COMED FUNDING LLC, S-3, 1998-08-07

COMED FUNDING LLC
S-3, 1998-08-07

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<PAGE>

As filed with the Securities and Exchange Commission on August __, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
COMED TRANSITIONAL FUNDING TRUST
(Issuer of Securities)

COMED FUNDING, LLC

(Depositor of the Trust as described herein)
(Exact name of Registrant as Specified in Its Certificate of Formation)

DELAWARE 36-4239488
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

COMED FUNDING, LLC
TEN SOUTH DEARBORN STREET, 37TH FLOOR, CHICAGO, ILLINOIS 60603,
(312) 394-7937
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
RUTH ANN M. GILLIS OF COMMONWEALTH EDISON COMPANY, THE SOLE MEMBER OF
COMED FUNDING, LLC
TEN SOUTH DEARBORN STREET, 37TH FLOOR, CHICAGO, ILLINOIS 60603,
(312) 394-3149
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
With copies to:

Frederick L. Feldkamp, Esq. Kevin J. Hochberg, Esq. Daniel C. Bird, Esq.
Foley & Lardner Sidley & Austin Winston & Strawn
330 North Wabash Avenue, One First National Plaza 35 W. Wacker Drive
Suite 3300 Chicago, Illinois 60603 Chicago, Illinois 60601
Chicago, Illinois 60611 (312) 853-2085 (312) 558-7446
(312) 755-1900

Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transitional Funding Trust Notes $1,000,000 100% $1,000,000 $295
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

SUBJECT TO COMPLETION, DATED _____________, 1998

PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED ____________, 1998

COMED TRANSITIONAL FUNDING TRUST

$____________ TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998
$____________ Class A-1_______ % Notes $__________ Class A-4______ % Notes
$____________ Class A-2_______ % Notes $__________ Class A-5______ % Notes
$____________ Class A-3_______ % Notes $__________ Class A-6______ % Notes
$___________ Class A-7_______ % Notes

COMMONWEALTH EDISON COMPANY
SERVICER

----------------

The ComEd Transitional Funding Trust Transitional Funding Trust Notes,
Series 1998 (the "Offered Notes") offered hereby will consist of the [seven]
Classes listed above. Each Offered Note will be secured primarily by the
Intangible Transition Property owned by the Trust, as described under
"Description of the Intangible Transition Property" herein and in the Prospectus
and by the other Note Collateral described under "Security for the Notes" in the
Prospectus.

----------------

THERE CURRENTLY IS NO SECONDARY MARKET FOR THE OFFERED NOTES, AND THERE IS NO
ASSURANCE THAT ONE WILL DEVELOP. PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG
OTHER THINGS, THE INFORMATION SET FORTH UNDER THE CAPTION "RISK FACTORS," WHICH
BEGINS ON PAGE 29 IN THE PROSPECTUS.

THE OFFERED NOTES OFFERED HEREBY DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE
STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF AND DO NOT REPRESENT AN
INTEREST IN OR OBLIGATION OF COMMONWEALTH EDISON COMPANY OR ANY OF ITS
AFFILIATES. NONE OF THE OFFERED NOTES OR THE UNDERLYING INTANGIBLE TRANSITION
PROPERTY WILL BE GUARANTEED OR INSURED BY COMMONWEALTH EDISON COMPANY OR ITS
AFFILIATES.

----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

----------------

<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discounts(2) Trust (1)(3)
-------- ----------- -----------
<S> <C> <C> <C>
Per Class A-1 Note............. % % %
Per Class A-2 Note............. % % %
Per Class A-3 Note............. % % %
Per Class A-4 Note............. % % %
Per Class A-5 Note............. % % %
Per Class A-6 Note............. % % %
Per Class A-7 Note............. % % %
Total.......................... $ $ $
</TABLE>
- -------------
(1) Plus accrued interest, if any, at the applicable Note Interest Rate
from ________________, 1998.
(2) The Grantee and ComEd have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the
Securities Act of 1933.
(3) Before deducting estimated expenses of $______________ payable by the
Trust.

----------------

The Offered Notes are offered severally by the Underwriters when, as and if
issued by the Trust and subject to receipt and acceptance by the Underwriters
and subject to their rights to reject orders in whole or in part. It is expected
that the Offered Notes will be delivered on or about _____________, 1998, in
book-entry form through the facilities of The Depository Trust Company, Cedel
Bank, societe anonyme, and the Euroclear System.

----------------

[UNDERWRITERS]

The date of this Prospectus Supplement is __________________, 1998.

<PAGE>

Interest on each Class of Offered Notes at the applicable Note Interest Rate
will be distributable quarterly on ______, __________, _________ and
_____________ or, if any such day is not a Business Day, the next succeeding
Business Day (each, a "Payment Date") commencing __________, 1999. See
"Description of the Offered Notes" herein.

The Offered Notes are part of a separate Series of ComEd Transitional Funding
Trust Transitional Funding Trust Notes being offered by the Trust from time to
time pursuant to a Prospectus dated _____________, 1998 (the "Prospectus"), of
which this Prospectus Supplement is a part and which accompanies this Prospectus
Supplement.

THE INTANGIBLE TRANSITION PROPERTY ASSIGNED TO THE TRUST BY THE GRANTEE AND
CERTAIN OTHER ASSETS OF THE TRUST ARE THE SOLE SOURCE OF PAYMENTS ON THE OFFERED
NOTES. NONE OF COMMONWEALTH EDISON COMPANY OR ITS AFFILIATES WILL HAVE ANY
OBLIGATIONS IN RESPECT OF THE OFFERED NOTES OR THE INTANGIBLE TRANSITION
PROPERTY, EXCEPT AS EXPRESSLY SET FORTH HEREIN AND IN THE PROSPECTUS.

TRANSITIONAL FUNDING ORDERS AUTHORIZING THE ISSUANCE OF THE OFFERED NOTES DO NOT
CONSTITUTE A PLEDGE OF THE FULL FAITH AND CREDIT OF THE STATE OF ILLINOIS OR OF
ANY OF ITS POLITICAL SUBDIVISIONS. THE ISSUANCE OF THE OFFERED NOTES UNDER THE
FUNDING LAW SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF
ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF
TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICES OF THE OFFERED NOTES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
OFFERED NOTES AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

Prospective investors should refer to the "Index of Principal Definitions"
which begins on page S-25 herein and which begins on page 113 in the Prospectus
for the location of the definitions of capitalized terms that appear in the
Prospectus and this Prospectus Supplement.

S-2
<PAGE>

REPORTS TO HOLDERS

Unless and until the Offered Notes are no longer issued in book-entry form,
the Servicer indirectly will provide to Cede & Co., as nominee of The Depository
Trust Company ("DTC") AND REGISTERED HOLDER OF THE OFFERED NOTES AND, UPON
REQUEST, TO PARTICIPANTS OF DTC, PERIODIC REPORTS CONCERNING THE OFFERED NOTES.
SEE "SERVICING -- STATEMENTS BY SERVICER" IN THE PROSPECTUS. SUCH REPORTS MAY BE
MADE AVAILABLE TO THE HOLDERS OF INTERESTS IN THE OFFERED NOTES (THE
"NOTEHOLDERS") UPON REQUEST TO THEIR PARTICIPANTS. SUCH REPORTS WILL NOT
CONSTITUTE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. THE FINANCIAL INFORMATION PROVIDED TO NOTEHOLDERS WILL
NOT BE EXAMINED AND REPORTED UPON, NOR WILL AN OPINION THEREON BE PROVIDED, BY
ANY INDEPENDENT PUBLIC ACCOUNTANT.

THE GRANTEE, ON BEHALF OF THE TRUST, WILL FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") SUCH PERIODIC REPORTS AS ARE REQUIRED BY
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), AND THE
RULES, REGULATIONS OR ORDERS OF THE COMMISSION THEREUNDER. COPIES OF THE
REGISTRATION STATEMENT AND EXHIBITS THERETO MAY BE OBTAINED AT THE LOCATIONS
SPECIFIED IN THE PROSPECTUS UNDER "AVAILABLE INFORMATION" AT PRESCRIBED RATES.
INFORMATION FILED WITH THE COMMISSION CAN ALSO BE INSPECTED AT THE COMMISSION'S
SITE ON THE WORLD WIDE WEB AT HTTP://WWW.SEC.GOV. THE GRANTEE MAY DISCONTINUE
FILING PERIODIC REPORTS UNDER THE EXCHANGE ACT AT THE BEGINNING OF ANY FISCAL
YEAR FOLLOWING THE ISSUANCE OF THE OFFERED NOTES IF THERE ARE FEWER THAN 300
HOLDERS OF SUCH OFFERED NOTES.

S-3
<PAGE>

PROSPECTUS SUPPLEMENT SUMMARY

THE FOLLOWING PROSPECTUS SUPPLEMENT SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE DETAILED INFORMATION APPEARING ELSEWHERE HEREIN AND IN THE
PROSPECTUS. CERTAIN CAPITALIZED TERMS USED BUT NOT DEFINED IN THIS PROSPECTUS
SUPPLEMENT SUMMARY HAVE THE MEANINGS ASCRIBED TO SUCH TERMS ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT OR, TO THE EXTENT NOT DEFINED HEREIN, HAVE THE MEANINGS
ASCRIBED TO SUCH TERMS IN THE PROSPECTUS. THE INDEX OF PRINCIPAL DEFINITIONS
INCLUDED IN THIS PROSPECTUS SUPPLEMENT WHICH BEGINS ON PAGE S-25 SETS FORTH THE
PAGES ON WHICH THE DEFINITIONS OF CERTAIN PRINCIPAL TERMS APPEAR.

Summary of Offered Notes. . . . . . . . The ComEd Transitional Funding Trust
Transitional Funding Trust Notes, Series
1998 (the "Offered Notes"). On the date
of initial issuance of the Offered Notes
(the "Series Issuance Date"), the
Offered Notes will be issued as
described below.

<TABLE>
<CAPTION>
INITIAL
PRINCIPAL SCHEDULED NOTE
CLASS AMOUNT MATURITY DATE FINAL MATURITY DATE INTEREST RATE
----- ------ ------------- ------------------- -------------
<S> <C> <C> <C> <C>
A-1....... %
A-2....... %
A-3....... %
A-4....... %
A-5....... %
A-6....... %
A-7....... %
</TABLE>

Transaction Overview................... For a brief summary of the statutes
and proceedings which form the basis
for the issuance and sale of the
Offered Notes by the Trust, and a
diagram of the parties to the
transaction, their roles and their
various relationships to the other
parties, investors are directed to
the discussion under the heading
"Prospectus Summary -- Transaction
Overview" in the Prospectus.

