Exhibit 1(a)
$200,000,000
BALTIMORE GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTES
SERIES E
FORM OF AGENCY AGREEMENT
___________, 1997
Lehman Brothers
Lehman Brothers Inc.
3 World Financial Center
12th Floor
New York, New York 10285-1200
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Dear Sirs:
1. Introduction. Baltimore Gas and Electric Company, a
Maryland corporation (the "Company"), confirms its agreement with
Lehman Brothers, Lehman Brothers Inc., and Goldman, Sachs & Co.
(individually, an "Agent" and collectively, the "Agents") with
respect to the issue and sale from time to time by the Company of
up to $200,000,000 aggregate principal amount of its Medium-Term
Notes, Series E registered under the registration statement
referred to in Section 2(a) (the "Notes"). The Notes will be
issued under an indenture, dated as of July 1, 1985, as
supplemented by the Supplemental Indentures dated as of October
1, 1987, and January 26, 1993, respectively (the "Indenture"),
between the Company and The Bank of New York (successor to
Mercantile-Safe Deposit and Trust Company) (the "Trustee").
The Notes shall have the maturity ranges (which shall be
from nine months to thirty years), annual interest rates,
redemption provisions and other terms set forth in the Prospectus
referred to in Section 2(a) as it may be supplemented from time
to time. The Notes will be issued, and the terms thereof
established, from time to time by the Company in accordance with
the Indenture, the Notes and the Procedures (as defined in
Section 3(d) hereof).
2. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, each Agent
as follows:
2
(a) A registration statement on Form S-3 (No. 333-_____),
covering $200 million principal amount of the Notes, including a
prospectus, has been filed with the Securities and Exchange
Commission ("Commission") and has become effective. Such
registration statement, including (i) the prospectus included
therein dated ______________ (such prospectus including each
document incorporated by reference therein, as may be amended or
supplemented from time to time, is hereinafter called the
"Prospectus") and (ii) all documents filed as part thereof or
incorporated by reference therein, as may be amended or
supplemented from time to time, are hereinafter called the
"Registration Statement." Any reference in this Agreement to
amending or supplementing the Prospectus shall be deemed to
include the filing of materials incorporated by reference in the
Prospectus after the Closing Date and any reference in this
Agreement to any amendment or supplement to the Prospectus shall
be deemed to include any such materials incorporated by reference
in the Prospectus after the Closing Date.
(b) The Registration Statement conforms in all respects to
the requirements of the Securities Act of 1933, as amended
("Act"), and the pertinent published rules and regulations of the
Commission thereunder ("33 Act Rules and Regulations") and the
Trust Indenture Act of 1939, as amended ("Trust Indenture Act"),
and does not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and on
the Closing Date, and at each of the times of (i) acceptance
referred to in Section 6(a) hereof, (ii) delivery referred to in
Section 6(e) hereof and (iii) amendment or supplement referred to
in Section 6(b) hereof (the Closing Date and each such time being
herein sometimes referred to as "Representation Date"), the
Registration Statement and the Prospectus will conform in all
respects to the requirements of the Act, the Trust Indenture Act
and the 33 Act Rules and Regulations and none of such documents
will contain an untrue statement of a material fact or will omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except
that the foregoing does not apply to statements or omissions in
such document based upon written information furnished to the
Company by any Agent specifically for use therein. The documents
incorporated by reference in the Registration Statement or the
Prospectus pursuant to Item 12 of Form S-3 of the Act, at the
time they were filed with the Commission, complied in all
material respects with the requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and the
pertinent published rules and regulations thereunder ("Exchange
Act Rules and Regulations"). Any additional documents deemed to
be incorporated by reference in the Prospectus will, when they
are filed with the Commission, comply in all material respects
with the requirements of the Exchange Act and the Exchange Act
Rules and Regulations and will not contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
3
light of the circumstances under which they were made, not
misleading.
3. Appointment as Agent; Solicitations as Agent.
(a) Subject to the terms and conditions stated herein, the
Company hereby appoints each of the Agents as an agent of the
Company for the purpose of soliciting or receiving offers to
purchase the Notes from the Company by others.
(b) On the basis of the representations and warranties
contained herein, but subject to the terms and conditions herein
set forth, each Agent agrees, as agent of the Company, to use all
reasonable efforts when requested by the Company to solicit
offers to purchase the Notes upon the terms and conditions set
forth in the Prospectus, as from time to time amended or
supplemented.
Upon receipt of notice from the Company as contemplated by
Section 4(b) hereof, each Agent shall suspend its solicitation of
purchases of Notes until such time as the Company shall have
furnished it with an amendment or supplement to the Registration
Statement or the Prospectus, as the case may be, contemplated by
Section 4(b) and shall have advised each Agent that such
solicitation may be resumed.
The Company reserves the right, in its sole discretion, to
suspend solicitation of offers to purchase the Notes commencing
at any time for any period of time or permanently. Upon receipt
of notice from the Company, the Agents will use their best
efforts promptly to suspend solicitation of offers to purchase
Notes from the Company, but in no event later than one business
day after notice, until such time as the Company has advised the
Agents that such solicitation may be resumed. For the purpose of
the foregoing sentence, "business day" shall mean any day which
is not a Saturday or a Sunday or a day on which banking
institutions in The City of New York and the City of Baltimore
are authorized or required by law or executive order to be
closed.
The Agents are authorized to solicit offers to purchase
Notes only in fully registered form, in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof, and at
a purchase price which, unless otherwise specified in a
supplement to the Prospectus, shall be equal to 100% of the
principal amount thereof. Each Agent shall communicate to the
Company, orally or in writing, each reasonable offer to purchase
Notes received by it as Agent. The Company shall have the sole
right to accept offers to purchase the Notes and may reject any
such offer, in whole or in part. Each Agent shall have the
right, in its discretion reasonably exercised, without notice to
the Company, to reject any offer to purchase Notes received by
it, in whole or in part, and any such rejection shall not be
deemed a breach of its agreement contained herein.
4
No Note which the Company has agreed to sell pursuant to
this Agreement shall be deemed to have been purchased and paid
for, or sold, by the Company until such Note shall have been
delivered to the purchaser thereof against payment by such
purchaser.
(c) At the time of delivery of, and payment for, any Notes
sold by the Company as a result of a solicitation made by, or
offer to purchase received by, an Agent, the Company agrees to
pay such Agent a commission in accordance with the schedule set
forth in Exhibit A hereto.
(d) Administrative procedures respecting the sale of Notes
(the "Procedures") shall be agreed upon from time to time by the
Agents and the Company. The initial Procedures, which are set
forth in Exhibit B hereto, shall remain in effect until changed
by agreement among the Company and the Agents. Each Agent and
the Company agree to perform the respective duties and
obligations specifically provided to be performed by each of them
herein and in the Procedures. The Company will furnish a copy of
the Procedures as from time to time in effect to
_________________ (the "Bank") which will act as the
authenticating agent for the Notes pursuant to the Authentication
Agency Agreement dated as of ____________, 1997 between the
Company and the Bank (the "Authentication Agency Agreement"), the
agent for payment, registration and notice with respect to the
Notes pursuant to the Agreement to Maintain Agency dated as of
_____________, 1997 between the Company and the Bank (the
"Agreement to Maintain Agency") and the agent for calculating
interest rates with respect to floating rate notes pursuant to
the Interest Calculation Agency Agreement dated as of
_____________, 1997 (the "Interest Calculation Agency
Agreement").
(e) The documents required to be delivered by Section 5
hereof shall be delivered at the offices of the Company, 39 W.
Lexington Street, Baltimore, Maryland, 21201, not later than 5:00
P.M., Baltimore time, on the date of this Agreement or at such
later time as may be mutually agreed by the Company and the
Agents, which in no event shall be later than the time at which
the Agents commence solicitation of purchases of Notes hereunder,
such time and date being herein called the "Closing Date."
4. Certain Agreements of the Company. The Company agrees
with the Agents that it will furnish to Cahill Gordon & Reindel,
counsel for the Agents, one signed copy of the Registration
Statement, including all exhibits and all documents incorporated
by reference, in the form it became effective and of all
amendments thereto and that, in connection with each offering of
Notes, it will take the following actions:
5
(a) From the time solicitation regarding sale of the Notes
is begun until all of the Notes have been sold (i) the Company
will advise each Agent promptly of any proposal to amend or
supplement the Registration Statement or the Prospectus by means
of a post-effective amendment, sticker, or supplement (except
post-effective amendments, supplements, and stickers relating
solely to interest rates or maturities of Notes) but not by means
of incorporation of document(s) by reference into the
Registration Statement or the Prospectus; (ii) the Company will
afford the Agents a reasonable opportunity to comment on any such
proposed post-effective amendment, sticker, or supplement; (iii)
the Company will advise each Agent of the filing of any such
post-effective amendment, sticker, or supplement; and (iv) the
Company will (x) advise each Agent of the institution by the
Commission of any stop order proceedings in respect of the
Registration Statement or of any part thereof, (y) use its best
efforts to prevent the issuance of any such stop order, and (z)
if a stop order is issued, to obtain its lifting as soon as
possible.
