending and Restating Deed of Trust dated
February 1, 1919
<PAGE>
ARTICLE I
ISSUE AND APPROPRIATION OF BONDS
Page
Sec. 1. Form of Bonds 7
Sec. 2. Execution of Bonds 8
Sec. 3. Aggregate Amount of Bonds to be Issued 9
Sec. 4. RESERVED 9
Sec. 5. Issuance of Bonds for Deposited Cash 9
Sec. 6. Reservation of Bonds to Retire Prior Charges 10
Sec. 7. Issuance of Bonds for Additional Property 11
Sec. 8. Issuance of Bonds for Retired Bonds 14
Sec. 9. RESERVED 14
Sec. 10 Depositaries of Cash 14
Sec. 11 Temporary Bonds 15
Sec. 12. Mutilated or Destroyed Bonds 16
Sec. 13. Registration and Transfer Books 16
Sec. 14. Charges for Exchange or Transfer 16
ARTICLE II
[RESERVED]
ARTICLE III
PARTICULAR COVENANTS OF BGE
Sec. 1. Payment of Principal and Interest 17
Sec. 2 Execution of Documents 17
Sec. 3. Payment of Taxes; Liens 18
<PAGE>
Sec. 4. Payment of Prior Charges 18
Sec. 5. Issue Bonds only for Proper Purpose 18
Sec. 6. Maintain Insurance 18
Sec. 7. Payment of Leases; Maintenance of Property 19
Sec. 8. Property of Subsidiaries 19
Sec. 9. Supplemental Indentures 20
Sec. 10. No Third Party Rights 20
ARTICLE IV
AS TO BONDS AND STOCKS PLEDGED HEREUNDER
Sec. 1. Stock and Bonds Delivered to Trustee 21
Sec. 2. Transfer of Stock to Trustee 21
Sec. 3. Company Entitled to Interest, Dividends and Voting Rights 21
Sec. 4. No Transfers or Encumbrances on Stock of Subsidiaries 22
Sec. 5. Limits on Acts of Subsidiaries 22
Sec. 6. Trustee's Rights to Stocks and Bonds 24
ARTICLE V
REMEDIES OF TRUSTEE AND BONDHOLDERS
Sec. 1. No Extension for Claims of Interest 23
Sec. 2. Events of Default 24
Sec. 3. Trustee's Possession of Property Upon Default; Distribution of Earnings
25
Sec. 4. Failure to Pay Interest When Due 26
Sec. 5. Trustee May Sell Property or Sue to Enforce Rights 27
Sec. 6. Bondholders May Control Sale 28
<PAGE>
Sec. 7. Notice of Sale 28
Sec. 8. Adjournment of Sale 28
Sec. 9. Completion of Sale 28
Sec. 10. Purchasers of Property 29
Sec. 11. Upon Sale Bonds Mature 29
Sec. 12. Application of Sale Proceeds 29
Sec. 13. Use of Bonds to Purchase Property 30
Sec. 14. No Contest to Sale by Company 30
Sec. 15. Right of Entry; Appointment of Receiver 31
Sec. 16. Failure to Pay Interest or Observe Other Covenants; Outstanding
Judgments 31
Sec. 17. Surrender of Property 31
Sec. 18. Judgment for Unpaid Principal or Interest 32
Sec. 19. Bondholder's Remedies 33
Sec. 20. Remedies not Exclusive 34
Sec. 21. No Waiver of Rights 34
ARTICLE VI
IMMUNITY OF OFFICERS, DIRECTORS AND STOCKHOLDERS
ARTICLE VII
BONDHOLDERS' ACTS, HOLDINGS AND APPARENT AUTHORITY
Sec. 1. Execution of Instruments by Bondholders 35
Sec. 2. Notaries 35
Sec. 3. Evidence of Bond Ownership 35
Sec. 4. RESERVED 36
<PAGE>
ARTICLE VIII
RELEASES OF MORTGAGED PROPERTY
Sec. 1. Sales of Property by BGE 36
Sec. 2. Certificate Required 37
Sec. 3. Application of Proceeds 37
Sec. 4. Possession of Property by Trustee 38
Sec. 5 Sale of Subsidiary Property 38
ARTICLE IX
CONCERNING THE TRUSTEE
Sec. 1 Duties of Trustee 38
Sec. 2. Negligence or Willful Misconduct 39
Sec. 3. No Responsibility for Company Statements. 40
Sec. 4. Reliance by Trustee on Others. 41
Sec. 5. Not Liable for Payment Beyond Monies Deposited. 43
Sec. 6. Trustee May Own Bonds. 43
Sec. 7. Segregation of Monies. 43
Sec. 8. Compensation 44
Sec. 9. Trustee May File Claims for Compensation. 44
Sec. 10. Power to do Acts Incidental to Action. 46
Sec. 11. Eliminate Conflicting Interests. 46
Sec. 12. Trustee as Creditor 47
Sec. 13. RESERVED 47
Sec. 14. Eligibility of Trustee 47
<PAGE>
Sec. 15. Resignation 47
Sec. 16. Removal 48
Sec. 17. New Trustee 48
Sec. 18. Acceptance 49
Sec. 19. Consolidation 50
ARTICLE X
COMPANY'S POSSESSION TILL DEFAULT AND RIGHT TO REDEEM BONDS BEFORE MATURITY.
SINKING FUND PROVISIONS
Sec. 1. Possession Until Default 51
Sec. 2. Redemption 51
Sec. 3. Sinking Fund 52
Sec. 4. Defeasance 53
ARTICLE XI
SUNDRY PROVISIONS
Sec. 1. Successors and Assigns 54
Sec. 2. Consolidation 54
Sec. 3. Successor May Issue Bonds 54
Sec. 4. Succession 55
Sec. 5. Plural/Singular 55
Sec. 6. Headings 55
ARTICLE XII
ADDITIONAL COVENANTS OF BGE
Sec. 1. Opinions of Counsel 56
Sec. 2. Paying Agent 56
<PAGE>
Sec. 3. Certificate and Opinion for Releases and Discharge of Indenture 57
Sec. 4. Certificates as to Fair Value 58
Sec. 5. Selection of Independent Experts 60
Sec. 6. Matters to be Included in Certificate or Opinion 60
Sec. 7. Filing of Claims by Trustee 60
Sec. 8. No Impairment of Bondholders' Rights 61
Sec. 9. Officer's Certificate as to Compliance 61
ARTICLE XIII
BONDHOLDERS' LISTS AND REPORTS BY BGE AND THE TRUSTEE
Sec. 1. Bondholders' Lists 61
Sec. 2. Trustee to Preserve Information; Furnishing Information to
Bondholders 62
Sec. 3. Filing Certain Reports with Trustee 63
Sec. 4. Trustee's Report to Bondholders 64
Sec. 5. Notice of Default to Bondholders 65
ARTICLE XIV
DEFINITIONS
Additional Property 65
Additional Securities 66
Amount of Bonds or Notes 66
Authorizing Resolutions 66
Bonds and Bondholders 67
Commission 67
Company 67
<PAGE>
Defaults 67
Indenture 67
Majority 67
Mortgaged Premises and Property or Mortgaged Property, or any equivalent
expression 67
Original Mortgage 67
Prior Charges 68
Residue Bonds 68
Subsidiaries 68
Trust Indenture Act 68
Trustee 68
Voting Stock 68
<PAGE>
THIS SUPPLEMENTAL INDENTURE, made as of the 20th day of
June in the year nineteen hundred and ninety-five, for
convenience of reference, and effective from the time of
execution and delivery hereof, by and between BALTIMORE GAS
AND ELECTRIC COMPANY (name changed from CONSOLIDATED GAS
ELECTRIC LIGHT AND POWER COMPANY OF BALTIMORE on April 4,
1955), a corporation duly created and organized under the
law of the State of Maryland, hereinafter called "BGE", and
BANKERS TRUST COMPANY, a corporation duly created and
organized under the law of the State of New York, having its
principal office and place of business at Four Albany
Street, Borough of Manhattan, The City of New York,
hereinafter called the "Trustee."
WHEREAS, BGE heretofore duly executed, acknowledged and
delivered to the Trustee (a)an indenture of mortgage or deed
of trust dated February 1, 1919 (which instrument, as
amended, restated and/or supplemented by the hereinafter
described seventy-three supplemental indentures and this
supplemental indenture, is hereinafter called the
"Indenture"), which has been duly recorded in the various
Maryland and Pennsylvania counties in which BGE owns real
property and (b) seventy-three supplemental indentures which
have been duly recorded, as necessary, in the various
Maryland counties in which BGE owns real property (with
respect to personal property and fixtures located in
Maryland now owned or hereafter acquired by BGE, the lien of
the Indenture has been perfected as a security interest
under the Maryland Uniform Commercial Code, by recording and
indexing a financing statement in the office of the Maryland
State Department of Assessments and Taxation); and certain
of the aforesaid supplemental indentures have been duly
recorded, as necessary, in the various Pennsylvania counties
in which BGE owns real property (with respect to personal
property and fixtures located in Pennsylvania, now owned or
hereafter acquired by the Company, the lien of the Indenture
has been perfected as a security interest under the
Pennsylvania Uniform Commercial Code by filing a financing
statement in the office of the Secretary of the Commonwealth
of the Commonwealth of Pennsylvania); and
WHEREAS, By the Indenture it is among other things
provided, in Section 9 of Article III thereof, that from
time to time BGE, when authorized by a resolution of its
Board of Directors, and the Trustee may, subject to the
provisions of the Indenture, execute, acknowledge and
deliver indentures supplemental thereto, which thereafter
shall form a part thereof, for the purpose (among others) of
making such provision, not inconsistent with the Indenture,
as may be necessary or desirable with respect to matters or
questions arising thereunder; and
<PAGE>
WHEREAS, BGE has determined to execute, acknowledge and
deliver this indenture, supplemental to the indenture of
mortgage or deed of trust dated February 1, 1919 and
hereafter to form a part thereof, for the purpose of (a)
restating in full the form of registered bond and (b)
amending in part and restating in full Articles I through
XIII, in order to (i) incorporate all the amendments
previously made to the indenture of mortgage or deed of
trust dated February 1, 1919; (ii) incorporate amendments
occurring by operation of law;(iii) amend or add language
that is necessary or desirable with respect to matters or
questions arising under the Indenture that do not adversely
affect the Bondholders, including adding a table of contents
and definition section; amending Article IX, Section 17, in
regard to publishing notices of a new trustee and Article X,
Section 3 in regard to publishing notices of a sinking fund
payment; adding explanatory footnotes; and making
ministerial grammar and punctuation changes in order to make
the Indenture easier to read, and BGE and the Trustee are
willing so to execute, acknowledge and deliver this
supplemental indenture for the purposes aforesaid; and
WHEREAS, No actual consideration is payable with
respect to this supplemental indenture and the amount of
debt allowed to be issued under the Indenture is not
increased by this supplemental indenture; and
WHEREAS, This supplemental indenture is not intended to
and will not supersede or replace or satisfy or in any
manner affect the liens or security interests previously
granted and conveyed to the Trustee by the Indenture; and
this supplemental indenture shall have no effect on the
priority of the liens or security interests that the
Indenture places on the property of BGE; and
WHEREAS, At a meeting of the Board of Directors of BGE
duly called and held as provided by law on March 17, 1995,
at which meeting a quorum of said Board of Directors was
present and voted, this supplemental indenture was then and
there submitted to the said Board of Directors and
resolutions authorizing the execution, acknowledgment and
delivery of this supplemental indenture were unanimously
adopted by the affirmative vote of all the members so
present.
WHEREAS, At the Board of Directors' meeting of April
30, 1919 the following Form of Registered Bond was approved:
[Form of Registered Bond]
No. _______ Series [ ] $_________
UNITED STATES OF AMERICA.
STATE OF MARYLAND.
<PAGE>
BALTIMORE GAS AND ELECTRIC COMPANY
REGISTERED [ ] PERCENT
FIRST REFUNDING MORTGAGE SINKING FUND
FOR VALUE RECEIVED, Baltimore Gas and
Electric Company, hereinafter called the
"Company", promises to pay to
_______________________________ or registered
assigns, [ ] dollars at its agency in the
Borough of Manhattan, in the City of New York, or
at its agency in the City of Baltimore, Maryland,
at the holder's option, on the [ ] day of [
], in the year [ ] and [ ], and to pay interest
thereon from the [ ] day of [ ] or [ ], as
the case may be, next preceding the date hereof
(unless this bond be dated [ ] or [ ], and
in that event from its date) at the rate of [ ]
percent per annum, payable at the holder's option,
at said agency in the Borough of Manhattan, in the
City of New York, or at said agency in the City of
Baltimore, [ ], on the [ ] days of [ ] and
[ ] in each year.
This bond is one of an issue of registered
bonds of the Company, known as its First Refunding
Mortgage Sinking Fund Bonds, issued and to be
issued, under and subject to, and equally secured
by, a mortgage or deed of trust dated as of the
first day of February, 1919, executed by the
Company to the Bankers Trust Company (of New
York), as Trustee, covering all the property and
franchises of the Company now owned or hereafter
acquired, to which mortgage or deed of trust
reference is made for a more particular
description of the property mortgaged, the nature
and extent of the security, the rights of the
holders of said bonds under the same, and the
terms and conditions upon which said bonds are
issued and secured.
This bond is one of a series, designated as
Series [ ] Percent First Refunding Mortgage
Sinking Fund Bonds, of said issue of bonds. Bonds
of Series [ ] are issued and to be issued as
registered bonds in denominations of [ ]
dollars and multiples thereof, and in other
respects shall be all of like tenor (including
date of maturity, but not including dates of
registered bonds).
The bonds of said issue are entitled to the
benefit of the sinking fund to be created by the
<PAGE>
Company by its payment to the Trustee annually, at
the end of each period of one year, accounting
from the first day of August, 1922, of a sum equal
to one percent of the largest principal amount of
bonds at any time during such yearly period
outstanding to be applied to the retirement of
bonds, by purchase [ ], as provided in said
mortgage.
In case of certain defaults specified in said
mortgage, the principal of all the bonds of said
issue may be declared due and become payable, in
the manner, with the effect and subject to the
conditions provided in said mortgage.
This bond is transferable by the registered
holder hereof, in person or by his attorney duly
authorized, on the books of the Company at its
said agency in the Borough of Manhattan, in the
City of New York, or at its agency in the City of
Baltimore, upon surrender and cancellation of this
bond; and upon any such transfer a new registered
bond will be issued to the transferee in exchange
hereof, upon payment, if the Company shall require
it, of the charge provided in said mortgage.
As provided in said mortgage, and on payment,
if the Company shall require it, of the charges
therein provided for, the registered holder of
this bond may surrender the same for cancellation
in exchange for a like amount of the principal
herefor in coupon bonds, and such coupon bonds may
in turn be reexchanged for a registered bond or
bonds.
This bond shall not become obligatory for any
purpose until it shall have been authenticated by
the certificate, hereon endorsed, of the Trustee
under said mortgage or deed of trust.
IN WITNESS WHEREOF, the Company has caused
its corporate name to be subscribed hereto by its
President or a Vice-President and its corporate
seal to be hereto affixed, attested by its
Secretary or an Assistant Secretary, this [ ] day
of [ ], 19 .
BALTIMORE GAS AND ELECTRIC COMPANY
By:____________________
President.
<PAGE>
Attest:
________________________
Secretary.
[Form of Trustee's Certificate]
This bond is one of the issue of bonds, of
the series designated therein, mentioned in the
within mentioned mortgage or deed of trust.
BANKERS TRUST COMPANY, TRUSTEE,
By:_________________________
Assistant Secretary
AND WHEREAS, At said meeting of the Board of
Directors of BGE, this Indenture was then and
there submitted by the President and entered upon
the minutes, and thereupon the following
resolution was by the vote of all of said
directors so present unanimously adopted:
RESOLVED: That the form of
indenture of mortgage or deed of trust
submitted by the President be and the
same is hereby approved, and the
President or a Vice-President and the
Secretary or an Assistant Secretary, or
other proper corporate officers, are
authorized to execute the said Indenture
on behalf of this Company under its
corporate seal, and to do or cause to be
done all acts necessary, proper or
expedient to carry into effect the
objects and purposes expressed in this
resolution or the aforegoing
resolutions, and to perfect said issue
of bonds and said mortgage or deed of
trust.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
That, in order to secure the payment of the principal of and
interest on all Bonds at any time issued and outstanding
under the Indenture, according to their tenor and effect,
and to secure the performance of all the covenants and
conditions contained in the Indenture as amended and
restated by this supplemental indenture, and to declare the
terms and conditions upon which said Bonds are issued, or to
be issued, and secured under the Indenture, BGE, in
consideration of the premises and of the purchase of such
Bonds by the holders thereof, has executed and delivered
<PAGE>
these presents and hereby ratifies, approves and confirms
each and all of the terms, provisions, covenants,
conditions, uses and trusts set forth in the Indenture in
all respects as fully as if all the terms, provisions,
covenants, conditions, and trusts thereof were herein again
set forth at length, as restated and amended hereby, and has
in the Indenture granted, bargained, sold, released,
conveyed, assigned, transferred, mortgaged, pledged, set
over and confirmed, and granted a security interest in all
and singular the premises, property and franchises of the
Company other than as excepted in the Indenture now owned
and hereafter acquired in Maryland or Pennsylvania, and by
these presents does grant, bargain, sell, release, convey,
assign, transfer, mortgage, pledge, set over and confirm,
and grant a security interest therein unto Bankers Trust
Company, and unto its successors and assigns forever.
TOGETHER, with any and all other property of every kind
and nature, real, personal or mixed (including rights,
privileges, franchises, bonds, stocks, claims and
indebtedness) which BGE now owns, or which it shall
hereafter at any time acquire, or which from time to time
hereafter shall be conveyed, delivered, transferred, or, by
writing of any kind, assigned to the Trustee, by BGE or by
anyone on its behalf, as additional security or as
substituted security hereunder, except as otherwise noted
herein.
TOGETHER, also with all the rights, privileges and
appurtenances to any of said premises, property and
franchises, belonging or in anywise appertaining, and the
reversion and reversions, remainder and remainders, rents,
issues, income and profits thereof, and all the estate,
right, title and interest which BGE now has or may hereafter
acquire therein or thereto or in or to any part thereof,
TO HAVE AND TO HOLD, all and singular the said
premises, property and franchises, appurtenances, rents,
issues, income and profits, hereby conveyed, transferred,
assigned, and confirmed or intended so to be, unto the
Trustee, its successors and assigns, forever.
IN TRUST, NEVERTHELESS, For the equal and proportionate
benefit and security of all holders of the Bonds and
interest obligations issued or to be issued under the
Indenture and for the enforcement of the payment of said
Bonds and interest obligations when payable and the
performance of and compliance with the covenants and
conditions of the Indenture as amended and restated by this
supplemental indenture, without preference, priority or
distinction, as to lien or otherwise, of any series of Bonds
over any other series of Bonds, or of any one Bond over any
other Bonds by reason of priority in the issue or
<PAGE>
Article I
Section 1
negotiation thereof or otherwise, so that each and every
Bond issued or to be issued hereunder or secured hereby
shall have the same right, lien and privilege under this
Indenture as amended and restated by this supplemental
indenture, and so that the principal and interest of every
such Bond shall, subject to the terms hereof as amended and
restated, be equally and proportionately secured hereby as
if all had been duly made, executed, delivered, sold and
negotiated simultaneously with the execution and delivery of
this Indenture, it being intended that the lien and security
of this Indenture shall take effect from the date of the
execution and delivery hereof without regard to the time of
such actual issue, sale or disposition of said Bonds, and as
though upon said date all of said Bonds had been actually
issued, sold and delivered to, and were in the hands of,
holders thereof for value.
AND IT IS HEREBY FURTHER COVENANTED AND DECLARED, That
all such Bonds, are issued and certified and delivered or to
be issued and certified and delivered, and the mortgaged
premises and property are to be held by the Trustee, subject
to the further covenants, conditions, uses and trusts in the
Indenture as amended and restated by this supplemental
indenture; and it is agreed and covenanted by BGE with the
Trustee and respective holders from time to time of Bonds
issued hereunder as follows, viz.:
provided, however, that no provision of this Indenture
as amended and restated by this supplemental indenture
is intended to reinstate any provisions in such
preamble which were amended and superseded by the
amendments to the Trust Indenture Act of 1939 effective
as of November 15, 1990.
2.
ARTICLE I.
Issue and Appropriation of Bonds
SEC. 1. Form of Bonds. The Bonds to be issued under
and secured by this Indenture, shall be substantially of the
tenor and purport above recited with appropriate
insertions, omissions, substitutions and variations in case
of Bonds made redeemable or convertible or payable in other
currencies or at other places, and in all other respects as
required or permitted by the terms of this Indenture.
Said Bonds may be issued in series, and all bonds of
any one series shall be identical, except to the extent of
such appropriate difference authorized or permitted by this
Indenture between Bonds of different denominations, as may
<PAGE>
Article I
Section 2
be determined by the Board of Directors of BGE at the
creation of such series. The several series may consist of
different aggregate amounts. At the option of BGE, the
maximum principal amount of Bonds issuable of any series may
be limited and may be expressed in the Bonds of such series.
The Bonds of each series may be designated by a
distinguishing letter or by appropriate words (limiting the
words 'First Refunding Mortgage Bonds') or by both a
distinguishing letter and appropriate words, and may be
numbered in any manner prescribed by BGE with the approval
of the Trustee. Bonds shall bear the date of their issue.
The Bonds of each series shall be of such denomination
or denominations, interchangeable or not, shall be made
payable on such date or dates, shall bear interest at such
rate, payable semi-annually or quarterly on such dates, and
shall be payable, as to principal and interest, at such
place or places, in such currency or currencies, of such
standard or standards, at such rate or rates of exchange (if
any), as shall be determined by the Board of Directors of
BGE at the time such series is created and shall be
expressed in the Bonds.
The Bonds of any particular series may be made
redeemable before maturity at the option of BGE as
hereinafter provided in Article X, and may be made
convertible at the option of the several holders thereof
into capital stock of BGE or a successor corporation, at
such price or prices, or rate or rates, upon such terms and
conditions, and during such period or periods (with respect
to such redemption or conversion) as shall be determined by
the Board of Directors of BGE at the time such series is
created and shall be expressed in the Bonds of such series.
Bonds of any particular series may, to any specified extent,
be made payable without deduction for taxes payable thereon
or deductible therefrom, as shall be determined by the Board
of Directors at the time such series is created and shall be
expressed in the Bonds of such series.
Any Bonds of any series issued hereunder may be
executed, certified and delivered originally, as the Board
of Directors, Executive Committee, or President of BGE may
(consistently with the terms of the Bonds of such series)
authorize.
SEC. 2. Execution of Bonds. All Bonds shall, from
time to time, be executed on behalf of BGE by its President
or a Vice President and its corporate seal shall be thereto
affixed and attested by the Secretary or an Assistant
<PAGE>
Article I
Section 3
Secretary. To the extent permitted by law, the signature of
either or both of the officers executing any Bond and the
corporate seal of BGE may be in facsimile. In case any of
the officers who shall have signed or sealed any of said
Bonds shall cease to be such officers of BGE before the
Bonds so signed and sealed shall have been actually
certified and delivered by the Trustee and disposed of, such
Bonds may, nevertheless, be adopted by BGE, and upon the
written request of BGE shall be certified and delivered,
subject to the provisions hereof, and may be disposed of by
BGE, as though the persons who signed or sealed such Bonds
had not ceased to be officers of BGE.