The Trust, whose primary asset will be
Intangible Transition Property
transferred to the Trust pursuant to the
Sale Agreements, will issue the Offered
Notes, which will be sold to the
Underwriters. The Offered Notes will be
secured primarily by all of the
Intangible Transition Property (whether
created by the Transitional Funding
Order issued by the ICC on July 21, 1998
(the "1998 TFO") or any other
Transitional Funding Order) which has
been transferred to the Trust pursuant
to a Sale Agreement. The Offered Notes
also will be secured by the Grant
Agreements, the Sale Agreements and the
Servicing Agreement; the Collection
Account and all amounts of cash or
investment property on deposit therein
or credited thereto from time to time;
all rights to compel ComEd, as Servicer
(or any successor), to file for and
obtain adjustments to the IFC Charges in
accordance with Section 18-104(d) of the
Act, the Transitional Funding Orders,
including the 1998 TFO and all IFC
Tariffs, including the 1998 IFC Tariff
(as hereinafter defined) filed with the
ICC in connection therewith; all present
and future claims, demands, causes and
choses in

S-4
<PAGE>

action in respect of any or all of the
foregoing; and all payments on or under
and all proceeds in respect of any or
all of the foregoing.

The IFC Charges are calculated to be
sufficient over time to (a) pay interest
and make Scheduled Payments on the
Offered Notes, (b) pay all related fees
and expenses of the Trust, including the
Servicing Fee and any Quarterly
Administration Fee, (c) replenish the
Capital Subaccount up to the Required
Capital Level, and (d) fund and maintain
the Overcollateralization Subaccount up
to the Required Overcollateralization
Level. The IFC Charges will be increased
in connection with the issuance of
additional Notes pursuant to any
subsequent Transitional Funding Order,
to a level calculated to be sufficient
over time to make the above-described
payments in respect of all outstanding
Notes.

The IFC Charges will be subject to both
Reconciliation Adjustments and True-Up
Adjustments, as described in the
Prospectus over the life of the Notes
(including the Offered Notes) to enhance
the likelihood of timely recovery of
such amounts. See "Description of the
Intangible Transition Property --
Adjustments to the IFC Charges" in the
Prospectus.

Risk Factors........................... Investors should consider the risks
associated with an investment in the
Offered Notes. For a discussion of
certain material risks associated
therewith, investors should review the
discussion under "Risk Factors" which
begins on page 29 of the Prospectus.

The Offered Notes...................... The Offered Notes are the ComEd
Transitional Funding Trust Transitional
Funding Trust Notes, Series 1998. The
Offered Notes are comprised of the
[seven] classes listed on the cover page
hereof (each, a "Class"). As of the
Series Issuance Date, the aggregate
principal balance of the Offered Notes
(the "Original Note Principal Balance")
will be $_________. Each Class of
Offered Notes will have a principal
balance (the "Class Principal Balance")
equal to the initial amount of principal
allocable to such Class, reduced by
principal paid to such Class in
accordance with the terms of the
Indenture. See "Description of the
Offered Notes" herein and "Description
of the Notes" in the Prospectus.

None of the Offered Notes or the
underlying Intangible Transition
Property will be guaranteed or insured
by ComEd or any of its affiliates. The
1998 TFO authorizing the issuance of the
Offered Notes does not constitute a
pledge of the full faith and credit of
the State of Illinois or of any of its
political subdivisions. The issuance of
the Offered Notes under the

S-5
<PAGE>

Funding Law shall not directly,
indirectly or contingently obligate the
State of Illinois or any political
subdivision thereof to levy or to pledge
any form of taxation therefor or to make
any appropriation for their payment.
The Offered Notes will be payable solely
by application of the proceeds of the
Intangible Transition Property and the
other Note Collateral held by the
Indenture Trustee under the Indenture.
If additional Notes (other than the
Offered Notes) are subsequently issued
under the Indenture, the Offered Notes
will be at least PARI PASSU with such
other Notes as to all of the Intangible
Transition Property and the other Note
Collateral. Any and all funds or
property released by the Indenture
Trustee pursuant to the Indenture will
cease to be Note Collateral and will no
longer be available for payment of the
Offered Notes.

Servicer/Administrator................. Commonwealth Edison Company, an Illinois
corporation ("ComEd") and a subsidiary
of Unicom Corporation, an Illinois
corporation, will act as the initial
servicer (in such capacity, and together
with any successor servicer, the
"Servicer") of the Intangible Transition
Property pursuant to the terms of the
Servicing Agreement, and as the initial
administrator (in such capacity, and
together with any successor
administrator, the "Administrator") of
the Trust and the Grantee pursuant to
the terms of an Administration Agreement
among the Trust, the Grantee and the
Administrator (the "Administration
Agreement"). For a more complete
discussion of ComEd and its role as
Servicer, see "The Servicer" herein and
in the Prospectus.

Grantee................................ The grantee of the Intangible Transition
Property will be ComEd Funding, LLC, a
special purpose Delaware limited
liability company (the "Grantee"), whose
sole member is ComEd. Pursuant to the
Sale Agreement entered into with respect
to the issuance by the Trust of the
Offered Notes, the Grantee will assign
all of its right, title and interest in
the Intangible Transition Property
created by the 1998 TFO (the "1998
ITP"), the Servicing Agreement and
certain other related assets to the
Trust. For a more complete discussion of
the Grantee, see "The Grantee" in the
Prospectus.

Trust.................................. The issuer of the Offered Notes will be
the ComEd Transitional Funding Trust
(the "Trust"), a Delaware business trust
created under a Declaration of Trust
(the "Trust Agreement") by the Delaware
Trustee and the Beneficiary Trustees.
For a more complete discussion of the
Trust, see "The Trust" in the
Prospectus.

Delaware Trustee....................... First Union Trust Company, National
Association, acting not in its
individual capacity, but solely as
trustee under the Trust Agreement (the
"Delaware Trustee").

S-6
<PAGE>

Beneficiary Trustees .................. __________________________________ and
________________________________.

Indenture.............................. The Offered Notes will be issued
pursuant to the terms of the Indenture
through the execution and delivery of a
trustee's issuance certificate or a
supplement to the Indenture. The 1998
ITP, any other subsequent Intangible
Transition Property created by
subsequent Transitional Funding Orders
and the other Note Collateral will be
pledged under the Indenture for the
benefit of the Noteholders. The
Indenture will be qualified under the
Trust Indenture Act of 1939.

Indenture Trustee...................... Harris Trust and Savings Bank, an
Illinois banking corporation, (the
"Indenture Trustee").

Intangible Transition Property......... As more fully described under
"Description of the Intangible
Transition Property" herein and in the
Prospectus, the Intangible Transition
Property, including the 1998 ITP, is the
separate property right as set forth in
the Funding Law and created under the
Transitional Funding Orders, including
the 1998 TFO, including, without
limitation, the right, title and
interest to impose and receive the IFC
Charges authorized thereby and all
related revenues, collections, claims,
payment, money, or proceeds thereof,
including all right, title, and interest
under and pursuant to such Transitional
Funding Orders.

IFC Charges............................ As more fully described under
"Description of the Intangible
Transition Property" and "Electric
Industry Restructuring in
Illinois -- Instrument Funding Charges"
in the Prospectus, IFC Charges are
nonbypassable, usage-based, per
kilowatt-hour charges to be imposed on
each existing and future retail customer
or class of retail customers in ComEd's
service area in Illinois, or other
person or group of persons obligated
from time to time to pay to ComEd or any
successor Applicable Rates, including
any customers who enter into competitive
contracts with ComEd to take
non-tariffed services but would
otherwise have been obligated to pay
Applicable Rates (collectively, the
"Customers").

The IFC Charges authorized in the 1998
TFO (the "1998 Authorized IFC Charges"),
which ComEd believes are higher than
will actually be required to make all
payments on the Offered Notes, based on
certain conservative assumptions
contained in the 1998 TFO, are set forth
in "Description of the Intangible
Transition Property" herein.

S-7
<PAGE>

Utility thereto to file an amendatory
tariff adjusting the amounts otherwise
billed by ComEd or such successor
Utility for Applicable Rates to offset
the amount of such excess (or, if ComEd
or such successor Utility shall have
previously filed any such amendatory
tariffs, the incremental amount of such
excess). However, the failure of such
amendatory tariff to become effective
for any reason shall not delay or impair
the effectiveness of the increase in the
IFC Charges.

In connection with the issuance and
pricing of the Offered Notes, ComEd
filed an IFC Tariff with the ICC (the
"1998 IFC Tariff") which provides for,
among other things, certain revisions to
the IFC Charges. The actual initial
cents per kilowatt-hour IFC Charge
payable by each of the thirteen (13) IFC
Customer Classes beginning on the Series
Issuance Date is as follows:

---------------------------------------
IFC CHARGE
IFC CUSTOMER CLASS (CENTS PER kWh)
---------------------------------------
Residential -- No
Space Heat
---------------------------------------
Residential -- Space
Heat
---------------------------------------
Standby Service
---------------------------------------
Interruptible Service
---------------------------------------
Street Lighting --
Fixture Based Rates
---------------------------------------
Street Lighting --
Dusk to Dawn and
Traffic Signal
---------------------------------------
Railroads
---------------------------------------
Water-Supply and
Sewage Pumping Service
---------------------------------------
In Lieu of Demand
---------------------------------------
0 to and including
100 kW Demand
---------------------------------------
Over 100 to and
including 1,000 kW
Demand
---------------------------------------
Over 1,000 to and
including 10,000 kW
Demand
---------------------------------------
Over 10,000 kW Demand
---------------------------------------

Adjustments to the IFC Charges......... The Servicing Agreement and the 1998 TFO
require the Servicer to calculate and
implement two different kinds of
adjustments to the IFC Charges:
Reconciliation Adjustments and True-Up
Adjustments, which are collectively
referred to as the "Adjustments." The
Adjustments to the IFC Charges will
continue until all interest and
principal on all the Offered Notes have
been paid in full. In addition, the IFC
Charges will be increased in connection
with the issuance of additional Notes
pursuant to any subsequent Transitional
Funding Order, to a level calculated to
be sufficient over time to provide for,

S-8
<PAGE>

among other things, payment of all
interest and principal in respect of all
outstanding Notes. For a detailed
discussion of Adjustments to IFC
Charges, see "Description of the
Intangible Transition
Property--Adjustments to the IFC
Charges" in the Prospectus and
"Description of the Intangible
Transition Property--Adjustments to the
IFC Charges" herein.

Payment Dates.......................... Payments will be made to holders of the
Offered Notes on each [_________,
___________, ________ and ___________]
(or, if any such date is not a Business
Day, the next succeeding Business Day),
commencing ___________, 1999 (each, a
"Payment Date").

Record Dates........................... With respect to any Payment Date or date
of any redemption, the Business Day
preceding such Payment Date or other
date if the Offered Notes are Book-Entry
Notes or, if Definitive Notes are
issued, the last day of the preceding
calendar month (each, a "Record Date").
Scheduled Maturity and Final
Maturity Dates......................... The "Scheduled Maturity Date" for any
Class will be the date when all
principal and interest on such Class of
Offered Notes is expected to be paid in
full by the Trust. The "Final Maturity
Date" for any Class corresponds to the
date on which such Class of Offered
Notes may be accelerated for failure to
pay outstanding principal thereon, which
may be up to [two] years after the
Scheduled Maturity Date for such Class.
The Scheduled Maturity Date and the
Final Maturity Date for each Class of
Offered Notes are specified herein under
"Description of the Offered Notes."