(b) If from the time solicitation regarding sale of the
Notes is begun until all of the Notes have been sold, the Company
shall determine that it is necessary to suspend solicitation of
the Notes because of the occurrence of an event that results in
the Prospectus either (x) including an untrue statement of a
material fact or omitting to state any material fact necessary to
make the statements in such Prospectus, in light of the
circumstances under which they were made when such Prospectus was
delivered, not misleading, or (y) failing to comply with the Act,
then the Company will promptly notify each Agent to suspend
solicitation of purchases of the Notes. Notwithstanding Section
4(a) if the Company shall determine to amend or supplement the
Registration Statement or Prospectus to correct such result, it
will advise each Agent promptly and afford the Agents a
reasonable opportunity to discuss and comment upon the nature of
the disclosure in such amendment or supplement. Notwithstanding
the foregoing, if at the time of any notification to suspend
solicitations (i) this Agreement shall be in effect and any Agent
shall own any of the Notes with the intention of reselling them,
or (ii) the Company has accepted an offer to purchase Notes but
the related settlement has not occurred, then the Company,
subject to the provisions of Section 4(a) of this Agreement, will
promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or
effect such compliance.
(c) The Company, during the period when a prospectus
relating to the Notes is required to be delivered under the Act,
will furnish to each Agent promptly after timely filing with the
Commission all documents required to be filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (except
those filings associated with employee benefit plans). The
Company will immediately notify each Agent of any downgrading in
the rating of the Notes or any other debt securities of the
6
Company, or any proposal to downgrade the rating of the Notes or
any other debt securities of the Company, by any "nationally
recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), as soon as the Company
learns of such downgrading or proposal to downgrade.
(d) The Company will furnish to each Agent copies of the
Registration Statement, including all exhibits except those
incorporated by reference, any related preliminary prospectus,
any related preliminary prospectus supplement, the Prospectus and
all amendments and supplements to such documents, in each case as
soon as available and in such quantities as are reasonably
requested.
(e) The Company will use its best efforts to obtain the
qualification of the Notes for sale and the determination of
their eligibility for investment under the laws of such
jurisdictions as the Agents designate and will continue such
qualifications in effect so long as required for the
distribution; provided, however, that the Company shall not be
required to qualify as a foreign corporation or to file any
consent to service of process under the laws of any jurisdiction
or to comply with any other requirements deemed by the Company to
be unduly burdensome.
(f) So long as any Notes are outstanding, the Company will
furnish to the Agents: (i) as soon as practicable after the end
of each fiscal year, a copy of its annual report to shareholders
for such year, (ii) as soon as available, a copy of each report
or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to shareholders, and
(iii) from time to time, such other information concerning the
Company as you may reasonably request.
(g) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, and will
reimburse each Agent for any expenses (including Blue Sky fees
and disbursements of counsel which will not in the aggregate
exceed $6,000) incurred by it in connection with qualification of
the Notes for sale and determination of their eligibility for
investment under the laws of such jurisdictions as such Agent may
designate and the printing of memoranda relating thereto, for any
filing fees charged by investment rating agencies for the rating
of the Notes, for any filing fee of the National Association of
Securities Dealers, Inc. relating to the Notes, and for the
reasonable fees and disbursements of counsel to the Agents.
(h) Not later than 45 days after the end of the 12-month
period beginning at the end of any fiscal quarter of the Company
in which the Closing Date or any other Representation Date
occurs, the Company will make generally available to its security
holders an earnings statement (which need not be audited)
covering such 12-month period which will satisfy the provisions
of Section 11(a) of the Act.
7
5. Conditions of Obligations of Agents. The obligation of
each Agent under this Agreement at any time to solicit offers to
purchase the Notes is subject to the accuracy of the
representations and warranties of the Company herein on the date
hereof, on each Representation Date and on the date of each such
solicitation, to the accuracy of the statements of the Company's
officers made pursuant to the provisions hereof on each such
date, to the performance by the Company of its obligations
hereunder on or prior to each such date, and to each of the
following additional conditions precedent:
(a) No stop order suspending the effectiveness of the
Registration Statement or of any part thereof shall have been
issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company or any Agent,
shall be contemplated by the Commission.
(b) Neither the Registration Statement nor the Prospectus,
as amended or supplemented as of any Representation Date or date
of such solicitation, as the case may be, shall contain any
untrue statement of fact which, in the opinion of any Agent, is
material or omits to state a fact which, in the opinion of such
Agent, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) There shall not have occurred (i) any suspension or
limitation of trading in securities generally on the New York
Stock Exchange other than a temporary suspension in trading to
provide for an orderly market, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-
counter market; (ii) any banking moratorium declared by Federal
or New York authorities; or (iii) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national
or international calamity or emergency if, in the reasonable
judgment of such Agents, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with solicitations of
purchases of, or sales of, Notes.
(d) At the Closing Date, the Agents shall have received an
opinion, dated the Closing Date, of the General Counsel or an
Associate General Counsel of the Company, to the effect that:
(i) The Company and Constellation Holdings, Inc. have
been duly incorporated and are validly existing as
corporations in good standing under the laws of the State
of Maryland, with power and authority (corporate and
other) to own their respective properties and conduct
their respective businesses as described in the
Prospectus; and the Company is duly qualified to do
business as a foreign corporation in good standing in the
8
Commonwealth of Pennsylvania and all other jurisdictions
in which the conduct of its business or the ownership of
its properties requires such qualification and the failure
to do so would have a material and adverse impact on its
financial condition;
(ii) The Indenture has been duly authorized, executed
and delivered by the Company, and is a valid instrument,
legally binding on the Company, enforceable in accordance
with its terms, except as limited by bankruptcy,
insolvency, or other laws affecting the enforcement of
creditors' rights and by general principles of equity;
(iii) The issuance and sale of Notes have been duly
authorized by all necessary corporate action of the
Company. The Notes (assuming that they have been duly
authenticated by the Trustee or a duly designated
Authentication Agent under the Indenture, which fact
counsel need not verify by an inspection of the Notes),
when issued in accordance with the provisions of this
Agreement and the Indenture, will be duly issued and
constitute legal, valid and binding obligations of the
Company enforceable in accordance with their terms and are
entitled to the benefits provided by the Indenture, except
as limited by bankruptcy, insolvency or other laws
affecting the enforcement of creditors' rights and by
general principles of equity;
(iv) The Registration Statement has become effective
under the Act and (a) to the best of such counsel's
knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act; (b) the
Registration Statement (as of its effective date) and the
Prospectus (as of the date of this Agreement) appeared to
comply as to form in all material respects with the
requirements of Form S-3 under the Act and the 33 Act
Rules and Regulations and the Trust Indenture Act; (c)
such counsel has no reason to believe that either the
Registration Statement as of its effective date or the
Prospectus as of the date of this Agreement contained any
untrue statement of a material fact or omitted to state
any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(d) the descriptions in the Registration Statement and
Prospectus of statutes, legal and governmental proceedings
and contracts and other documents are accurate and fairly
present the information required to be shown; and (e) such
counsel does not know of any legal or governmental
proceedings required to be described in the Prospectus
which are not described as required, nor of any contracts
or documents of a character required to be described in
the Registration Statement or Prospectus or to be filed as
9
exhibits to the Registration Statement which are not
described or filed as required; it being understood that
such counsel, in addressing the matters covered in this
paragraph (iv), need express no opinion as to the
financial statements or other financial and statistical
information contained in the Registration Statement or the
Prospectus or incorporated therein or attached as an
exhibit thereto or as to the Statement of Eligibility and
Qualification on Form T-1 of the Trustee under the
Indenture;
(v) The approval of the Public Service Commission of
Maryland necessary for the valid issuance by the Company
of Notes pursuant to this Agreement has been obtained and
continues in full force and effect. The Company has
received the approval of the Federal Energy Regulatory
Commission ("FERC") for the issuance of Notes on or before
December 31, 1998 with maturities of not more than 12
months after the date of issuance and the approval of FERC
will be required for the issuance of any Notes having such
maturities after December 31, 1998. Such counsel knows of
no other approval of any other regulatory authority which
is legally required for the valid offering, issuance, sale
and delivery of the Notes by the Company under this
Agreement (except that such opinion need not pass upon the
requirements of state securities acts);
(vi) To the best of such counsel's knowledge and
belief, the consummation of the transactions contemplated
in this Agreement and the compliance by the Company with
all the terms of the Indenture did not and will not result
in a breach of any of the terms or provisions of, or
constitute a default under, the Company's Charter or By-
Laws or any indenture, mortgage or deed of trust or other
agreement or instrument to which the Company is a party;
(vii) Each of this Agreement, the Authentication
Agency Agreement, the Agreement to Maintain Agency, the
Interest Calculation Agency Agreement and the Letter of
Representations has been duly authorized, executed and
delivered by the Company;
(viii) The Indenture is duly qualified under the Trust
Indenture Act;
(ix) The issuance, sale and delivery of the Notes as
contemplated by this Agreement are not subject to the
approval of the Commission under the provisions of the
Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"); and
(x) The Notes and Indenture conform as to legal
matters with the statements concerning them in the
Registration Statement and Prospectus under the caption
10
"DESCRIPTION OF NOTES" and on the cover page of the
Prospectus.
(e) At the Closing Date, the Agents shall have received a
certificate, dated the Closing Date, of the Chairman of the
Board, President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation and
relying upon opinions of counsel to the extent legal matters are
involved, shall state that (i) the representations and warranties
of the Company in this Agreement are true and correct in all
material respects, (ii) the Company has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date,
(iii) no stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and
no proceedings for that purpose have been instituted or are
contemplated by the Commission, and (iv) subsequent to the date
of the most recent financial statements set forth or incorporated
by reference in the Prospectus, there has been no material
adverse change in the financial position or in the financial
results of operations of the Company, except as set forth or
contemplated in the Prospectus or as described in such
certificate.