Only such Bonds as shall bear thereon endorsed a
certificate substantially in the form hereinbefore recited,
executed by the Trustee, shall be secured by this Indenture,
or entitled to any lien, right or benefit hereunder, and
such certificate of the Trustee upon any such Bond executed
by BGE shall be conclusive evidence that the Bond so
certified has been duly issued hereunder, and that the
holder is entitled to the benefit of the trust hereby
created.
Bonds to be secured hereby shall, from time to time, be
executed and delivered by BGE to the Trustee for
certification, and thereupon the Trustee shall certify and
deliver the same as provided in this Article, and not
otherwise.
SEC. 3. Aggregate Amount of Bonds to be Issued. The
aggregate principal amount of Bonds which may be executed by
BGE and certified and delivered by the Trustee and be
secured by this Indenture and issued and outstanding at any
one time shall not, in any event, exceed the amount at the
time permitted by law, but otherwise, except as hereinafter
in this Article I provided, is not limited. The principal
amount of Bonds authorized by corporate action of BGE to be
issued under this Indenture may be fixed and changed from
time to time in accordance with the applicable law at the
time of the change without approval by or consent of the
Trustee or the holders of outstanding Bonds.
SEC. 4. RESERVED
SEC. 5. Issuance of Bonds for Deposited Cash. From
time to time, Bonds to be issued under this Indenture shall,
at the request of BGE and upon deposit with the Trustee of
cash in an amount equal to the principal amount of the Bonds
so certified, be certified by the Trustee and delivered, on
the written order of BGE, signed by its President or a Vice-
President, and on receipt by the Trustee of the Authorizing
Resolutions. Cash so deposited shall, from time to time, be
<PAGE>
Article I
Section 6
reserved or paid out for one or more of the purposes for
which, as in this Article hereafter provided, Bonds shall be
reserved or may be issued.
SEC. 6. Reservation of Bonds to Retire Prior Charges.
Whenever Bonds are certified and delivered, pursuant to
Section 7 of this Article, for the purpose of acquiring any
Additional Property which, at the time of such acquisition,
is subject to any Prior Charge there shall be reserved, for
the purpose of acquiring, paying or refunding such Prior
Charge, Bonds to be issued hereunder in an amount equal to
the principal or par amount of such Prior Charge. No Bonds
shall be certified and delivered, pursuant to Section 7 of
this Article, for such acquisition of Additional Property
subject to any Prior Charge, unless there then remain, to be
so reserved, Bonds to be issued hereunder in an amount equal
to the principal or par amount of such Prior Charge.
From time to time Bonds so reserved shall be certified
and delivered in amounts equal to the principal or par
amounts of the Prior Charges so acquired, paid or refunded,
upon delivery or transfer of such Prior Charges to the
Trustee (or upon discharge and release thereof in lieu of
such delivery or transfer). All Prior Charges so delivered
to the Trustee shall be held by the Trustee or canceled (but
shall not be withdrawn upon substitution).
No Bonds, however, shall be certified and delivered,
under this Section 6, with respect to Prior Charges which
shall have been paid or retired through the operation of any
sinking fund provided for that purpose. Whenever the
retirement of Prior Charges through the operation of any
sinking fund, or for any other reason, the amount of Bonds
reserved under this Section 6 shall become unnecessary for
the purposes for which said amount is reserved, then such
amount shall ipso facto be reduced to the amount necessary
thereafter to be reserved. In such event the Bonds not
necessary to be so reserved may be certified and delivered
pursuant to Section 7 of this Article. BGE may deliver to
the Trustee, as evidence of any such reduction, a
certificate, executed and verified as is provided with
respect to certificates in Section 7 of this Article,
stating the facts by reason of which such reduction has
occurred, and may deliver with such certificate canceled
bonds, stock certificates or obligations, or other evidence
of such cancellation or retirement and the manner thereof.
The Trustee may (without being obliged so to do) accept such
certificates, with or without accompanying evidence, as
conclusive evidence of a reduction of the amount reserved
under this Section 6, or may require such additional
evidence as it may deem proper.
<PAGE>
Article I
Section 7
SEC. 7. Issuance of Bonds for Additional Property.
From time to time, while BGE is in possession of the
mortgaged premises and property as herein (in Article X,
Section 1) permitted, but only on compliance with the
provisions in this Section 7 hereafter contained, Residue
Bonds shall, at the request of BGE, be certified and
delivered by the Trustee for the purpose of paying, or
reimbursing expenditures made by BGE on or after February 1,
1919, and within three years prior to such request, for
making improvements, betterments and extensions, and
acquiring additional property.
The total amount of Residue Bonds issued on account of
the acquisition of stock of Subsidiaries shall never exceed
seven million five hundred thousand dollars ($7,500,000).
Whenever BGE shall have acquired or is about to acquire
Additional Property, and requests the certification and
delivery of Residue Bonds by the Trustee, there shall be
delivered to the Trustee:
A. The Authorizing Resolutions.
B. A certificate, verified before a Notary Public, of
its President or a Vice-President and its Treasurer or an
Assistant Treasurer, and (in the case of any construction
work, machinery or equipment) of an architect or an engineer
(who may be an architect or engineer of BGE), selected by
BGE and approved by the Trustee, stating in reasonable
detail the Additional Property acquired or to be acquired,
and certifying, in substance, (a) that an amount therein
specified is due for, or has been expended on or since the
first day of February, 1919, and within three years prior to
the delivery of said certificate to the Trustee, for, and is
the actual cost of, Additional Property therein mentioned;
(b) that said amount is not in excess of the reasonable
value of said Additional Property; (c) that said Additional
Property is necessary or useful in the conduct of a
business, then conducted by BGE and then within its
corporate powers and purposes, of either one or both of the
groups set forth in the definition of Additional Property,
specifying which group or groups; (d) that said Additional
Property is free from Prior Charges, except as otherwise
specified (specifying the nature and amount of, and any
other necessary facts concerning, any Prior Charge); (e)
that said expenditures, made or about to be made, are of the
class usually and properly made out of capital (including,
among other things, taxes, insurance and interest accruing
during construction, computed, however, over construction
periods in no case exceeding eighteen months, and at rates
of interest not exceeding the respective rates borne by the
Bonds to be certified hereunder); (f) that no part of said
<PAGE>
Article I
Section 7
expenditures was included in any previous certificate so
delivered to the Trustee hereunder, or in any application of
Moines made by the Trustee (or any pending request for such
application) pursuant to Article III, Section 6, Article IV,
Section 6, or Article VIII, Section 3, hereof, or was
provided for in any issue of Subsidiary Securities, any
issue or creation of Prior Charges, or any disposition of
Subsidiary Securities or Prior Charges or of any Moines
under any mortgage securing the same, or in any pending
request for such issue, creation or disposition; and
(g)(when Additional Securities are so acquired or to be
acquired), (1) that the aforesaid amount is the actual cost,
and is not in excess of the reasonable value, of particular
property (including construction), if any, therein mentioned
or referred to, for the acquisition of which said Additional
Securities are issued, and (2) (when Additional Securities
of a corporation which has not theretofore become a
Subsidiary are so acquired) that the Subsidiary which issued
said Additional Securities owns property, therein mentioned
or referred to, the reasonable value of which is not less
than the aforesaid amount specified as the actual cost of
said Additional Securities, plus the principal or par amount
of all Prior Charges, all other liens on said property and
all debts and preferred stock of said Subsidiary ranking
ahead of or pari passu with any of said Additional
Securities, and (when said Additional Securities include
common stock), the value of all other outstanding common
stock, valued at the cost of that so acquired, and (3) that
BGE has acquired at least a majority of the voting stock
(and of each class thereof) of said Subsidiary, specifying
the amount, if any, of bonds, securities and stock (of each
class) not so acquired.
C. Such instruments of conveyance, assignment and
transfer as may be necessary, in the opinion of counsel (who
may be counsel to BGE), selected by BGE and approved by the
Trustee, to vest in the Trustee all the right, title and
interest of BGE in and to the Additional Property so
acquired or to be acquired, or the opinion of such counsel
that no such instruments are necessary for such purpose; and
also the opinion of such counsel to the effect (1) that BGE
has title to said Additional Property, subject to no Prior
Charge except as specified in the certificate mentioned in
paragraph B, next preceding this paragraph, and, (2) (when
Additional Securities are so acquired or to be acquired),
that the Subsidiary which issued, or issues, said Additional
Securities has title, subject to no Prior Charge except as
specified in the aforesaid certificate, (a) to the
particular property, if any, for the cost of which said
Additional Securities are issued, and (b) (when Additional
Securities of a corporation which has not theretofore become
a Subsidiary are so acquired) to all of its property
<PAGE>
Article I
Section 7
mentioned or referred to in the aforesaid certificate
pursuant to clause (g) (2) of the aforesaid paragraph B,
that said Subsidiary is validly organized, has corporate
power to conduct the business conducted by it, has valid
franchises or rights, if such be necessary, for the
operation of said property, or that none such are necessary,
that said Additional Securities are validly issued, and that
the mortgage, if any, securing the same is validly executed
and is a valid lien on the property purporting to be subject
thereto, including the particular property, if any, for the
cost of which Additional Securities are then issued, and,
(3) (when Additional Property is so acquired or to be
acquired for the conduct of any business which (a) is not a
gas or electric business or (b) is located outside the City
of Baltimore, Baltimore County, Anne Arundel County and
Howard County, State of Maryland) that BGE has corporate
power to acquire said Additional Property and has both
corporate power and valid franchises or rights or
governmental grants, if such be necessary, to conduct the
business for which said Additional Property is acquired, or
that none such are necessary. A title insurance policy,
issued by a title insurance or guarantee company, selected
by BGE and approved by the Trustee, doing business in the
City of Baltimore, or in the State and the County or City
where any real property in question is situated, insuring to
BGE the title to such property in an amount not less than
the actual cost thereof as certified pursuant to clause (a)
or clause (g) (1) of the aforesaid paragraph B, may in any
case be delivered in lieu of an opinion of counsel to the
same effect, or may be accepted by counsel as the basis for
an opinion without personal examination of the matters
thereby covered.
D. The amount of Residue Bonds to be from time to
time certified and delivered by the Trustee shall not exceed
eighty percent of the amount, so certified, of such actual
expenditures for Additional Property, and, in case of
Additional Property subject to Prior Charges, shall not
exceed the amount, if any, remaining after deducting the
amount of such Prior Charges from eighty percent of the sum
of (1) the amount of such Prior Charges, (2) the amount of
all liens on said Additional Property already vested in the
Trustee which, if not so vested, would constitute Prior
Charges, and (3) the amount of expenditures so certified.
For all the purposes of this Indenture, the amount of
all Prior Charges shall be taken to be the principal or par
amount thereof, and the actual cost of all Additional
Securities (except common stock issued by a corporation when
or before, but not after, it becomes a Subsidiary) shall in
every case be taken to be not more than par, and (in the
case of stock having no par value) not more than book value
<PAGE>
Article I
Section 8
at the time of the issuance of such stock. At no time shall
the aggregate amount of outstanding Prior Charges (not
acquired, paid or refunded under Section 6 of this Article)
on Additional Property with respect to which Residue Bonds
shall have been certified exceed the aggregate amount of
Residue Bonds theretofore certified and delivered.
The Trustee may accept the instruments hereinbefore
provided for as conclusive evidence of any or all of the
facts or matters of opinion stated therein, and of the
propriety hereunder and conformity with the provisions
hereof of the action requested of it on the strength of such
instruments. The Trustee, however, shall not be obliged to
accept any of said instruments as sufficient, but may
require such additional information, evidence, opinions or
advice, or make such inquiry or examination as it may deem
proper.
SEC. 8. Issuance of Bonds for Retired Bonds. At any
time, and from time to time, at the request of BGE, upon
surrender to the Trustee and cancellation of any Bonds
previously certified and delivered hereunder (including
Bonds of any series, not sold or disposed of, but held in
the treasury of BGE), the Trustee shall certify and deliver
new Bonds hereunder, of any series designated by BGE, in an
amount equal to the amount of Bonds previously issued
hereunder so surrendered, whether such Bonds so surrendered
shall have been paid or retired at, after or before
maturity, but not if they shall have been paid or retired
through the operation of the sinking fund hereunder provided
for that purpose.
SEC. 9. [RESERVED]
SEC. 10. Depositaries of Cash. Whenever money or cash
is required or authorized to be deposited with the Trustee
under any of the provisions of this Article I, or of Article
III, Article IV, Article VIII, or Section 3 of Article X of
this Indenture, in lieu of such deposit with the Trustee the
President or a Vice-President or the Treasurer of BGE may
from time to time, in a writing filed with the Trustee,
designate additional banks or trust companies, approved by
the Trustee, with which Moines may be deposited, and may fix
the proportions or amounts in which deposits shall be made
therewith, or revoke the designation of any bank or trust
company theretofore designated, or reduce or increase the
proportion or amount of such Moines which may be kept on
deposit with any such depositary or depositaries, and
accordingly such Moines shall be transferred from one
depositary to another upon the written order of the Trustee;
provided, however, that there shall not at any time be on
deposit with any one bank or trust company other than the
<PAGE>
Article I
Section 11
Trustee an amount thereof greater in the aggregate than one-
half the amount of the capital and surplus of such bank or
trust company. The Moines deposited with depositaries other
than the Trustee shall be deposited in the name of the
Trustee, as Trustee hereunder, with such other
identification as the Trustee may require, and shall be paid
out only upon the written order of the Trustee. In every
case of a deposit with a depositary other than the Trustee,
such depositary shall deliver to the Trustee and to BGE an
appropriate instrument in duplicate acknowledging the
receipt of such money and agreeing to hold and to pay the
same from time to time upon the written order of the
Trustee. Any depositary shall be protected by any such
order in any payment made upon the faith thereof, and no
such depositary shall be under any obligation to see to the
application of the amount so paid. Interest at such rate as
shall be agreed upon with BGE shall be allowed by the
Trustee on any Moines deposited with it, and by any other
depositary or depositaries by which such deposited Moines
may be held, and (so long as BGE is in possession of the
mortgaged premises and property as herein permitted) all
such interest shall be paid from time to time to or upon the
order of BGE. Prior to the occurrence of an event of
default hereunder as defined in Section 2 of Article V of
the Indenture, and after the curing of any such event of
default, the Trustee shall have no responsibility either to
BGE or to the holders of the Bonds for any of said Moines
while on deposit with any bank or trust company, other than
the Trustee, designated by BGE. All money or cash deposited
under any of the provisions of this Article I or of Article
III, Article IV, Article VIII or Section 3 of Article X of
this Indenture shall, until paid out pursuant to the
provisions of this Indenture, be deemed to be held by the
Trustee, subject to the lien and trusts of this Indenture,
as part of the mortgaged premises and property.
SEC. 11. Temporary Bonds. Until the Bonds of any
series to be issued hereunder shall be ready for delivery,
BGE may execute and issue, and the Trustee shall certify and
deliver (subject to all the conditions and limitations
hereinbefore set forth) temporary Bonds, or which shall be
otherwise substantially of the tenor of the Bonds in lieu of
which they shall be issued, shall be of any denominations,
(unless issued with coupons in which event they shall be in
the denomination of one thousand dollars), may be made
interchangeable with temporary Bonds of other denominations,
and shall be exchangeable, without expense to the holder,
for the Bonds in lieu of which they shall be issued. BGE
will cause such Bonds to be prepared without unreasonable
delay. Immediately upon such exchange, such temporary Bonds
shall forthwith be canceled by the Trustee and delivered to
BGE. Until so exchanged, said temporary Bonds shall in all
<PAGE>
Article I
Section 12
respects be entitled to the lien and security, and subject
to all the provisions of this Indenture, and interest
payments (if not represented by coupons), when and as made,
shall be noted thereon upon presentation of such Bonds for
that purpose.
SEC 12. Mutilated or Destroyed Bonds. In case any
Bond issued hereunder shall become mutilated or be destroyed
or lost, BGE in its discretion may issue, and thereupon the
Trustee shall certify and deliver, a new Bond, as the case
may be, of like tenor and date, bearing the same serial
number, in exchange and substitution for, and upon
cancellation of, the mutilated Bond or in lieu of and
substitution for the Bond, so destroyed or lost, upon the
production of evidence satisfactory to BGE and the Trustee
of the destruction or loss of such Bond, as the case may be,
and upon receipt also of indemnity satisfactory to them.
SEC 13. Registration and Transfer Books. BGE, at
such place or places as shall be designated in any of the
Bonds issued hereunder, will keep books for the registration
and transfer of such Bonds, which at all reasonable times
shall be open for inspection by the Trustee; and upon
presentation for such purpose BGE will register or cause to
be registered therein, as hereinafter provided, and under
such reasonable regulations as it may prescribe, any Bond
issued hereunder which by its terms is entitled to be
registered.
Any holder of Bonds of one denomination which by their
terms are exchangeable for Bonds of another denomination or
denominations may at any time surrender the same for
cancellation and receive in exchange therefor a like amount
of the principal thereof in Bonds of another denomination or
denominations, of the same series, as desired by such
holder.
In every case of any such exchange of Bonds of one
denomination for Bonds of another denomination or
denominations, or transfer of registered Bonds, the Trustee
forthwith shall cancel the surrendered Bond, and shall
deliver the same to BGE.
SEC. 14. Charges for Exchange or Transfer. For any
transfer of Bonds and for any exchange of Bonds for Bonds of
another denomination or denominations, BGE, at its option,
may require the payment of a sum sufficient to reimburse it
for any stamp tax or other governmental charge connected
therewith, and also the further sum of one dollar for each
new Bond issued upon such transfer or exchange.
<PAGE>
Article II
ARTICLE II
[RESERVED]
ARTICLE III
Particular Covenants of BGE
BGE covenants as follows:
SEC. 1. Payment of Principal and Interest. It will
duly and punctually pay, or cause to be paid, to every
holder of any Bond issued and secured hereunder, the
principal and interest accruing thereon, at the dates and
places and in the manner mentioned in such Bonds, according
to the true intent and meaning thereof. If so provided in
any such Bonds, such payment will, to the extent so
provided, be made without deduction for taxes.
BGE will maintain offices or agencies at such place or
places as shall be designated in any of the Bonds issued
hereunder for payment of principal or interest,
registration, transfer, exchange or any other purpose in
this Indenture or in any such Bonds specified, and from time
to time will notify the Trustee of the location of all such
offices or agencies. If BGE shall fail so to maintain any
such office or agency or so to notify the Trustee,
presentations and demands may be made to or upon, and notice
may be served upon, BGE at the office of the Trustee.
SEC. 2. Execution of Documents. Whenever required by
the Trustee, BGE will do, execute, acknowledge and deliver,
or it will cause to be done, executed, acknowledged and
delivered, all and every such further acts, deeds, transfers
and assurances for the better assuring, conveying and
confirming unto the Trustee all and singular the premises,
estates and property hereby conveyed, or intended so to be,
as the Trustee shall reasonably require for better
accomplishing the provisions and purposes of this Indenture,
and for securing payment of the principal and interest of
the Bonds intended to be hereby secured.
Whenever and as often as required by the Trustee, BGE
will execute such deeds, conveyances or instruments as may
be necessary or proper to convey to the Trustee, or vest in
the Trustee the legal title to, any property hereafter
acquired by BGE, but all property which shall be so
acquired, whether so conveyed to or vested in the Trustee or
not, shall become ipso facto subject to the lien and
operation of this Indenture, as fully as if so conveyed to
or vested in the Trustee.
<PAGE>
Article III
Section 3
The Trustee shall be under no duty or obligation to
require any such acts, deeds, transfers, assurances,
conveyances or other instruments mentioned in this Section 2
of this Article.
SEC. 3. Payment of Taxes; Liens. BGE will, from time
to time (1) pay and discharge all taxes, assessments and
governmental charges lawfully imposed upon the premises or
property hereby mortgaged, or upon any part thereof, or upon
the income or profits thereof, or upon BGE or otherwise, and
(2) pay, or make adequate provision for the discharge of all
lawful claims and demands of mechanics, laborers, and
others, which, in either case (of taxes, assessments or
governmental charges, or of claims or demands) would
constitute liens, prior to the lien of these presents, upon
the premises or property hereby mortgaged, or any part
thereof, or the income or profits thereof; provided BGE need
not pay any such tax, assessment, governmental charge, claim
or demand, so long as in good faith it shall contest the
validity thereof. BGE will not do or suffer to be done
anything whereby the lien or security of this Indenture
might be impaired.
SEC. 4. Payment of Prior Charges. BGE will pay and
discharge, or cause to be paid and discharged, as the same
accrues, all Prior Charges. BGE will at all times cause to
be duly observed and performed all the covenants and
conditions contained in any of the mortgages, deeds of trust
or other instruments securing or creating any of the Prior
Charges for which Bonds or deposited cash shall be reserved
under Section 6 of Article I of this Indenture. BGE will
pay and discharge, or cause to be paid and discharged, at
maturity, (and will not extend or renew, or permit to be
extended or renewed), all Prior Charges for which such
reservation shall be made.
SEC. 5. Issue Bonds only for Proper Purpose. BGE
will not issue, negotiate, sell or dispose of any Bonds
hereby secured, or apply or use any sums disbursed to it by
the Trustee as herein provided, in any manner, or for any
purpose, other than as herein prescribed.
SEC. 6. Maintain Insurance. BGE will insure and keep
insured to the extent to which similar property is usually
insured by similar companies, either through insurance
companies (whether stock, mutual or of any other kind) or
through an insurance fund to be maintained by BGE, or
through both means, all of the hereby mortgaged property
which is usually insured by similar companies. If BGE shall
fail to effect or keep in force such insurance, the Trustee
may insure such property, in like manner, at the cost of
BGE, but shall be under no obligation to do so. The
<PAGE>
Article III
Section 7
policies, if any, for such insurance shall be made payable
to the Trustee, as its interest may appear but all premiums
on such policies shall be paid by BGE. All proceeds of such
insurance with insurance companies shall be applied only to
the replacement, repair or restoration of the property
damaged or destroyed or, at the option of BGE, shall be
applied as proceeds of sale of property are authorized to be
applied under Section 3 of Article VIII of this Indenture.
Until so applied, all such proceeds shall be paid to the
Trustee and deposited with it or some other depositary or
depositaries pursuant to Section 10 of Article I of this
Indenture. Before the Trustee shall disburse and pay over
to BGE any such proceeds of insurance for application to
replacements, repairs or restoration, BGE shall make
application for such payment, to the Trustee, in the same
manner, and (so far as, in the opinion of the Trustee, the
nature of the application permits) with similar accompanying
instruments and Authorizing Resolutions as is provided in
Section 7 of Article I of this Indenture with respect to the
certification and delivery of Residue Bonds.
BGE will furnish annually to the Trustee a certificate,
signed by the President or a Vice-President and by the
Treasurer or an Assistant Treasurer of BGE, stating that it
has kept all of the mortgaged property which is usually
insured by similar companies insured to the extent to which
similar property is usually insured by similar companies,
through stock, mutual or other insurance companies or
through an insurance fund maintained by BGE, and stating the
total amount of such insurance. If BGE maintains an
insurance fund, such certificate shall state the amount
thereof and the securities in which it is invested.
SEC. 7. Payment of Leases; Maintenance of Property.