Failure to pay principal on any Class of
Offered Notes in full by the Final
Maturity Date shall constitute an Event
of Default, and the Indenture Trustee
may and, upon the written direction of
the holders of not less than a majority
in principal amount of all Notes of all
Series then outstanding, shall declare
the unpaid principal amount of all the
Notes of all Series then outstanding to
be due and payable. See "Description of
the Notes -- Events of Default" and
"Ratings" in the Prospectus.

Issuance of Additional Series.......... The Trust may issue additional Series of
Notes from time to time. An additional
Series may be issued only upon
satisfaction of the conditions described
under "Description of the Notes --
Conditions of Issuance of Additional
Series" in the Prospectus.

Interest............................... On each Payment Date, the Indenture
Trustee shall pay pro rata to the
Noteholders of each Class as of the
related Record Date any unpaid interest
payable on any prior Payment Dates,
together with interest thereon at the
applicable Note Interest

S-9
<PAGE>

Rate, and interest in an amount equal to
one-fourth of the product of (a) the
applicable Note Interest Rate and (b)
the applicable Class Principal Balance
as of the close of business on the
preceding Payment Date after giving
effect to all payments of principal made
to the Noteholders on such preceding
Payment Date; provided, however, that
with respect to the initial Payment
Date, interest on each outstanding Class
Principal Balance will accrue from and
including the Series Issuance Date to,
but excluding, such initial Payment
Date. Interest will be calculated on the
basis of a 360-day year of twelve 30-day
months. Interest on the Offered Notes
will be distributed prior to any
distribution of principal on the Offered
Notes. See "Description of the Offered
Notes -- Payments of Interest" herein
and "Description of the Notes --
Interest and Principal" in the
Prospectus.

Principal.............................. Unless an Event of Default has occurred
and is continuing and the Offered Notes
have been declared due and payable, on
each Payment Date, the Indenture Trustee
shall, as of the related Record Date and
subject to availability of funds in the
Collection Account, make principal
payments on the Offered Notes in the
following order and priority: [(1) to
the holders of the Class A-1 Notes,
until the Class Principal Balance
thereof has been reduced to zero; (2) to
the holders of the Class A-2 Notes,
until the Class Principal Balance
thereof has been reduced to zero; (3) to
the holders of the Class A-3 Notes,
until the Class Principal Balance
thereof has been reduced to zero; (4) to
the holders of the Class A-4 Notes,
until the Class Principal Balance
thereof has been reduced to zero; (5) to
the holders of the Class A-5 Notes,
until the Class Principal Balance
thereof has been reduced to zero; (6) to
the holders of the Class A-6 Notes,
until the Class Principal Balance
thereof has been reduced to zero; (7) to
the holders of the Class A-7 Notes,
until the Class Principal Balance
thereof has been reduced to zero;
provided, however, that, unless an Event
of Default has occurred and is
continuing and the Offered Notes have
been declared due and payable, in no
event shall the principal payment on any
Class on a Payment Date be greater than
the Scheduled Payment for such Class and
Payment Date.] See "Description of the
Offered Notes -- Payments of
Principal" herein and "Description of
the Notes -- Interest and Principal" in
the Prospectus.

Optional Redemption.................... Pursuant to the terms of the Indenture,
the Offered Notes may be redeemed on any
Payment Date if, after giving effect to
payments that would otherwise be made on
such date, the outstanding principal
balance of the Offered Notes has been
reduced to less than [five percent (5%)]
of the initial principal

S-10
<PAGE>

balance thereof. See "Description of
the Offered Notes -- Optional
Redemption" herein.

Collection Account
and Subaccounts....................... Upon issuance of the Offered Notes, a
Collection Account will be established
and held by the Indenture Trustee for
the benefit of the Noteholders of all
Series of Notes. The Collection Account
will consist of four subaccounts: a
general subaccount (the "General
Subaccount"), a reserve subaccount (the
"Reserve Subaccount"), a subaccount for
the Overcollateralization Amount (the
"Overcollateralization Subaccount"), and
a capital subaccount (the "Capital
Subaccount"). Unless the context
indicates otherwise, references herein
to the Collection Account include each
of the subaccounts contained therein.
Withdrawals from and deposits to these
subaccounts will be made as described
under "Security for the Notes --
Allocations; Payments" in the
Prospectus.

Credit Enhancement..................... The Offered Notes will benefit from the
following forms of credit enhancement:

OVERCOLLATERALIZATION. The
Overcollateralization Amount established
in connection with the issuance of the
Offered Notes will be [$__________],
which is 0.50 percent of the initial
aggregate Class Principal Balance for
all of the Offered Notes. The IFC
Charges will be set and adjusted at a
rate that is intended to recover, among
other things, the Overcollateralization
Amount over the life of the Offered
Notes according to the schedule set
forth under "Description of the Offered
Notes -- Overcollateralization Amount"
herein. Collections allocated to the
Overcollateralization Amount for all
Series of Notes, including the Offered
Notes, will be held in the
Overcollateralization Subaccount, as
described further under "Security for
the Notes -- Description of Indenture
Accounts -- Overcollateralization
Subaccount" in the Prospectus and any
such amounts will be available to pay
interest and make Scheduled Payments on
all Series of Notes, including the
Offered Notes, to the extent of any
shortfalls in current IFC Collections
available for such payment. The amount
required to be on deposit in the
Overcollateralization Subaccount with
respect to the Offered Notes as of any
Payment Date, as specified in the
schedule set forth under "Description of
the Offered Notes --
Overcollateralization Amount" herein, is
referred to herein as the "Required
Overcollateralization Level."

RESERVE SUBACCOUNT. IFC Collections
available with respect to any Payment
Date in excess of amounts necessary to
(a) pay interest and make Scheduled
Payments on all Series of Notes,

S-11
<PAGE>

including the Offered Notes (or, if the
Notes have been declared due and
payable, to pay the Notes in full), (b)
pay all related fees and expenses of the
Trust, including the Servicing Fee and
any Quarterly Administration Fee, (c)
replenish the Capital Subaccount up to
the Required Capital Level, and (d) fund
and maintain the Overcollateralization
Subaccount up to the Required
Overcollateralization Level (all as
described under "Security for the
Notes -- Allocations; Payments" in the
Prospectus), will be allocated to the
Reserve Subaccount. On each Payment
Date, the Indenture Trustee will draw on
amounts in the Reserve Subaccount, to
the extent amounts available in the
General Subaccount are insufficient to
pay expenses of the Trust and to pay
interest and make Scheduled Payments on
the Notes and to make other payments and
transfers in accordance with the terms
of the Indenture.

CAPITAL SUBACCOUNT. Prior to or upon the
issuance of the Offered Notes, the
Grantee will transfer capital to the
Trust in the amount of [$__________],
which is 0.50 percent of the initial
aggregate Class Principal Balance for
all of the Offered Notes. Such amount
is the Required Capital Level with
respect to the Offered Notes and,
together with the Required Capital Level
with respect to any other Series of
Notes, will be deposited into the
Capital Subaccount. Withdrawals from
and deposits to the Capital Subaccount
will be made as described under
"Security for the Notes -- Allocations;
Payments" in the Prospectus.

Allocations and Payment................ On each Payment Date, amounts on deposit
in the Collection Account will be
applied in the manner described under
"Security for the Notes -- Allocations;
Payments" in the Prospectus.

Servicing Compensation................. The Servicer will be entitled to receive
a servicing fee on each Payment Date
(the "Servicing Fee"), in an amount
equal to (a) $__________, for so long as
IFC Charges are billed concurrently with
charges otherwise billed by the Servicer
to Customers (which ComEd and any
successor thereto are required to do)
and (b) $_____________, if IFC Charges
are not billed concurrently with charges
otherwise billed by the Servicer to
Customers. The Servicing Fee in
clause (b) will only be payable if the
Servicer is not ComEd or a successor
thereto. The Servicing Fee will be paid
prior to the payment of any amounts in
respect of interest on and principal of
the Offered Notes. The Servicer will be
entitled to retain as additional
compensation net investment income on
IFC Payments received by the Servicer
prior to remittance thereof to the
Collection Account and the portion of
late fees, if any, paid by Customers
relating to the IFC Payments. See

S-12
<PAGE>

"Servicing -- Servicing Compensation"
herein and in the Prospectus.

No Servicer Advances................... The Servicer will not be obligated to
make any advances of interest or
principal on the Offered Notes.

Maturity, Weighted Average Life and
Yield Considerations................... The actual Payment Dates on which
principal is paid on each Class of
Offered Notes and, therefore, the
weighted average life and yield to
maturity on the Offered Notes may be
affected by various factors. See
"Certain Payment, Weighted Average Life
and Yield Considerations" and
"Description of the Intangible
Transition Property -- Adjustments to
the IFC Charges" in the Prospectus.

Denominations.......................... Each Class of Offered Notes will be
issued in minimum initial denominations
of [$1,000] and in integral multiples
thereof.

Book-Entry Notes....................... The Offered Notes will initially be
represented by one or more certificates
registered in the name of Cede & Co.
("Cede") (each, a "Book-Entry Note"),
the nominee of The Depository Trust
Company ("DTC"), and available only in
the form of book-entries on the records
of DTC, its Participants and its
Indirect Participants. Holders may also
hold Book-Entry Notes of a Series
through CEDEL or Euroclear (in Europe),
if they are participants in such systems
or indirectly through organizations that
are participants in such systems. For a
more complete discussion of the
Book-Entry Notes, see "Risk Factors" and
"Description of the Notes -- Book-Entry
Registration" in the Prospectus.

Ratings................................ It is a condition of issuance of the
Offered Notes that the Offered Notes be
rated [_____] by ______________________,
[_____] by ___________________________,
[_____] by
_______________________________ and
[_____] by _______________________ (each
of such rating agencies, a "Rating
Agency).

A security rating is not a
recommendation to buy, sell or hold
securities and may be subject to
revision or withdrawal at any time. No
person is obligated to maintain any
rating on any Offered Note and,
accordingly, there can be no assurance
that the ratings assigned to any Class
of Offered Notes upon initial issuance
thereof will not be revised or withdrawn
by a Rating Agency at any time
thereafter. If a rating of any Series or
Class of Offered Notes is revised or
withdrawn, the liquidity of such Series
or Class of Offered Notes may be
adversely affected. In general, the
ratings address credit risk and do not
represent any assessment of the rate of
principal payments on the Offered
Notes. See "Risk Factors -- Nature of
the Notes -- Uncertain Payment Amounts
and Weighted Average

S-13
<PAGE>

Life" in the Prospectus, "Certain
Payment, Weighted Average Life and Yield
Considerations" herein and in the
Prospectus and "Ratings" herein and in
the Prospectus.

Taxation of the Notes.................. Interest paid on the Offered Notes
generally will be taxable to a
United States Noteholder as ordinary
interest income at the time it accrues
or is received in accordance with such
United States Noteholder's method of
accounting for United States federal
income tax purposes. See "Certain
United States Federal Tax
Considerations" herein and in the
Prospectus.