(f) At the Closing Date, the Agents shall have received a
letter, dated the Closing Date, of Coopers & Lybrand, confirming
that they are independent pubic accountants within the meaning of
the Act and the 33 Act Rules and Regulations, and stating in
effect that:
(i) In their opinion, the consolidated financial
statements and supporting schedules audited by them which
are included in the Company's Form 10-K ("Form 10-K"),
which is incorporated by reference in the Registration
Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the 33
Act Rules and Regulations and the Exchange Act and the
Exchange Act Rules and Regulations;
(ii) On the basis of procedures specified in such
letter (but not an audit in accordance with generally
accepted auditing standards), including reading the
minutes of meetings of the shareholders, the Board of
Directors and the Executive Committee of the Company since
the end of the year covered by the Form 10-K as set forth
in the minute books through a specified date not more than
five days prior to the Closing Date, performing the
procedures specified in Statement on Auditing Standards
No. 71, Interim Financial Information, on the unaudited
interim consolidated financial statements of the Company
incorporated by reference in the Registration Statement,
if any, and reading the latest available unaudited interim
consolidated financial statements of the Company, and
11
making inquiries of certain officials of the Company who
have responsibility for financial and accounting matters
as to whether the latest available financial statements
not incorporated by reference in the Registration
Statement are prepared on a basis substantially consistent
with that of the audited consolidated financial statements
incorporated in the Registration Statement, nothing has
come to their attention that has caused them to believe
that (1) any unaudited consolidated financial statements
incorporated by reference in the Registration Statement do
not comply in form in all material respects with the
applicable requirements of the Act and the 33 Act Rules
and Regulations and the Exchange Act and the Exchange Act
Rules and Regulations or any material modifications should
be made to those unaudited consolidated financial
statements for them to be in conformity with generally
accepted accounting principles; (2) at the date of the
latest available balance sheet not incorporated by
reference in the Registration Statement there was any
change in the capital stock, change in long-term debt or
decrease in consolidated net assets or common
shareholders' equity as compared with the amounts shown in
the latest balance sheet incorporated by reference in the
Registration Statement or for the period from the closing
date of the latest income statement incorporated by
reference in the Registration Statement to the closing
date of the latest available income statement read by them
there were any decreases, as compared with the
corresponding period of the previous year, in operating
revenues, operating income, net income, the ratio of
earnings to fixed charges (measured on the most recent
twelve month period), or in earnings per share of common
stock except in all instances of changes or decreases that
the Registration Statement discloses have occurred or may
occur, or which are described in such letter; or (3) at a
specified date not more than five days prior to the
Closing Date, there was any change in the capital stock or
long-term debt of the Company or, at such date, there was
any decrease in net assets of the Company as compared with
amounts shown in the latest balance sheet incorporated by
reference in the Registration Statement, or for the period
from the closing date of the latest income statement
incorporated by reference in the Registration Statement to
a specified date not more than five days prior to the
Closing Date, there were any decreases as compared with
the corresponding period of the previous year, in
operating revenues, operating income, net income or in
earnings applicable to common stock, except in all cases
for instances of changes or decreases that the
Registration Statement discloses have occurred or may
occur, or which are described in such letter; and
(iii) Certain specified procedures have been applied
to certain financial or other statistical information (to
12
the extent such information was obtained from the general
accounting records of the Company) set forth or
incorporated by reference in the Registration Statement
and that such procedures have not revealed any
disagreement between the financial and statistical
information so set forth or incorporated and the
underlying general accounting records of the Company,
except as described in such letter.
(g) The Agents shall have received from Cahill Gordon &
Reindel, counsel for the Agents, an opinion dated the Closing
Date, with respect to the matters referred to in paragraph 5(d)
subheadings (ii), (iii), (iv)b, (v), (vii), (viii) and (x) and
such other related matters as you may require and the Company
shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass on such matters.
In rendering such opinion, Cahill Gordon & Reindel may
rely, as to the incorporation of the Company, the approval of the
Public Service Commission of Maryland required for the issuance,
sale and delivery of the Notes, and all other matters governed
by the laws of the State of Maryland, the applicability of the
1935 Act and the approval of FERC for the issuance, sale and
delivery of the Notes upon the opinion of Counsel for the Company
referred to above.
In addition, such counsel shall state that such counsel
has participated in conferences with officers, counsel and other
representatives of the Company, representatives of the
independent certified public accountants for the Company and
representatives of the Agents at which the contents of the
Registration Statement and the Prospectus and related matters
were discussed; and, although such counsel is not passing upon
and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration
Statement and Prospectus (except as to the matters referred to in
their opinion rendered pursuant to subheading (x) above), on the
basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers, counsel and other
representatives of the Company), no facts have come to the
attention of such counsel which lead such counsel to believe that
either the Registration Statement (as of its effective date) or
the Prospectus (as of the date of this Agreement), contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
such statements therein not misleading (it being understood that
such counsel need make no comment with respect to the financial
statements and other financial and statistical information
included in the Registration Statement or Prospectus or
incorporated therein or as to the Statement of Eligibility and
Qualification on Form T-l of the Trustee under the Indenture).
(h) The approval of the Public Service Commission of
Maryland necessary for the valid issuance of Notes by the Company
13
pursuant to this Agreement has been obtained and continues in
full force and effect. The Company has received the approval of
FERC for the issuance of Notes on or before December 31, 1998
with maturities of not more than 12 months after the date of
issuance and the approval of FERC will be obtained before the
issuance of any Notes having such maturities after December 31,
1998.
The Company will furnish the Agents with such conformed
copies of such opinions, certificates, letters and documents as
the Agents reasonably request.
6. Additional Covenants of the Company. The Company agrees
that:
(a) Each acceptance by the Company of an offer for the
purchase of Notes shall be deemed to be an affirmation that its
representations and warranties contained in this Agreement are
true and correct at the time of such acceptance, it being
understood that such representations and warranties shall relate
to the Registration Statement and the Prospectus as amended or
supplemented at each such time. Each such acceptance by the
Company of an offer for the purchase of Notes shall be deemed to
constitute an additional representation, warranty and agreement
by the Company that, as of the settlement date for the sale of
such Notes, after giving effect to the issuance of such Notes and
of any other Notes to be issued on or prior to such settlement
date, the aggregate amount of Notes which have been issued and
sold by the Company will not exceed the amount of Notes
registered pursuant to the Registration Statement.
(b) From the time solicitation regarding the sale of the
Notes is begun until all of the Notes have been sold, each time
the Company (i) amends or supplements the Registration Statement
or the Prospectus (other than in reference solely to interest
rates or maturities of Notes) by means of a post-effective
amendment, sticker, or supplement but not by means of
incorporation of document(s) by reference into the Registration
Statement or the Prospectus; (ii) files an annual report on Form
10-K under the Exchange Act; (iii) files its quarterly reports on
Form 10-Q under the Exchange Act; and (iv) files a report on Form
8-K under the Exchange Act (the date of filing each of the
aforementioned documents is referred to as a "Representation
Date"); the Company shall furnish the Agents (but in the case of
(iv) above only if requested by the Agents) with a certificate of
the Chairman, President or any Vice President and a principal
financial or accounting officer of the Company, in form
satisfactory to the Agents, to the effect that on the
Representation Date, to the best of their knowledge after
reasonable investigation and relying upon opinions of counsel to
the extent legal matters are involved, (i) the representations
and warranties of the Company in this Agreement are true and
correct in all material respects; (ii) the Company has complied
with all agreements and satisfied all conditions on its part to
14
be performed or satisfied hereunder at or prior to the
Representation Date; (iii) no stop order suspending the
effectiveness of the Registration Statement or of any part
thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; and (iv)
subsequent to the date of the most recent financial statements
set forth or incorporated by reference in the Prospectus, there
has been no material adverse change in the financial position or
in the financial results of operations of the Company, except as
set forth in or contemplated by the Prospectus or as described in
such certificate.
(c) From the time solicitation regarding the sale of the
Notes is begun until all of the Notes have been sold, at each
Representation Date referred to in Section 6(b) (i) or (ii) and,
only if requested by the Agents, at each Representation Date
referred to in Section 6(b) (iii) or (iv), the Company shall
concurrently furnish the Agents with a written opinion or
opinions of counsel for the Company, dated the Representation
Date or the date of such filing, in form satisfactory to the
Agents, to the effect set forth in Section 5(d) hereof, but
modified, as necessary, to relate to the Registration Statement
and the Prospectus as then amended or supplemented; provided,
however, that in lieu of such opinion, counsel may furnish the
Agents with a letter to the effect that the Agents may rely on a
prior opinion delivered under Section 5(d) or this Section 6(c)
to the same extent as if it were dated the date of such letter
(except that statements in such prior opinion shall be deemed to
relate to the Registration Statement and the Prospectus as
amended or supplemented at such Representation Date).
(d) From the time solicitation regarding the sale of the
Notes is begun until all of the Notes have been sold, at each
Representation Date referred to in Section 6(b) (i) or (ii) and,
only if requested by the Agents, at each Representation Date
referred to in Section 6(b) (iii) or (iv), but in each case only
if such documents referred to in Section 6(b) include additional
financial information, the Company shall cause Coopers & Lybrand
concurrently to furnish the Agents with a letter, addressed
jointly to the Company and the Agents and dated the
Representation Date or the date of such filing, in form and
substance satisfactory to the Agents, to the effect set forth in
Section 5(f) hereof but modified to relate to the Registration
Statement and the Prospectus as amended or supplemented at such
Representation Date, with such changes as may be necessary to
reflect changes in the financial statements and other information
derived from the accounting records of the Company; provided,
however, that if the Registration Statement or the Prospectus is
amended or supplemented solely to include financial information
as of and for a fiscal quarter, Coopers & Lybrand may limit the
scope of such letter to the unaudited financial statements
included in such amendment or supplement unless there is
contained therein any other accounting, financial or statistical
information that, in the reasonable judgment of the Agents,
15
should be covered by such letter, in which event such letter
shall also cover such other information and procedures as shall
be agreed upon by the Agents.