BGE from time to time will punctually pay all ground rents
and other rentals and perform all obligations, covenants and
conditions under any leases of property in which it holds
any leasehold interest. BGE will preserve all its
easements, franchises and rights, and will at all times keep
the mortgaged premises and property in good working order
and condition, so as to enable it to conduct its business
efficiently, and will from time to time make all needful
repairs, renewals and replacements and all useful and proper
alterations, additions, betterments and improvements.
SEC. 8. Property of Subsidiaries. Subject to the
provisions of any mortgages or instruments securing any
Prior Charges, BGE will at all times cause to be duly
observed and performed with respect to the property,
franchises and income of Subsidiaries all things in Sections
<PAGE>
Article III
Section 9
3, 6 and 7 of this Article covenanted with respect to its
own property, franchises and income.
SEC. 9. Supplemental Indentures. From time to time
BGE, when authorized by a resolution of its Board of
Directors, and the Trustee may, subject to the provisions of
this Indenture, and, when so required by this Indenture,
shall execute, acknowledge and deliver indentures
supplemental hereto, which thereafter shall form a part
hereof, for the purpose of (a) conveying, assuring or
confirming to, or vesting in, the Trustee any property, now
owned or hereafter acquired by BGE, pursuant to any of the
provisions of Section 7 of Article I or Section 2 of this
Article III hereof; (b) adding to the limitations or
restrictions specified in this Indenture further limitations
or restrictions upon the amount or purposes of issue of
Bonds hereby secured (or upon payment of deposited cash) or
of any securities or obligations of BGE or any other
corporation's capital stock of which shall be owned by BGE,
or otherwise adding to the covenants of BGE in this
Indenture for the protection of the holders of the
Securities; (c) making provisions for the conversion into
capital stock, or the redemption before maturity, or
additional provision for the retirement through a sinking
fund, of any Bonds thereafter to be issued hereunder; (d)
evidencing the succession, or successive successions, of
another corporation to BGE and the assumption by such
successor corporation of the covenants and obligations of
BGE in the Bonds and in this or any supplemental indenture
contained; (e) making such provision, not inconsistent with
this Indenture, as may be necessary or desirable with
respect to matters or questions arising hereunder; or (f) as
may be necessary to comply with any applicable federal,
state or local law, rule or regulation.
No supplemental indenture shall be executed pursuant to
any of the provisions of the Indenture which shall not
comply with the provisions of the Trust Indenture Act.
SEC 10. No Third Party Rights. Nothing in this
Indenture shall be construed to give to any person or
corporation other than the parties hereto and the holders of
the Bonds any right, remedy or claim whatsoever under or in
respect of this Indenture or any covenant, condition or
provision herein contained; all its covenants, conditions
and provisions, except as aforesaid, being for the sole and
exclusive benefit of the parties hereto and of the holders
of the Bonds.
<PAGE>
Article IV
Section 1
ARTICLE IV.
As to Bonds and Stocks Pledged Hereunder
SEC. 1. Stock and Bonds Delivered to Trustee. BGE
shall cause all bonds and securities, and certificates for
all shares of stock, of other corporations, (except
temporary investments, of reserves or other funds, intended
to be reconverted into cash), now owned or hereafter
acquired by it, together with proper instruments of
assignment and transfer thereof in blank, to be forthwith,
or immediately upon acquisition by BGE, delivered to the
Trustee to be held by it, subject in all respects to the
lien and operation of this Indenture.
SEC. 2. Transfer of Stock to Trustee. The Trustee
may cause to be transferred into its name, as Trustee
hereunder, or into the name of any nominee or nominees
selected by it, all shares of stock the certificates for
which shall be delivered to it under any of the provisions
hereof; and in its discretion the Trustee may at any time
cause all or any part of the bonds delivered to it under any
of the provisions hereof to be registered in its name, as
Trustee hereunder. The Trustee may, however, from time to
time, assign and transfer, or permit to be assigned and
transferred, as many shares of stock as may be necessary to
qualify persons who may be chosen directors or officers of
the several corporations whose stock is so held by the
Trustee, such assignment and transfer being made upon such
terms and conditions as the Trustee shall deem necessary or
proper for the protection of the trusts of this Indenture,
by redelivery to the Trustee of the stock certificates
endorsed in blank, or otherwise.
SEC. 3. Company Entitled to Interest, Dividends and
Voting Rights. So long as BGE is in possession of the
mortgaged premises and property as herein (in Article X,
Section 1) permitted, BGE shall be entitled to receive all
interest and dividends (when paid out of income, but not if
paid out of the proceeds of a sale of property belonging to
a corporation the bonds, securities or stock of which are
subject to the lien of this Indenture) or other Moines in
the nature of income paid in respect of any such bonds,
securities or stock, and to exercise in such manner as it
shall think fit (except in this Article IV or elsewhere in
this Indenture restricted) the voting power conferred by any
such stock; and for that purpose the Trustee shall execute
or cause to be executed from time to time, at the expense of
BGE, such proxies or other instruments, in favor of BGE or
its nominees, in such form and for such purposes as shall be
reasonably required by BGE, and shall be expressed in the
written request of the President or a Vice-President of BGE
<PAGE>
Article IV
Section 4
therefor, to enable it to exercise such voting powers in
respect of such shares of stock held by or registered in the
name of the Trustee.
The Trustee shall be protected in respect of any such
proxy or other instrument which it may execute or cause to
be executed, if such proxy or other instrument shall contain
a provision substantially as follows:
"This instrument shall not be used or voted
in any respect in contravention of any of the
terms or of the intent of the Indenture, amended
and restated as of January 1, 1995 from BGE to
Bankers Trust Company, as Trustee, to which
reference is hereby made."
SEC. 4. No Transfers or Encumbrances on Stock of
Subsidiaries. BGE hereby further covenants:
(A) Not to sell, assign or transfer any such claim for
dividend or interest, or collect any such claim by legal
proceedings or by the enforcement of any security except
with the prior written assent of the Trustee; such claims,
until actually paid, to remain subject to the lien of this
Indenture.
(B) Not to sell, encumber or voluntarily part with
ownership of or title to, but subject to the lien hereof to
hold, all stock of any Subsidiary, or its equity of
redemption therein, or the voting power thereon.
(C) To take all such action as from time to time may
be necessary to preserve the corporate existence and rights
of every Subsidiary, until it shall have lawfully acquired
and subjected to the lien of this Indenture all the property
and franchises of any such corporation.
SEC. 5. Limits on Acts of Subsidiaries. BGE will at
all times prevent any Subsidiary :
(A) From creating any new secured indebtedness or lien
upon its properties or franchises, except to secure loans
from BGE to such corporation made for enabling it to acquire
additional property or to make betterments, improvements or
extensions, any such secured indebtedness or lien created as
security for such loans from BGE to be subject in all
respects to the lien of this Indenture and to be forthwith
transferred and delivered to the Trustee.
<PAGE>
Article IV
Section 5
(B) From creating any other indebtedness, except (1)
current operating expenses, bank indebtedness or inter-
company indebtedness (between Subsidiaries or between
Subsidiaries and BGE), contracted in the ordinary course of
business, or (2) (in the case of any Subsidiary)
indebtedness created for the same purpose and upon the same
conditions stated, with respect to new secured indebtedness
or liens, in clause 2 of subdivision (A) of this Section 5.
(C) From causing the consolidation or merger (or,
through sale or transfer of property and franchises as an
entirety, the substantial equivalent thereof) of any such
corporation with any other corporation or corporations,
except upon the following terms, to wit: (1) One or more
Subsidiaries may consolidate with BGE, if the consolidation
agreement shall provide (a) that all the property and
franchises of the corporation or corporations so
consolidating with BGE shall, immediately upon such
consolidation, pass to the Trustee hereunder, subject only
to such liens on such property as may have existed prior to
the consolidation, and (b) that the new corporation
resulting from such consolidation shall execute its deed of
trust, or such other and further assurance of title as the
Trustee or its counsel may demand, conveying to the Trustee
as security for the Securities all of the property of said
new corporation, subject only to the liens thereon existing
prior to such consolidation; and (2) any Subsidiary may
consolidate with any other Subsidiary or Subsidiaries,
provided that the Trustee shall receive the same proportion
of the total authorized capital stock (and voting stock of
each class) of the consolidated corporation as the aggregate
stock (and voting stock of each class) which it then holds
in the consolidating corporations bears to the aggregate
authorized capital stock (and voting stock of each class,
respectively) of such consolidating corporations, and
provided further that no indebtedness or liens shall be
created upon the property of such consolidating or
consolidated corporations, except indebtedness or liens of
the same kind, for the same purposes and upon the same
conditions stated in clause (2) of subdivision (A) and in
subdivision (B) of this Section 5.
(D) From authorizing the increase of the capital stock
of any such corporation, unless such new stock shall be sold
for at least par, nor, in any case (1) in such a manner as
to create any preference in favor of any stock over the
stock subject to the lien of this Indenture; or (2) in such
a manner as to cause the amount of stock (or voting stock of
any class) subject to this Indenture to be a smaller
proportion of the total authorized capital stock (or voting
stock of any class) of such corporation.
<PAGE>
Article IV
Section 6
(E) From doing anything else inconsistent with the
provisions or purposes of this Indenture or detrimental to
the interests of the holders of the Securities.
SEC. 6. Trustee's Rights to Stocks and Bonds.
Subject only to the rights and powers hereinbefore reserved
to BGE while it is in possession of the mortgaged premises
and property, the Trustee shall have and may exercise all
the rights of owner with respect to any and all bonds,
obligations or stocks so owned, and accordingly may at any
time do whatever may be necessary for the purpose of
maintaining or preserving the corporate existence, rights
and franchises of the corporations issuing such bonds,
obligations or stocks, or for the purpose of protecting the
interests of the Trustee and of the holders of the
Securities.
All Moines received by the Trustee pursuant to any of
the provisions of this Article IV shall be deposited
pursuant to Section 10 of Article I, and shall be applied as
proceeds of sale of property are authorized to be applied
under Section 3 of Article VIII of this Indenture.
ARTICLE V.
Remedies of Trustee and Bondholders
SEC. 1. No Extension for Claims of Interest. BGE
will not, directly or indirectly, extend or assent to the
extension of the time for payment of any claim for interest
upon any of the Bonds and will not, directly or indirectly,
be a party to or approve any arrangement therefor by
purchasing or funding said claims for interest on Bonds or
in any other manner. In case the time for payment of any
such claim for interest shall be so extended, whether or not
such extension be by or with the consent of BGE, or in case
any such claim for interest shall, through pledge or sale
before, at, or after maturity, become detached from any bond
or note and not owned by the owner of the bond or note to
which it relates, then such extended or detached claim for
interest shall not be entitled, in case of default
hereunder, to the benefit or security of this Indenture,
except subject to the prior payment in full of the principal
of all the Bonds then outstanding and of all claims for
interest not so extended, separated or detached; the
intention of this Indenture being to prevent any
accumulation, after maturity, of claims for interest.
SEC. 2. Events of Default. The following events
shall constitute "events of default," that is to say:
<PAGE>
Article V
Section 3
(1) Default in the payment of any interest on any of
the Bonds and the continuance of such default for the period
of sixty days; or
(2) Default in the payment of the principal of any of
the Bonds; or
(3) [RESERVED]
(4) Default in the due observance or performance of
any other covenant or condition herein required to be kept
or performed by BGE, and the continuance of such default for
a period of sixty days after written notice thereof to BGE
from the Trustee, or from the holders of five percent in
amount of the Bonds outstanding; or
(5) An order made for the appointment of a receiver of
BGE, or of the mortgaged premises and property or any part
thereof, (if such appointment shall, in the opinion of the
Trustee, be prejudicial to the security of the Bonds, or to
the interests of the holders of the Bonds), or for the
winding up or liquidation of the business and affairs of
BGE, or for adjudicating BGE a bankrupt, or corporate action
taken on the part of BGE for any of the purposes aforesaid.
SEC. 3. Trustee's Possession of Property Upon
Default; Distribution of Earnings. Upon the happening of
any one or more of the aforementioned "events of default",
the Trustee, personally or by its agents or attorneys, may
enter into and upon all or any part of the property and
premises, franchises, rights and interests hereby conveyed,
and each and every part thereof, and may exclude BGE, its
agents and servants, wholly therefrom, and having and
holding the same may use, operate and control said property
and premises, and manage the same, and conduct the business
thereof, either personally or by its superintendents,
managers, receivers, agents and servants or attorneys, to
the best advantage of the holders of the Bonds; and upon
every such entry the Trustee, at the expense of the trust
estate, from time to time either by purchase, repairs or
construction, may maintain and restore, and may insure or
keep insured, the said property and premises whereof it
shall become possessed, as aforesaid; and likewise from time
to time, at the expense of the trust estate, may make all
necessary or proper repairs, renewals and replacements, and
useful alterations, additions, betterments and improvements
thereto and thereon, as to it may seem judicious; and, in
such case, the Trustee shall have the right to manage the
mortgaged premises, and to carry on the business and
exercise all rights and powers of BGE, either in the name of
BGE or otherwise, as the Trustee shall deem best; and it
shall be entitled to collect and to receive all earnings,
<PAGE>
Article V
Section 4
income, rents, issues and profits of the same and every part
thereof; and after deducting the expenses of operating said
property and premises, and of conducting the business
thereof, and of all repairs, maintenance, renewals,
replacements, alterations, additions, betterments and
improvements, and all payments which may be made for taxes,
assessments, insurance and prior or other proper charges
upon the said property and premises, or any part thereof, as
well as just and reasonable compensation for its own
services, and for all attorneys, counsel, agents, clerks,
servants and other employees by it properly engaged and
employed, it shall apply the Moines arising as aforesaid as
follows:
In case the principal of none of the Bonds shall have
become due and be unpaid, to the payment of the interest in
default, in the order of the maturity of the installments of
such interest, with interest thereon at the same rate as is
borne by the Bonds or notes upon which such interest is due;
such payments to be made ratably to the persons entitled
thereto, without discrimination or preference.
In case the principal of any of the Bonds shall have
become due, by declaration or otherwise, and shall be
unpaid, first to the payment of the accrued interest (with
interest on the overdue installments thereof at the same
rate as is borne by the Bonds or notes upon which such
interest is due) in the order of the maturity of the
installments, and then to the payment of the principal of
all the Bonds, whether due or not; in every instance such
payments to be made ratably to the persons entitled to such
payment, without any discrimination or preference; these
provisions, however, not being intended in any wise to
modify the provisions of Section 1 of this Article.
SEC. 4. Failure to Pay Interest When Due. In case
default shall be made in the payment of any interest on any
of the Bonds, and any such default shall have continued for
a period of sixty days, then and in every case of such
continuing default, upon the written request of the holders
of a majority in amount of the Bonds then outstanding, the
Trustee, by notice in writing delivered to BGE, shall
declare the principal of all the Bonds then outstanding to
be due and payable immediately, and upon any such
declaration the same shall become and be immediately due and
payable, anything in this Indenture or in the Bonds
contained to the contrary notwithstanding. This provision,
however, is subject to the condition that if, at any time
after the principal of the Bonds shall have been so declared
due and payable, all arrears of interest upon all the Bonds,
with interest on overdue installments of interest at the
same rate as is borne by the bonds or notes upon which such
<PAGE>
Article V
Section 5
interest is due, and the principal of any of the Bonds which
shall have become due by their terms, and the expenses of
the Trustee, shall either be paid by BGE, or be collected
out of the mortgaged premises before any sale of the
mortgaged premises or property shall have been made, then
and in every such case the holders of a majority in amount
of the Bonds then outstanding, by written notice to BGE and
to the Trustee, may waive such default and its consequences;
but no such waiver shall extend to or affect any subsequent
default or impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any
right under this Indenture, by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued
or abandoned because of such waiver, or for any other
reason, or shall have been determined adversely to the
Trustee, then and in every such case BGE and the Trustee
shall be restored to their former position and rights
hereunder in respect of the mortgaged premises and property,
and all rights, remedies and powers of the Trustee shall
continue as though no such proceedings had been taken.
SEC. 5. Trustee May Sell Property or Sue to Enforce
Rights. Upon the happening of any one or more of the
aforementioned "events of default", the Trustee, with or
without entry, personally or by attorney, in its discretion
(a) may sell, to the highest and best bidder, all and
singular the mortgage property and premises, franchises,
rights and interests, and all right, title and interest,
claim and demand therein, and right of redemption thereof,
in one lot and as an entirety, unless such sale as an
entirety is impracticable by reason of some statute or other
cause; which sale shall be made at public auction in the
City of Baltimore, in the State of Maryland, at such time
and upon such terms as the Trustee may fix and briefly
specify in the notice of sale to be given, as herein
provided; or (b) may proceed to protect and enforce its
rights and the rights of holders of the Bonds under this
Indenture, by a suit or suits in equity or at law, whether
for the specific performance of any covenant or agreement
contained herein, or in aid of the execution of any power
herein granted, or for the foreclosure of this Indenture, or
for the enforcement of any other appropriate legal or
equitable remedy, as the Trustee shall deem most effectual
to protect and enforce any of its rights or duties
hereunder.
Upon the written request of the holders of not less
than a majority in principal amount of all the Bonds at the
time outstanding, in case of any such 'event of default,' it
shall be the duty of the Trustee, upon being indemnified as
hereinafter provided, to take all needful steps for the
<PAGE>
Article V
Section 6
protection and enforcement of its rights and the rights of
the holders of the Bonds, and to exercise the powers of
entry or sale herein conferred, or both, or to take
appropriate judicial proceedings by action, suit or
otherwise, as the Trustee, being advised by counsel learned
in the law, shall deem most expedient in the interest of the
holders of the Bonds.
SEC. 6. Bondholders May Control Sale. Anything in
this Indenture contained to the contrary notwithstanding,
the holders of sixty-five percent in amount of the
Securities then outstanding, from time to time, shall have
the right to direct and to control any and all proceedings
for any sale of the premises hereby conveyed, mortgaged or
pledged, or for the foreclosure of this Indenture, or for
the appointment of a receiver, or any other proceedings
hereunder; provided, however, that the Trustee shall have
the right to refuse to comply with any direction or order of
holders of the Bonds under this Section, if in its judgment,
or in the judgment of its counsel, compliance therewith
would be unjustly prejudicial to non-assenting holders.
SEC. 7. Notice of Sale. Notice of any sale pursuant
to any provision of this Indenture, whether made under the
power of sale hereby granted and conferred, or under or by
virtue of judicial proceedings, or of some judgment or
decree of foreclosure and sale, shall state the time and
place when and where the same is to be made, and shall
contain a brief general description of the property to be
sold, and shall be sufficiently given if published once in
each week for four successive weeks prior to such sale in a
newspaper published in the Borough of Manhattan, in the City
of New York, and in two newspapers published in the City of
Baltimore, in the State of Maryland, and in such other
manner as may be required by law.
SEC. 8. Adjournment of Sale. The Trustee from time
to time may adjourn any sale to be made by it under the
provisions of this Indenture, by announcement at the time
and place appointed for such sale, or for such adjourned
sales; and without further notice or publication, it may
make such sale at the time and place to which the same shall
be so adjourned.
SEC. 9. Completion of Sale. Upon the completion of
any sale under this Indenture, the Trustee shall execute and
deliver to the accepted purchaser or purchasers a good and
sufficient deed or deeds or other instruments of conveyance
of the property and franchises sold. And the Trustee and
its successors are hereby appointed the true and lawful
attorney or attorneys, irrevocable, of BGE, in its name and
stead to make any necessary deeds and conveyances of
<PAGE>
Article V
Section 10
property thus sold; and for that purpose it or they may
execute all necessary acts of assignment and transfer, BGE
hereby ratifying and confirming all that its said attorney
or attorneys shall lawfully do by virtue hereof.
Any such sale made under, or by virtue of, this
Indenture, whether under the power of sale hereby granted
and conferred, or under or by virtue of judicial
proceedings, shall operate to divest all right, title,
interest, claim and demand whatsoever, either at law or in
equity, of BGE of, in and to the premises sold, and shall be
a perpetual bar, both at law and in equity, against BGE, its
successors and assigns, and against any and all persons
claiming or to claim the premises sold, or any part thereof,
from, through, or under BGE, its successors or assigns.
SEC. 10. Purchasers of Property. The receipt of the
Trustee or of the court officer conducting the sale shall be
a sufficient discharge to any purchaser of the property, or
any part thereof, sold as aforesaid, for the purchase money,
and no such purchaser, or his representatives, grantees, or
assigns, after paying such purchase money and receiving such
receipt, shall be bound to see to the application of such
purchase money upon or for any trust or purpose of this
Indenture, or, in any manner whatsoever, be answerable for
any loss, misapplication or non-application of any such
purchase money, or any part thereof, or be bound to inquire
as to the authorization, necessity, expediency or regularity
of any such sale.
SEC. 11. Upon Sale Bonds Mature. In case of such
sale, whether under the power of sale hereby granted or
pursuant to judicial proceedings, the principal of all the
Bonds, if not previously due, immediately thereupon shall
become and be due and payable, anything in the Bonds issued
hereunder or in this Indenture to the contrary
notwithstanding.
SEC. 12. Application of Sale Proceeds. The purchase
money, proceeds and avails of any such sale hereunder,
whether under the power of sale hereby granted or pursuant
to judicial proceedings, together with any other sums which
then may be held by the Trustee under any of the provisions
of this Indenture as part of the trust estate or of the
proceeds thereof, shall be applied as follows:
First. To the payment of the costs and expenses of
such sale, including a reasonable compensation to the
Trustee, its agents, and attorneys, and of all expenses,
liabilities and advances made or incurred in good faith and
without negligence by the Trustee in managing and
maintaining the property hereby conveyed, and to the payment
<PAGE>
Article V
Section 13
of all taxes, assessments or liens prior to the lien of
these presents, except any taxes, assessments, or other
superior liens to which such sale shall have been made
subject.
Second. To the payment of the whole amount then owing
or unpaid upon the Bonds for principal and interest, with
interest on the overdue installments of interest at the same
rate as is borne by the bonds or notes upon which such
interest is due, and in case such proceeds shall be
insufficient to pay in full the whole amount so due and
unpaid upon the Bonds then to the payment of such principal
and interest, without preference or priority of principal
over interest, or of interest over principal, or of any
installment of interest over any other installment of
interest, ratably to the aggregate of such principal and the
accrued unpaid interest, subject, however, to the provisions
of Section 1 of this Article.
Third. To the payment of the surplus, if any, to BGE,
its successors or assigns, or to whosoever may be lawfully
entitled to receive the same.
SEC. 13. Use of Bonds to Purchase Property. In case
of any such sale hereunder, any purchaser, for the purpose
of making settlement or payment for the property purchased,
shall be entitled to turn in any Bonds or notes in order
that there may be credited, as paid thereon, the sums
payable out of the net proceeds of such sale to the holder
of such Bonds or notes, as his ratable share of such net
proceeds, after allowing for the proportion of the total
purchase price required to pay the costs and expenses of the
sale, or otherwise; and such purchaser shall be credited, on
account of the purchase price of the property purchased,
with the sums payable out of such net proceeds on the Bonds
so turned in; and, at any such sale, any bondholders or
noteholders may bid for, and purchase, such property, and
may make payment on account thereof as aforesaid, and, upon
compliance with the terms of sale, may hold, retain and
dispose of such property without further accountability
therefor.