ERISA Considerations................... Subject to the considerations described
in "ERISA Considerations" in the
Prospectus, a fiduciary or other person
contemplating purchasing the Offered
Notes on behalf of or with assets of any
employee benefit plan or other plan or
arrangement (including but not limited
to an insurance company general account)
that is subject to Title I of the
Employee Retirement Income Security Act
1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of
1986, as amended (the "Code")
(collectively, "Plans"), should
carefully review with its legal advisors
whether the purchase or holding of the
Offered Notes could give rise to a
transaction prohibited or not otherwise
permissible under ERISA or Section 4975
of the Code.

S-14
<PAGE>

DESCRIPTION OF THE OFFERED NOTES

GENERAL

The Offered Notes, together with any Notes of any other Series which may
hereafter be issued by the Trust (collectively, the "Notes"), will be issued by
the Trust pursuant to the Indenture and the trustee's issuance certificate or
series supplement, if any, thereto. Pursuant to the Indenture, further trustee's
issuance certificates or series supplements may be executed in order for the
Trust to issue additional Series of Notes. In connection with the issuance of
any additional Series of Notes pursuant to a subsequent Transitional Funding
Order, the IFC Charges will be increased to a level calculated to be sufficient
over time to provide for, among other things, payment of all interest and
principal in respect of all outstanding Notes. This summary should be read
together with the material under the heading "Description of the Notes" in the
Prospectus.

The Offered Notes will be comprised of the following [seven] Classes:

Initial Note
Principal Scheduled Interest
Class Amount Maturity Date Final Maturity Date Rate
----- ------ ------------- ------------------- ----
<S> <C> <C> <C> <C>
A-1........
A-2........
A-3........
A-4........
A-5........
A-6........
A-7........
</TABLE>

SECURITY

To secure the payment of principal of and interest on the Offered Notes, the
Trust has granted to the Indenture Trustee, for the benefit of the holders of
the Notes (the "Noteholders"), a security interest in all of the Trust's right,
title and interest in and to the 1998 ITP, any subsequent Intangible Transition
Property created under any subsequent Transitional Funding Order and the other
Note Collateral. If additional Notes (other than the Offered Notes) are
subsequently issued, the Offered Notes will be at least PARI PASSU with such
other Notes as to all of the Intangible Transition Property and the other Note
Collateral. The Note Collateral is described more specifically under "Security
for the Notes--Pledge of Note Collateral" in the Prospectus.

PAYMENTS OF INTEREST

Interest on each Class of the Offered Notes will accrue from the Series
Issuance Date at the rates set forth on the cover page and above (each, a "Note
Interest Rate"), in each case payable quarterly on each Payment Date of each
year, commencing ____________, 1999.

On each Payment Date, Noteholders of each Class of Offered Notes will be
entitled to receive pro rata any unpaid interest payable on any prior Payment
Dates, together with interest thereon at the applicable Note Interest Rate and
interest in an amount equal to one-fourth of the product of (a) the applicable
Note Interest Rate and (b) the applicable Class Principal Balance as of the
close of business on the preceding Payment Date after giving effect to all
payments of principal made to the Noteholders on such preceding Payment Date;
provided, however, that with respect to the initial Payment Date, interest on
each outstanding Class Principal Balance will accrue from and including the
Series Issuance Date to but excluding such first Payment Date. Interest will be
calculated on the basis of a 360-day year of twelve 30-day months. See
"Description of the Notes -- Interest and Principal" in the Prospectus.

S-15
<PAGE>

PAYMENTS OF PRINCIPAL

Unless an Event of Default has occurred and is continuing and the Offered
Notes have been declared due and payable, on each Payment Date, each Class of
the Offered Notes will be entitled to receive payments of principal as follows:

[(1) to the holders of the Class A-1 Notes, until the Class Principal
Balance thereof has been reduced to zero;
(2) to the holders of the Class A-2 Notes, until the Class Principal
Balance thereof has been reduced to zero;
(3) to the holders of the Class A-3 Notes, until the Class Principal
Balance thereof has been reduced to zero;
(4) to the holders of the Class A-4 Notes, until the Class Principal
Balance thereof has been reduced to zero;
(5) to the holders of the Class A-5 Notes, until the Class Principal
Balance thereof has been reduced to zero;
(6) to the holders of the Class A-6 Notes, until the Class Principal
Balance thereof has been reduced to zero;
(7) to the holders of the Class A-7 Notes, until the Class Principal
Balance thereof has been reduced to zero;]

provided, however, that, unless an Event of Default has occurred and is
continuing and the Offered Notes have been declared due and payable, in no event
shall the principal payment on any Class on a Payment Date be greater than the
Scheduled Payment for such Class and Payment Date.

Principal will be payable at the Corporate Trust Office of the Indenture
Trustee in the City of Chicago, Illinois, or at the office or agency of the
Indenture Trustee maintained for such purposes in the Borough of Manhattan, the
City of New York.

The following Expected Amortization Schedule sets forth the scheduled
outstanding Class Principal Balance for each Class of the Offered Notes at each
Payment Date from the Series Issuance Date to the Scheduled Maturity Date for
such Class. In preparing the following table, it has been assumed, among other
things, that (a) the Offered Notes are issued on _________, 1998, (b) payments
on the Offered Notes are made on each Payment Date, commencing ________, 1999,
(c) the Servicing Fee equals [_______________], (d) there are no net earnings on
amounts on deposit in the Collection Account, (e) Operating Expenses, Quarterly
Administration Fees, and amounts owed to the Indenture Trustee, the Delaware
Trustee and the Indenture Trustee are in the aggregate [$________] per quarter,
and all such amounts are payable in arrears, and (f) all IFC Collections are
deposited in the Collection Account in accordance with ComEd's forecasts.

EXPECTED AMORTIZATION SCHEDULE
OUTSTANDING PRINCIPAL BALANCE
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------ SERIES 1998
DATE CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5 CLASS A-6 CLASS A-7 TOTAL
- ---- --------- --------- --------- --------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series Issuance Date $_________
</TABLE>

[INFORMATION TO BE PROVIDED]

There can be no assurance that the Class Principal Balances of the Offered
Notes will be reduced as indicated in the foregoing table, and the actual
reductions in such Class Principal Balances may be slower (or, if an Event of
Default occurs and is continuing and the Offered Notes have been declared due
and payable, faster) than those indicated in the chart. See "Risk Factors" in
the Prospectus for a discussion of various factors which

S-16
<PAGE>

may, individually or in the aggregate, affect the rate of reductions of the
Class Principal Balances of the Offered Notes.

The entire unpaid principal amount of the Offered Notes will be due and payable
on the date on which an Event of Default has occurred and is continuing, if the
Indenture Trustee or holders of not less than a majority in principal amount of
the Notes of all Series then outstanding have declared the Offered Notes to be
immediately due and payable. See "Security for the Notes -- Events of Default;
Rights Upon Event of Default" in the Prospectus.

OPTIONAL REDEMPTION

The Offered Notes may be redeemed on any Payment Date commencing with the
Payment Date on which the outstanding principal balance of the Offered Notes
(after giving effect to payments that would otherwise be made on such date) has
been reduced to less than [five] percent of the initial principal balance of the
Offered Notes. Notice of such redemption will be given by the Indenture Trustee
to each holder of Offered Notes to be redeemed by first-class mail, postage
prepaid, mailed not less than 25 days nor more than 50 days prior to the date of
redemption.

OVERCOLLATERALIZATION AMOUNT

The 1998 TFO provides that the Trust, as the assignee of the Intangible
Transition Property, is entitled to collect an additional amount (for the
Offered Notes, the "Overcollateralization Amount"), which is intended to enhance
the likelihood that payments on the Offered Notes will be made in accordance
with their respective Expected Amortization Schedules. The
Overcollateralization Amount established in connection with the issuance of the
Offered Notes will be [$__________], which is 0.50 percent of the initial
aggregate principal amount of the Offered Notes. The Overcollateralization
Amount is scheduled to be collected over the life of the Offered Notes in
accordance with the Schedule set forth hereinbelow. The Required
Overcollateralization Level for the Offered Notes on each Payment Date is as
follows:

REQUIRED OVERCOLLATERALIZATION LEVEL SCHEDULE

REQUIRED REQUIRED
OVERCOLLATERALIZATION OVERCOLLATERALIZATION
PAYMENT DATE LEVEL PAYMENT DATE LEVEL
------------ ----- ------------ -----
<S> <C> <C> <C>
</TABLE>

[INFORMATION TO BE PROVIDED]

OTHER CREDIT ENHANCEMENT

RESERVE SUBACCOUNT. IFC Collections available with respect to any Payment
Date in excess of amounts necessary to (a) pay interest and make Scheduled
Payments on the Notes (or if the Notes have been declared due and payable, to
pay the Notes in full), (b) pay all related fees and expenses of the Trust,
including the Servicing Fee and any Quarterly Administration Fee, (c) replenish
the Capital Subaccount up to the Required Capital Level, and (d) fund and
maintain the Overcollateralization Subaccount up to the Required
Overcollateralization Level (all as described under "Security for the Notes --
Allocations; Payments" in the Prospectus), will be allocated to the Reserve
Subaccount. On each Payment Date, the Indenture Trustee will draw on amounts in
the Reserve Subaccount, to the extent amounts available in the General
Subaccount are insufficient to pay expenses of the Trust and to pay interest and
make Scheduled Payments on the Notes and to make other payments and transfers in
accordance with the terms of the Indenture.

S-17
<PAGE>

for all of the Offered Notes. Such amount is the Required Capital Level with
respect to the Offered Notes and, together with the Required Capital Level with
respect to any other Series of Notes, will be deposited into the Capital
Subaccount. Withdrawals from and deposits to the Capital Subaccount will be
made as described under "Security for the Notes -- Allocations; Payments" in the
Prospectus.

ALLOCATIONS; PAYMENTS

On each Payment Date, the Indenture Trustee will, at the direction of the
Servicer, apply all amounts on deposit in the Collection Account in the manner
described under "Security for the Notes -- Allocations; Payments" in the
Prospectus.

S-18
<PAGE>

DESCRIPTION OF THE INTANGIBLE TRANSITION PROPERTY

1998 TFO

The Funding Law authorizes the ICC to issue the 1998 TFO in favor of the
Grantee at the request of ComEd to create and establish the 1998 ITP and to
permit the Trust to finance the 1998 ITP through the issuance of the Offered
Notes. The total dollar amount of 1998 ITP authorized by the 1998 TFO is
$6.323 billion, which represents the maximum dollar amount of IFC Charges which
may be applied and invoiced over time by the Servicer on behalf of the Trust
without further action by the ICC. In its application for the 1998 TFO, ComEd
estimated $4.931 billion as the amount of IFC Charges which would be necessary
to be billed through the Scheduled Maturity Date of all Classes of Offered Notes
in order to pay interest and principal on the Offered Notes, based on certain
conservative assumptions set forth therein. The 1998 TFO also permits the sale
of the Offered Notes in an aggregate principal amount not to exceed
$3.4 billion.