(e) On each settlement date for the sale of Notes, the
Company shall, if requested by an Agent that solicited or
received the offer to purchase any Notes being delivered on such
settlement date, furnish such Agent with a written opinion of the
General Counsel or an Associate General Counsel of the Company,
dated the date of delivery thereof, in form satisfactory to such
Agent, to the effect set forth in clauses (i), (ii), (iii) and
(v) of Section 5(d) hereof, but modified, as necessary, to relate
to the Prospectus as amended or supplemented at such settlement
date and except that such opinion shall state that the Notes
being sold by the Company on such settlement date, when delivered
against payment therefor as provided in the Indenture and this
Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding
obligations of the Company enforceable in accordance with their
terms, subject only to the exceptions as to enforcement set forth
in clauses (ii) and (iii) of Section 5(d) hereof, and conform to
the description thereof contained in the Prospectus as amended or
supplemented at such settlement date.
(f) The Company agrees that any obligation of a person who
has agreed to purchase Notes to make payment for and take
delivery of such Notes shall be subject to (i) the accuracy, on
the related settlement date fixed pursuant to the Procedures, of
the Company's representations and warranties deemed to be made to
the Agents pursuant to Section 2 and the last sentence of
subsection (a) of this Section 6; (ii) the satisfaction, on such
settlement date, of each of the conditions set forth in Sections
5(a), (b), (c) and (h), it being understood that under no
circumstance shall any Agent have any duty or obligation to
exercise the judgment permitted under Section 5(b) or (c) on
behalf of any such person; (iii) the absence of any change or
development involving a prospective change, not contemplated by
the Prospectus, in or affecting particularly the business or
properties of the Company which materially impairs the investment
quality of the Notes; and (iv) no downgrading in the rating of
the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Act).
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each
Agent and each person if any, who controls either Agent within
the meaning of the Act or the Exchange Act against any losses,
claims, damages or liabilities, joint or several, to which such
Agent or such controlling person may become subject, under the
Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
16
based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement or the
Prospectus, or any related preliminary prospectus or arise out of
or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will
reimburse each Agent and each such controlling person for any
legal or other expenses reasonably incurred by such Agent or such
controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable to such Agent or
controlling person in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission made in any such documents in reliance upon and
in conformity with written information furnished to the Company
by such Agent or such controlling person specifically for use
therein unless such loss, claim, damage or liability arises out
of the offer or sale of Notes occurring after such Agent or
controlling person has notified the Company in writing that such
information should no longer be used therein. This indemnity
agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Agent will indemnify and hold harmless the
Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Act or the
Exchange Act, against any losses, claims, damages or liabilities
to which the Company or any such director, officer or controlling
person may become subject, under the Act, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement or the Prospectus, or any
related preliminary prospectus or arise out of or are based upon
the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information
furnished to the Company by such Agent specifically for use
therein; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that such Agent
will not be liable to the Company or any such director, officer
or controlling person in any such case to the extent that any
such loss, claim, damage or liability arises out of the offer or
sale of Notes occurring after such Agent has notified the Company
in writing that such information should no longer be used
17
therein. This indemnity agreement will be in addition to any
liability which such Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under (a) and (b) above,
notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is
brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who may, with the consent
of the indemnified party, be counsel to the indemnifying party)
and who shall not be counsel to any other indemnified party who
may have interests conflicting with those of such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation.
(d) If recovery is not available under the foregoing
indemnification provisions of this Section for any reason other
than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the extent
that contribution is not permitted under Section ll(f) of the
Act. In determining the amount of contribution to which the
respective parties are entitled, there shall be considered the
relative benefits received by each party from the offering of the
Notes (taking into account the portion of the proceeds of the
offering realized by each), the parties' relative knowledge and
access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent
any statement or omission, and any other equitable considerations
appropriate under the circumstances. The Company and the Agents
and such controlling persons agree that it would not be equitable
if the amount of such contribution were determined by pro rata or
per capita allocation (even if the Agents and such controlling
persons were treated as one entity for such purpose).
Notwithstanding the provisions of this subsection (d), no Agent
or controlling person shall be required to make contribution
hereunder which in the aggregate exceeds the total public
offering price of the Notes, distributed to the public through it
pursuant to this Agreement or upon resale of Notes purchased by
it from the Company, less the aggregate amount of any damages
which such Agent or such controlling person has otherwise been
18
required to pay in respect to the same claim or substantially
similar claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligations of each Agent
and each controlling person in this subsection (d) to contribute
are several, in the same proportion which the amount of the Notes
which are the subject of the action and which were distributed to
the public through such Agent or such controlling person pursuant
to this Agreement bears to the total amount of such Notes
distributed to the public through any other Agent or controlling
person pursuant to this Agreement, and not joint.
8. Status of Each Agent. In soliciting offers to purchase
the Notes from the Company pursuant to this Agreement and in
assuming its other obligations hereunder (other than offers to
purchase pursuant to Section 11), each Agent is acting
individually and not jointly and is acting solely as agent for
the Company and not as principal. Each Agent will use all
reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Notes from
the Company has been solicited by such Agent and accepted by the
Company, but such Agent shall have no liability to the Company in
the event any such purchase is not consummated for any reason.
If the Company shall default on its obligations to deliver Notes
to a purchaser whose offer it has accepted, the Company (i) shall
hold the Agents harmless against any loss, claim or damage
arising from or as a result of such default by the Company, and
(ii), in particular, shall pay to the Agents any commission to
which they would be entitled in connection with such sale.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties
and other statements of the Company or its officers and of the
Agents set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of
any Agent, the Company or any of their respective
representatives, officers or directors or any controlling person
and will survive delivery of and payment for the Notes. If this
Agreement is terminated pursuant to Section 10 or for any other
reason, the Company shall remain responsible for the expenses to
be paid or reimbursed by it pursuant to Section 4(g) and the
obligations of the Company under Sections 4(f) and (h) and the
respective obligations of the Company and the Agents pursuant to
Section 7 shall remain in effect. In addition, if any such
termination shall occur either (i) at a time when any Agent shall
own any of the Notes with the intention of reselling them or (ii)
after the Company has accepted an offer to purchase Notes and
prior to the related settlement, the obligations of the Company
under the last sentence of Section 4(b), under Sections 4(a),
4(c), 4(d), 4(e), 6(a), 6(e) and 6(f) and, in the case of a
termination occurring as described in (ii) above, under Section
19
3(c) and under the last sentence of Section 8, shall also remain
in effect.
10. Termination. This Agreement may be terminated for any
reason at any time by the Company as to any Agent or, in the case
of either Agent, by such Agent insofar as this Agreement relates
to such Agent, upon the giving of one day's written notice of
such termination to the other parties hereto. Any settlement
with respect to Notes placed by an Agent occurring after
termination of this Agreement shall be made in accordance with
the Procedures and each Agent agrees, if requested by the
Company, to take the steps therein provided to be taken by such
Agent in connection with such settlement.
11. Other Sales and Purchases of Notes. From time to time,
any Agent may agree with the Company to purchase all or a portion
of Notes from the Company as an underwriter (acting either alone
or in conjunction with one or more investment banking firms) for
resale to the public. In this event, such purchase shall be made
in accordance with the terms of a separate agreement to be
entered into between such Agent and the Company in substantially
the form attached hereto as Exhibit C.
Without the oral consent (confirmed in writing) of the
Company, neither Agent shall have the right to purchase all or a
portion of the Notes for its own account. In the event the
Company consents to such purchase, the purchase shall be made in
accordance with the terms of a separate agreement to be entered
into between such Agent and the Company in substantially the form
attached hereto as Exhibit D.
Nothing in this Agreement shall prohibit the sale of all
or a portion of Notes directly by the Company to any person or
entity without the involvement of either of the Agents or from
entering into similar agreements with other firms as agents.
The Company will not appoint another agent without
providing each Agent with at least one business day's notice.
12. Notices. Except as otherwise provided herein, all
notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices
to Lehman Brothers Inc. shall be mailed, delivered or telecopied
to it at 3 World Financial Center, 12th Floor, New York, New York
10285-1200, telecopier, (212) 528-1718, Attention: Medium-Term
Note Department; notices to Goldman, Sachs & Co. shall be mailed,
delivered or telecopied to it at 85 Broad Street, New York, New
York 10004, telecopier, (212) 902-3000, Attention: Registration
Department; and notices to the Company shall be mailed, delivered
or telecopied to it at 39 W. Lexington Street, Baltimore,
Maryland 21201, telecopier, (410) 234-5367, Attention: Treasurer,
8th Floor, Gas and Electric Building, or in the case of any party
hereto, to such other address or person as such party shall
20
specify to each other party by a notice given in accordance with
the provisions of this Section 12. Any such notice shall take
effect at the time of receipt.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, their respective
successors, the officers and directors and controlling persons
referred to in Section 7 and, to the extent provided in Section
6(f), any person who has agreed to purchase Notes from the
Company, and no other person will have any right or obligation
hereunder.