SEC. 14. No Contest to Sale by Company. BGE will not
at any time insist upon or plead, or in any manner whatever
claim or take the benefit or advantage of, any stay or
extension law now or at any time hereafter in force where
the mortgaged premises or property are situate, nor will it
claim, take or insist on, any benefit or advantage from any
law, now or hereafter in force, providing for the valuation
or appraisement of the mortgaged premises or property, or
any part thereof, prior to any sale or sales thereof to be
made pursuant to any provision herein contained, or to the
<PAGE>
Article V
Section 15
decree of any court of competent jurisdiction; nor after any
such sale or sales will it claim or exercise any right under
any law enacted by any authority to redeem the property so
sold or any part thereof; and it hereby expressly waives all
benefit and advantage of any such law or laws; and it
covenants that it will not hinder, delay or impede the
execution of any power herein granted and delegated to the
Trustee, but that it will suffer and permit the execution of
every such power, as though no such law or laws had been
made or enacted.
SEC. 15. Right of Entry; Appointment of Receiver. If
upon the happening of any "event of default" a bill in
equity shall be filed or any other judicial proceedings
commenced to enforce any right of the Trustee or of the
holders of the Bonds under this Indenture, then the Trustee
shall be entitled to exercise the right of entry herein
conferred, and also any and all other rights and powers
herein conferred, and provided to be exercised by the
Trustee upon the occurrence and continuance of default, as
hereinbefore provided; and as a matter of right, the Trustee
shall be entitled to the appointment of a receiver of the
premises and property hereby mortgaged, and of the earnings,
income, revenue, rents, issues and profits thereof, with
such powers as the court making such appointment shall
confer.
SEC. 16. Failure to Pay Interest or Observe Other
Covenants; Outstanding Judgments. In case BGE shall make
default in the payment of any interest on any of the Bonds,
or in the due observance or performance of any other
covenant or condition herein required to be kept or
performed by BGE, and at the time of such default there
shall be any existing judgment against BGE, unsatisfied and
unsecured by bond on appeal, the Trustee shall thereupon be
entitled forthwith to exercise all the rights and powers
herein conferred, and provided to be exercised by the
Trustee upon the happening of an "event of default," and as
a matter of right the Trustee shall thereupon be entitled to
the appointment of a receiver of the premises and property
hereby mortgaged, and of the earnings, income, revenue,
rents, issues and profits thereof, with such powers as the
court making such appointment shall confer.
SEC. 17. Surrender of Property. BGE, at any time
before full payment of the Bonds, and whenever it shall deem
it expedient for the better protection and security of the
Bonds, although there be then no default entitling the
Trustee to enter into possession, with the consent of the
Trustee may surrender and deliver to the Trustee full
possession of the whole or any part of the property,
premises, franchises and interests hereby conveyed or
<PAGE>
Article V
Section 18
intended so to be, and then being in the possession of BGE,
for any period fixed or indefinite. Upon such surrender and
delivery to the Trustee with its consent, the Trustee shall
enter into and upon the premises so surrendered and
delivered, and shall take and receive possession thereof,
for such period fixed or indefinite, as aforesaid, without
prejudice, however, to its right at any time subsequently,
when entitled thereto by any provision hereof, to insist
upon and to maintain such possession, though beyond the
expiration of any prescribed period. Upon any such
voluntary surrender and delivery of said property and
premises or any part thereof, the Trustee, from the time of
its entry, shall maintain, use, manage, control and employ
the same in accordance with the provisions of this
Indenture, and shall receive and apply the income and
revenues thereof, as provided in Section 3 of this Article.
SEC. 18. Judgment for Unpaid Principal or Interest.
BGE covenants that (1) in case default shall be made in the
payment of any interest on any of the Bonds, and such
default shall have continued for a period of sixty days, or
(2) in case default shall be made in the payment of the
principal of any of the Bonds, then, upon demand of the
Trustee, BGE agrees to pay to the Trustee for the benefit of
the holders of the Bonds hereby secured then outstanding,
the whole amount due and payable on such Bonds then
outstanding, for interest or principal, or both, as the case
may be, with interest upon the overdue installments of
interest at the same rate as is borne by the Bonds upon
which such interest is due; and in case BGE shall fail to
pay the same forthwith upon such demand, the Trustee, in its
own name and as trustee of an express trust, shall be
entitled to recover judgment against BGE, for the whole
amount so due and unpaid.
In the case of a default in payment of the principal of
any Bond issued hereunder, when and as the same shall become
due and payable, or in the case of a default in payment of
the interest on any such Bond, when and as the same shall
become due and payable and the continuance of such default
for a period of sixty days, the Trustee shall be entitled
and is authorized to recover judgment, in its own name and
as trustee of an express trust, against BGE and any other
obligor upon the Bonds issued hereunder for the whole amount
of such principal and interest remaining unpaid. Nothing in
the preceding paragraph of this Section 18 shall be
construed as limiting or qualifying anything in this
paragraph, but this paragraph shall be construed and given
full effect as if the preceding paragraph had never been
contained in the Indenture.
<PAGE>
Article V
Section 19
The Trustee shall be entitled to recover judgment as
aforesaid, either before, or after, or during the pendency
of, any proceedings for the enforcement of the lien of this
Indenture upon the mortgaged premises and property, and the
right of the Trustee to recover such judgment shall not be
affected by any entry or sale hereunder, or by the exercise
of any other right, power or remedy for the enforcement of
the provisions of this Indenture or the foreclosure of the
lien thereof; and in case of a sale of the mortgaged
premises or property and of the application of the proceeds
of sale to the payment of the mortgage debt, the Trustee in
its own name and as trustee of an express trust shall be
entitled to enforce payment of, and to receive, all amounts
then remaining due and unpaid upon any and all of the Bonds
then outstanding, for the benefit of the holders thereof,
and shall be entitled to recover judgment for any portion of
the mortgage debt remaining unpaid, with interest. No
recovery of any such judgment by the Trustee, and no levy of
any execution upon any such judgment on property subject to
the lien of this Indenture or upon any other property, shall
in any manner, or to any extent, affect the lien of the
Trustee upon the mortgaged premises or property or any part
thereof, or any rights, powers or remedies of the Trustee
hereunder, or any rights, powers or remedies of the holders
of the Bonds; but such lien, rights, powers and remedies
shall continue unimpaired as before.
Any Moines collected by the Trustee under this Section
shall be applied by the Trustee, first to the payment, at
the option of the Trustee, of the costs and expenses of the
proceedings resulting in the collection of such Moines, and
of the expenses paid or incurred by the Trustee in
theretofore managing and maintaining the property hereby
conveyed, and then to the payment of the amounts then due
and unpaid upon such Bonds without any preference or
priority of any kind, except as provided in Section 1 of
this Article, and ratably according to the amounts due and
payable upon such Bonds at the date fixed by the Trustee for
the distribution of such Moines.
SEC. 19. Bondholder's Remedies. No holder of any Bond
hereby secured shall have any right to institute any suit,
action or proceeding in equity or at law for the foreclosure
of this Indenture, or for the execution of any trust thereof
or for the appointment of a receiver, or for any other
remedy hereunder, unless such holder previously shall have
given to the Trustee written notice of such default and of
the continuance thereof, as hereinbefore provided; nor
unless, also, the holders of not less than a majority in
principal amount of all the Bonds then outstanding shall
have made written request upon the Trustee and shall have
afforded to it reasonable opportunity, either to proceed to
<PAGE>
Article V
Section 20
exercise the powers hereinbefore granted, or to institute
such action, suit or proceeding in its own name; nor unless,
also, they shall have offered to the Trustee satisfactory
security and indemnity against the costs, expenses and
liabilities to be incurred therein or thereby; and such
notification, request and offer of indemnity are hereby
declared, in every such case, at the option of the Trustee,
to be conditions precedent to the execution of the powers
and trusts of this Indenture and to any action, or cause of
action, for foreclosure or for the appointment of a
receiver, or for any other remedy hereunder; it being
understood and intended that no one or more holders of Bonds
shall have any right in any manner whatever to affect,
disturb or prejudice the lien of this Indenture by his or
their action, or to enforce any right hereunder, except in
the manner herein provided; and that all proceedings at law
or in equity shall be instituted, had and maintained in the
manner herein provided, and for the equal benefit of all
holders of such outstanding Bonds.
SEC. 20. Remedies not Exclusive. Except as herein
expressly provided to the contrary, no remedy herein
conferred upon, or reserved to, the Trustee, or to the
holders of Bonds hereby secured, is intended to be exclusive
of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy
given hereunder, or now or hereafter existing at law or in
equity or by statute.
SEC. 21. No Waiver of Rights. No delay or omission of
the Trustee, or of any holder of Bonds hereby secured, to
exercise any right or power accruing upon any default
continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such
default, or an acquiescence therein; and every power and
remedy given by this Article to the Trustee or to the
holders of the Bonds may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by
the holders of the Bonds, severally and respectively.
ARTICLE VI.
Immunity of Officers, Directors and Stockholders
No recourse under or upon any obligation, covenant or
agreement of this Indenture, or of any Bond hereby secured,
shall be had against any incorporator, stockholder, officer
or director of BGE, or of any successor corporation, either
directly or through BGE, by the enforcement of any
assessment or by any legal or equitable proceeding by virtue
of any statute or otherwise; it being expressly agreed and
understood that this Indenture and the obligations hereby
<PAGE>
Article VII
Section 1
secured are solely corporate obligations and that no
personal liability whatever does or shall attach to, or be
incurred by, the incorporators, stockholders, officers or
directors of BGE, or of any successor corporation, or any of
them, under or by reason of any of the obligations,
covenants or agreements contained in this Indenture, or in
any of the Bonds hereby secured, or implied therefrom; and
that any and all personal liability of every name and
nature, either at common law or in equity, or by statute or
constitution, of every such incorporator, stockholder,
officer or director, is hereby expressly waived as a
condition of, and consideration for, the execution and issue
of this mortgage and such Bonds.
ARTICLE VII.
Bondholders' Acts, Holdings and Apparent Authority
SEC. 1. Execution of Instruments by Bondholders. Any
request or other instrument provided by this Indenture to be
signed and executed by holders of the Bonds may be in any
number of concurrent instruments of similar tenor and may be
signed or executed by such holders in person or by agent
appointed in writing. Proof of the execution of any such
request or other instrument, or of any writing appointing
any such agent, and the holding by any person of Bonds,
transferable by delivery, shall be sufficient for any
purpose of this Indenture, if made in the manner provided in
this Article.
SEC. 2. Notaries. The fact and date of the execution
by any person of any such request or other instrument or
writing may be proved by the certificate of any notary
public, that the person signing such request or other
instrument acknowledged to him the execution thereof or by
an affidavit of a witness of such execution.
SEC. 3. Evidence of Bond Ownership. The amount of
Bonds, transferable by delivery, held by any person
executing any such request or other instrument as a holder
of Bonds, and the issue numbers of the Bonds held by such
person, and the date of his holding the same, may be proved
by a certificate executed by any trust company, bank,
bankers, or other depositary (wherever situated), if such
certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned
such person had on deposit with such depositary, or
exhibited to it, the Bonds therein described. The ownership
of Bonds shall be proved by the registers of such Bonds, as
provided in Section 13 of Article I hereof. Such proof
shall be conclusive in favor of the Trustee with regard to
any action by it under such request or other instrument, and
<PAGE>
Article VII
Section 4
the Trustee may conclusively assume for all purposes that
such ownership has continued until it shall be notified in
writing to the contrary.
SEC. 4. [RESERVED]
ARTICLE VIII.
Releases of Mortgaged Property
SEC. 1. Sales of Property by BGE. So long as BGE is
in possession of the mortgaged premises and property as
herein (in Article X, Section 1) permitted, BGE may, under
the conditions hereinafter stated , sell or exchange, free
and clear from the lien of this Indenture, any of the
mortgaged premises and property, except bonds, securities
and stocks of Subsidiaries and franchises.
Under the authority of a resolution of its Board of
Directors, or of its Executive Committee, BGE may sell or
exchange any equipment or machinery which may be worn out or
superseded by new and improved equipment or machinery, and a
release of such equipment or machinery from the lien of this
Indenture need not be procured by BGE or the purchaser from
the Trustee.
Under the authority of a resolution of its Board of
Directors or Executive Committee BGE may request the
Trustee to release from the lien of this Indenture any real
or leasehold property, or other personal property, except
bonds, securities and stocks of Subsidiaries and franchises,
and the Trustee may release the property so requested ;
<PAGE>
Article VIII
Section 2
provided, however, that no such property shall be released
unless at the time of such release BGE shall have sold or
exchanged or contracted for the sale or exchange of the
property so released, and unless at the time of such release
such property shall be no longer necessary in the operation
nor conduct of BGE's business, any such release may be in a
separate instrument, executed by the Trustee, or the Trustee
may join in the grant or assignment of such property made by
BGE.
Any such exchange of property shall be effected in
compliance with the provisions of Section 3 of this Article
relative to investment of proceeds of sale, so far as, in
the opinion of the Trustee, such provisions are in their
nature so applicable.
SEC. 2. Certificate Required. Except in case of an
exchange of property, a certificate signed by the President
or a Vice-President and by an engineer or (if the property
disposed of be bonds, securities or stock) the Treasurer or
an Assistant Treasurer of BGE, may be received by the
Trustee as conclusive evidence of any of the facts mentioned
in this Article; and such certificate, together with a copy
of the resolution of the Board of Directors or Executive
Committee of BGE, certified by its Secretary or an Assistant
Secretary, shall be a full warrant to the Trustee for its
action on the faith thereof; but the Trustee, in its
discretion, may require such further and additional evidence
as to it may seem reasonable. The purchaser or purchasers
of any property so sold or disposed of under this Article
shall not be required to see to the application of the
purchase money.
SEC. 3. Application of Proceeds. The proceeds of any
and all sales of property hereunder (including all Moines
received as compensation for any property taken by exercise
of the power of eminent domain) shall be paid to the Trustee
and deposited pursuant to Article I, Section 10 hereof and
shall be invested in the acquisition of other property, in
the same manner and upon compliance with the same provisions
as are prescribed in Article I, Section 7, hereof with
respect to the disbursement of deposited cash, except in so
far as, in the opinion of the Trustee, such provisions are
in their nature inapplicable to such investment of such
proceeds of sales of property. Such application of proceeds
to the acquisition of other property shall, however, not be
subject to the limitation, specified in Article I, Section
<PAGE>
Article VIII
Section 4
7, to eighty percent of the cost of such additional
property.
In case the United States, or any State, county or
municipality therein, shall at any time so purchase, or take
by exercise of the power of eminent domain, and pay in cash
for, substantially all the property of BGE, free and clear
of the lien of this Indenture, leaving no substantial part
of said property not so purchased or taken, the proceeds of
such sale or taking may and, at the option of each holder of
any of the Bonds, shall be applied to the purchase, at par
and accrued interest, of any and all of the Bonds then
outstanding which the holders thereof desire to sell at said
price. All of the Bonds so purchased shall forthwith be
canceled by the Trustee, and no further Bonds shall be
issued hereunder for any purpose.
SEC. 4. Possession of Property by Trustee. In case
the mortgaged premises and property shall be in the
possession of the Trustee under any provision of this
Indenture, or of a receiver lawfully appointed, the powers
given to BGE in and by this Article may be exercised by the
Trustee or such receiver.
SEC. 5. Sale of Subsidiary Property. BGE covenants
that no Subsidiary will sell, exchange or dispose of any of
its property, except (1) when, if the property disposed of
were property of BGE, BGE might sell or exchange such
property, free and clear of the lien hereof, and then
(except as otherwise required under the terms of any
mortgage or instrument securing any Prior Charges) only
under the conditions in this Article stated with respect to
property of BGE, including the same action on the part of
BGE and written consent one the part of the Trustee, which,
however, may, but need not be, expressed in a formal release
or conveyance, and (2) when property is conveyed or
transferred to BGE.
ARTICLE IX
Concerning the Trustee
SEC. 1. Duties of Trustee. The Trustee hereby accepts
the trust created by the Indenture. The Trustee undertakes,
prior to the occurrence of an event of default as such term
is defined in Section 2 of Article V of the Indenture, and
after the curing of any such event of default, to perform
such duties and only such duties as are specifically set
forth in the Indenture, and in case of the occurrence of any
such event of default (which has not been cured) to exercise
such of the rights and powers vested in it by the Indenture,
and to use the same degree of care and skill in their
<PAGE>
Article IX
Section 2
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
The Trustee shall not be relieved from liability for
its own negligent action, its own negligent failure to act
or its own willful misconduct. The Trustee shall not,
however, be liable for any error of judgment made in good
faith by a responsible officer or officers of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; the Trustee, prior to the
occurrence of an event of default, and after the curing of
any such event of default, shall not be liable except for
the performance of such duties as are specifically set forth
in the Indenture, and no implied covenants or obligations
shall be read into the Indenture against the Trustee, but
the duties and obligations of the Trustee, prior to the
occurrence of an event of default, and after the curing of
any such event of default, shall be determined solely by the
express provisions of the Indenture; and the Trustee, prior
to the occurrence of an event of default, and after the
curing of any such event of default, may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, in the absence of bad faith on
the part of the Trustee, upon certificates or opinions
conforming to the requirements of the Indenture, but the
Trustee shall examine the evidence furnished to it pursuant
to any provision of this Indenture to determine whether or
not such evidence conforms to the requirements hereof.
For the purposes of Sections 1 and 2 of this Article,
an event of default shall be deemed cured when the default
which gave rise to such event of default has been cured or
the event of default has been waived as permitted by the
Indenture.
SEC. 2. Negligence or Willful Misconduct. No
provision of the Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct,
except that:
a. prior to the occurrence of an event of default
hereunder as defined in Section 2 of Article V of
the Indenture, and after the curing of any such
event of default, the Trustee shall not be liable
except for the performance of such duties as are
specifically set out in the Indenture, and no
implied covenants or obligations shall be read
into the Indenture against the Trustee, but the
duties and obligations of the Trustee, prior to
the occurrence of such an event of default and
after the curing of any such event of default
<PAGE>
Article IX
Section 3
which may have occurred, shall be determined
solely by the express provisions of the Indenture;
and
b. prior to the occurrence of an event of default
hereunder as defined in Section 2 of Article V of
the Indenture, and after the curing of any such
event of default, and in the absence of bad faith
on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
conforming to the requirements of the Indenture;
and
c. the Trustee shall not be liable for any error of
judgment made in good faith by a responsible
officer or officers of the Trustee, unless it
shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
d. the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in
good faith in accordance with the direction of the
holders of not less than a majority in aggregate
principal amount of the Bonds at the time
outstanding relating to the time, method, and
place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under the
Indenture.
SEC. 3. No Responsibility for Company Statements. The
recitals of fact in the Indenture and in the Bonds contained
(other than the certificate of authentication of the Trustee
on the Bonds), shall be taken as the statements of BGE, and
the Trustee assumes no responsibility for the correctness of
the same. The Trustee makes no representation as to the
value of the mortgaged property or any part thereof, or as
to the title of BGE thereto, or as to the value or validity
of the security afforded thereby and by the Indenture, or as
to the value or validity of any securities at any time held
under the Indenture, or as to the validity of the Indenture
or of the Bonds issued thereunder, and the Trustee shall
incur no responsibility, except as otherwise provided in
Section 1 of this Article, in respect of such matters.
Except as herein otherwise provided, any notice or
demand which by any provision of the Indenture is required
or permitted to be given or served by the Trustee on BGE
shall be deemed to have been sufficiently given and served,
for all purposes, by being deposited postage prepaid in a
<PAGE>
Article IX
Section 4
post office letter box in the City of New York, addressed
(until another address is filed by BGE with the Trustee) to
BGE at 39 W. Lexington Street, Baltimore, Maryland 21201,
Attention: Treasurer.
SEC. 4. Reliance by Trustee on Others. Except to the
extent otherwise provided by Sections 1 and 2 of this
Article:
1. The Trustee may rely and shall be protected
in acting upon any resolution, certificate, opinion,
notice, request, consent, order, statement, report,
bond, or other paper or document believed by it to be
genuine and to have been signed or presented by the
proper party or parties; and
2. The Trustee may consult with counsel and the
opinion of such counsel shall be full and complete
authorization and protection in respect of any action
taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
3. The Trustee may execute any of the trusts or
powers of the Indenture and perform any duty
thereunder, itself or by or through its attorneys,
agents or employees.
4. Whenever the existence or non-existence of
any fact or other matter shall be material, the Trustee
shall, prior to the occurrence of an event of default
hereunder as defined in Section 2 of Article V of the
Indenture, and after the curing of any such event of
default, be protected in acting or refraining from
acting under any provision of the Indenture, in relying
upon a certificate as to the existence or non-existence
of any such fact or matter signed by the President or a
Vice-President and the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer of
BGE, but in its discretion the Trustee may accept other
evidence of such fact or matter, or may require such
further or additional evidence as to it may seem
reasonable.
5. Unless other evidence be herein specifically
prescribed, any request, direction or order of BGE
mentioned herein shall be expressed by a resolution of
the Board of Directors or the Executive Committee of
BGE, and the same shall be evidenced to the Trustee by
a copy thereof certified as such by the Secretary or an
Assistant Secretary of BGE, under the corporate seal,
and the Trustee may accept such copy as conclusive
<PAGE>
Article IX
Section 4
evidence of the adoption of such resolution and of the
facts and statements therein contained.
6. Whenever in the Indenture, in connection with
any application for the authentication and delivery of
Bonds or for the payment of any Moines held by the
Trustee or for the execution of any release or upon any
other application to the Trustee, resolutions,
certificates, statements, opinions, appraisals,
reports, orders and/or other papers are required by any
of the provisions of the Indenture to be delivered to
the Trustee as a condition of the granting of such
application, it is intended that the truth and accuracy
of the facts and opinions stated therein shall, in each
and every such case, be conditions precedent to the
right of BGE to have such application granted.
Nevertheless, upon any such application, the
resolutions, certificates, statements, opinions,
appraisals, reports, orders and/or other papers so
required to be delivered to the Trustee may be received
by the Trustee as conclusive evidence of any act or
matter therein set forth, and shall, in the absence of
bad faith on the part of the Trustee, be full warrant,
authority and protection to the Trustee acting on faith
thereof, not only in respect of the facts but also in
respect of the opinions therein set forth; and, before
granting any such application, the Trustee shall not be
bound to make any further investigation of the facts or
opinions so set forth; but the Trustee may in its
discretion, make any such further investigation as it
may see fit. If the Trustee shall determine to make
such further investigation, it shall be entitled to
examine the books, records and premises of BGE, either
itself or through its agents or attorneys; and unless
satisfied, with or without such examination, of the
truth and accuracy of the matters stated in such
resolutions, certificates, statements, opinions,
appraisals, reports, orders and/or other papers, the
Trustee shall be under no obligation to grant the
application. If, after such examination or other
inquiry, the Trustee shall determine to grant the
application, it shall not be liable for any action
taken in good faith. The reasonable expense of every
such examination or other inquiry shall be paid to BGE,
or if paid by the Trustee, shall be repaid by BGE, upon
demand, with interest at the rate of 6% per annum, and
until such repayment shall be secured by a lien on the
mortgaged property and the proceeds thereof prior to
the lien of the Bonds issued hereunder.
If and to the extent that any provision of the
Indenture limits, qualifies, conflicts with, or is
<PAGE>
Article IX
Section 5
contrary to any of the provisions of Sections 1, 2 and
4 of this Article, the provisions of said Sections of
this Article shall be deemed to control and govern.