The 1998 TFO creates and establishes, among other things, the 1998 ITP and
authorizes the imposition and collection of the IFC Charges, which constitute
separate nonbypassable usage-based charges expressed in cents per kilowatt-hour
payable by Customers in an aggregate amount sufficient to repay in full the
Offered Notes, fund the Overcollateralization Subaccount and pay all related
fees and expenses. The 1998 TFO entitles the Trust, as the assignee of the 1998
ITP from the Grantee, to receive the payments made pursuant to the IFC Charges,
from all Customers through December 31, 2008 or, if later, until the Trust has
received IFC Collections sufficient to retire all the outstanding Offered Notes
and cover related fees and expenses. Subsequent Transitional Funding Orders may
authorize and create additional Intangible Transition Property and additions to
the IFC Charges in order to pay interest and principal on other Series of Notes
to be issued in connection therewith, together with related fees, expenses and
the Required Overcollateralization Level and Required Capital Level established
with respect to such Series of Notes.

The 1998 Authorized IFC Charges set forth in the 1998 TFO (which may be
increased by the ICC in connection with the issuance of a subsequent
Transitional Funding Order) which ComEd believes are higher than will actually
be required to make all payments on the Offered Notes, based on certain
conservative assumptions contained in the 1998 TFO, are as follows:
<TABLE>
<CAPTION>

IFC CHARGE
IFC CUSTOMER CLASS (CENTS PER kWh)
------------------ --------------
<S> <C>
Residential -- No Space Heat 1.476
Residential -- Space Heat 0.950
Standby Service 0.701
Interruptible Service 0.464
Street Lighting -- Fixture Based Rates 2.375
Street Lighting -- Dusk to Dawn and Traffic Signal 0.740
Railroads 1.047
Water-Supply and Sewage Pumping Service 0.963
In Lieu of Demand 1.399
0 to and including 100 kW Demand 1.099
Over 100 to and including 1,000 kW Demand 0.869
Over 1,000 to and including 10,000 kW Demand 0.805
Over 10,000 kW Demand 0.623
</TABLE>

As required by the Funding Law, any increase in the amount of the IFC Charges
for any of the IFC Customer Classes above the level of the 1998 Authorized IFC
Charges for such IFC Customer Class set forth in the immediately preceding table
shall require ComEd or any successor Utility thereto to file an amendatory
tariff adjusting the amounts otherwise billed by ComEd or such successor Utility
for Applicable Rates to offset the

S-19
<PAGE>

amount of such excess (or, if ComEd or such successor Utility shall have
previously filed any such amendatory tariffs, the incremental amount of such
excess). In connection with the issuance and pricing of the Offered Notes,
ComEd filed the 1998 IFC Tariff with the ICC which provides for, among other
things, certain revisions to the IFC Charges. The actual initial cents per
kilowatt-hour IFC Charge payable by each of the thirteen (13) IFC Customer
Classes beginning on the Series Issuance Date is as follows:

IFC CHARGE
IFC CUSTOMER CLASS (CENTS PER kWh)
------------------ --------------
<S> <C>
Residential -- No Space Heat
Residential -- Space Heat
Standby Service
Interruptible Service
Street Lighting -- Fixture Based Rates
Street Lighting -- Dusk to Dawn and Traffic Signal
Railroads
Water-Supply and Sewage Pumping Service
In Lieu of Demand
0 to and including 100 kW Demand
Over 100 to and including 1,000 kW Demand
Over 1,000 to and including 10,000 kW Demand
Over 10,000 kW Demand
</TABLE>

ADJUSTMENTS TO THE IFC CHARGES

The Servicing Agreement and the 1998 TFO require the Servicer to calculate
and implement Adjustments to the IFC Charges which are designed to enhance the
likelihood that the IFC Collections which are remitted to the Collection Account
will be sufficient to (a) pay interest and make Scheduled Payments on the Notes,
(b) pay all related fees and expenses of the Trust, including the Servicing Fee
and any Administration Fee, (c) replenish the Capital Subaccount up to the
Required Capital Level, and (d) fund and maintain the Overcollateralization
Subaccount up to the Required Overcollateralization Level. In addition, the IFC
Charges will be increased in connection with the issuance of additional Notes
pursuant to any subsequent Transitional Funding Order, to a level calculated to
be sufficient over time to provide for, among other things, payment of all
interest and principal in respect of all outstanding Notes.

The first kind of adjustment, a "Reconciliation Adjustment," will be
calculated by the Servicer within the two-week period preceding every other
Payment Date, commencing on _____________, 1999 (each Payment Date, a
"Reconciliation Payment Date").

The second kind of adjustment to the IFC Charges, a "True-Up Adjustment,"
will be calculated by the Servicer within the two-week period preceding every
Payment Date which is not a Reconciliation Payment Date, commencing on
__________, 1999 (each Payment Date, a "True-Up Payment Date") only if, as of
the True-Up Payment Date, the aggregate outstanding principal balance of the
Notes exceeds the scheduled aggregate outstanding principal balance of the Notes
set forth on the Expected Amortization Schedule by the greater of [5]% and
[$__________].

The changes in IFC Charges, if any, resulting from a Reconciliation
Adjustment and any True-Up Adjustment will take effect on the first billing day
of the month following the applicable Reconciliation Payment Date or True-Up
Payment Date.

See "Description of the Intangible Transition Property -- Adjustments to the
IFC Charges" in the Prospectus.

S-20
<PAGE>

THE SERVICER

The following is information which supplements that provided under the
heading "The Servicer" in the Prospectus. For a more complete discussion of the
Servicer, see "The Servicer" in the Prospectus.

[SUPPLEMENTAL FINANCIAL INFORMATION, IF ANY]

SERVICING

GENERAL

The Servicer will manage, service and administer, and make collections in
respect of, the Intangible Transition Property pursuant to the Servicing
Agreement between the Servicer and the Grantee. The Servicer may not resign
from its obligations and duties under the Servicing Agreement unless certain
requirements are met. The 1998 TFO does not require approval by the ICC of such
resignation. For a detailed discussion of the Servicer's procedures, the manner
in which payments from Customers are remitted to the Collection Account, and
related matters, see "Servicing" in the Prospectus.

NO SERVICER ADVANCES

The Servicer will not make any advances of interest or principal on the
Offered Notes.

SERVICING COMPENSATION

The Servicer will be entitled to receive a servicing fee on each Payment in
an amount equal to (a) $__________, for so long as IFC Charges are billed
concurrently with charges otherwise billed by the Servicer to Customers (which
ComEd and any successor thereto are required to do) and (b) $_____________, if
IFC Charges are not billed concurrently with charges otherwise billed by the
Servicer to Customers. The Servicing Fee in clause (b) will only be payable if
the Servicer is not ComEd or a successor thereto. The Servicing Fee (together
with any portion of the Servicing Fee that remains unpaid from prior Payment
Dates) will be paid solely to the extent funds are available therefor as
described under "Security for the Notes--Allocations; Payments" in the
Prospectus. The Servicing Fee will be paid prior to the payment of any amounts
in respect of interest on and principal of the Offered Notes. The Servicer will
be entitled to retain as additional compensation net investment income on IFC
Payments received by the Servicer prior to remittance thereof to the Collection
Account and the portion of late fees, if any, paid by Customers relating to the
IFC Payments.

STATEMENTS BY SERVICER

For each Remittance Date and each Payment Date, the Servicer will provide the
statements and reports described under "Servicing -- Statements by Servicer" in
the Prospectus.

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

[ComEd has received a ruling from the IRS holding that, among other things,
(a) the Trust's issuance and sale of the Offered Notes and the transfer of the
proceeds of such issuance to ComEd will not result in gross income to the
Grantee, the Trust or ComEd and (b) because neither the Trust nor the Grantee
will elect to be classified as an association taxable as a corporation for
federal income tax purposes, the Offered Notes will constitute obligations of
ComEd for federal income tax purposes.] See "Certain United States Federal Tax
Considerations" in the Prospectus.

The Indenture provides that a Noteholder and any persons holding a beneficial
interest in an Offered Note, by acquiring any Offered Note or interest therein,
agrees to treat the Offered Note as indebtedness of ComEd

S-21
<PAGE>

secured by the Note Collateral for purposes of federal, state and local income
and franchise taxes, and any other taxes imposed upon, measured by, or based
upon gross or net income, unless otherwise required by appropriate taxing
authorities.

For a discussion of certain United States federal income and estate tax
considerations relevant to the purchase, ownership and disposition of the Notes
by the initial beneficial owners thereof, see "Certain United States Federal Tax
Considerations" in the Prospectus.

S-22
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement,
the Trust has agreed to sell to each of the Underwriters named below (the
"Underwriters"), and each of the Underwriters, for whom ____________________,
________________ and ________________ are acting as representatives, has
severally agreed to purchase, the respective principal amounts of the Offered
Notes set forth opposite its name below.
<TABLE>
<CAPTION>

Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6 Class A-7
Name of Underwriter Notes Notes Notes s Notes Notes Notes Notes
------------------- ----- ----- --------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $ $

-------- -------- -------- -------- -------- -------- --------

TOTAL $ $ $ $ $ $ $
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and to pay for all of the Offered Notes
offered hereby, if any are taken.

The Underwriters propose to offer the Offered Notes in part directly to
retail purchasers at the initial public offering price set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers at
such price less a concession not in excess of ______ percent of the principal
amount of the Class A-1 Notes, ______ percent of the principal amount of the
Class A-2 Notes, ______ percent of the principal amount of the Class A-3 Notes,
______ percent of the principal amount of the Class A-4 Notes, ______ percent of
the principal amount of the Class A-5 Notes, ______ percent of the principal
amount of the Class A-6 Notes and ______ percent of the principal amount of the
Class A-7 Notes. The Underwriters may allow and such dealers may reallow a
concession, not in excess of ______ percent of the principal amount of the Class
A-1 Notes, ______ percent of the principal amount of the Class A-2 Notes, ______
percent of the principal amount of the Class A-3 Notes, ______ percent of the
principal amount of the Class A-4 Notes, ______ percent of the principal amount
of the Class A-5 Notes, ______ percent of the principal amount of the Class A-6
Notes and ______ percent of the principal amount of the Class A-7 Notes. After
the Offered Notes are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the Underwriters.

The Offered Notes are a new issue of securities with no established trading
market. The Offered Notes will not be listed on any securities exchange. The
Trust has been advised by the Underwriters that they intend to make a market in
the Offered Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Offered Notes.

In connection with the offering, the Underwriters may purchase and sell the
Offered Notes in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Offered Notes; and syndicate short positions involve
the sale by the Underwriters of a greater number of Offered Notes than they are
required to purchase from the Trust in the offering. The Underwriters also may
impose a penalty bid, whereby selling concessions allowed to syndicate members
or other broker-dealers in respect of the Offered Notes sold in the offering for
their account may be reclaimed by the syndicate if such Offered Notes are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Offered Notes, which may be higher than the price that might otherwise prevail
in the open market; and these activities, if commenced, may be discontinued at
any time.

Under the terms of the Underwriting Agreement, the Trust has agreed to
reimburse the Underwriters for certain expenses.