14. Governing Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York. This Agreement may be executed in
counterparts and the executed counterparts shall together
constitute a single instrument.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance hereof in the space provided for that
purpose below.
Very truly yours,
BALTIMORE GAS AND ELECTRIC COMPANY
By: ______________________________
CONFIRMED AND ACCEPTED, as of the
date first above written:
LEHMAN BROTHERS INC.
By: ___________________________
GOLDMAN, SACHS & CO.
______________________________
Goldman, Sachs & Co.
Exhibit A
to Agency Agreement
The Company agrees to pay either Agent a commission equal to
the following percentage of the principal amount of Notes sold to
purchasers solicited by such Agent:
Commission Rate
(as a percentage of
Term principal amount)
------ ------------------
9 months to less than 12 months .125
12 months to less than 18 months .15
18 months to less than 24 months .20
2 years to less than 3 years .25
3 years to less than 4 years .35
4 years to less than 5 years .45
5 years to less than 7 years .50
7 years to less than 10 years .55
10 years to less than 15 years .60
15 years to less than 20 years .65
20 years through 30 years .75
Exhibit B
to Agency Agreement
Exhibit B to the Agency Agreement will be added at the time the Agency
Agreement is signed and will consist of administrative procedures agreed on by
the Company and the Agents.
Exhibit C
To Agency Agreement
BALTIMORE GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTES, SERIES E
FORM OF PURCHASE AGREEMENT
INCLUDING
STANDARD PURCHASE PROVISIONS
BALTIMORE GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTES, SERIES E
PURCHASE AGREEMENT
________________________
(Date)
Baltimore Gas and Electric Company
39 W. Lexington Street
Baltimore, Maryland 21201
Dear Sirs:
Referring to the Medium-Term Notes, Series E of Baltimore Gas
and Electric Company (the "Company") covered by the registration
statement on Form S-3 (No. 333-_____), (such registration
statement, including (i) the prospectus included therein, dated
_________________, as supplemented by a prospectus supplement
dated ____________ in the form first filed under Rule 424(b)
(such prospectus as so supplemented, including each document
incorporated by reference therein is hereinafter called the
"Prospectus") and (ii) all documents filed as part thereof or
incorporated by reference therein, is hereinafter called the
"Registration Statement") on the basis of the representations,
warranties and agreements contained in this Agreement, but
subject to the terms and conditions herein set forth, the
purchaser or purchasers named in Schedule A hereto (the
"Purchasers") agree to purchase, severally, and the Company
agrees to sell to the Purchasers, severally, the respective
principal amounts of the Company's Medium-Term Notes, Series E
having the terms described below (the "Purchased Notes") set
forth opposite the name of each Purchaser on Schedule A hereto.
The price at which the Purchased Notes shall be purchased
from the Company by the Purchasers shall be ______% of the
principal amount plus accrued interest, if any, from
_____________. The initial public offering price shall be _____%
of the principal amount plus accrued interest, if any, from
____________________. The Purchased Notes will be offered by the
Purchasers as set forth in the Prospectus Supplement relating to
such Purchased Notes.
The Purchased Notes will have the following terms:
Fixed Interest rate (if applicable): ________ % per annum
(accruing from )
Floating Interest Rate (if applicable):
Interest Rate Basis: ___________________
Spread: ___________________
Spread Multiplier: ___________________
Index Maturity: ___________________
Initial Interest Rate: ___________________
Maximum Interest Rate: ___________________
Minimum Interest Rate: ___________________
Interest Reset Dates: ___________________
Interest Determination Dates: ___________________
Calculation Agent: ___________________
Interest Payment Dates: ___________________
Stated Maturity: ___________________
Redeemable by the Redemption Prices
Company on or after: (% of Principal Amount):
________________ ___________________
________________ ___________________
________________ ___________________
Subject to Repurchase by
the Company at the option of Repurchase Prices
the holder on: (% of Principal Amount):
________________ ___________________
________________ ___________________
________________ ___________________
The "Closing Date" shall be: ___________________
The place to which the
Purchased Notes may be
checked, packaged and
delivered shall be: ___________________
Notices to the Purchasers shall be sent to the following
address(es) or telecopier number(s):
If we are acting as Representative(s) for the several
Purchasers named in Schedule A hereto, we represent that we are
authorized to act for such several Purchasers in connection with
the transactions contemplated in this Agreement, and that, if
there are more than one of us, any action under this Agreement
taken by any of us will be binding upon all the Purchasers.
All of the provisions contained in the document entitled
"Baltimore Gas and Electric Company Standard Purchase
Provisions", a copy of which has been previously furnished to us,
are hereby incorporated by reference in their entirety and shall
be deemed to be a part of this Agreement to the same extent as if
such provisions had been set forth in full herein.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed
duplicate hereof, whereupon it will become a binding agreement
between the Company and the several Purchasers in accordance with
its terms.
Very truly yours,
[Firm Name]
By
Title: _______________________
Acting on behalf of and as
Representative(s) of the
several Purchasers named in
Schedule A hereto.*
The foregoing Purchase
Agreement is hereby confirmed
as of the date first above
written
BALTIMORE GAS AND ELECTRIC COMPANY
By _______________________
Title: _____________________
- ---------------------------------------
* To be deleted if the Purchase Agreement is not
executed by one or more Purchasers acting as
Representative(s) of the Purchasers for purposes of this
Agreement.
SCHEDULE A
Name of Purchaser Amount
- ----------------- --------
Total
---------
$
=========
BALTIMORE GAS AND ELECTRIC COMPANY
STANDARD PURCHASE PROVISIONS
From time to time, Baltimore Gas and Electric Company, a
Maryland corporation ("Company") may enter into purchase
agreements that provide for the sale of designated securities to
the purchaser or purchasers named therein. The standard
provisions set forth herein may be incorporated by reference in
any such purchase agreement ("Purchase Agreement"). The Purchase
Agreement, including the provisions incorporated therein by
reference, is herein sometimes referred to as "this Agreement."
Unless otherwise defined herein, terms defined in the Purchase
Agreement are used herein as therein defined.
1. Introductory. The Company proposes to issue and sell
from time to time its Medium-Term Notes, Series E ("Notes")
registered under the registration statement referred to in
Section 2(a). The Notes will be issued under an Indenture, dated
as of July 1, 1985, between the Company and The Bank of New York
(successor to Mercantile-Safe Deposit and Trust Company), as
Trustee as supplemented by the Supplemental Indentures dated as
of October 1, 1987 and January 26, 1993, respectively (the
"Indenture"). The Notes will be sold to the Purchasers for
resale in accordance with the terms of the offering determined at
the time of the sale. The Notes involved in any such offering
are hereinafter referred to as the "Purchased Notes," and the
firm or firms, as the case may be, which agree to purchase the
same are hereinafter referred to as the "Purchasers" of such
Purchased Notes. The terms "you" and "your" refer to those
Purchasers who sign the Purchase Agreement either on behalf of
themselves only or on behalf of themselves and as representatives
of the several Purchasers named in Schedule A thereto, as the
case may be.
2. Representations and Warranties of the Company. The
Company represents and warrants to and agrees with each Purchaser
that:
(a) A registration statement on Form S-3 (No. 333-_____),
covering $200 million principal amount of the Notes,
including a prospectus has been filed with the Securities and
Exchange Commission ("Commission") and has become effective.
The terms Registration Statement and Prospectus shall have
the meanings ascribed to them in the Purchase Agreement.
(b) The Registration Statement conforms in all respects
to the requirements of the Securities Act of 1933, as amended
("Act"), and the pertinent published rules and regulations of
the Commission thereunder ("33 Act Rules and Regulations")
and the Trust Indenture Act of 1939, as amended ("Trust
Indenture Act"), and does not include any untrue statement of
a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, except that the foregoing does not
apply to statements or omissions in such document based upon
2
written information furnished to the Company by any Purchaser
specifically for use therein. The documents incorporated by
reference in the Registration Statement or the Prospectus
pursuant to Item 12 of Form S-3 of the Act, at the time they
were filed with the Commission, complied in all material
respects with the requirements of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), and the pertinent
published rules and regulations thereunder ("Exchange Act
Rules and Regulations"). Any additional documents deemed to
be incorporated by reference in the Prospectus will, when
they are filed with the Commission, comply in all material
respects with the requirements of the Exchange Act and the
Exchange Act Rules and Regulations and will not contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading.
3. Delivery and Payment. The Company will deliver the
Purchased Notes to you for the accounts of the Purchasers, at the
offices of the Trustee (at the place specified in the Purchase
Agreement) against payment of the purchase price by certified or
official bank check or checks in same day or New York or
Baltimore Clearing House funds drawn to the order of the Company,
at the office of the Company, 39 W. Lexington Street, Baltimore,
Maryland, at the time set forth in this Agreement or at such
other time not later than seven full business days thereafter as
you and the Company determine, such time being herein referred to
as the "Closing Date." The Purchased Notes so to be delivered
will be in definitive fully registered form registered in such
denominations, of $1,000 or multiples thereof, and in such names
as you request in writing not later than 3:00 p.m., New York
Time, on the third full business day prior to the Closing Date,
or, if no such request is received, in the names of the
respective Purchasers in the amounts agreed to be purchased by
them pursuant to this Agreement. The Company shall make the
Purchased Notes available for checking and packaging at the
offices of the Trustee (at the place specified in the Purchase
Agreement) prior to the Closing Date and, unless prevented from
doing so by circumstances beyond its control, not later than 2:00
p.m., New York Time, on the business day next preceding the
Closing Date. If you request that any Purchased Notes be issued
in a name or names other than that of the Purchaser agreeing to
purchase such Purchased Notes hereunder, the Company shall not be
obligated to pay any transfer taxes resulting therefrom. The
Notes may also be represented by a permanent global Note or
Notes, registered in the name of The Depository Trust Company, as
depositary (the "Depositary"), or a nominee of the Depositary
(each such Note represented by a permanent global Note being
referred to herein as a "Book-Entry Note"). Beneficial interests
in Book-Entry Notes will only be evidenced by, and transfers
thereof will only be effected through, records maintained by the
Depositary's participants.