Without limiting the generality of the foregoing, the
provisions of the Indenture referred to in the
preceding sentence shall be deemed to include the
following: the provision contained in Section 6 of
Article I of the Indenture to the effect that the
Trustee may accept certificates as conclusive evidence
of a reduction of the amount of Bonds reserved to be
issued under said Section 6; the provision contained in
Section 7 of Article I to the effect that the Trustee
may accept the instruments provided for as conclusive
evidence of the facts or matters of opinion stated
therein and of the propriety and conformity of the
action requested; the provision contained in Section 2
of Article III to the effect that the Trustee shall be
under no duty or obligation to require any acts, deeds,
transfers, assurances, conveyances or other instruments
mentioned; the provision contained in Section 6 of
Article III to the effect that the Trustee shall be
under no obligation to insure mortgaged property; the
provision contained in Section 19 of Article V to the
effect that notification, request and offer of
indemnity are, at the option of the Trustee, conditions
precedent to the execution of the powers and trusts of
the Indenture; and the provision contained in Section 2
of Article VIII, concerning releases of mortgaged
property, to the effect that a certificate may be
received by the Trustee as conclusive evidence of the
facts mentioned in said Article and, together with a
certified copy of a resolution, shall be a full warrant
to the Trustee for its action thereon.
SEC. 5. Not Liable for Payment Beyond Monies
Deposited. Whenever provision is made in the Indenture for
the payment of monies by the Trustee, whether on redemption
of Bonds, or payment of Bonds, the payment or repayment of
monies to BGE, or otherwise, the Trustee shall in no event
be liable to anyone beyond the amount of monies deposited
with it for any such purpose.
SEC. 6. Trustee May Own Bonds. The Trustee, in its
individual or any other capacity, may become the owner or
pledgee of Bonds secured hereby with the same rights it
would have if it were not Trustee.
SEC. 7. Segregation of Monies. Subject to the
provisions of Section 10 of Article I of the Indenture, all
monies received by the Trustee whether as Trustee or paying
agent shall, until used or applied as herein provided, be
held in trust for the purposes for which they were paid, but
<PAGE>
Article IX
Section 8
need not be segregated from other funds, except as otherwise
provided by law, and the Trustee shall not be under any
liability to pay interest thereon except such, if any, as
during the period it may generally allow on similar funds.
Unless an event of default as defined in Section 2 of
Article V of the Indenture shall have happened and shall be
continuing to the knowledge of the Trustee, any interest so
allowed by the Trustee shall be paid over to BGE.
SEC. 8. Compensation. The Trustee shall be entitled
to reasonable compensation for all services rendered by it
in the execution of the trusts created by the Indenture, and
shall be reimbursed by BGE for any expenditures made by the
Trustee on account of any provisions or requirements
thereof, and for any liability or damages which the Trustee,
acting in good faith and without negligence, may incur or
sustain; and for its indemnification in respect of such
trusts and its duties hereunder, and for payment of its
compensation, disbursements and expenses, the Trustee is
hereby given a lien upon the mortgaged premises and property
and the proceeds thereof, prior to the lien of the holders
of any of the Bonds secured hereby.
SEC. 9. Trustee May File Claims for Compensation. In
order to further assure the Trustee that it will be
compensated and reimbursed as provided in Section 8 of this
Article and that the prior lien provided for in said Section
8 upon the trust estate to secure the payment of such
compensation and reimbursement will be enforced for the
benefit of the Trustee, all parties to the Indenture agree,
and each holder or owner of any Bond by his acceptance
thereof shall be deemed to have agreed that in the event of:
(1) the adjudication of BGE as a bankrupt by any court
of competent jurisdiction,
(2) the filing of any petition seeking the
reorganization of BGE under the Federal Bankruptcy
Laws or any other applicable law or statute of the
United States of America or of any State thereof,
(3) the appointment of one or more trustees or
receivers of BGE or of all or substantially all of
the property of BGE,
(4) the filing by BGE of a petition to take advantage
of any insolvency act, or
(5) the institution of any other proceeding wherein it
shall become necessary or desirable to file or
present claims against BGE,
<PAGE>
Article IX
Section 9
the Trustee may file from time to time in any such
proceeding or proceedings one or more claims, supplemental
claims and amended claims as a secured creditor for its
reasonable compensation for all services rendered by it
(including services rendered during the course of any such
proceeding or proceedings) and for reimbursement for all
advances, expenses and disbursements (including the
reasonable compensation and the expenses and disbursements
of its counsel and of all persons not regularly in its
employ) made or incurred by it in the execution of the
trusts created by the Indenture and in the exercise and
performance of any of the powers and duties of the Trustee
under the Indenture; and the Trustee and its counsel and
agents may file in any such proceeding or proceedings,
applications or petitions for compensation for such services
rendered, and for reimbursement for such advances, expenses
and disbursements. The claim or claims of the Trustee filed
in any such proceeding or proceedings shall be reduced by
the amount of compensation for services, and reimbursements
for advances, expenses and disbursements paid to it after
final allowances to it and to its counsel and agents by the
court in any such proceeding as an expense of administration
or in connection with a plan of reorganization or
readjustment. To the extent that compensation and
reimbursement are denied to the Trustee or to its counsel or
other agents because of not being rendered or incurred in
connection with the administration of an estate in a
proceeding or in connection with a plan of reorganization or
readjustment, approved as required by law, because such
services were not rendered in the interests of and with
benefit to the estate of BGE as a whole but in the interests
of and with benefit to the holders of the Bonds, in the
execution of the trusts created by the Indenture or in the
exercise and performance of any of the powers and duties of
the Trustee under the Indenture or because of any other
reason, the court may to the extent permitted by law allow
such claim, as supplemented and amended, in any such
proceeding or proceedings and for the purposes of any plan
of reorganization or readjustment of BGE's obligations,
classify the Trustee as a secured creditor of a class
separate and distinct from that of other creditors and of a
class having priority and precedence over the class in which
the holders of Bonds are placed by reason of having a lien,
prior and superior to that of the holders of the Bonds, upon
the trust estate, including all property or funds held or
collected by the Trustee as such. The amount of the claim
or claims of the Trustee for services rendered and for
advances, expenses and disbursements, including the
reasonable compensation and the expenses and disbursements
of its counsel and of all persons not regularly in its
employ which are not allowed and paid in any such
proceeding, but for which the Trustee is entitled to the
<PAGE>
Article IX
Section 10
allowances of a secured claim as in the Indenture provided,
may be fixed by the court or judge in any such proceeding or
proceedings to the extent that such court or judge has or
exercises jurisdiction over the amount of any such claim or
claims.
If and to the extent that the Trustee and its counsel
and other persons not regularly in its employ do not receive
compensation for services rendered, and reimbursement of its
or their advances, expenses and disbursements, as herein
provided, as the result of allowances made in any such
proceeding or by any plan of reorganization or readjustment
of obligations of BGE, the Trustee shall be entitled, in
priority to the holders of the Bonds, to receive any
distributions of any securities, dividends or other
disbursements which would otherwise be made to the holders
of Bonds in any such proceeding or proceedings and is hereby
constituted and appointed, irrevocably, the attorney in fact
for the holders of the Bonds and each of them to collect and
receive, in their name, place and stead, such distributions,
dividends or other disbursements, to deduct therefrom the
amounts due to the Trustee, its counsel and other persons
not regularly in its employ on account of services rendered,
advances, expenses, and disbursements made or incurred, and
to pay and distribute the balance, pro rata, to the holders
of the Bonds. The Trustee shall have a lien upon any
securities or other considerations to which the holders of
Bonds may become entitled pursuant to any such plan of
reorganization or readjustment of obligations, or in any
such proceeding or proceedings; and the court or judge in
any such proceeding or proceedings may determine the terms
and conditions under which any such lien shall exist and be
enforced.
SEC. 10. Power to do Acts Incidental to Action.
Whenever it is provided in the Indenture that the Trustee
shall take any action upon the happening of a specified
event or upon the fulfillment of any condition or upon the
request of BGE or of Bondholders, the Trustee taking such
action shall have full power to give any and all notices and
to do any and all acts and things incidental to such action.
SEC. 11. Eliminate Conflicting Interests. If the
Trustee shall have or acquire any conflicting interest
within the meaning of the Trust Indenture Act, it shall
either eliminate such conflicting interest or resign to the
extent, in the manner and with the effect, and subject to
the conditions, provided in the Trust Indenture Act and this
Indenture. For purposes of Section 310(b)(1) of the Trust
Indenture Act, and to the extent permitted thereby, the
Trustee, in its capacity as trustee in respect of the Bonds
of any series, shall not be deemed to have a conflicting
<PAGE>
Article IX
Section 12
interest arising from its capacity as trustee in respect of
the Bonds of any other series.
SEC. 12. Trustee as Creditor. If the Trustee shall be
or become a creditor of BGE (or any other obligor upon the
Bonds), the Trustee shall be subject to any and all
applicable provisions of the Trust Indenture Act regarding
the collection of claims against BGE (or such other
obligor).
SEC. 13. RESERVED
SEC. 14. Eligibility of Trustee. At all times the
Trustee hereunder shall be a trust company which is a
corporation organized and doing business under the laws of
the United States or of the State of New York or the State
of Maryland, which (A) is authorized under such laws to
exercise corporate trust powers and has its principal office
in the Borough of Manhattan in the City of New York or in
the City of Baltimore, Maryland, and (B) is subject to
supervision or examination by Federal or State authority,
and (C) has a combined capital and surplus aggregating at
least $1,000,000, if there be such a trust company willing
and able to accept the trust upon reasonable or customary
terms. If the Trustee publishes reports of condition at
least annually, pursuant to law or to the requirements of
said supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of
the Trustee shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition
so published. The Indenture shall always have a Trustee who
satisfies the requirements of Section 310(a)(1) and (5) of
the Trust Indenture Act.
SEC. 15. Resignation. The Trustee, or any successor
hereafter appointed, may at any time resign and be
discharged of the trusts hereby created by giving written
notice to BGE and thereafter publishing notice thereof,
specifying a date when such resignation shall take effect,
which notice shall be published at least once a week for
four successive weeks in a newspaper printed in the English
language and customarily published on each business day, of
general circulation in the Borough of Manhattan, in the City
of New York, State of New York, and at least once a week for
four successive weeks in a newspaper printed in the English
language and customarily published on each business day, of
general circulation in the City of Baltimore, in the State
of Maryland, and, except as provided in Section 11 of this
Article, such resignation shall take effect upon the day
specified in such notice unless previously a successor
trustee shall have been appointed as hereinafter provided,
<PAGE>
Article IX
Section 16
in which event such resignation shall take effect
immediately on the appointment of such successor trustee.
SEC. 16. Removal. The Trustee, or any successor
hereafter appointed, may be removed at any time by the
holders of sixty-five percent in principal amount of the
Bonds then outstanding hereunder, by an instrument or
concurrent instruments in writing, signed in duplicate by
such Bondholders, or by their attorneys in fact duly
authorized, one of which shall be filed with BGE and one
with the Trustee for the time being.
In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of Section 14 of
this Article, then the Trustee shall resign immediately in
the manner and with the effect specified in Section 15 of
this Article; and, in the event that the Trustee does not
resign immediately in such case, then it may be removed
forthwith by an instrument or concurrent instruments in
writing filed with the Trustee and either (a) signed by the
President or a Vice-President of BGE with its corporate seal
attested by a Secretary or an Assistant Secretary of BGE or
(b) signed and acknowledged by the holders of a majority in
aggregate principal amount of the Bonds then outstanding or
by their attorneys in fact duly authorized.
SEC. 17. New Trustee. In case at any time the
Trustee, or any successor hereafter appointed, shall resign
or shall be removed (unless the Trustee shall be removed as
provided in Section 11 of this Article in which event the
vacancy shall be filled as provided in said Section) or
shall become incapable of acting, or shall be adjudicated a
bankrupt or insolvent, or if a receiver of the Trustee or of
any such successor or of its property shall be appointed, or
if any public officer shall take charge or control of the
Trustee or of any such successor or of its property and
affairs, a successor may be appointed by the holders of a
majority in principal amount of the Bonds then outstanding
hereunder by an instrument or concurrent instruments in
writing signed and acknowledged by such Bondholders or by
their attorneys in fact duly authorized, and filed with such
successor trustee, notification thereof being given to BGE
and the retiring trustee; provided, nevertheless, that until
a new trustee shall be appointed by the Bondholders as
aforesaid, BGE, by instrument executed by order of its Board
of Directors and duly acknowledged by its President or a
Vice-President and its Secretary or an Assistant Secretary,
may appoint a trustee to fill such vacancy until a new
trustee shall be appointed by the Bondholders as herein
authorized. BGE shall publish notice of any such
appointment, which notice shall be published at least once a
week for two successive weeks in a newspaper printed in the
<PAGE>
Article IX
Section 18
English language and customarily published on each business
day, of general circulation in the Borough of Manhattan, in
the City of New York, State of New York, and at least once a
week for two successive weeks in a newspaper printed in the
English language and customarily published on each business
day, of general circulation in the City of Baltimore, in the
State of Maryland. Publication in a single newspaper
circulated in both cities is sufficient. Any such trustee
so appointed by BGE shall immediately and without further
act be superseded by a trustee appointed by the Bondholders,
if such Bondholders shall make such appointment within one
year from the date they first had the right so to appoint
under the terms hereof.
If in a proper case no appointment of a successor
trustee shall be made pursuant to the foregoing provisions
of this Article IX within six months after a vacancy shall
have occurred in the office of trustee, the holder of any
Bond outstanding hereunder or any retiring trustee may apply
to any court of competent jurisdiction to appoint a
successor trustee. Said court may thereupon after such
notice, if any, as such court may deem proper and prescribe,
appoint a successor trustee.
If the Trustee resigns because of a conflict of
interest as provided in Section 11 of this Article and a
successor has not been appointed by BGE or the Bondholders
or, if appointed, has not accepted the appointment within 30
days after the date of such resignation, the resigning
Trustee may apply to any court of competent jurisdiction for
the appointment of a successor trustee.
Any trustee appointed under the provisions of this
Article in succession to the Trustee shall be a trust
company eligible under Section 14 of this Article, and
qualified under Section 11 of this Article.
Any trustee which has resigned or been removed shall
nevertheless retain the lien upon the trust estate,
including all property or funds held or collected by the
trustee, as such, to secure the amounts due to the trustee
as compensation, reimbursement and expenses, afforded to it
by Section 8 of this Article and retain the rights afforded
to it by Section 9 of this Article.
SEC. 18. Acceptance. Any successor trustee appointed
hereunder shall execute, acknowledge and deliver to its
predecessor trustee, and also BGE, an instrument accepting
such appointment hereunder, and thereupon such successor
trustee, without any further act, deed or conveyance shall
become fully vested with all the estates, properties,
rights, powers, trusts, duties, and obligations of its
<PAGE>
Article IX
Section 19
predecessor in trust hereunder, with like effect as if
originally named as trustee herein; but the trustee ceasing
to act shall nevertheless, on the written request of BGE, or
of the successor trustee, or of the holders of 10 percent in
aggregate principal amount of the Bonds then outstanding
under the Indenture, execute, acknowledge and deliver such
instruments of conveyance and further assurance and do such
other things as may reasonably be required for more fully
and certainly vesting and confirming in such successor
trustee all the right, title and interest of the trustee
which it succeeds in and to the mortgaged property and such
rights, powers, trusts, duties and obligations, and the
trustee ceasing to act shall also, upon like request, pay
over, assign and deliver to the successor trustee any money
or other property subject to the lien of the Indenture which
may then be in its possession, and thereupon the Trustee so
ceasing to act shall be fully relieved and discharged from
all liability or responsibility therefor, either to BGE or
to the holder of any Bonds outstanding under the Indenture.
Should any deed, conveyance or instrument in writing from
BGE be required by the new trustee for more fully and
certainly vesting and confirming to such new trustee such
estates, properties, rights, powers, trusts, duties and
obligations, any and all such deeds, conveyances and
instruments in writing shall, on request, be executed,
acknowledged and delivered by BGE.
SEC. 19. Consolidation. Any company into which the
Trustee, or any successor to it, may be merged or with which
it, or any successor to it, may be consolidated or any
company resulting from any merger or consolidation to which
the Trustee, or any successor to it, shall be a party,
provided such corporation shall be eligible under the
provisions of Section 14 of this Article and qualified under
the provisions of Section 11 of this Article, shall be a
successor trustee under the Indenture, without the execution
or filing of any paper or the performance of any further act
on the part of any other parties hereto, anything herein to
the contrary notwithstanding. In case any of the Bonds
contemplated to be issued hereunder shall have been
authenticated but not delivered, any such successor trustee
may adopt the certificate of authentication of the Trustee,
or of any successor to it, as trustee hereunder, and deliver
the same so authenticated; and in case any of said Bonds
shall not have been authenticated, any successor trustee may
authenticate such Bonds either in the name of any
predecessor hereunder or in the name of the successor
trustee, and in all such cases such certificate of
authentication shall have the full force which it is
anywhere in said Bonds or in the Indenture provided that the
certificate of authentication of the Trustee shall have.
<PAGE>
Article X
Section 1
ARTICLE X.
Company's Possession Till Default and Right to Redeem Bonds
Before Maturity. Sinking Fund Provisions
SEC. 1. Possession Until Default. Until some default
shall have been made in the payment of the interest or of
the principal of some Bond or Bonds, hereby secured, or in
the due observance or performance of some covenant or
condition hereof obligatory upon BGE, and until such default
shall have continued beyond the period of grace, if any,
herein provided in respect thereof, or until BGE shall have
voluntarily surrendered possession to the Trustee as herein
permitted, BGE, its successors and assigns, shall be
suffered and permitted to retain actual possession of all
the premises, property and appurtenances hereby mortgaged
(except bonds, securities and stocks of other corporations),
and to manage, operate and use the same and every part
thereof, with the rights and franchises appertaining
thereto, and to collect, receive, take, use and enjoy the
earnings, income, rents, issues and profits thereof.
SEC. 2. Redemption. BGE shall have the right, at its
option, to redeem before maturity Bonds hereby secured of
any series which by their terms are made so redeemable, at
such price or prices, during such period or periods and in
such period or periods and in such amount or amounts as
shall be expressed in the Bonds. In case less than all the
outstanding Bonds of any particular series shall be
redeemed, the Bonds so to be redeemed shall be selected by
the Trustee by lot and by the serial numbers thereof, in
such manner as the Trustee shall deem equitable, and not by
the names of the holders or owners thereof, if known.
Notice of intention so to redeem any such Bonds shall
be given by BGE by publication in at least one daily
newspaper published in the Borough of Manhattan, in the City
of New York, and in at least one daily newspaper published
in the City of Baltimore, at least once each week, for a
period of sixty days next preceding the redemption date
fixed in such notice, which notice shall (unless all the
outstanding Bonds of a series are to be redeemed) state the
serial numbers of the Bonds so called for redemption, and
shall state that in case such Bonds be not presented for
redemption on the date in said notice specified, all
interest on said Bonds so called for redemption shall cease
from and after the said date, provided, however, that in
respect of Bonds of any particular series, notice of
intention so to redeem any or all of such Bonds need not be
given by publication but shall be given by mail in the
manner set out in the next succeeding paragraph.
<PAGE>
Article X
Section 3
In addition, a similar notice of intention to redeem
shall be sent by BGE by mail, not less than sixty days prior
to the date fixed for redemption, to the holder of each Bond
called for redemption which shall have been registered, and
to the holder of each Bond which shall have been called,
such notice to be mailed to the address, if any, of such
holder upon such register.
Notice having been given as aforesaid, all of the Bonds
so called for redemption shall thereupon be and become due
and payable (at such redemption price) on such redemption
date, anything therein or herein to the contrary
notwithstanding, and from and after such redemption date, if
the Moines necessary to redeem such Bonds shall have been
deposited, as hereinafter provided, and affidavits,
satisfactory to the Trustee, as to the publication and
mailing of such notice, shall have been lodged with it,
interest upon said Bonds shall cease.
Such redemption shall be provided for by depositing
with the Trustee such sum as may be sufficient to pay the
redemption price, together with the then accrued interest,
on the Bonds so called for redemption. BGE shall also make
adequate provision for such redemption at the place or
places where the Bonds so called for redemption are payable
as to principal.
All Bonds so redeemed shall forthwith be canceled by
the Trustee.
In respect of Bonds of any particular series, there may
be substituted in lieu of the period of sixty days mentioned
in the second and third paragraphs of this Section 2 such
shorter period as shall be determined by the Board of
Directors of BGE at the time such series is created, and
shall be expressed in the Bonds.
SEC. 3. Sinking Fund. BGE covenants and agrees that
it will create a sinking fund for the benefit of the Bonds
hereby secured by paying to the Trustee annually, at the end
of each period of one year, accounting from the first day of
August, 1922, the first payment being due on the first day
of August, 1923, a sum equal to one percent of the largest
amount of Bonds at any time during such yearly period
outstanding hereunder.
The Trustee shall apply the sinking fund, as it accrues
by each payment, to the purchase price of Bonds hereby
secured in the open market, at public or private sale, or
upon any exchange or brokers' board, at the lowest prices
obtainable, not exceeding the redemption price thereof if
any (or for series of Bonds providing special "Sinking Fund
<PAGE>
Article X
Section 4
Redemption Prices," at not exceeding such special prices).
If any such Bonds cannot be purchased at such redemption
price or less, the Trustee shall proceed to apply the
sinking fund, or the balance thereof, to the redemption of
such Bonds in the manner provided in Section 2 of this
Article, and shall, in the name of BGE, call by lot for
redemption in the manner provided in Section 2 of this
Article, and at such time as in its discretion shall be
deemed practicable, as many Bonds as can be redeemed out of
said sinking fund or said balance thereof.
BGE, in addition to the aforesaid sinking fund
payments, shall pay to the Trustee such sums as shall be
necessary to pay interest accrued, on any of the Bonds so
purchased or redeemed, to the respective dates of such
purchase or redemption.
Before the date for each sinking fund payment the
Trustee shall publish once (not less than 28 days nor more
than 35 days before the date of the sinking fund payment) in
a newspaper published in the Borough of Manhattan, in the
City of New York, a newspaper published in the City of
Baltimore, in the State of Maryland, a newspaper published
in the City of Philadelphia, in the State of Pennsylvania
and a newspaper published in the City of Boston, in the
State of Massachusetts, a notice inviting sealed written
proposals, to be received by the Trustee on or before the
date for such sinking fund payment, for the sale of Bonds to
the Trustee for the sinking fund. BGE shall pay to the
Trustee all expenses of such publication. In determining
the lowest prices obtainable in the purchase of Bonds for
the sinking fund, and in selecting Bonds for redemption
through the sinking fund, the Trustee may take into
consideration the interest rates and dates of maturity and
resultant yields to maturity and any other characteristics
by the Trustee deemed relevant, such as, for instance, rates
of exchange or tax covenants, of Bonds of different series.
SEC. 4. Defeasance. If, when all the Bonds and notes
hereby secured shall have become due and payable, BGE shall
well and truly pay, or shall cause to be paid, the whole
amount of the principal Moines and interest due upon all of
the Bonds, hereby secured and then outstanding, or shall
provide for such payment by depositing with the Trustee
hereunder for the payment of such Bonds the entire amount
due thereon for principal and interest, and also shall pay
or cause to be paid all other sums payable hereunder by BGE,
and shall well and truly keep and perform all the things
herein required to be kept and performed by it according to
the true intent and meaning of this Indenture, then and in
<PAGE>
Article XI
Section 1
that case all property, rights and interests hereby conveyed
shall revert to BGE, and the estate, right, title and
interest of the Trustee shall thereupon cease, determine and
become void, and the Trustee in such case, on demand of BGE
and at its cost and expense, shall permit satisfaction of
this Indenture to be entered upon the records; otherwise,
the same shall be continued and remain in full force and
virtue.