The Grantee and ComEd have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act.

S-23
<PAGE>

RATINGS

It is a condition of issuance of the Offered Notes that the Offered Notes be
rated [_____] by ____________________________, [_____] by ___________________,
[_____] by ____________________________, and [_____] by ______________________.
A security rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time by the assigning Rating
Agency. No person is obligated to maintain the rating on any Offered Note, and,
accordingly, there can be no assurance that the ratings assigned to any Class of
Offered Notes upon initial issuance will not be revised or withdrawn by a Rating
Agency at any time thereafter. If a rating of any Class of Offered Notes is
revised or withdrawn, the liquidity of such Class of Offered Notes may be
adversely affected. In general, ratings address credit risk and do not represent
any assessment of the rate of principal payments.

LEGAL MATTERS

Certain legal matters relating to the Offered Notes and certain federal
income tax consequences of the issuance of the Offered Notes will be passed upon
by Sidley & Austin, counsel to ComEd, the Grantee and the Trust. Certain legal
matters relating to the Offered Notes will be passed upon by Richards, Layton &
Finger, special Delaware counsel to the Trust, and by Winston & Strawn, Chicago,
Illinois, counsel to the Underwriters. Winston & Strawn acts from time to time
as counsel to ComEd and its affiliates in certain matters unrelated to the
offering of the Offered Notes.

S-24
<PAGE>

INDEX OF PRINCIPAL DEFINITIONS

Set forth below is a list of the defined terms used in this Prospectus
Supplement and defined herein and the pages on which the definitions of such
terms may be found herein. Certain defined terms used in this Prospectus
Supplement are defined in the Prospectus. See "Index of Principal Definitions"
in the Prospectus.
<TABLE>
<CAPTION>
DEFINED
DEFINED TERM ON PAGE
- ------------ -------
<S> <C>
1998 Authorized IFC Charges. . . . . . . . . . . . . . . . . . . . . . . S-7
1998 IFC Tariff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
1998 ITP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
1998 TFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4

Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . S-6
Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6

Book-Entry Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13

Capital Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Class Principal Balance. . . . . . . . . . . . . . . . . . . . . . . . . S-5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
ComEd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7

Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13

ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14

Final Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . S-9

General Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Grantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6

Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7

Note Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15

Offered Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Original Note Principal Balance. . . . . . . . . . . . . . . . . . . . . S-5
Overcollateralization Amount . . . . . . . . . . . . . . . . . . . . . . S-17
Overcollateralization Subaccount . . . . . . . . . . . . . . . . . . . . S-11

Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14

Rating Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
Reconciliation Adjustment. . . . . . . . . . . . . . . . . . . . . . . . S-20

S-25
<PAGE>

Reconciliation Payment Date. . . . . . . . . . . . . . . . . . . . . . . S-20
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Required Overcollateralization Level . . . . . . . . . . . . . . . . . . S-11
Reserve Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11

Scheduled Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . S-9
Series Issuance Date . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12

True-Up Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
True-Up Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6

Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
</TABLE>

(THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)

S-26

<PAGE>

SUBJECT TO COMPLETION, DATED _______, 1998

PROSPECTUS
COMED TRANSITIONAL FUNDING TRUST
TRANSITIONAL FUNDING TRUST NOTES
ISSUABLE IN SERIES
-----------------

COMMONWEALTH EDISON COMPANY
SERVICER

The ComEd Transitional Funding Trust Transitional Funding Trust Notes (the
"Notes") offered hereby in an aggregate principal amount of up to $
may be sold from time to time in series (each, a "Series"), each of which may
be comprised of one or more classes (each, a "Class"), as described in the
related Prospectus Supplement. Each Series of Notes will be issued by the ComEd
Transitional Funding Trust (the "Trust"), a Delaware business trust to be
created under a Declaration of Trust (the "Trust Agreement") by a Delaware
trustee to be named in the related Prospectus Supplement (the "Delaware
Trustee").

(CONTINUED ON FOLLOWING PAGE)

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

------------------------------------

PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH UNDER THE CAPTION "RISK FACTORS," WHICH BEGINS ON PAGE 29 HEREIN.

THE NOTES OFFERED HEREBY DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF
ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF AND DO NOT REPRESENT AN INTEREST
IN OR OBLIGATION OF COMMONWEALTH EDISON COMPANY OR ANY OF ITS AFFILIATES. NONE
OF THE NOTES OR THE UNDERLYING INTANGIBLE TRANSITION PROPERTY WILL BE GUARANTEED
OR INSURED BY COMMONWEALTH EDISON COMPANY OR ITS AFFILIATES.

THE INTANGIBLE TRANSITION PROPERTY ASSIGNED TO THE TRUST BY THE GRANTEE, CERTAIN
OTHER ASSETS OF THE TRUST AND PAYMENTS ON ANY RELATED SWAP AGREEMENT WILL BE THE
SOLE SOURCE OF PAYMENTS ON THE NOTES. NEITHER COMMONWEALTH EDISON COMPANY NOR
ANY OF ITS AFFILIATES WILL HAVE ANY OBLIGATIONS IN RESPECT OF THE NOTES OR THE
INTANGIBLE TRANSITION PROPERTY, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE
RELATED PROSPECTUS SUPPLEMENT.

TRANSITIONAL FUNDING ORDERS AUTHORIZING THE ISSUANCE OF THE NOTES DO NOT
CONSTITUTE A PLEDGE OF THE FULL FAITH AND CREDIT OF THE STATE OF ILLINOIS OR OF
ANY OF ITS POLITICAL SUBDIVISIONS. THE ISSUANCE OF THE NOTES UNDER THE FUNDING
LAW SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF
ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF
TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT.

THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES OFFERED
HEREBY UNLESS ACCOMPANIED BY THE RELATED PROSPECTUS SUPPLEMENT.

------------------------------------

Prospective investors should refer to the "Index of Principal Definitions"
which begins on page 113 herein for the location of the definitions of
capitalized terms that appear in this Prospectus.

___________ __, 1998

<PAGE>

(CONTINUED FROM PREVIOUS PAGE)

By one or more orders of the Illinois Commerce Commission (the "ICC"), in
accordance with Article XVIII of the Illinois Public Utilities Act, the
Intangible Transition Property will be created and will be granted by the ICC to
ComEd Funding, LLC, a special purpose Delaware limited liability company (the
"Grantee"), whose sole member is Commonwealth Edison Company, an Illinois
corporation ("ComEd"). The Intangible Transition Property, among other things,
will represent a current right to receive IFC Charges. The IFC Charges are
nonbypassable usage-based per kilowatt-hour charges to be imposed against
certain customers of ComEd and collections thereof will be the primary source of
payment of principal and interest on the Notes. Pursuant to one or more
Intangible Transition Property Sale Agreements between the Grantee and the Trust
(each, a "Sale Agreement"), the Grantee will assign its rights in, to and under
the related Intangible Transition Property, the Servicing Agreement and other
related assets to the Trust. ComEd will also enter into one or more Agreements
Relating to Grant of Intangible Transition Property (each, a "Grant Agreement")
for the benefit of the Grantee, the rights under which will be assigned to the
Trust pursuant to the related Sale Agreement. See "Description of the
Intangible Transition Property -- Sale and Assignment of Intangible Transition
Property." ComEd will act as initial servicer of the Intangible Transition
Property (in its capacity as servicer, the "Servicer") pursuant to the
Intangible Transition Property Servicing Agreement (the "Servicing Agreement")
between ComEd and the Grantee. See "Servicing."

The Notes will be secured primarily by the Intangible Transition Property, as
described under "Prospectus Summary -- Intangible Transition Property" and
"Description of the Intangible Transition Property." The Notes will also be
secured by the Grant Agreements, the Sale Agreements and the Servicing
Agreement; the Collection Account and all amounts of cash or investment property
on deposit therein or credited thereto from time to time; with respect to
Floating Rate Notes only, any interest rate exchange agreement (a "Swap
Agreement") executed solely to permit the issuance of Notes that accrue interest
at a variable rate based on the index described in the related Prospectus
Supplement (the "Floating Rate Notes"); all rights to compel ComEd, as Servicer
(or any successor) to file for and obtain adjustments to the IFC Charges; all
present and future claims, demands, causes and choses in action in respect of
any or all of the foregoing; and all payments on or under and all proceeds in
respect of any or all of the foregoing. See "Security for the Notes -- Pledge
of Note Collateral."

The Trust will issue to investors separate Series of Notes from time to time
upon terms determined at the time of sale and described in the related
Prospectus Supplement. Each Series of Notes may be issuable in one or more
Classes. A Series may include Classes which differ as to the interest rate,
timing, sequential order and amount of distributions of principal or interest,
or both, or otherwise. As more specifically described under "Security for the
Notes -- Allocations; Payments," the Trust will use all payments made with
respect to Intangible Transition Property (including investment earnings
thereon) to pay certain expenses described herein, interest due on the Notes and
principal payable on the Notes, allocated among the Series and Classes of Notes
based on the priorities described herein and in the related Prospectus
Supplement, except that investment earnings on amounts on deposit in the
Collection Account shall, to the extent such amounts are not otherwise required
to make other payments described herein, or in the related Prospectus
Supplement, be paid to the Trust or as it directs. All principal not previously
paid, if any, on any Note will be due and payable on the Final Maturity Date of
such Note. The Intangible Transition Property, certain other assets of the Trust
and, solely with respect to Floating Rate Notes, payments pursuant to any Swap
Agreement entered into with respect to the issuance of any Series of Floating
Rate Notes (or any Class thereof) will be the only source of payments on the
Notes of such Series (or any Class thereof). While the specific terms of any
Series of Notes (and the Classes, if any, thereof) will be described in the
related Prospectus Supplement, the terms of such Series and any Classes thereof
will not be subject to prior review by, or consent of, the Noteholders of any
previously issued Series.

Offers of the Notes of a Series may be made through one or more different
methods, including offerings through underwriters, as described under "Plan of
Distribution" herein and "Underwriting" in the related Prospectus Supplement.
There will have been no secondary market for the Notes of any Series prior to
the offering thereof. There can be no assurance that a secondary market for any
Series of Notes will develop or, if

2
<PAGE>

one does develop, that it will continue. It is not anticipated that any of the
Notes will be listed on any securities exchange.

No dealer, salesperson, or any other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or the related Prospectus Supplement and, if given or made, such
information or representations must not be relied upon as having been authorized
by ComEd, the Trust, the Grantee or any dealer, salesperson or any other person.
Neither the delivery of this Prospectus or the related Prospectus Supplement nor
any sale made hereunder or thereunder shall under any circumstances create an
implication that there has been no change in the information herein or therein
since the date hereof. This Prospectus and the related Prospectus Supplement do
not constitute an offer to sell or a solicitation of an offer to buy any
security in any jurisdiction in which it is unlawful to make such offer or
solicitation.