3
4. Offering by the Purchasers. The several Purchasers
propose to offer the Purchased Notes for sale to the public as
set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and
agrees with the several Purchasers that:
(a) It will promptly cause the Prospectus to be filed
with the Commission as required by Rule 424.
(b) For as long as a prospectus relating to the Purchased
Notes is required to be delivered under the Act, if any event
relating to or affecting the Company or of which the Company
shall be advised in writing by the Purchasers shall occur
which, in the Company's opinion, should be set forth in a
supplement or amendment to the Prospectus in order either to
make the Prospectus comply with the requirements of the Act
or which would require the making of any change in the
Prospectus so that as thereafter delivered to purchasers such
Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the
Company will promptly amend or supplement the Prospectus by
either (i) preparing and filing with the Commission
supplement(s) or amendment(s) to the Prospectus, or (ii)
making an appropriate filing pursuant to the Exchange Act,
which will supplement or amend the Prospectus so that, as
supplemented or amended, the Prospectus when the Prospectus
is delivered to a purchaser will comply with the Act and will
not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Prior to any such filing,
the Company shall give oral notice to the Purchasers.
(c) Not later than 45 days after the end of the 12-month
period beginning at the end of the fiscal quarter of the
Company in which the Closing Date occurs, the Company will
make generally available to its security holders an earnings
statement (which need not be audited) covering such 12-month
period which will satisfy the provisions of Section 11(a) of
the Act.
(d) The Company will furnish to you copies of the
following documents, in each case as soon as available after
filing and in such quantities as you reasonably request (i)
the Registration Statement relating to the Notes as
originally filed and all pre-effective amendments thereto (at
least one of which will be signed and will include all
exhibits except those incorporated by reference to previous
filings with the Commission); (ii) each prospectus relating
to the Purchased Notes; and (iii) during the time when a
prospectus relating to the Purchased Notes is required to be
4
delivered under the Act, all post-effective amendments and
supplements to the Registration Statement or Prospectus,
respectively (except supplements relating to securities that
are not Purchased Notes).
(e) The Company will use its best efforts to obtain the
qualification of the Purchased Notes for sale and the
determination of their eligibility for investment under the
laws of such jurisdictions as you designate and will continue
such qualifications in effect so long as required for the
distribution, provided, however, that the Company shall not
be required to qualify as a foreign corporation or to file
any consent to service of process under the laws of any
jurisdiction or to comply with any other requirements deemed
by the Company to be unduly burdensome.
(f) During the period of five years after the Closing
Date, the Company will furnish to you, and upon request, to
each of the other Purchasers: (i) as soon as practicable
after the end of each fiscal year, a copy of its annual
report to shareholders for such year, (ii) as soon as
available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the
Exchange Act or mailed to shareholders, and (iii) from time
to time, such other information concerning the Company as you
may reasonably request.
(g) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, and will
reimburse the Purchasers for any expenses (including Blue Sky
fees not exceeding $6,000 and disbursements of counsel)
incurred by them in connection with qualification of the
Purchased Notes for sale and determination of their
eligibility for investment under the laws of such
jurisdictions as you designate and the printing of memoranda
relating thereto, for any filing fees charged by investment
rating agencies for the rating of the Purchased Notes, for
any expenses incurred in connection with listing the
Purchased Notes on a national securities exchange and for
expenses incurred in distributing prospectuses to the
Purchasers, except that if this Agreement is terminated by
the Purchasers under Section 6(c) hereof, the Company shall
not be obligated to reimburse the Purchasers for any of the
foregoing expenses.
(h) The Company will not offer or sell any of its other
debt securities which are substantially similar to the
Purchased Notes prior to ten business days after the Closing
Date without the consent of the Purchasers.
6. Conditions of the Obligations of the Purchasers. The
obligations of the several Purchasers to purchase and pay for the
Purchased Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein,
5
to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following
additional conditions precedent:
(a) Subsequent to the signing of this Agreement, you
shall have received a letter of Coopers & Lybrand, dated the
Closing Date, confirming that they are independent public
accountants within the meaning of the Act and the 33 Act
Rules and Regulations, and stating in effect that:
(i) In their opinion, the consolidated financial
statements and supporting schedules audited by them which
are included in the Company's Form 10-K ("Form 10-K"),
which is incorporated by reference in the Registration
Statement comply in form in all material respects with
the applicable accounting requirements of the Act and the
33 Act Rules and Regulations and the Exchange Act and the
Exchange Act Rules and Regulations;
(ii) On the basis of procedures specified in such
letter (but not an audit in accordance with generally
accepted auditing standards), including reading the
minutes of meetings of the shareholders, the Board of
Directors and the Executive Committee of the Company
since the end of the year covered by the Form 10-K as set
forth in the minute books through a specified date not
more than five days prior to the Closing Date, performing
procedures specified in Statement on Auditing Standards
No. 71, Interim Financial Information, on the unaudited
interim consolidated financial statements of the Company
incorporated by reference in the Registration Statement,
if any, and reading the latest available unaudited
interim consolidated financial statements of the Company,
and making inquiries of certain officials of the Company
who have responsibility for financial and accounting
matters as to whether the latest available financial
statements not incorporated by reference in the
Registration Statement are prepared on a basis
substantially consistent with that of the audited
consolidated financial statements incorporated in the
Registration Statement, nothing has come to their
attention that has caused them to believe that (1) any
unaudited consolidated financial statements incorporated
by reference in the Registration Statement do not comply
in form in all material respects with the applicable
requirements of the Act and the 33 Act Rules and
Regulations and the Exchange Act and the Exchange Act
Rules and Regulations or any material modifications
should be made to those unaudited consolidated financial
statements for them to be in conformity with generally
accepted accounting principles; (2) at the date of the
latest available balance sheet not incorporated by
reference in the Registration Statement there was any
6
change in the capital stock, change in long-term debt or
decrease in consolidated net assets or common
shareholders' equity as compared with the amounts shown
in the latest balance sheet incorporated by reference in
the Registration Statement or for the period from the
closing date of the latest income statement incorporated
by reference in the Registration Statement to the closing
date of the latest available income statement read by
them there were any decreases, as compared with the
corresponding period of the previous year, in operating
revenues, operating income, net income, the ratio of
earnings to fixed charges (measured on the most recent
twelve month period), or in earnings per share of common
stock except in all instances of changes or decreases
that the Registration Statement discloses have occurred
or may occur, or which are described in such letter; or
(3) at a specified date not more than five days prior to
the Closing Date, there was any change in the capital
stock or long-term debt of the Company or, at such date,
there was any decrease in net assets of the Company as
compared with amounts shown in the latest balance sheet
incorporated by reference in the Registration Statement,
[or for the period from the closing date of the latest
income statement incorporated by reference in the
Registration Statement to a specified date not more than
five days prior to the Closing Date, there were any
decreases as compared with the corresponding period of
the previous year, in operating revenues, operating
income, net income or in earnings applicable to common
stock,] except in all cases for changes or decreases
which the Registration Statement discloses have occurred
or may occur, or which are described in such letter; and
(iii) Certain specified procedures have been applied
to certain financial or other statistical information (to
the extent such information was obtained from the general
accounting records of the Company) set forth or
incorporated by reference in the Registration Statement
and that such procedures have not revealed any
disagreement between the financial and statistical
information so set forth or incorporated and the
underlying general accounting records of the Company,
except as described in such letter.
(b) Prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have
been instituted, or to the knowledge of the Company or you,
shall be contemplated by the Commission.
(c) Subsequent to the date of this Agreement, (i) there
shall not have occurred any change or any development
involving a prospective change not contemplated by the
Prospectus in or affecting particularly the business or
7
properties of the Company which, in the judgment of a
majority in interest of the Purchasers including you,
materially impairs the investment quality of the Purchased
Notes, (ii) no rating of any of the Company's debt securities
shall have been lowered by any recognized rating agency and
(iii) trading in securities generally on the New York Stock
Exchange shall not have been suspended nor limited, other
than a temporary suspension in trading to provide for an
orderly market, nor shall minimum prices have been
established on such Exchange, a banking moratorium shall not
have been declared either by New York State or Federal
authorities and there shall not have occurred an outbreak or
escalation of major hostilities in which the United States is
involved or other substantial national or international
calamity or crisis, the effect of which on the financial
markets of the United States is such as to make it, in your
judgment, impracticable to market the Purchased Notes.
(d) There shall not be in effect on the Closing Date any
order of the Public Service Commission of Maryland which
would prevent the issuance, sale and delivery of the
Purchased Notes in accordance with the terms contemplated by
this Agreement.