ARTICLE XI.
Sundry Provisions
SEC. 1. Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Indenture
contained, by or in behalf of any party hereto, shall bind
and inure to the benefit of the parties hereto, their
successors and assigns, whether so expressed or not, as
fully as if the covenant of any party hereto had been in
each instance made on behalf of said party, its successors
or assigns, by and with the other party or parties to said
covenant, their successors and assigns.
SEC. 2. Consolidation. Nothing contained in this
Indenture, or in any Bond issued hereunder, shall prevent
any consolidation or merger of BGE with any other
corporation; provided, however, that such consolidation or
merger shall not impair the lien and security of this
Indenture or any of the rights or powers of the Trustee, or
of the Bondholders hereunder, and that, upon any such
consolidation or merger the due and punctual payment of the
principal and interest of all said Bonds secured hereby,
according to their tenor, and the due and punctual
performance and observance of all the covenants and
conditions of this Indenture shall be assumed by the
corporation formed by such consolidation or merger.
SEC. 3. Successor May Issue Bonds. In case BGE,
pursuant to Section 2 of this Article, shall be consolidated
or merged with any other corporation, as aforesaid, the
successor corporation formed by such consolidation or
merger, upon executing and causing to be recorded an
indenture with the Trustee, satisfactory to the Trustee,
whereby such successor corporation shall assume the due and
punctual payment of the principal and interest of said
Bonds, and the performance of all the covenants and
conditions of this Indenture, shall succeed to and be
substituted for BGE, with the same effect as if it had been
named herein, and such successor corporation thereupon may
cause to be signed and may issue, either in its own name or
in the name of BGE, any or all of the Bonds which shall not
theretofore have been signed on behalf of BGE and certified
<PAGE>
Article XI
Section 4
by the Trustee; and, upon the order of said successor
corporation in lieu of BGE, and subject to all the terms,
conditions and restrictions herein prescribed, the Trustee
shall certify and deliver any of such Bonds which shall have
been previously signed by the officers of BGE and delivered
to the Trustee for certification, and any of such Bonds
which said successor corporation shall thereafter cause to
be signed and delivered to the said Trustee for that
purpose. All the Bonds so issued shall in all respects have
the same rank and security as the Bonds theretofore or
thereafter issued in accordance with the terms of this
Indenture.
In case of any such consolidation or merger of BGE with
any other corporation whose property is subject to a
mortgage or instrument purporting to cover after-acquired
property and providing for substitution thereunder of a
corporation so formed by consolidation for such
consolidating corporation, then such corporation so formed,
as successor to BGE, shall at all times keep the property
formerly the property of BGE, and any other property subject
to the lien hereof prior to the lien of such mortgage or
instrument of such other consolidating corporation,
distinguishable from property subject to such other lien
prior to the lien hereof.
SEC. 4. Succession. For every purpose of this
Indenture, including the execution, issue and use of any and
all Bonds issued hereunder, the term "BGE" includes and
means any such successor corporation. Every such successor
corporation shall possess and from time to time may exercise
each and every right and power hereunder of BGE in its name
or otherwise. Any act or proceeding by any provision of
this Indenture required to be done or performed by any
Board, Committee or officer of BGE shall and may be done and
performed with like force and effect by the like Board,
Committee or officer of any corporation that shall at the
time be the lawful successor, by consolidation or merger, of
BGE.
SEC. 5. Plural/Singular. Except when otherwise
indicated, the words "Bond", "Bondholder" and "holder" shall
include the plural as well as the singular number.
SEC. 6. Headings. Article and Section headings are
added for convenience and identification only and are not
intended to describe, interpret, define, or limit the scope,
extent or intent of the Indenture or any provision hereof.
<PAGE>
Article XII
Section 1
ARTICLE XII
Additional Covenants of BGE
SEC. 1. Opinions of Counsel. BGE covenants and
agrees:
(a) That it will furnish to the Trustee, promptly
after the execution and delivery of any indenture
supplemental to the Indenture, an opinion of counsel (who
may be of counsel for BGE) either stating that in the
opinion of such counsel the Indenture has been properly
recorded, and filed so as to make effective the lien
intended to be created thereby, and reciting the details of
such action, or stating that in the opinion of such counsel
no such action is necessary to make such lien effective. It
shall be a compliance with this subsection (a) if (1) the
opinion of counsel herein required to be delivered to the
Trustee shall state that the Indenture has been received for
record or filing in each jurisdiction in which it is
required to be recorded or filed and that, in the opinion of
counsel (if such is the case), such receipt for record or
filing makes effective the lien intended to be created by
the Indenture, and (2) such opinion is delivered to the
Trustee within such time, following the date of the
execution and delivery of any supplemental indenture, as
shall be practicable having due regard to the number and
distance of the jurisdictions in which the Indenture is
required to be recorded or filed.
(b) That it will furnish to the Trustee, on or before
each November 1, an opinion of counsel (who may be of
counsel for BGE), either stating that in the opinion of such
counsel such action has been taken with respect to the
recording, filing, re-recording, and re-filing of the
Indenture as is necessary to maintain the lien of the
Indenture, and reciting the details of such action, or
stating that in the opinion of such counsel no such action
is necessary to maintain such lien.
SEC. 2. Paying Agent. BGE covenants that it will
cause any paying agent (other than BGE and the Trustee)
heretofore or hereafter appointed by it to execute and
deliver to the Trustee an instrument in which it shall agree
with the Trustee, subject to the provisions of this Section,
(1) that such paying agent shall hold in trust for the
benefit of the Bondholders or the Trustee all sums held by
such paying agent for the payment of the principal of or
interest or premium on any Bonds outstanding under the
Indenture; and (2) that such paying agent shall give the
Trustee notice of any failure by BGE or any other obligor on
any such Bonds to make payment of the principal of or
<PAGE>
Article XII
Section 3
interest or premium on any such Bond, and of any default by
BGE or any other obligor on any such Bonds in the making of
any such payment. Such paying agent shall not be obligated
to segregate such sums from other funds of such paying
agent, except to the extent required by law.
If BGE acts as its own paying agent, it shall, on or
before each date on which the principal of, or an
installment of interest or the premium on, any Bond
outstanding under the Indenture becomes due, set aside and
hold in trust for the benefit of the Bondholders or the
Trustee a sum sufficient to pay such principal or interest
or premium so becoming due on any such Bond and shall give
to the Trustee notice of such action or of its failure (or
the failure of any other obligor on any such Bonds) to take
such action.
Anything in this Section to the contrary
notwithstanding, the agreement to hold sums in trust as
provided in this Section shall be subject to the provisions
of Section 2 of Article X of the Indenture.
SEC. 3. Certificate and Opinion for Releases and
Discharge of Indenture.
(a) In the case of a request by BGE to the Trustee for
the release or the release and substitution of property
(whether securities or other property) subject to the lien
of the Indenture, as provided in Article VIII of the
Indenture, the Trustee shall receive as a condition
precedent to granting such request a certificate signed by
the President or a Vice-President and by an engineer or (if
the property disposed of be bonds, stock or other
securities) the Treasurer or an Assistant Treasurer of BGE,
stating that BGE has sold or exchanged or contracted for the
sale or exchange of the property to be released, and that
such property is no longer necessary in the operation or
conduct of BGE's business, and an opinion of counsel (who
may be of counsel to BGE), stating that the instruments
which have been or are therewith delivered to the Trustee
conform to the requirements of the Indenture and constitute
sufficient authority under the Indenture for the Trustee to
execute the release or effect the release and substitution
requested, and that in his opinion the conditions precedent
provided for in the Indenture in respect of such release or
release and substitution have been complied with .
(b) In the case of a request by BGE to the Trustee for
the satisfaction and discharge of the Indenture, as provided
in Article X, Section 4 of the Indenture, the Trustee shall
<PAGE>
Article XII
Section 4
receive as a condition precedent to granting such request a
certificate, signed by the President or a Vice-President and
the Treasurer or an Assistant Treasurer of BGE, stating that
the whole amount of the principal Monies and interest due
upon all of the Bonds secured by the Indenture and then
outstanding have been paid, or that such payment has been
provided for by deposit with the Trustee of the entire
amount due for principal and interest, and an opinion of
counsel (who may be of counsel to BGE), stating that the
instruments which have been or are therewith delivered to
the Trustee conform to the requirements of the Indenture and
constitute sufficient authority under the Indenture for the
Trustee to satisfy and discharge the Indenture, and that in
his opinion the conditions precedent provided for in the
Indenture in respect of such satisfaction have been complied
with.
SEC. 4. Certificates as to Fair Value.
Notwithstanding any other provision in the Indenture, BGE
shall furnish to the Trustee, in addition to or as part of
any certificate or opinion required by other applicable
provisions of the Indenture:
(a) A certificate or opinion of an engineer,
appraiser, or other expert as to the fair value of any
property or securities to be released from the lien of the
Indenture, which certificate or opinion shall state that in
the opinion of the person making the same the proposed
release will not impair the security under the Indenture in
contravention of the provisions thereof; such certificate or
opinion shall be made by an independent engineer, appraiser,
or other expert, if the fair value of such property or
securities and of all other property or securities released
since the commencement of the then current calendar year, as
set forth in the certificates or opinions required by this
subdivision (a), is ten percent (10%) or more of the
aggregate principal amount of Bonds at the time outstanding;
but such certificate or opinion of an independent engineer,
appraiser, or other expert shall not be required in the case
of any release of property or securities, if the fair value
thereof as set forth in the certificate or opinion required
by this subdivision (a) is less than twenty-five thousand
dollars ($25,000) or less than one percent (1%) of the
aggregate principal amount of Bonds at the time outstanding;
and
(b) A certificate or opinion of an engineer,
appraiser, or other expert as to the fair value to BGE of
any property the subjection of which to the lien of the
Indenture is to be made the basis for the authentication and
delivery of Bonds, the withdrawal of cash constituting a
<PAGE>
Article XII
Section 4
part of the trust estate, or the release of property or
securities subject to the lien of the Indenture; and if
(1) within six (6) months prior to the date of
acquisition thereof by BGE such property has been used
or operated by a person or persons other than BGE in a
business similar to that in which it has been or is to
be used or operated by BGE; and
(2) the fair value to BGE of such property as set
forth in such certificate or opinion is not less than
twenty-five thousand dollars ($25,000) and not less
than one percent (1%) of the aggregate principal amount
of Bonds at the time outstanding,
such certificate or opinion shall be made by an independent
engineer, appraiser, or other expert, and, in the case of
the authentication and delivery of Bonds or in the case of
the paying over to BGE of deposited cash under the
provisions of Section 5, 6 and 7 of Article I, Section 6 of
Article III, Section 6 of Article IV, or Section 3 of
Article VIII of the Indenture shall cover the fair value to
BGE (as of the date of the certificate or opinion previously
furnished the Trustee with reference thereto) of any
property so used or operated which has been subjected to the
lien of the Indenture and which has been used as the basis
for any action as aforesaid since the commencement of the
then current calendar year, and as to which a certificate or
opinion of an independent engineer, appraiser, or other
expert has not previously been furnished; and
(c) A certificate or opinion of an engineer,
appraiser, or other expert as to the fair value to BGE of
any securities (other than Bonds issued under the Indenture
and securities secured by lien prior to the lien of the
Indenture upon property subject to the lien of the
Indenture) the deposit of which with the Trustee is to be
made the basis for the authentication and delivery of Bonds,
the withdrawal of cash constituting a part of the trust
estate or the release of property or securities subject to
the lien of the Indenture; and if the fair value to BGE of
such securities and of all other such securities made the
basis of any such authentication and delivery, withdrawal or
release since the commencement of the then current calendar
year as set forth in the certificates or opinions required
by this subdivision (c) is ten percent (10%) or more of the
aggregate principal amount of Bonds at the time outstanding,
such certificate or opinion shall be made by an independent
engineer, appraiser, or other expert, and in the case of the
authentication and delivery of Bonds or in the case of the
paying over to BGE of deposited cash under the provisions of
Sections 5, 6 and 7 of Article I, Section 6 of Article III,
<PAGE>
Article XII
Section 5
Section 6 of Article IV, or Section 3 of Article VIII of the
Indenture shall cover the fair value to BGE of all other
such securities so deposited since the commencement of the
current calendar year as to which a certificate or opinion
of an independent engineer, appraiser, or other expert has
not previously been furnished; but such a certificate of an
independent engineer, appraiser, or other expert shall not
be required with respect to any securities so deposited if
the fair value thereof to BGE, as set forth in the
certificate or opinion required by this subdivision (c), is
less than twenty-five thousand dollars ($25,000) or less
than one percent (1%) of the aggregate principal amount of
Bonds at the time outstanding.
SEC. 5. Selection of Independent Experts. In cases
under this Article in which a certificate or opinion is
required to be made by an independent person, such
certificate or opinion shall be made by an independent
engineer, appraiser, or other expert, as the case may be,
approved by the Trustee in the exercise of reasonable care.
In cases where such certificate or opinion is not required
to be made by an independent person, such certificate or
opinion may, except as otherwise provided in this Article,
be made by any engineer, appraiser, or other expert, as the
case may be, employed by or otherwise holding office in BGE,
and the Trustee shall not be under any responsibility for
the approval of any such person.
SEC. 6. Matters to be Included in Certificate or
Opinion. Each certificate or opinion with respect to
compliance with a condition or covenant provided for in the
Indenture shall include (1) a statement that the person
making such certificate or opinion has read such covenant or
condition; (2) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation
as is necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not in
the opinion of such person such condition or covenant has
been complied with.
SEC. 7. Filing of Claims by Trustee. The Trustee may
file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of
the Trustee and of the Bondholders allowed in any judicial
proceedings relative to BGE (or any other obligor on any
Bonds outstanding under the Indenture), or its creditors, or
its property.
<PAGE>
Article XII
Section 8
SEC. 8. No Impairment of Bondholders' Rights. The
right of any holder of any Bond to receive payment of the
principal of and interest on such Bond, on or after the
respective due dates expressed in such Bond, or to institute
suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected
without the consent of such holder. The provisions of this
Section, however, shall be subject to the provisions of
Section 19 of Article V of the Indenture to the extent that
the provisions of said Section 19 of Article V may make
written request upon the Trustee by the holders of specified
amounts of Bonds a condition precedent to the institution of
certain specified suits, actions or proceedings.
SEC. 9. Officer's Certificate as to Compliance. At
least annually, BGE shall deliver to the Trustee an
Officer's Certificate executed by the principal executive
officer, the principal financial officer or the principal
accounting officer of BGE, as to such officer's knowledge of
BGE's compliance with all conditions and convents under this
Indenture, such compliance to be determined without regard
to any period of grace or requirement of notice under this
Indenture.
ARTICLE XIII
Bondholders' Lists and Reports by BGE and the Trustee
SEC. 1. Bondholders' Lists. BGE will, so long as any
Bonds are outstanding under the Indenture, furnish or cause
to be furnished to the Trustee between March 15 and April 1,
and between September 15 and October 1, in each year and at
such other times as the Trustee may request in writing,
within thirty days after the receipt by BGE of any such
request, a list in such form as the Trustee may reasonably
require containing all the information in the possession or
control of BGE or of any of its paying agents, as to the
names and addresses of the holders of Bonds obtained since
the date as of which the next previous list, if any, was
furnished, but no such list shall include the names or
addresses of the holders of registered Bonds . Any such
list shall be dated as of a date not more than fifteen days
prior to the time such information is furnished or caused to
be furnished, and need not include information received
after such date.
<PAGE>
Article XIII
Section 2
SEC. 2. Trustee to Preserve Information; Furnishing
Information to Bondholders.
(a) The Trustee shall preserve, in as current a form
as is reasonably practicable, all information as to the
names and addresses of the Bondholders (1) contained in the
most recent list furnished to it as provided in Section 1 of
this Article, (2) received by it in the capacity of paying
agent under the Indenture, if and when acting in such
capacity, and (3) filed with it within two preceding years
pursuant to the provisions of paragraph (c) (2) of Section 3
of this Article. The Trustee may (1) destroy any list
furnished to it as provided in said Section 1 upon receipt
of a new list so furnished; (2) destroy any information
received by it as paying agent for any series of Bonds upon
delivering to itself as Trustee, not earlier than 45 days
after an interest payment date of the Bonds of such series,
a list containing the names and addresses of the holders of
Bonds of such series obtained from such information since
the delivery of the next previous list, if any, with respect
to such series; (3) destroy any list delivered to itself as
Trustee which was compiled from information received by it
as such paying agent upon the receipt of a new list so
delivered with respect to the same series; and (4) destroy
any information received by it pursuant to the provisions of
paragraph (c)(2) of Section 3 of this Article, but not until
two years after such information has been filed with it.
(b) In case three or more holders of Bonds outstanding
under the Indenture (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish
to the Trustee reasonable proof that each such applicant has
owned one or more Bonds outstanding under the Indenture for
a period of at least six month preceding the date of such
application, and such application states that the applicants
desire to communicate with other holders of Bonds with
respect to their rights under the Indenture or under the
Bonds, and is accompanied by a copy of the form of proxy or
other communication which such applicants propose to
transmit, then the Trustee shall, within five business days
after the receipt of such application, at its election,
either
(1) afford to such applicants access to all
information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of
this Section and to the names and addresses of the
holders of Bonds; or
(2) inform such applicants as to the approximate
number of holders of Bonds whose names and addresses
appear in the information preserved at the time by the
<PAGE>
Article XIII
Section 3
Trustee in accordance with the provisions of subsection
(a) of this Section and as to the approximate number of
holders of Bonds and as to the approximate cost of
mailing to such Bondholders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford to such
applicants access to such information, the Trustee shall,
upon the written request of such applicants, mail to each
Bondholder whose name and address appear in the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section a copy of the
form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to
the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the
Trustee shall mail to such applicants, and file with the
Securities and Exchange Commission together with a copy of
the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be
contrary to the best interests of the Bondholders, or would
be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If said
Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such
objections, or if, after the entry of an order sustaining
one or more of such objections, said Commission shall find,
after notice and opportunity for a hearing, that all the
objections so sustained have been met, and shall enter an
order so declaring, the Trustee shall mail copies of such
material to all such bondholders with reasonable promptness
after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their
application.
(c) The Trustee shall not be held accountable by
reason of the mailing of any material pursuant to any
request made under subsection (b) of this Section.
SEC. 3. Filing Certain Reports with Trustee.
(a) BGE will file with the Trustee within 15 days
after BGE is required to file the same with the Commission,
copies of the annual reports and of the information,
documents, and other reports (or copies of such portion of
any of the foregoing as such Commission may from time to
time by rules and regulations prescribe) which BGE may be
required to file with such Commission pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934; or,
<PAGE>
Article XIII
Section 4
if BGE is not required to file information, documents or
reports pursuant to either of such Sections, then to file
with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by said
Commission, such of the supplementary and periodic
information, documents, and reports which may be required
pursuant to Section 13 of the Securities Exchange Act of
1934 in respect of a security listed and registered on a
national securities exchange as may be prescribed from time
to time in such rules and regulations;
(b) BGE will file with the Trustee and the Commission,
in accordance with the rules and regulations prescribed from
time to time by said Commission, such additional
information, documents and reports with respect to
compliance by BGE with the conditions and covenants provided
for in the Indenture as may be required from time to time by
such rules and regulations;
(c) BGE will transmit by mail to the holders of Bonds,
such summaries of any information, documents and reports
required to be filed by BGE pursuant to subsections (a) and
(b) of this Section 3 as may be required by the rules and
regulations prescribed from time to time by the Commission
in the following manner: (1) to all registered holders of
Bonds, as the names and addresses of such holders appear
upon the registration books of BGE; (2) to such holders
of Bonds as have, within two years preceding such
transmission, filed their names and addresses with the
Trustee for that purpose; (3) to each Bondholder whose name
and address is preserved at the time by the Trustee, as
provided in subsection (a) of Section 2 of this Article.
(d) BGE will furnish to the Trustee (1) with or as a
part of each annual report and each other document or report
filed with the Trustee pursuant to subsection (a) or (b) of
this Section 3, a certificate signed by the President or a
Vice-President and by the Treasurer or an Assistant
Treasurer of BGE, stating that in the opinion of the signers
such annual report or other document or report complies with
the requirements of such subsection (a) or (b) and (2) after
BGE shall have mailed or caused to be mailed to holders of
Bonds any summary of information, documents or reports
pursuant to subsection (c) of this Section 3, a like
certificate stating that in the opinion of the signers such
summary complies with the requirements of such subsection
(c).
SEC. 4. Trustee's Report to Bondholders.
(a) Annually, not later than October 1 in each year,
the Trustee shall transmit to the holder of Bonds and the
<PAGE>
Article XIII
Section 5
Commission a report with respect to any events described in
Section 313(a) of the Trust Indenture Act, in such manner
and to the extent required by the Trust Indenture Act.
(b) BGE covenants that, if at any time the Trustee
shall not be the Registrar of the Bonds, it will, upon
written demand of the Trustee, promptly furnish, or cause
each Registrar thereof to furnish, to the Trustee a list of
the names and addresses of the holders of such Bonds of
which the Trustee is not the Registrar. The Trustee may
destroy any list so furnished to it upon receipt of a new
list.
SEC. 5. Notice of Default to Bondholders. The
Trustee shall, within 90 days after the occurrence thereof,
give to the Bondholders, in the manner and to the extent
provided in subsection (c) of Section 3 of this Article,
notice of all Defaults known to the Trustee, unless such
Defaults shall have been cured before the giving of such
notice but, in the case of Defaults of the character
specified in subdivisions (1), (3) and (4) of Section 2 of
Article V of the Indenture, no such notice shall be given
until at least 60 days after the occurrence thereof;
provided that, except in the case of Default in the payment
of the principal of or interest on any of the Bonds, or in
the payment of any sinking fund installment, 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 and/or responsible officers of
the Trustee in good faith determine that the withholding of
such notice is in the interests of the Bondholders.
ARTICLE XIV
Definitions
Additional Property means any improvements,
betterments, extensions or additional property with respect
to which Bonds may be so certified. Additional Property
shall include Additional Securities (as hereinafter defined)
and property of any other kind, which (in either case), at
the time of so acquiring Additional Property may be
necessary or useful in the conduct of any business, then
conducted by BGE and then within its corporate powers and
purposes, within either of the following groups:
(a) a gas or electric business or business incidental
thereto and conveniently conducted in connection therewith;
provided that the property so used or to be used in any such
gas or electric business shall be situated in Maryland,
Pennsylvania, Delaware, Virginia, West Virginia or the
District of Columbia, or connected by lines of operation or
<PAGE>
Section XIV
Definitions
distribution with other gas or electric property of BGE or a
Subsidiary situated within such territory.
(b) any other business; provided that the total amount
of Residue Bonds issued on account of any business not
within Group A shall never exceed ten million dollars
($10,000,000).
The phrase "acquiring (or the acquisition of)
Additional Property" or any equivalent expression shall
include making (or the making of) such improvements,
betterments or extensions.
Except Additional Securities, Additional Property shall
include no bonds, obligations or stocks of other
corporations, but may include outstanding liens on or
interests in property now or hereafter owned by BGE.