UNTIL 90 DAYS AFTER THE DATE OF EACH PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THE
DISTRIBUTION THEREOF, MAY BE REQUIRED TO DELIVER THIS PROSPECTUS AND THE RELATED
PROSPECTUS SUPPLEMENT. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

AVAILABLE INFORMATION

The Grantee, as depositor of the Trust, has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (as amended, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Notes. This Prospectus, which forms a
part of the Registration Statement, and any Prospectus Supplement describe the
material terms of each document filed as an exhibit to the Registration
Statement; however, this Prospectus and any Prospectus Supplement do not contain
all of the information contained in the Registration Statement and the exhibits
thereto. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission are not necessarily complete, and in each instance reference
is made to the copy of such document so filed. Each such statement is qualified
in its entirety by such reference. For further information, reference is made to
the Registration Statement and the exhibits thereto, which are available for
inspection without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
regional offices located as follows: Chicago Regional Office, Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and New York
Regional Office, 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of the Registration Statement and exhibits thereto may be obtained at the
above locations at prescribed rates. Information filed with the Commission can
also be inspected at the Commission's site on the World Wide Web at
http://www.sec.gov.

The Grantee will file with the Commission such periodic reports with respect
to each Series of Notes as are required by the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules, regulations or orders of the
Commission thereunder. The Grantee may discontinue filing periodic reports under
the Exchange Act at the beginning of any fiscal year following the issuance of
the Notes of any Series if there are fewer than 300 holders of such Notes.

REPORTS TO HOLDERS

Unless and until the Notes are no longer issued in book-entry form, the
Servicer will provide to Cede & Co., as nominee of The Depository Trust Company
("DTC") and registered holder of the Notes, and, upon request, to Participants
of DTC, periodic reports concerning the Notes. See "Security For the Notes --
Reports to Noteholders." Such reports may be made available to the holders of
interests in the Notes (the "Noteholders") upon request to their Participants.
Such reports will not constitute financial statements prepared in accordance
with generally accepted accounting principles. The financial information
provided to Noteholders will not be examined and reported upon, nor will an
opinion thereon be provided, by any independent public accountant.

3
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

All reports and other documents filed by the Grantee, on behalf of the Trust,
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering made
hereby shall be deemed to be incorporated by reference in this Prospectus and to
be part hereof. Any statement contained herein or in a Prospectus Supplement, or
in a document incorporated or deemed to be incorporated by reference herein or
therein shall be deemed to be modified or superseded for purposes of this
Prospectus and any Prospectus Supplement to the extent that a statement
contained herein, in any Prospectus Supplement or in any other subsequently
filed document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.

The Grantee will provide without charge to each person to whom a copy of this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any of or all the documents incorporated herein by reference (other than
exhibits to such documents). Requests for such copies should be directed to the
Grantee, at ComEd Funding, LLC at Ten South Dearborn Street, 37th Floor,
Chicago, Illinois 60603, or by telephone at (312) 394-7937, Attention: David
Zahakaylo.

PROSPECTUS SUPPLEMENT

The Prospectus Supplement for a Series of Notes will describe the following
terms of such Series and, if applicable, the Classes thereof: (a) the
designation of the Series and, if applicable, the Classes thereof, (b) the
principal amount, (c) the annual rate at which interest accrues, or if the Trust
has entered into a Swap Agreement with respect to such Series, the index on
which a variable rate of interest will be based, (d) the dates on which payments
of interest and principal are scheduled to occur, (e) the Scheduled Maturity
Date and the Final Maturity Date of such Series, (f) the initial Reconciliation
Payment Date and initial True-Up Payment Date of such Series, (g) the issuance
date of the Series, (h) the place or places for the payment of principal and
interest, (i) the authorized denominations, (j) the provisions for optional
redemption of such Series, (k) the Expected Amortization Schedule for principal
of such Series and, if applicable, the Classes thereof, (l) the IFC Charges as
of the date of issuance of such Series of Notes and the portion of total IFC
Charges authorized and initially imposed in connection with such issuance, (m)
the total dollar amount of Intangible Transition Property authorized by the
related Transitional Funding Order, (n) any other terms of such Series and any
Class thereof that are not inconsistent with the provisions of the Notes and
that will not result in any Rating Agency reducing or withdrawing its then
current rating of any outstanding Series or Class of Notes, (o) the identity of
the Indenture Trustee and the Delaware Trustee, and (p) the terms of any Swap
Agreement executed solely to permit the issuance of floating rate Notes.

4
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .3

REPORTS TO HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . .4

PROSPECTUS SUPPLEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .4

TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Unusual Nature of the Intangible Transition Property. . . . . . . . . . 29
Legal Challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Possible Amendment or Repeal of Amendatory Act; Breach of State
Pledge;Limited Rights and Remedies. . . . . . . . . . . . . . . . . 29
Limit on Amount of Intangible Transition Property . . . . . . . . . . . 30
Potential Servicing Issues. . . . . . . . . . . . . . . . . . . . . . . 30
Uncertainties Related to the Electric Industry Generally. . . . . . . . 33
Changing Regulatory and Legislative Environment . . . . . . . . . . . . 35
Reliance on Broad Base of Customers . . . . . . . . . . . . . . . . . . 35
Reduction in Amount of Revenue From Applicable Rates. . . . . . . . . . 36
Bankruptcy and Creditors' Rights Issues . . . . . . . . . . . . . . . . 38
Nature of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 40

ELECTRIC INDUSTRY RESTRUCTURING IN ILLINOIS. . . . . . . . . . . . . . . . 43
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Amendatory Act Overview . . . . . . . . . . . . . . . . . . . . . . . . 43
Transition Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Transition Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Alternative Retail Electric Suppliers . . . . . . . . . . . . . . . . . 45
Competitive Services. . . . . . . . . . . . . . . . . . . . . . . . . . 46
Instrument Funding Charges. . . . . . . . . . . . . . . . . . . . . . . 46
Federal Initiatives; Increased Competition. . . . . . . . . . . . . . . 47

DESCRIPTION OF THE INTANGIBLE TRANSITION PROPERTY. . . . . . . . . . . . . 48
Creation of Intangible Transition Property Under the Funding Law. . . . 48
Limitations on the Amounts of Transitional Funding Instruments,
Intangible Transition Property and Instrument Funding Charges
Which Can Be Authorized; Permitted Use of Proceeds. . . . . . . . . 49
Imposition and Collection of Instrument Funding Charges; Adjustments
Thereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Transitional Funding Order Issued at the Request of ComEd . . . . . . . 52
Transactions Pursuant to the Transitional Funding Orders. . . . . . . . 53
Nonbypassable IFC Charges . . . . . . . . . . . . . . . . . . . . . . . 53
Adjustments to the IFC Charges. . . . . . . . . . . . . . . . . . . . . 54
Sale and Assignment of Intangible Transition Property . . . . . . . . . 55
Grant Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Representations and Warranties of ComEd . . . . . . . . . . . . . . . . 57
Covenants of ComEd. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Amendment of Grant Agreements . . . . . . . . . . . . . . . . . . . . . 60
Indemnification Obligations of ComEd. . . . . . . . . . . . . . . . . . 60
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Sale Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Representations And Warranties of Grantee . . . . . . . . . . . . . . . 61
Covenants of the Grantee. . . . . . . . . . . . . . . . . . . . . . . . 62
Amendment of Sale Agreements. . . . . . . . . . . . . . . . . . . . . . 64
Indemnification Obligations of the Grantee. . . . . . . . . . . . . . . 64

CERTAIN PAYMENT, WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS. . . . . . 65

THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

THE GRANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Managers and Officers . . . . . . . . . . . . . . . . . . . . . . . . . 67

THE SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ComEd Customer Base, Electric Energy Consumption and Base Rates . . . . 68
Forecasting Electricity Consumption . . . . . . . . . . . . . . . . . . 71
Forecast Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Credit Policy; Billing; Collections; Restoration of Service . . . . . . 72
Loss and Delinquency Experience . . . . . . . . . . . . . . . . . . . . 74
Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Year 2000 Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

SERVICING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Servicing Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . 77
Servicing Standards and Covenants . . . . . . . . . . . . . . . . . . . 78
Remittances to Collection Account . . . . . . . . . . . . . . . . . . . 78
No Servicer Advances. . . . . . . . . . . . . . . . . . . . . . . . . . 79
Servicing Compensation. . . . . . . . . . . . . . . . . . . . . . . . . 79
Alternative Retail Electric Suppliers and Other Third-Party Collectors. 80
Servicer Representations and Warranties . . . . . . . . . . . . . . . . 80
Statements by Servicer. . . . . . . . . . . . . . . . . . . . . . . . . 81
Evidence as to Compliance . . . . . . . . . . . . . . . . . . . . . . . 81
Certain Matters Regarding the Servicer. . . . . . . . . . . . . . . . . 82
Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Rights upon Servicer Default. . . . . . . . . . . . . . . . . . . . . . 82
Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . 83
Successor Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 85
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Interest and Principal. . . . . . . . . . . . . . . . . . . . . . . . . 86
Payments on the Notes . . . . . . . . . . . . . . . . . . . . . . . . . 86
Floating Rate Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Registration and Transfer of the Notes. . . . . . . . . . . . . . . . . 87
Book-Entry Registration . . . . . . . . . . . . . . . . . . . . . . . . 87
Definitive Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Conditions of Issuance of Additional Series . . . . . . . . . . . . . . 91
List of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . 92
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECURITY FOR THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 93
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Pledge of Note Collateral . . . . . . . . . . . . . . . . . . . . . . . 93
Security Interest in Note Collateral. . . . . . . . . . . . . . . . . . 93
Description of Indenture Accounts . . . . . . . . . . . . . . . . . . . 94
Allocations; Payments.. . . . . . . . . . . . . . . . . . . . . . . . . 96
State Pledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Reports to Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . 98
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . 98
Certain Covenants of the Delaware Trustee and the Trust . . . . . . . . 99
Events of Default; Rights Upon Event of Default . . . . . . . . . . . .100
Actions by Noteholders. . . . . . . . . . . . . . . . . . . . . . . . .102
Annual Compliance Statement . . . . . . . . . . . . . . . . . . . . . .102

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . .103
Tax Consequences to United States Noteholders . . . . . . . . . . . . .103
Tax Consequences to Non-United States Noteholders . . . . . . . . . . .104
Backup Withholding and Information Reporting. . . . . . . . . . . . . .106

ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .109

USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . .111

RATINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

INDEX OF PRINCIPAL DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .113

INDEX OF FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . .F-1
</TABLE>

7
<PAGE>

PROSPECTUS SUMMARY

THE FOLLOWING PROSPECTUS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND BY REFERENCE
TO THE INFORMATION WITH RESPECT TO EACH SERIES OF NOTES CONTAINED IN THE RELATED
PROSPECTUS SUPPLEMENT. CAPITALIZED TERMS USED BUT NOT DEFINED IN THIS PROSPECTUS
SUMMARY HAVE THE MEANINGS ASCRIBED TO SUCH TERMS ELSEWHERE IN THIS PROSPECTUS.
THE INDEX OF PRINCIPAL DEFINITIONS WHICH BEGINS ON PAGE 113 SETS FORTH THE PAGES
ON WHICH THE DEFINITIONS OF CERTAIN PRINCIPAL TERMS APPEAR.