(e) You shall have received an opinion, dated the Closing
Date, of the General Counsel or an Associate General Counsel
of the Company to the effect that:
(i) The Company and Constellation Holdings, Inc. have
been duly incorporated and are validly existing as
corporations in good standing under the laws of the State
of Maryland, with power and authority (corporate and
other) to own their respective properties and conduct
their respective businesses as described in the
Prospectus; and the Company is duly qualified to do
business as a foreign corporation in good standing in the
Commonwealth of Pennsylvania and all other jurisdictions
in which the conduct of its business or the ownership of
its properties requires such qualification and the
failure to do so would have a material and adverse
impact on its financial condition;
(ii) The Indenture has been duly authorized, executed
and delivered by the Company and is a valid instrument,
legally binding on the Company and enforceable in
accordance with its terms, except as limited by
bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights and by general
principles of equity;
(iii) The issuance and sale of the Purchased Notes
have been duly authorized by all necessary corporate
action of the Company. The Purchased Notes being
8
delivered to the Purchasers at the Closing (assuming that
they have been duly authenticated by the Trustee or a
duly designated Authentication Agent under the Indenture,
which fact counsel need not verify by an inspection of
the Purchased Notes), have been duly issued and
constitute legal, valid, and binding obligations of the
Company enforceable in accordance with their terms, and
are entitled to the benefits provided by the Indenture
except as such enforceability or entitlement may be
limited by bankruptcy, insolvency, or other laws
affecting the enforcement of creditors' rights and by
general principles of equity;
(iv) The Registration Statement has become effective
under the Act and, (a) to the best of such counsel's
knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act; (b) the
Registration Statement (as of its effective date) and the
Prospectus (as of the date of this Agreement) and any
amendments or supplements thereto, as of their respective
dates, appeared to comply as to form in all material
respects with the requirements of Form S-3 under the Act
and the 33 Act Rules and Regulations and the Trust
Indenture Act; (c) such counsel has no reason to believe
that either the Registration Statement or the Prospectus,
or any such amendment or supplement, as of such
respective dates, contained any untrue statement of a
material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statement therein not misleading; (d) the descriptions in
the Registration Statement and Prospectus of statutes,
legal and governmental proceedings and contracts and
other documents are accurate and fairly present the
information required to be shown; (e) and such counsel
does not know of any legal or governmental proceedings
required to be described in the Prospectus which are not
described as required, or of any contracts or documents
of a character required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not
described or filed as required; it being understood that
such counsel, in addressing the matters covered in this
paragraph (iv) need express no opinion as to the
financial statements or other financial and statistical
information contained in the Registration Statement or
the Prospectus or incorporated therein or attached as an
exhibit thereto or as to the Statement of Eligibility and
Qualification on Form T-l of the Trustee under the
Indenture.
(v) The approval of the Public Service Commission of
Maryland necessary for the valid issuance by the Company
9
of the Purchased Notes pursuant to this Agreement has
been obtained and continues in full force and effect.
The Company has received the approval of FERC for the
issuance of Purchased Notes on or before December 31,
1998 with maturities of not more than 12 months after the
date of issuance and the approval of FERC will be
required for the issuance of any Purchased Notes having
such maturities after December 31, 1998 and such counsel
knows of no other approval of any other regulatory
authority which is legally required for the valid
offering, issuance, sale and delivery of the Purchased
Notes by the Company under this Agreement (except that
such opinion need not pass upon the requirements of state
securities acts);
(vi) To the best of such counsel's knowledge and
belief, the consummation of the transactions contemplated
in this Agreement and the compliance by the Company with
all the terms of the Indenture did not and will not
result in a breach of any of the terms and provisions of,
or constitute a default under, the Company's Charter or
By-Laws or any indenture, mortgage or deed of trust or
other agreement or instrument to which the Company is a
party;
(vii) Each of this Agreement, the Authentication
Agency Agreement, the Agreement to Maintain Agency, the
Interest Calculation Agency Agreement and the Letter of
Representations has been duly authorized, executed and
delivered by the Company;
(viii) The Indenture is duly qualified under the
Trust Indenture Act;
(ix) The issuance, sale and delivery of the Purchased
Notes as contemplated by this Agreement are not subject
to the approval of the Securities and Exchange Commission
under the provisions of the Public Utility Holding
Company Act of 1935 (the "1935 Act"); and
(x) The Notes and Indenture conform as to legal
matters with the statements concerning them in the
Registration Statement and Prospectus under the caption
"DESCRIPTION OF NOTES" and on the cover page of the
Prospectus.
(f) The Agents shall have received from Cahill Gordon &
Reindel, counsel for the Agents, an opinion dated the Closing
Date, with respect to the matters referred to in paragraph 6(e)
subheadings (ii), (iii), (iv)b, (v), (vii), (viii) and (x) and
such other matters as the Agents shall reasonably request and the
Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass on such
matters.
10
In rendering such opinion, Cahill Gordon & Reindel
may rely, as to the incorporation of the Company, the approval of
the Public Service Commission of Maryland required for the
issuance, sale and delivery of the Purchased Notes and all other
matters governed by the laws of the State of Maryland, the
applicability of the 1935 Act, and FERC approval for the
issuance, sale and delivery of the Purchased Notes, upon the
opinion of Counsel for the Company referred to above.
In addition, such counsel shall state that such
counsel has participated in conferences with officers, counsel
and other representatives of the Company, representatives of the
independent public accountants for the Company and
representatives of the Purchasers at which the contents of the
Registration Statement and the Prospectus and related matters
were discussed; and, although such counsel is not passing upon
and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration
Statement and Prospectus (except as to the matters referred to in
their opinion rendered pursuant to subheading (x) above), on the
basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers, counsel and other
representatives of the Company), no facts have come to the
attention of such counsel which lead such counsel to believe that
either the Registration Statement (as of its effective date) or
the Prospectus (as of the date of this Agreement), and any
subsequent amendments or supplements thereto, as of their
respective dates, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make such statements therein not
misleading (it being understood that such counsel need make no
comment with respect to the financial statements and other
financial and statistical data included in the Registration
Statement or Prospectus or incorporated therein or as to the
Statement of Eligibility and Qualification on Form T-l of the
Trustee under the Indenture).
(g) You shall have received a certificate of the Chairman
of the Board, President or any Vice President and a principal
financial or accounting officer of the Company, dated the
Closing Date, in which such officers shall state, to the best
of their knowledge after reasonable investigation, and
relying on opinions of counsel to the extent that legal
matters are involved, that the representations and warranties
of the Company in this Agreement are true and correct in all
material respects, that the Company has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date, that
no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are contemplated by the
Commission, and that, subsequent to the date of the most
recent financial statements set forth or incorporated by
11
reference in the Prospectus, there has been no material
adverse change in the financial position or in the financial
results of operation of the Company except as set forth or
contemplated in the Prospectus or as described in such
certificate.
(h) The Company will furnish you with such conformed
copies of such opinions, certificates, letters and documents
as you reasonably request.
In case any such condition shall not have been satisfied,
this Agreement may be terminated by you upon notice in writing or
by telecopy to the Company without liability or obligation on the
part of the Company or any Purchaser, except as set forth in
Section 10 hereof.
7. Conditions of the Obligations of the Company. The
obligations of the Company to sell and deliver the Purchased
Notes are subject to the following conditions precedent:
(a) Prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have
been instituted or, to the knowledge of the Company or you,
shall be contemplated by the Commission.
(b) There shall not be in effect on the Closing Date any
order of the Maryland Commission or Federal Energy Regulatory
Commission which would prevent the issuance, sale and
delivery of the Purchased Notes or which contains conditions
or provisions with respect thereto which are not acceptable
to the Company, it being understood that no order in effect
at the date of this Agreement contains any such unacceptable
conditions or provisions.
If any such condition shall not have been satisfied, then
the Company shall be entitled, by notice in writing or by
telecopy to you, to terminate this Agreement without any
liability on the part of the Company or any Purchaser, except
as set forth in Section 10 hereof.
8. Indemnification.
(a) The Company will indemnify and hold harmless each
Purchaser and each person, if any, who controls any Purchaser
within the meaning of the Act or Exchange Act against any
losses, claims, damages or liabilities, joint or several, to
which such Purchaser or such controlling person may become
subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
the Registration Statement or the Prospectus, or any related
preliminary prospectus or arise out of or are based upon the
12
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse each
Purchaser and each such controlling person for any legal or
other expenses reasonably incurred by such Purchaser or such
controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable to
such Purchaser or controlling person in any such case to the
extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such
documents in reliance upon and in conformity with written
information furnished to the Company by such Purchaser or
such controlling person specifically for use therein unless
such loss, claim, damage or liability arises out of the offer
or sale of the Purchased Notes occurring after such Purchaser
or controlling person has notified the Company in writing
that such information should no longer be used therein. This
indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Purchaser will indemnify and hold harmless the
Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any,
who controls the Company within the meaning of the Act or the
Exchange Act, against any losses, claims, damages or
liabilities to which the Company or any such director,
officer or controlling person may become subject, under the
Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement or the Prospectus, or any related preliminary
prospectus or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written
information furnished to the Company by such Purchaser
specifically for use therein; and will reimburse any legal or
other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided,
however, that such Purchaser will not be liable to the
Company, or any such director, officer or controlling person
in any such case to the extent that any such loss, claim,
damage or liability arises out of the offer or sale of
Purchased Notes occurring after such Purchaser has notified
the Company in writing that such information should no longer
be used therein. This indemnity agreement will be in
13
addition to any liability which such Purchaser may otherwise
have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under (a) and (b)
above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section. In
case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled
to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to
such indemnified party (who may, with the consent of the
indemnified party, be counsel to the indemnifying party) and
who shall not be counsel to any other indemnified party who
may have interests conflicting with those of such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation.