Additional Securities means bonds, securities (notes
and other obligations being hereinafter referred to as
securities) and stocks of corporations which, at the time of
the request for certification and delivery of Residue Bonds
with respect to such Additional Securities, are engaged in
some business within one or both of the aforesaid Groups (A)
and (B) within the definition of Additional Property and of
which at least a majority of the voting stock (of each class
thereof) already has been owned or then is acquired by BGE.
Additional Securities shall include no bonds,
securities or stocks hereafter issued by any Subsidiary
after becoming a Subsidiary except mortgage bonds or (if
mortgage bonds then being not lawfully issuable by such
Subsidiary) promissory notes or (if neither mortgage bonds
nor promissory notes be lawfully issuable) stock, issued (in
the case of either bonds, notes, or stock) for the
acquisition of property (including construction) which, if
acquired by BGE, would be Additional Property.
Amount of Bonds or Notes means principal amount.
Authorizing Resolutions means in regard to the request
for certification and delivery of any Bonds hereunder, a
resolution of the Board of Directors or Executive Committee
of BGE, certified by a Secretary or Assistant Secretary
requiring the issue of the specified amount of Bonds,
designating the series of such Bonds and [except for
requesting the certification of Bonds under Section 4 or 5
of Article I] stating the purposes for which such Bonds are
to be certified and delivered and, if such Bonds are to be
of a series not theretofore created, a similarly certified
copy of a resolution of the Board of Directors of BGE
designating the new series then to be created and specifying
<PAGE>
Section XIV
Definitions
the amount (if limited), maturity, denominations, rate of
interest, interest dates, currencies, rate of exchange (if
any), character of registration (if any), terms and dates of
redemption (if redeemable) or conversion into capital stock
(if convertible), or of exchange for Bonds of other
denominations or series (if so exchangeable), and other
provisions of the Bonds of which certification and delivery
are requested. Bonds so certified and delivered shall
conform to such specifications.
Bonds and Bondholders means the Bonds and holders
thereof issued from time to time pursuant to the terms of
the Indenture. Bonds hereby secured or issued hereunder, or
any equivalent expression means every outstanding and unpaid
Bond of the entire issue hereby intended to be secured.
Whenever in Section 6, 7, 8 and 9 of Article I
reference is made to the reservation or the issuance,
certification or delivery of Bonds or Residue Bonds
hereunder, every such reference shall be taken to include
(unless the contrary is expressly stated or is necessarily
implied by the context) the reservation or the payment (as
the case may be) of deposited cash, as fully as if in each
instance express reference were made to both alternatives,
viz, Bonds or deposited cash.
Commission means the Securities and Exchange
Commission.
Company means Baltimore Gas and Electric Company, its
successors and assigns.
Defaults means for purposes of Section 5 of Article
XIII the events specified in Section 2 of Article V, not
including any periods of grace provided for therein.
Indenture means this amended and restated Indenture and
as it may be further supplemented and amended hereafter.
Majority means a majority in principal amount.
Mortgaged Premises and Property or Mortgaged Property,
or any equivalent expression means all the property, real,
personal or mixed, including stocks, bonds, obligations to
franchises conveyed hereby and subject hereto, or intended
so to be.
Original Mortgage means the Mortgage or Deed of Trust
dated as of February 1, 1919 by and between BGE and the
Trustee.
<PAGE>
Section XIV
Definitions
Prior Charges means all liens (except taxes or similar
liens for a current year, or shorter period, only) on any
Additional Property at the time of the acquisition thereof
by BGE and also all liens, except as aforesaid (and all
outstanding bonds or securities secured by mortgages or
liens) on the property of and all other outstanding
securities and preferred stocks of any Subsidiary at the
time of the acquisition of Additional Securities thereof by
BGE; but shall not include any such bonds, securities or
preferred stock then deposited with the Trustee hereunder or
any other such liens then vested in the Trustee.
"Additional Property subject to Prior Charges" "Prior
Charges on Additional Property" or any equivalent expression
shall include "Additional Securities" of a Subsidiary the
property of which is so subject to Prior Charges.
Residue Bonds means all Bonds which may be certified
and delivered pursuant to Section 7 of Article I (i.e. all
Bonds authorized to be issued hereunder not reserved or
certified and delivered under Section 6 or under Sections 4
or 5 of Art. I.)
Whenever in Section 6, 7, 8 and 9 of Article I
reference is made to the reservation or the issuance,
certification or delivery of Bonds or Residue Bonds
hereunder, every such reference shall be taken to include
(unless the contrary is expressly stated or is necessarily
implied by the context) the reservation or the payment (as
the case may be) of deposited cash, as fully as if in each
instance express reference were made to both alternatives,
viz, bonds or deposited cash.
Subsidiaries means corporations whose bonds, securities
or stocks shall constitute Additional Securities with
respect to which Residue Bonds shall have been certified.
(See Appendix 10 for a discussion of this definition, and
the exclusion of Diversified Holdings, Inc. (now
Constellation Holdings, Inc.), Resource and Property
Management, and BGE Home Products & Services, Inc. from this
definition. Also excluded is BNG, Inc. and Safe Harbor
Water Power Corporation.).
Trust Indenture Act means the Trust Indenture Act of
1990, as may be amended from time to time.
Trustee means Bankers Trust Company acting as trustee
hereunder or Trustees for the time being, whether original
or successor.
Voting Stock means any securities the holders of which
are by law entitled to any of the voting powers of stock
holders.
<PAGE>
Section XIV
Definitions
3. The recitals of fact contained herein and in the
Bonds (other than the certificates of authentication of the
Trustee on the Bonds), shall be taken as the statements of
BGE, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no
representations to the value of the mortgaged property or
any part thereof, or as to the title of BGE thereto, or as
to the value or validity of the security afforded thereby
and by the Indenture, or as to the value or validity of any
securities at any time held under the Indenture, or as to
the validity of this supplemental indenture or the Indenture
or of the Bonds issued thereunder, and the Trustee shall
incur no responsibility, except as otherwise provided in the
Indenture, in respect of such matters.
4. If and to the extent that any provision of this
supplemental indenture limits, qualifies, or conflicts with
another provision of the Indenture required to be included
therein by any of Sections 310 to 317, inclusive, of the
Trust Indenture Act of 1939, as amended, such required
provision shall control; provided, however, that nothing in
this supplemental indenture contained shall be so construed
as to relieve BGE or the Trustee of any duty or obligation
which it would otherwise have to any holder of any Bond
heretofore issued under the Indenture, or so construed as to
grant to the Trustee any rights as against any holder of
Bonds heretofore issued under the Indenture not granted
under said Indenture, and no provision in this supplemental
indenture contained shall impair any of the rights of any
holder of any Bond heretofore issued under the Indenture.
5. All the provisions of this supplemental indenture
shall become effective immediately. This supplemental
indenture and all the provisions hereof shall form a part of
the Indenture and all references or mention in the Indenture
to the Indenture or to any of the terms, provisions,
covenants, conditions, uses or trusts thereof or the
recitals or statements therein or to the recording, filing
or refiling thereof, shall be applicable to the terms,
provisions, covenants, conditions, uses and trusts of, and
the recitals and statements in, this supplemental indenture
and the Indenture as hereby amended and restated, and to the
recording, filing and refiling thereof, as fully and with
the same force and effect as if all the terms, provisions,
convenants, conditions, uses and trusts of, and all the
recitals and statements in, the Indenture were herein again
set forth at length and the entire Indenture as hereby
amended and restated were herein set forth at length as one
new instrument.
IN TESTIMONY WHEREOF, Baltimore Gas and Electric
Company has caused these presents to be signed in its
<PAGE>
Signatures
corporate name by its President or a Vice-President and its
corporate seal to be hereunto affixed, duly attested by its
Secretary or an Assistant Secretary; and the Bankers Trust
Company has also caused these presents to be signed in its
corporate name by its President or a Vice-President and its
corporate seal to be hereunto affixed, duly attested by its
Secretary or an Assistant Secretary; all as of the day and
year first above written.
ATTEST: BALTIMORE GAS AND ELECTRIC
COMPANY
______/S/ L.H. CHURCH__________ By:__/S/ C.W.SHIVERY____________________
Name: Charles W. Shivery
Title: Vice President
STATE OF MARYLAND, CITY/COUNTY OF BALTIMORE_, TO WIT:
I HEREBY CERTIFY that on this 20TH day of JUNE,
1995, before me, the subscriber, a Notary Public of the
State of Maryland in ________________ aforesaid, personally
appeared Charles W. Shivery of the Baltimore Gas and
Electric Company, and on behalf of the said corporation did
acknowledge the foregoing instrument to be the act and deed
of the Baltimore Gas and Electric Company.
IN TESTIMONY WHEREOF I have hereunto set my hand and
Notarial Seal on the day and year aforesaid.
MARIA LEIGH HOWSER
Notary Public
My Commission Expires: 2-1-96
[BANKERS TRUST COMPANY SIGNATURE ON NEXT PAGE]
<PAGE>
APPENDICES
Appendix 1 Executive Committee can authorize actual
sales of bonds with Board authorization.
Appendix 2 Company can be sole loss payee for
insurance claims of $100,000 or less.
Appendix 3 Enumerates types of property that can be
sold without compliance with provisions
of Article VIII.
Appendix 4 No Director authority needed to sell
real estate for $1 million or less.
Appendix 5 Property which can be sold without
Trustee's release.
Appendix 6 No deposit of proceeds of sale of
property for $100,000 or less required;
deposit required on contribution of real
estate to charity.
Appendix 7 Notice of sinking fund can be published
in Wall Street Journal.
Appendix 8 Documentation required for an exchange
of property.
Appendix 9 No bondholder list letter required
unless BGE maintains records.
Appendix 10 Companies excluded from definition of
Subsidiary.
<PAGE>
Appendices 1-10 available from BGE without charge by calling
Charles W. Shivery, Vice President - Finance & Accounting and
Chief Financial Officer, 410 234-5511, or writing Baltimore
Gas and Electric Company, 39 West Lexington Street,
Baltimore, Maryland 21203.
<PAGE>
EXHIBIT NO. 10
BALTIMORE GAS AND ELECTRIC COMPANY
EXECUTIVE BENEFITS PLAN
effective July 1, 1995
<PAGE>
TABLE OF CONTENTS
Page No.
1. Objective 1
2. Definitions 1
3. Plan Administration 3
4. Eligibility 3
5. Supplemental Pension Benefit 4
(a) Retirement benefits 4
(i) Eligibility for retirement benefits 4
(ii) Computation of retirement benefits 4
(iii)Form of payout of retirement benefits 5
(iv) Amount, timing, and source of monthly
retirement benefit payout 5
(v) Amount, timing, and source of lump sum
retirement benefit payout 6
(vi) Death of participant entitled to lump
sum payout 6
(vii)Health and dental benefits 7
(b) Accrued Benefit 7
(i) Computation of gross accrued benefit 7
(ii) Computation of net accrued benefit 7
(c) Entitlement to benefit upon happening of
certain events 8
(i) Satisfaction of requirements 8
(ii) Other events 8
(1) Change in control 8
(2) Plan amendment 9
(3) Involuntary Demotion, Termination
From Employment With BGE, or
eligibility withdrawal without
Cause 10
(iii)Form of Benefit payout 10
(iv) Amount, timing and source of benefit
payout 10
(v) Death of participant entitled to lump
sum payout 11
6. Supplemental Long-Term Disability Benefit 12
(i) Eligibility for disability benefits 12
(ii) Computation of disability benefits 12
(iii)Form of payment of disability benefits 12
(iv) Amount, timing, and source of monthly
disability benefit payout 13
(v) Bonus 13
<PAGE>
7. Supplemental Survivor Annuity Benefit 13
(i) Eligibility for survivor annuity benefit 13
(ii) Computation of survivor annuity benefit 14
(iii)Form of payout of survivor annuity benefits 15
(iv) Amount, timing, and source of monthly
survivor annuity benefit payout 15
8. Death Benefit 15
9. Dependent Death Benefit 16
10. Sickness Benefit 16
11. Vacation Benefit 16
12. Planning Benefit 16
13. Miscellaneous 17
<PAGE>
BALTIMORE GAS AND ELECTRIC COMPANY
EXECUTIVE BENEFITS PLAN
1. Objective. The objective of this Plan is to enhance the
benefits provided to officers and key employees of BGE and
its subsidiaries in order to attract and retain talented
executive personnel.
2. Definitions. All words beginning with an initial capital
letter and not otherwise defined herein shall have the
meaning set forth in the Pension Plan. All singular terms
defined in this Plan will include the plural and vice versa.
As used herein, the following terms will have the meaning
specified below:
"Annual Base Salary" means an amount determined by adding
the monthly base rate of pay amounts (i.e., the types of
such pay that are includable in the computation of Pension
Plan benefits)earned over the twelve calendar months
immediately preceding the month that includes the date of
the computation.
"Average Incentive Award" (or "Average Award") means
generally the product of the percentage equal to an average
of the two highest of the participant's five immediately
prior year award percentages earned under BGE's Executive
Annual Incentive Plan, BGE's Manager Annual Incentive Plan
and/or the Results Incentive Awards Program multiplied by
the participant's annualized base rate of pay amount (i.e.,
the types of such pay that are includable in the computation
of Pension Plan benefits) in effect at the end of the prior
year, and is calculated in accordance with procedures
attached hereto.
"BGE" means Baltimore Gas and Electric Company, a Maryland
corporation, or its successor.
"BGE's Executive Annual Incentive Plan" means such plan or
other incentive plan or arrangement designated in writing by
the Plan Administrator.
"BGE's Manager Annual Incentive Plan" means such plan or
other incentive plan or arrangement designated in writing by
the Plan Administrator.
<PAGE>
"Cause" means the participant's (a) failure to comply with
BGE policy, (b) deliberate and continual refusal to
satisfactorily perform employment duties on substantially a
full-time basis, (c) deliberate and continual refusal to act
in accordance with any specific instructions of a majority
of BGE's Board of Directors, (d) disclosure, without the
consent of a majority of BGE's Board of Directors, of
confidential information or trade secrets concerning BGE
which could be materially damaging to BGE, or (e) deliberate
misconduct which could be materially damaging to BGE without
reasonable good faith belief by the participant that such
conduct was in the best interest of BGE.
"Committee" means the Committee on Management of the Board
of Directors of BGE.
"Demotion" means a transfer to a position with BGE or a
subsidiary of BGE that either (a) is below the substantially
equivalent position in which the participant was employed on
the date of transfer, or (b) results in a substantial
reduction in pay when compared to the participant's pay on
the date of the transfer. Whether a position is a
substantially equivalent position shall be determined in the
reasonable discretion of the Committee, with reference to
factors including whether the participant retains principal
responsibility for a department or division, and whether the
participant remains eligible for the perquisites enjoyed by
the participant before the position change.
"Income Replacement Percentage" means the percentage under
the LTD Plan that is used to calculate the participant's
actual LTD Plan benefit.
"Interest Rate" means the rate equal to 3.5% plus 65% of
yield on the Lehman Brothers Government/Corporate Bond
Index.
"LTD Plan" means the Baltimore Gas and Electric Company
Disability Insurance Plan as may be amended from time to
time, or any successor plan.
"Mortality Table" means the mortality table used to value
liabilities for Pension Plan funding purposes.
"Pension Plan" means the Pension Plan of Baltimore Gas and
Electric Company as may be amended from time to time.
<PAGE>
"Plan Administrator" means, as set forth in Section 3, the
Committee.
"Rabbi Trust" means the trust established by BGE pursuant to
the Grantor Trust Agreement Dated as of July 31, 1994,
between BGE and Citibank, N.A.
"Results Incentive Awards Program" means the program
applicable to BGE employees that provides awards; but
includes only the types of awards that are includable in the
computation of Pension Plan benefits.
"Termination From Employment With BGE" means a participant's
separation from service with BGE or a subsidiary of BGE;
however, a participant's retirement, disability, or transfer
of employment to a subsidiary of BGE shall not constitute a
Termination From Employment With BGE.
3. Plan Administration. The Committee is the Plan
Administrator and has sole authority (except as specified
otherwise herein) to interpret the Plan and, in general, to
make all other determinations advisable for the
administration of the Plan to achieve its stated objective.
Appeals of written decisions by the Plan Administrator may
be made to the Board of Directors of BGE. Decisions by the
Board shall be final and not subject to further appeal. The
Plan Administrator shall have the power to delegate all or
any part of its duties to one or more designees, and to
withdraw such authority, by written designation.
4. Eligibility. Each officer or key employee of BGE or its
subsidiaries may be designated in writing by the Plan
Administrator as a participant with respect to one or more
benefits under the Plan. Once designated, participation
shall continue until such designation is withdrawn at the
discretion and by written order of the Plan Administrator,
provided, however, that such withdrawal may not be made for
benefits provided pursuant to Sections 5 and 7 with respect
to a participant who has satisfied the eligibility
requirements to retire (as set forth in Section 5(a)(i)).
Notwithstanding the foregoing, any participant who is
disabled under the LTD Plan shall continue to participate in
this Plan while classified as disabled and, for purposes of
the supplemental pension benefit provided by this Plan,
while classified as disabled, shall be deemed to continue to
accrue Credited Service until no later than his/her Normal
Retirement Date.
<PAGE>
5. Supplemental Pension Benefit.
(a) Retirement benefits.
(i) Eligibility for retirement benefits. A participant
shall be eligible to retire under this Plan on or
after the participant's Normal Retirement Date, or
on the first day of any month preceding his/her
Normal Retirement Date, if the participant has
attained (1) age 55 and has accumulated at least
20 years of Credited Service; or (2) age 60 and
has accumulated at least one year of Credited
Service.
(ii) Computation of retirement benefits. A participant
who is eligible to retire under this Plan will be
entitled to supplemental pension retirement
benefits under this Plan, which will be calculated
as set forth below on the participant's Retirement
Date:
(1) add the Annual Base Salary and the Average
Incentive Award,
(2) divide the sum by 12,
(3) multiply this dollar amount by the
appropriate percentage, determined as
follows: Chairman of the Board and President
of BGE, and President of Constellation
Holdings, Inc. - 60%; all other participants
(by completed years of Credited Service) 1
through 9 - 3% per year; 10 through 19 - 40%;
20 through 24 - 45%; 25 through 29 - 50%; and
30 or more - 55%,
(4) multiply this dollar amount by the Early
Retirement Adjustment Factor set forth under
the Pension Plan; provided, however, if the
participant is age 62 or older and is an
officer or key employee of BGE or its
subsidiaries, other than the Chairman of the
Board or the President of BGE or the
President of Constellation Holdings, Inc.,
such factor shall be one (1),
(5) subtract from this dollar amount the charges
relating to coverage for a preretirement
<PAGE>
survivor annuity in excess of 50%, and for a
post-retirement survivor annuity in excess of
50%, and
(6) subtract from the remainder the net amount
payable to the participant under the Pension
Plan.
(iii)Form of payout of retirement benefits. Each
participant entitled to supplemental pension
retirement benefits will receive his/her
supplemental pension retirement benefits payout in
the form of a monthly payment, unless the
participant makes a valid election to receive
his/her supplemental pension retirement benefits
payout in the form of a lump sum.
A participant may elect to receive his/her
supplemental pension retirement benefits payout in
the form of a lump sum by submitting to the Plan
Administrator a signed Lump Sum Election Form.
The Form must be received by the Plan
Administrator before the beginning of the calendar
year during which the participant's Retirement
Date occurs. The election may be revoked at any
time before the beginning of the calendar year
during which the participant's Retirement Date
occurs, by submitting to the Plan Administrator a
signed Lump Sum Revocation Form.
(iv) Amount, timing, and source of monthly retirement
benefit payout. A participant entitled to monthly
supplemental pension retirement benefits will
receive monthly payments equal to the amount
determined under paragraph (a)(ii). Such payments
shall commence effective with the participant's
Retirement Date. If such participant receives (or
would have received but for the Internal Revenue
Code limitations) cost of living adjustment(s)
under the Pension Plan, the monthly payments
hereunder will be automatically increased based on
the percentage of, and at the same time as, such
adjustment(s). Monthly payments hereunder shall
permanently cease upon the death of the
participant, effective with the monthly payment
for the month following the month of the
participant's death. Monthly payments hereunder
shall be made in accordance with the provisions of
<PAGE>
the Rabbi Trust and, to the extent not paid under
the terms of the Rabbi Trust, from general
corporate assets.
(v) Amount, timing, and source of lump sum retirement
benefit payout. A participant entitled to a lump
sum supplemental pension retirement benefit will
receive a lump sum payment. This lump sum payment
will be calculated by a certified actuary and will
be equal to the present value of an immediate
annuity including the estimated present value of
post-retirement supplemental survivor annuity
benefits described in Section 7, using (1) the
supplemental pension retirement benefit amount
calculated under paragraph (a)(ii), which is
expressed as a monthly amount, (2) the Interest
Rate computed on the participant's Retirement
Date, and (3) the Mortality Table. Such lump sum
payment shall be made within 60 days after the
participant's Retirement Date. The lump sum
payment shall be made in accordance with the
provisions of the Rabbi Trust and, to the extent
not paid under the terms of the Rabbi Trust, from
general corporate assets. A participant who
receives a lump sum payment shall not be entitled
to any cost of living adjustments or to post-
retirement survivor annuity coverage under the
Plan.
(vi) Death of participant entitled to lump sum payout.
In the event of the death of a participant after
his/her Retirement Date and before the participant
receives the lump sum payment under paragraph
(a)(v), such lump sum payment shall be made to the
participant's surviving spouse (as defined in
Section 7(i)). The lump sum payment shall be the
same amount and made at the same and from the same
sources as set forth in paragraph (a)(v). If
there is no surviving spouse at the date of the
participant's death, no payments shall be made
pursuant to Sections 5 or 7. A surviving spouse
who receives a lump sum benefit under this
paragraph (a)(vi) shall not be entitled to any
cost of living adjustments or to post-retirement
survivor annuity coverage.
(vii) Health and dental benefits. A participant who
receives supplemental pension retirement benefits
<PAGE>
under this Plan, but who is not eligible for
benefits under the BGE Retiree Flexible Benefits
Program, is entitled to health and dental benefits
under this Plan that in the sole discretion of the
Plan Administrator, are reasonably similar to
health and dental benefits provided for
participants under the BGE Retiree Flexible
Benefits Program, taking into account age and
service.
(b) Accrued Benefit.
(i) Computation of gross accrued benefit. The
computation of the gross accrued supplemental
pension benefit for a participant as of the date
of the computation will be made as follows:
(1) add the Annual Base Salary and the Average
Incentive Award,
(2) divide the sum by 12, and
(3) multiply this dollar amount by the
appropriate percentage, determined as
follows: Chairman of the Board and President
of BGE and President of Constellation
Holdings, Inc. - 60%; all other participants
(by completed years of Credited Service as of
the date of the computation) 1 through 9 - 3%
per year; 10 through 19 - 40%; 20 through 24
- - 45%; 25 through 29 - 50%; and 30 or more -
55%.
(ii) Computation of net accrued benefit. The
computation of the net accrued supplemental
pension benefit for a participant as of the date
of the computation will be made by subtracting
from the gross accrued benefit determined under
paragraph (b)(i) the amount, computed on the date
a benefit is payable under paragraph (c)(iii), of
(1) the participant's Accrued Gross Pension under
the Pension Plan, expressed as a monthly amount if
the participant is not eligible for Normal
Retirement, Early Retirement or Disability
Retirement benefits under the Pension Plan,
otherwise (2) the gross amount payable to the
participant under the Pension Plan.
<PAGE>
(c) Entitlement to benefit upon happening of certain
events.
(i) Satisfaction of requirements. A participant who
has satisfied the age and Credited Service
requirements set forth in Section 5(a)(i) while
eligible as set forth in Section 4, but who does
not retire under the Plan due to Demotion,
Termination From Employment With BGE, or the
withdrawal of a participant's eligibility to
participate under Section 5, shall be entitled to
his/her net accrued supplemental pension benefit.
The effective date of the Demotion, Termination
From Employment With BGE, or eligibility
withdrawal event shall be the date of such
Demotion, Termination From Employment With BGE, or
eligibility withdrawal.
(ii) Other events. A participant, regardless of
his/her age and years of Credited Service, shall
be entitled to his/her net accrued supplemental
pension benefit upon the happening of any of the
following entitlement events, but only if such
entitlement event occurs before a participant
retires under this Plan:
(1) Change in control. A change in control,
followed within two years by the
participant's Demotion, a participant's
Termination From Employment With BGE,
or the withdrawal of the participant's
eligibility to participate under the Plan, is
an entitlement event. The effective date of
the entitlement event shall be the date of
the Demotion, Termination From Employment
With BGE, or eligibility withdrawal.
A change in control for purposes of this
paragraph (c)(i)(1) shall mean (w) the
purchase or acquisition by any person, entity
or group of persons, (within the meaning of
section 13(d) or 14(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), or
any comparable successor provisions), of
beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange
Act) of 20 percent or more of either the
<PAGE>
outstanding shares of common stock of BGE or
the combined voting power of BGE's then
outstanding shares of voting securities
entitled to a vote generally, or (x) the
approval by the stockholders of BGE of a
reorganization, merger, or consolidation, in
each case, with respect to which persons who
were stockholders of BGE immediately prior to
such reorganization, merger or consolidation
do not, immediately thereafter, own more than
50 percent of the combined voting power
entitled to vote generally in the election of
directors of the reorganized, merged or
consolidated entity's then outstanding
securities, or (y) a liquidation or
dissolution of BGE or the sale of
substantially all of its assets, or (z) a
change of more than one-half of the members
of the Board of Directors of BGE within a 90-
day period for reasons other than the death,
disability, or retirement of such members.
(2) Plan amendment. A Plan amendment that has
the effect of reducing a participant's gross
accrued supplemental pension benefit is an
entitlement event. In determining whether
such a reduction has occurred, the
participant's gross accrued supplemental
pension benefit calculated on the day
immediately preceding the effective date of
the amendment shall be compared to the
participant's gross accrued supplemental
pension benefit calculated on the effective
date of the amendment. An amendment that has
the effect of reducing future benefit
accruals is not an entitlement event. It is
intended that an entitlement event under this
paragraph (c)(i)(2) will occur only with
respect to those amendments that are
substantially similar to amendments that are
prohibited by Internal Revenue Code section
411(d)(6) with respect to qualified pension
plans. The effective date of the entitlement
event shall be the effective date of the Plan
amendment.
(3) Involuntary Demotion, Termination From
Employment With BGE, or eligibility
<PAGE>
withdrawal without Cause. A participant's
involuntary Demotion or involuntary
Termination From Employment With BGE without
Cause, or the withdrawal of a participant's
eligibility to participate under Sections 5
or 7 of the Plan without Cause, is an
entitlement event. The effective date of the
entitlement event shall be the effective date
of the participant's involuntary Demotion or
involuntary Termination From Employment With
BGE without Cause, or the eligibility
withdrawal without Cause.
(iii) Form of benefit payout. Each participant entitled
to a payout under this paragraph (c) will receive
such payout in the form of a lump sum payment.
(iv) Amount, timing, and source of benefit payout. A
participant entitled to a payout of his/her net
accrued benefit, as a result of the occurrence of
an event described in paragraphs (c)(i),
(c)(ii)(1), (2), or (3) will be entitled to a lump
sum benefit. This lump sum benefit will be
calculated by a certified actuary as the present
value of an annuity beginning at age 62 (unless
the participant is the Chairman of the Board or
President of BGE, or the President of
Constellation Holdings, Inc. in which case age 65)
(or the participant's actual age, if the
participant is older than age 62 (unless the
participant is the Chairman of the Board or
President of BGE, or the President of
Constellation Holdings, Inc. in which case age 65)
on the date the lump sum benefit is payable),
including the estimated present value of post-
retirement survivor annuity benefits described in
Section 7, using (1) the net accrued benefit
amount calculated under paragraph (b)(ii) on the
effective date of the event, which is expressed as
a monthly amount, (2) the Early Retirement
Adjustment Factor computed by substituting the
date the lump sum benefit is payable for the
Retirement Date, (3) the Interest Rate computed on
the date the lump sum benefit is payable, and (4)
the Mortality Table. The lump sum benefit shall
be payable on the date that is the later of the
date of the participant's Termination From
Employment With BGE or the date the participant
<PAGE>
reaches age 55. The lump sum payment shall be
made within 60 days after such date and shall be
made in accordance with the provisions of the
Rabbi Trust and, to the extent not paid under the
terms of the Rabbi Trust, from general corporate
assets. A participant who receives a lump sum
benefit under this paragraph (c)(iv) shall not be
entitled to any cost of living adjustments or to
preretirement or post-retirement survivor annuity
coverage.
(v) Death of participant entitled to lump sum payout.
In the event of the death of a participant after
the occurrence of an event described in paragraphs
(c)(i), (c)(ii)(1), (2), or (3) and before the
participant receives the lump sum payment under
paragraph (c)(iv), such lump sum payment shall be
made to the participant's surviving spouse (as
defined in Section 7(i)). The lump sum payment
will be calculated by a certified actuary and will
be equal to 50% of the present value of an
immediate annuity using (1) the monthly amount
under paragraph (c)(iv), (2) the Early Retirement
Adjustment Factor computed using the participant's
age at the date of the participant's death, or if
the participant was younger than age 60 on the
date of death, using age 60, (3) the Interest Rate
computed on the date the lump sum benefit is
payable, and (4) the Mortality Table. However, if
the participant's death occurred during the 60 day
period described in paragraph (c)(iv), 100% shall
be used instead of 50% in the preceding sentence.
The lump sum benefit shall be payable on the date
that is the later of the date that the participant
would have reached age 55 or the date of the
participant's death. The lump sum payment shall
be made within 60 days after such date, and shall
be made in accordance with the provisions of the
Rabbi Trust and, to the extent not paid under the
terms of the Rabbi Trust, from general corporate
assets. If there is no surviving spouse at the
date of the participant's death, no payments shall
be made pursuant to Sections 5 or 7. A surviving
spouse who receives a lump sum benefit under this
paragraph (c) (v) shall not be entitled to any
cost of living adjustments or to preretirement or
post-retirement survivor annuity coverage.
<PAGE>
6. Supplemental Long-Term Disability Benefit.
(i) Eligibility for disability benefits. Any participant
who has completed at least one full calendar month of
service with BGE or its subsidiaries, who has elected
coverage under the LTD Plan, and who is disabled (as
determined under the LTD Plan) will be entitled to
supplemental disability benefits under this Plan.
(ii) Computation of disability benefits. The amount of such
supplemental disability benefits shall be determined as
follows:
(1) multiply the monthly base rate of pay amount in
effect immediately prior to becoming entitled to
benefits under the LTD Plan by twelve,
(2) add the Average Incentive Award to the product,
(3) add certain bonuses and incentives that are
included in the computation of Average Pay under
the Pension Plan (except that awards under the
Results Incentive Awards Program shall be
excluded), earned over the last 12 months to the
product,
(4) divide the sum by 12,
(5) multiply this monthly dollar amount by the Income
Replacement Percentage, and
(6) subtract from the product the gross monthly amount
provided for the participant under the LTD Plan
before such amount is reduced for other benefits
as set forth under the LTD Plan.
(iii)Form of payment of disability benefits. Each
participant entitled to supplemental disability
benefits will receive his/her supplemental disability
benefit payout in the form of a monthly payment.
(iv) Amount, timing, and source of monthly disability
benefit payout. A participant entitled to supplemental
disability benefits will receive a monthly payment
equal to the amount determined under (ii) above. Such
payments shall commence effective with the commencement
of the participant's LTD Plan benefit payments.
Monthly payments shall permanently cease when benefit
<PAGE>
payments under the LTD Plan cease. Monthly payments
shall be made from BGE's general corporate assets.
If a participant receiving payments pursuant to this
Section 6 receives cost of living adjustment(s) under
the LTD Plan, the payments hereunder will be
automatically increased based on the same percentage
of, and at the same time as, such adjustment(s).
(v) Bonus. Any participant who has less than ten years of
Credited Service shall be entitled to a monthly taxable
cash bonus, equal to an amount based on the cost of LTD
Plan coverage, using the formula for computing BGE-
provided Flexible Benefits Plan credits for LTD Plan
coverage and taking into account the Participant's
Credited Service and covered compensation. Such cash
bonus shall be made from BGE's general corporate
assets.
7. Supplemental Survivor Annuity Benefit.
(i) Eligibility for survivor annuity benefit. Following
the death of a participant, a supplemental survivor
annuity may be paid to the participant's surviving
spouse until the death of that spouse, using the same
percentage to compute such supplemental benefit that is
actually used to compute any survivor annuity provided
on behalf of the participant under the Pension Plan.
The participant will not bear the cost of up to a 50%
survivor annuity benefit, but will bear the cost of a
survivor annuity benefit in excess of 50%. For
purposes of this Section 7, a participant's surviving
spouse is the individual married to the participant on
the date of the participant's death. If there is no
surviving spouse, or if the participant or the
participant's spouse previously received or is entitled
to receive a lump sum payment under Section 5, no
supplemental survivor annuity will be payable.
(ii) Computation of survivor annuity benefit. The amount of
the supplemental survivor annuity will be determined as
follows:
(1) if the participant had retired prior to the date
of death:
<PAGE>
(a) begin with the monthly pension benefit (under
Section 5 of this Plan) that the participant
was receiving prior to the date of death, and
(b) multiply this dollar amount by the percentage
used to compute the survivor annuity provided
on behalf of the participant under the
Pension Plan.
(2) otherwise:
(a) begin with the larger of the Early Retirement
pension benefit (under both the Pension Plan
and Section 5 of this Plan) to which the
participant would have been entitled to
receive if the:
(A) participant had been retired at age 60
on the date of death for purposes of
computing the Early Retirement
Adjustment Factor, or
(B) participant had retired on the date of
death for purposes of computing the
Early Retirement Adjustment Factor,
(b) multiply this dollar amount by the percentage
used to compute the survivor annuity provided
on behalf of the participant under the
Pension Plan,
(c) subtract from the product the net amount, if
any, of the survivor annuity provided on
behalf of the participant under the Pension
Plan, and
(d) subtract from this dollar amount the charges
relating to coverage (under both the Pension
Plan and this Plan) for a preretirement
survivor annuity in excess of 50%, and for a
post-retirement survivor annuity in excess of
50%.
(iii)Form of payout of survivor annuity benefits. Each
surviving spouse entitled to a supplemental survivor
annuity benefit will receive his/her survivor annuity
benefit payout in the form of a monthly payment.
<PAGE>
(iv) Amount, timing, and source of monthly survivor annuity
benefit payout. A surviving spouse entitled to monthly
supplemental survivor annuity benefits will receive a
monthly payment equal to the amount determined under
(ii) above. Such payments shall commence effective
with the first day of the month following the month of
the participant's death. If such surviving spouse
receives (or would have received but for the Internal
Revenue Code limitations) cost of living adjustment(s)
under the Pension Plan, the monthly payments hereunder
will be automatically increased based on the percentage
of, and at the same time as, such adjustment(s).
Monthly payments shall permanently cease upon the death
of the surviving spouse, effective with the monthly
payment for the month following the month of the
surviving spouse's death. Monthly payments shall be
made in accordance with the provisions of the Rabbi
Trust and, to the extent not paid under the terms of
the Rabbi Trust, from general corporate assets.
8. Death Benefit. BGE shall make arrangements, through its
split-dollar life insurance program or otherwise, for life
insurance coverage for each participant providing that the
participant's beneficiary shall receive, as a pre-rollout
death benefit, an amount which is approximately equal to
three times the participant's compensation, and as a post-
rollout benefit, an amount which is approximately equal to
two times the participant's compensation, as set forth in a
separate agreement between BGE and the participant.
As determined in the sole discretion of the Plan
Administrator, in the event that either (i) a participant is
ineligible to receive the type of life insurance coverage
provided to other participants under this Plan, or (ii) such
coverage is not available on reasonably cost-effective terms
as a result of any penalty for smoking or other factors that
are reflected in the insurance carrier's rates, then BGE
shall provide a benefit that, in the discretion of the Plan
Administrator, is substantially equivalent to the cost of
the benefit provided to other participants under this Plan.
9. Dependent Death Benefit. In the event of the death of a
participant's qualified dependent while the participant is
an active employee of BGE, BGE shall make a death benefit
payment to the participant, from general corporate assets.
For purposes of this Section 9, qualified dependent shall
have the same meaning as set forth in BGE's Family Life
Insurance Plan. For purposes of this Section 9, the amount
<PAGE>
of the death benefit payment shall be the highest amount of
insurance that would have been payable with respect to such
qualified dependent if coverage had been provided under
BGE's Family Life Insurance Plan. The dependent death
benefit payment under this Plan shall be grossed-up for
income tax withholding.
10. Sickness Benefit. Each participant, without regard to
length of service, shall be entitled to the greater of the
benefits stipulated under the BGE sick benefit policy for
employees or twenty-six (26) weeks of paid sick benefits
within a rolling 52-week period.
11. Vacation Benefit. Each participant, without regard to
length of service, shall be entitled to the greater of the
benefits stipulated under the BGE vacation benefit policy
for employees or five weeks of paid vacation during a
calendar year.
12. Planning Benefit. Each participant shall be entitled to
certain personal financial, tax, and estate planning
services paid for by BGE but provided through designated
professional firms. This entitlement shall be subject to
any dollar limitation established by the Plan Administrator
with respect to all such fees. The services shall be
provided to each participant by the chosen firm(s) on a
personalized and confidential basis; and each firm shall
have sole responsibility for quality of the services which
it may render.
The services to be provided shall be on an on-going and
continuous basis, but shall be limited to (i) the
development and legal documentation of both career-oriented
financial plans and personal estate plans, and (ii) tax
counseling regarding personal tax-return preparation and the
most advantageous structuring, tax-wise, of proposed
personal transactions.
Such planning benefit shall continue during the year of
retirement plus the next two calendar years and include the
completion of the federal and state personal tax returns for
the second calendar year following retirement. However, if
a retired member of senior management continues to serve as
a member of the Board of Directors of BGE, his/her planning
benefit period shall be extended until he/she no longer
serves as a member of the Board of Directors.
<PAGE>
Upon the death of a participant entitled to the planning
benefit provided hereunder, his/her surviving spouse shall
be entitled to receive the following planning benefit: (i)
if the deceased was not retired at the time of death, the
surviving spouse shall be entitled to the planning benefit
for the year in which the death occurred plus the next two
calendar years, including completion of the federal and
state personal tax returns for the second calendar year
after the year in which the death occurred; or (ii) if the
deceased was retired at the time of death, then the
surviving spouse shall receive a planning benefit equal to
that the deceased would have received if he/she had not died
prior to expiration of the planning benefit. The surviving
spouse of a retired member of senior management whose death
occurs while serving as a member of the Board of Directors
of BGE, shall be entitled to a planning benefit as set forth
in (i) above.
The planning benefit provided under this Plan shall be
grossed-up for income tax withholding.
13. Miscellaneous. None of the benefits provided under this
Plan shall be subject to alienation or assignment by any
participant or beneficiary nor shall any of them be subject
to attachment or garnishment or other legal process except
(i) to the extent specially mandated and directed by
applicable State or Federal statute; (ii) as requested by
the participant or beneficiary to satisfy income tax
withholding or liability; and (iii) any policy of insurance
written by a commercial carrier on a split-dollar basis
shall be assignable.
This Plan may be amended from time to time, or suspended or
terminated at any time, provided, however, that no amendment
or termination shall reduce any previously accrued
supplemental pension benefit under this Plan or prejudice
the rights of any participant or beneficiary entitled to
receive payment hereunder at the time of such action. All
amendments to this Plan which would increase or decrease the
compensation of any Officer of BGE, either directly or
indirectly, must be approved by the Board of Directors. All
other permissible amendments may be made at the written
direction of the Committee.
Participation in this Plan shall not constitute a contract
of employment between BGE and any person and shall not be
deemed to be consideration for, or a condition of, continued
employment of any person.
<PAGE>
The Plan, notwithstanding the creation of the Rabbi Trust,
is intended to be unfunded for purposes of Title I of the
Employee Retirement Security Act of 1974. BGE shall make
contributions to the Rabbi Trust in accordance with the
terms of the Rabbi Trust. Any funds which may be invested
and any assets which may be held to provide benefits under
this Plan shall continue for all purposes to be a part of
the general funds and assets of BGE and no person other than
BGE shall by virtue of the provisions of this Plan have any
interest in such funds and assets. To the extent that any
person acquires a right to receive payments from BGE under
this Plan, such rights shall be no greater than the right of
any unsecured general creditor of BGE.
This Plan shall be governed in all respects by Maryland law.
<PAGE>
Executive Benefits Plan
Procedures
Computation of Average Incentive Award
Average Incentive Award is the product of the annualized prior
year, year end base rate of pay multiplied by the greater of the
following:
(i) a fraction, the numerator of which is expressed as a
percentage and is equal to the sum of the two highest
of the percentages of the applicable annualized year
end base rate of pay awarded to the participant under
BGE's Executive Annual Incentive Plan during the
participant's most recent five calendar years of
participation thereunder (or such shorter period, if
applicable, as set forth below), and the denominator of
which is 2 (reduced, if applicable, as set forth
below), or
(ii) a fraction, the numerator of which is expressed as a
percentage and is equal to the sum of the two highest
of the percentages of the applicable annualized base
rate of pay awarded to the participant under BGE's
Executive Annual Incentive Plan, BGE's Manager Annual
Incentive Plan, or the Results Incentive Awards Program
(collectively referred to as Incentive Plans) during
the participant's most recent five calendar years of
participation thereunder (or such shorter period, if
applicable, as set forth below), and the denominator of
which is 2 (reduced, if applicable, as set forth
below),
provided that
- - for purposes of (i) and (ii), the year that the
participant separates from service due to retirement,
disability, or other termination of employment with BGE
shall be completely disregarded, therefore, the
computation of the Average Award shall generally be
made, except as otherwise provided herein, by taking
into consideration the five years preceding the year of
such separation from service, and
- - for purposes of (i) and (ii), no consideration shall be
given, in the numerator and the denominator, to any
year (or for purposes of (ii), part of a year) for
which awards were not made under the applicable
Incentive Plans, and
- - for purposes of (i) and (ii), consideration shall be
given, in more than one the numerator and the
denominator, to any year (or for purposes of (ii), part
<PAGE>
of a year) for which awards were made to one or more
participants under the applicable Incentive Plans, even
though the participant did not receive an award, and
- - for purposes of (i), and for purposes of (ii) except as
provided below, no consideration shall be given, in the
numerator and in the denominator, to any year during
which the participant is deemed to have participated
under the applicable Incentive Plans for less than the
full year, notwithstanding the fact that the
participant may have received a reduced award based
upon participation for some portion of that year, and
- - for purposes of (ii), consideration shall be given to a
year during which a participant had participated in
more than one Incentive Plan, however, the numerator
with respect to such year shall equal the sum of the
actual percentage award under BGE's Executive Annual
Incentive Plan (expressed as a percentage of the
applicable annualized year end base rate of pay as an
officer or key employee) plus the actual percentage
award under BGE's Manager Annual Incentive Plan
(expressed as a percentage of annualized final base
rate of pay as a manager) plus the actual percentage
award under the Results Incentive Awards Program
(expressed as a percentage of annualized final base
rate of pay as a regular employee).
<PAGE>
EXHIBIT 12
<TABLE>
<CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED AND PREFERENCE DIVIDEND REQUIREMENTS
12 Months Ended
June December December December December December
1995 1994 1993 1992 1991 1990
(In Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Net Income $296,507 $323,617 $309,866 $264,347 $233,681 $175,446
Taxes on Income 143,669 156,702 140,833 105,994 88,041 22,818
Adjusted Net Income $440,176 $480,319 $450,699 $370,341 $321,722 $198,264
Fixed Charges:
Interest and Amortization of Debt Discount
and Expense and Premium on all Indebtedness $207,277 $204,205 $199,415 $200,848 $213,616 $194,656
Capitalized Interest 13,784 12,427 16,167 13,800 20,953 25,748
Interest Factor in Rentals 2,101 2,011 2,144 2,033 1,801 1,840
Total Fixed Charges $223,162 $218,643 $217,726 $216,681 $236,370 $222,244
Preferred and Preference
Dividend Requirements: (1)
Preferred and Preference Dividends $ 39,774 $ 39,922 $ 41,839 $ 42,247 $ 42,746 $ 40,261
Income Tax Required 19,042 19,075 18,763 16,729 15,916 5,166
Total Preferred and Preference
Dividend Requirements $ 58,816 $ 58,997 $ 60,602 $ 58,976 $ 58,662 $ 45,427
Total Fixed Charges and Preferred
and Preference Dividend Requirements $281,978 $277,640 $ 278,328 $ 275,657 $ 295,032 $ 267,671
Earnings (2) $649,554 $686,535 $ 652,258 $ 573,222 $537,139 $394,760
Ratio of Earnings to Fixed Charges 2.91 3.14 3.00 2.65 2.27 1.78
Ratio of Earnings to Combined Fixed
Charges and Preferred and Preference
Dividend Requirements 2.30 2.47 2.34 2.08 1.82 1.47
(1) Preferred and preference dividend requirements consist of an amount equal to the pre-tax earnings that
would be required to meet dividend requirements on preferred stock and preference stock.
(2) Earnings are deemed to consist of net income that includes earnings of BGE's consolidated subsidiaries,
equity in the net income of BGE's unconsolidated subsidiary, income taxes (including deferred income taxes
and investment tax credit adjustments), and fixed charges other than capitalized interest.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 5,454,600
<OTHER-PROPERTY-AND-INVEST> 1,195,244
<TOTAL-CURRENT-ASSETS> 648,155
<TOTAL-DEFERRED-CHARGES> 845,586
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 8,143,585
<COMMON> 1,425,460
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,300,899
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,712,638
278,000
209,185
<LONG-TERM-DEBT-NET> 2,542,030
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 113,500
<LONG-TERM-DEBT-CURRENT-PORT> 296,373
63,000
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,928,859
<TOT-CAPITALIZATION-AND-LIAB> 8,143,585
<GROSS-OPERATING-REVENUE> 1,360,306
<INCOME-TAX-EXPENSE> 56,253
<OTHER-OPERATING-EXPENSES> 1,091,164
<TOTAL-OPERATING-EXPENSES> 1,147,417
<OPERATING-INCOME-LOSS> 212,889
<OTHER-INCOME-NET> 6,478
<INCOME-BEFORE-INTEREST-EXPEN> 219,367
<TOTAL-INTEREST-EXPENSE> 97,624
<NET-INCOME> 121,743
19,904
<EARNINGS-AVAILABLE-FOR-COMM> 101,839
<COMMON-STOCK-DIVIDENDS> 112,120
<TOTAL-INTEREST-ON-BONDS> 110,310
<CASH-FLOW-OPERATIONS> 289,061
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