(d) If recovery is not available under the foregoing
indemnification provisions of this Section, for any reason
other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the
extent that contribution is not permitted under Section 11(f)
of the Act. In determining the amount of contribution to
which the respective parties are entitled, there shall be
considered the relative benefits received by each party from
the offering of the Purchased Notes (taking into account the
portion of the proceeds of the offering realized by each),
the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any
statement or omission, and any other equitable considerations
appropriate under the circumstances. The Company and the
Purchasers and such controlling persons agree that it would
not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the
Purchasers and such controlling persons were treated as one
entity for such purpose). Notwithstanding the provisions of
this subsection (d), no Purchaser or controlling person shall
be required to make contribution hereunder which in the
aggregate exceeds the total public offering price of the
Purchased Notes, purchased by the Purchaser under this
14
Agreement, less the aggregate amount of any damages which
such Purchaser or such controlling person has otherwise been
required to pay in respect of the same claim or any
substantially similar claim. The Purchasers' obligations to
contribute are several in proportion to their respective
underwriting obligations and are not joint.
9. Default of Purchasers. If any Purchaser or
Purchasers default in their obligations to purchase Purchased
Notes hereunder and the aggregate principal amount of Purchased
Notes which such defaulting Purchaser or Purchasers agreed but
failed to purchase is 10% of the principal amount of Purchased
Notes or less, you may make arrangements satisfactory to the
Company for the purchase of such Purchased Notes by other
persons, including any of the Purchasers, but if no such
arrangements are made by the Closing Date the non-defaulting
Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Purchased Notes
which such defaulting Purchasers agreed but failed to purchase.
If any Purchaser or Purchasers so default and the aggregate
principal amount of Purchased Notes with respect to which such
default or defaults occur is more than the above percentage and
arrangements satisfactory to you and the Company for the purchase
of such Purchased Notes by other persons are not made within
thirty-six hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting
Purchaser or the Company, except as provided in Section 10. In
the event that any Purchaser or Purchasers default in their
obligation to purchase Purchased Notes hereunder, the Company
may, by prompt written notice to the non-defaulting Purchasers,
postpone the Closing Date for a period of not more than seven
full business days in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents, and the Company will
promptly file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made
necessary. As used in this Agreement, the term "Purchaser"
includes any person substituted for a Purchaser under this
Section. Nothing herein will relieve a defaulting Purchaser from
liability for its default.
10. Survival of Certain Representations and Obligations.
The respective indemnities, agreements, representations,
warranties, and other statements of the Company or its officers
and of the several Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless
of any investigation, or statement as to the results thereof,
made by or on behalf of any Purchaser or the Company or any of
its officers or directors or any controlling person, and will
survive delivery of and payment for the Purchased Notes. If this
Agreement is terminated pursuant to Section 6, 7 or 9 or if for
any reason the purchase of the Purchased Notes by the Purchasers
is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5(g).
15
In addition, in such event the respective obligations of the
Company and the Purchasers pursuant to Section 8 shall remain in
effect; provided, however, that you will use your best efforts to
promptly notify each other Purchaser and each dealer and
prospective customer to whom you have delivered a Prospectus for
the Purchased Notes by telephone or telegraph, confirmed by
letter in either case, of such termination or failure to
consummate, including in such notice instructions regarding the
continued use of the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary
prospectus.
11. Notices. All communications hereunder will be in
writing, and, if sent to the Purchasers will be mailed, delivered
or telecopied and confirmed to the address furnished in writing
for the purpose of such communications hereunder, or, if sent to
the Company, will be mailed, delivered or telecopied and
confirmed to it, attention of Treasurer at 39 W. Lexington
Street, Baltimore, Maryland 21201, telecopier (410) 234-5367;
provided, however, that any notice to a Purchaser pursuant to
Section 8 will be mailed, delivered or telecopied to such
Purchaser at its address appearing in its Purchasers'
Questionnaire.
12. Successors. This Purchase Agreement will inure to
the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and
controlling persons referred to in Section 8, and no other person
will have any right or obligation hereunder.
13. Construction. This Purchase Agreement shall be
governed by and construed in accordance with the laws of the
State of Maryland.
14. Counterparts. This Agreement may be executed in one
or more counterparts and it is not necessary that the signatures
of all parties appear on the same counterpart, but such
counterparts together shall constitute but one and the same
agreement.
Exhibit D
to Agency Agreement
PURCHASE AGREEMENT
(for purchaser's account)
[Date]
Baltimore Gas and Electric Company
39 W. Lexington Street
Baltimore, Maryland 21201
Attention: Treasurer
The undersigned agrees to purchase the following
principal amount of the Notes described in the Agency Agreement
among Baltimore Gas and Electric Company, Lehman Brothers, Lehman
Brothers Inc., and Goldman, Sachs & Co. dated _____________, 1997
(the "Agency Agreement"):
Principal Amount: $____________
Fixed Interest Rate (if applicable): ____________ %
Floating Interest Rate (if applicable): ____________
Interest Rate Basis: ____________
Spread: ____________
Spread Multiplier: ____________
Index Maturity: ____________
Initial Interest Rate: ____________
Maximum Interest Rate: ____________
Minimum Interest Rate: ____________
Interest Reset Dates: ____________
Interest Determination Dates: ____________
Calculation Agent: ____________
Interest Payment Dates: ____________
Stated Maturity: ____________
Redeemable at the option Redemption Prices
of the Company on or after: (% of Principal Amount):
________________ __________________
________________ __________________
________________ __________________
Subject to repurchase by
the Company at the option Repurchase Prices
of the holder on: (% of Principal Amount):
__________________ __________________
__________________ __________________
__________________ __________________
Discount: ____________ % of Principal Amount
Price to be paid
to Company
(in immediately
available funds): $ ______________
Settlement Date: _______________ , 19____
Except as otherwise expressly provided therein, all
terms used herein which are defined in the Agency Agreement shall
have the same meanings as in the Agency Agreement. The term
Agent, as used in the Agency Agreement, shall be deemed to refer
only to the undersigned for purposes of this Agreement.
This Agreement incorporates by reference Sections 4, 6,
7, 12 and 13 of the Agency Agreement, the first and last
sentences of Section 9 thereof and, to the extent applicable, the
Procedures. You and we agree to perform, to the extent
applicable, our respective duties and obligations specifically
provided to be performed by each of us in the Procedures.
Our obligation to purchase Notes hereunder is subject to
the accuracy on the above Settlement Date of your representations
and warranties contained in Section 2 of the Agency Agreement (it
being understood that such representations and warranties shall
relate to the Registration Statement and the Prospectus as
amended at such Settlement Date) and to your performance and
observance of all covenants and agreements contained in Sections
4 and 6 thereof. Our obligation hereunder is also subject to the
following conditions:
(a) the satisfaction, at such Settlement Date, of each
of the conditions set forth in subsections (a), (b) and (d)
through (h) of Section 5 of the Agency Agreement (it being
understood that each document so required to be delivered shall
be dated such Settlement Date and that each such condition and
the statements contained in each such document that relate to the
Registration Statement or the Prospectus shall be deemed to
relate to the Registration Statement or the Prospectus, as the
case may be, as amended or supplemented at the time of settlement
on such Settlement Date and except that the opinion described in
Section 5(d) of the Agency Agreement shall be modified so as to
state that the Notes being sold on such Settlement Date, when
delivered against payment therefor as provided in the Indenture
and this Agreement, will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally
binding obligations of the Company enforceable in accordance with
their terms, subject only to the exceptions as to enforcement set
forth in clause (ii) of Section 5(d) of the Agency Agreement, and
will conform to the description thereof contained in the
Prospectus as amended or supplemented at such Settlement Date);
and
(b) there shall not have occurred (i) any change, or any
development involving a prospective change not contemplated by
the Prospectus, in or affecting particularly the business or
properties of the Company which, in our judgment, materially
impairs the investment quality of the Notes, (ii) any downgrading
in the rating of the Company's debt securities by any "nationally
recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act); (iii) any suspension or
limitation of trading, other than a temporary suspension in
trading to provide for an orderly market, in securities generally
on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-
counter market; (iv) any banking moratorium declared by Federal
or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national
or international calamity or emergency if, in our judgment, the
effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Notes.
In further consideration of our agreement hereunder, you
agree that between the date hereof and the above Settlement Date,
you will not offer or sell, or enter into any agreement to sell,
any debt securities of the Company in the United States, other
than sales of Notes, borrowings under your revolving credit
agreements and lines of credit, the private placement of
securities and issuances of your commercial paper.
If for any reason our purchase of the above Notes is not
consummated, you shall remain responsible for the expenses to be
paid or reimbursed by you pursuant to Section 4 of the Agency
Agreement and the respective obligations of you and the
undersigned pursuant to Section 7 shall remain in effect. If for
any reason our purchase of the above Notes is not consummated
other than because of our default or a failure to satisfy a
condition set forth in clause (iii), (iv) or (v) of paragraph (b)
above, you shall reimburse us, severally, for all out-of-pocket
expenses reasonably incurred by us in connection with the
offering of the above Notes and not otherwise required to be
reimbursed pursuant to Section 4 of the Agency Agreement.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland. This
Agreement may be executed in counterparts and the executed
counterparts shall together constitute a single instrument.
[Insert Name of Purchaser]
By: ______________________
CONFIRMED AND ACCEPTED, as of
the date first above written:
BALTIMORE GAS AND ELECTRIC COMPANY
By: __________________________