Transaction Overview . . . . . . . The Illinois Electric Utility Transitional
Funding Law of 1997 (the "Funding Law")
permits Illinois electric utilities
(collectively, the "Utilities"), including
Commonwealth Edison Company, an Illinois
corporation ("ComEd"), and other permitted
issuers, including the Trust, to issue
transitional funding instruments, such as
the Notes, in an aggregate amount for each
Utility not to exceed, among certain other
restrictions, 50% of such Utility's total
capitalization as of December 31, 1996;
provided, however, that prior to August 1,
1999, the maximum amount of transitional
funding instruments may not exceed 25% of
such Utility's total capitalization as of
December 31, 1996.

Pursuant to the Funding Law, the Illinois
Commerce Commission (the "ICC") has issued
and may hereafter issue one or more
financing orders in favor of the Grantee
at the request of ComEd (each a
"Transitional Funding Order") each of
which provides, among other things, for
the creation of Intangible Transition
Property and the vesting thereof in the
Grantee. The Intangible Transition
Property created by each Transitional
Funding Order, among other things,
represents the right to impose and receive
certain nonbypassable usage-based charges
(expressed in cents per kilowatt-hour and
included in the regular utility bills of
existing and future electric service
customers in ComEd's service area in
Illinois, together with certain other
"retail customers" as defined in the
Illinois Public Utilities Act (the
"Act")), and all related revenues,
collections, claims, payments, money or
proceeds thereof. These charges are
nonbypassable in that Customers cannot
avoid paying them regardless of from whom
their electricity is purchased; provided,
however, that such charges must be
deducted from amounts which could
otherwise be billed by ComEd (or its
successor) or other provider of electric
service to such Customers on account of
its tariffed rates (or, in the case of
Customers not taking tariffed services on
account of private contracts, from the
charges and rates for the equivalent
services provided by ComEd). ComEd will
enter into one or more Agreements Relating
to Grant of Intangible Transition Property
(each, a "Grant Agreement" and
collectively, the "Grant Agreements")
relating to the grant by the ICC to the
Grantee of all of the rights in and to the
Intangible Transition Property created by
the related Transitional Funding Order and
containing certain

8
<PAGE>

representations, warranties and covenants
with respect to such Intangible Transition
Property.

Pursuant to an Intangible Transition
Property Sale Agreement between the
Grantee and the Trust (each, a "Sale
Agreement" and collectively, the "Sale
Agreements"), the Grantee has assigned and
may further assign its rights in, to and
under the Intangible Transition Property
created by the related Transitional
Funding Order, the Servicing Agreement and
certain other related assets to the Trust.
The Trust, whose primary asset will be all
of the Intangible Transition Property
transferred to the Trust pursuant to the
Sale Agreements, will issue the Notes,
which will be sold to the underwriters
named in each Prospectus Supplement. The
Notes will be secured primarily by all of
the Intangible Transition Property. The
Notes also will be secured by the Grant
Agreements, the Sale Agreements and the
Intangible Transition Property Servicing
Agreement between the Servicer and the
Grantee (the "Servicing Agreement"); the
Collection Account and all amounts of cash
or investment property on deposit therein
or credited thereto from time to time;
with respect to Floating Rate Notes only,
any interest rate exchange agreement
(each, a "Swap Agreement") entered into
with respect to the issuance of such
Floating Rate Notes; all rights to compel
ComEd, as Servicer (or any successor) to
file for and obtain adjustments to the IFC
Charges in accordance with
Section 18-104(d) of the Act, the
Transitional Funding Orders and all
tariffs filed with the ICC in connection
therewith (each an "IFC Tariff"); all
present and future claims, demands, causes
and choses in action in respect of any or
all of the foregoing; and all payments on
or under and all proceeds in respect of
any or all of the foregoing. See "Security
for the Notes."

The IFC Charges will be calculated and
adjusted from time to time to generate
projected revenues expected to be
sufficient over time to (a) pay interest
and make Scheduled Payments on the Notes,
(b) pay all related fees and expenses of
the Trust, including the Servicing Fee and
any Quarterly Administration Fee, (c)
replenish the Capital Subaccount up to the
Required Capital Level, and (d) fund and
maintain the Overcollateralization
Subaccount up to the Required
Overcollateralization Level. The IFC
Charges will be subject to both
Reconciliation Adjustments and True-Up
Adjustments, as described under
"Description of the Intangible Transition
Property -- Adjustments to the IFC
Charges" over the term of each Series of
Notes to enhance the likelihood of timely
recovery of such amounts.

9
<PAGE>

The following diagram represents a general
summary of the parties to the transactions
contemplated hereby, their roles and their
various relationships to the other
parties.

PARTIES TO TRANSACTION

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Grant of rights in, to and
under Intangible Transition
- ----------------- Property, pursuant to ----------------------------- Parties to Trust Indenture governing
ILLINOIS Transitional Funding Order GRANTEE issuance of Notes: Notes secured by
COMMERCE --------------------------------- ComEd Funding, LLC Intangible Transition Property and
COMMISSION - Sole Member: Commonwealth substantially all other assets
- ----------------- Edison Company of Trust ------------
---------------------------- ------------------------ INDENTURE
- ----------------- TRUSTEE
COMMONWEALTH Assignment of all right, title ------------
EDISON ------------------------------------- and interest in Intangible
COMPANY Proceeds from sale of Notes in Transition Property and the
- ----------------- consideration of receipt by other Note Collateral in
Grantee of Intangible Transition exchange for proceeds of Sale of Notes for
Property the Notes cash, pursuant to
Underwriting
--------------------------------- Agreement -------------
TRUST UNDERWRITERS
ComEd Transitional -------------
- --------------------- Funding Trust Sale of
SERVICER - Delaware Trustee Notes
Commonwealth Edison ------------------------------------- - Beneficiary Trustees for Cash
Company Servicing of Intangible Transition --------------------------------- -------------
- --------------------- Property for servicing fee, INVESTORS
pursuant to Servicing Agreement Parties to Swap -------------
Agreement
- --------------------- -----------------------------
ADMINISTRATOR SWAP
Commonwealth Edison ------------------------------------------ COUNTERPARTY
Company Administration of Trust and Grantee (To be named, if any)
- --------------------- for administration fee, pursuant to -----------------------------
Administration Agreement
</TABLE>

Risk Factors. . . . . . . . . . . . Investors should consider the risks
associated with an investment in the
Notes. For a discussion of certain
material risks associated therewith,
investors should review the discussion
under "Risk Factors", which begins on page
29.

Servicer/Administrator. . . . . . . ComEd, a subsidiary of Unicom Corporation,
an Illinois corporation ("Unicom"), will
act as the initial servicer (in such
capacity, and together with any successor
servicer, the "Servicer") of the
Intangible Transition Property pursuant to
the terms of the Servicing Agreement, and
as the initial administrator (in such
capacity, and together with any successor
administrator, the "Administrator") of the
Trust and the Grantee pursuant to the
terms of an Administration Agreement among
the Trust, the Grantee and the
Administrator (the "Administration
Agreement").

ComEd is a public utility primarily
engaged in the business of generating,
transmitting and distributing electric
energy to customers in Northern Illinois,
including the Chicago metropolitan area.
See "The Servicer."

Grantee . . . . . . . . . . . . . . The grantee of the Intangible Transition
Property will be ComEd Funding, LLC, a
special purpose Delaware limited liability
company (the "Grantee"), whose sole member
is ComEd. In accordance with the Funding
Law and each Transitional Funding Order,
the Grantee shall be a grantee of the
Intangible Transition Property, authorized
to

10
<PAGE>

assign such Intangible Transition Property
to the Trust as an assignee. Pursuant to
a Sale Agreement, the Grantee will sell
and assign to the Trust all of its right,
title and interest in such Intangible
Transition Property, the Servicing
Agreement and certain other related assets
to the Trust.

Trust . . . . . . . . . . . . . . . The issuer of the Notes will be the ComEd
Transitional Funding Trust (the "Trust"),
a Delaware business trust. In accordance
with the Funding Law and the related
Transitional Funding Order, the Trust
shall be entitled to receive the
Intangible Transition Property created by
such Transitional Funding Order as
assignee of the Grantee, and shall be
authorized to issue Notes as transitional
funding instruments. The assets of the
Trust will consist of the Intangible
Transition Property and the other Note
Collateral, including capital transferred
by the Grantee in an amount specified in
each Prospectus Supplement which will be
sufficient to meet certain requirements of
the Indenture (the "Indenture") between
the Trust and the Indenture Trustee.

Delaware Trustee. . . . . . . . . . A Delaware entity (the "Delaware Trustee")
shall be named as trustee under the
Declaration of Trust (the "Trust
Agreement"), as set forth in each
Prospectus Supplement.

Beneficiary Trustees. . . . . . . . The individuals named in the related
Prospectus Supplement as Beneficiary
Trustees shall serve as Beneficiary
Trustees (each, a "Beneficiary Trustee")
of the Trust.

The Notes . . . . . . . . . . . . . The Notes will be issued in series (each,
a "Series") and each Series of Notes may
be issued in one or more classes (each, a
"Class"). Each Series and Class of Notes
will be in an initial aggregate principal
amount, and will bear interest at a rate
described in the related Prospectus
Supplement and will be at least ratable to
any subsequent Series and Class of Notes.
The Notes will be issued under the
Indenture.

The Indenture provides that collections
received with respect to the Intangible
Transition Property ("IFC Collections")
will be used, among other things, to pay
(a) fees payable to the Delaware Trustee,
the Indenture Trustee, the Servicer and
the Administrator; (b) Operating Expenses;
and (c) interest (including amounts, if
any, payable with respect to any Swap
Agreement entered into with respect to the
issuance of any Floating Rate Notes) due
on the Notes and principal payable on the
Notes, allocated among the Series and
Classes of Notes based on the priorities
described herein and in the related
Prospectus Supplement, until each
outstanding Series and Class of Notes is
retired. However, as described under
"Description of the Notes -- Interest and
Principal," unless an Event of Default has
occurred and is continuing and the Notes
have been declared due and payable,
principal on the Notes on any Payment Date
will only be paid until the outstanding
principal balance of the Notes has been
reduced to the principal balance specified
in the Expected Amortization Schedule for
such Payment Date. To the extent that,

11
<PAGE>

with respect to any Payment Date, amounts
on deposit in certain subaccounts of the
Collection Account are insufficient to
reduce the principal balance of the Notes
to the amount required pursuant to the
Expected Amortization Schedule on such
Payment Date, the amount of such
deficiency will be deferred to a
subsequent Payment Date without a default
occurring under the Indenture. All
principal not previously paid, if any, on
a Note is due and payable on the Final
Maturity Date of such Note.

Each Series of Notes is non-recourse, and
will be secured only by, and payable
solely out of the proceeds of, Intangible
Transition Property, together with the
other Note Collateral. See "Description
of the Notes" and "Security for the
Notes."

A Series of Notes may include two or more
Classes of Notes which differ as to the
interest rate and the timing, sequential
order and amount of payments of principal
or interest or both or otherwise.

In addition, a Series of Notes may include
one or more Classes of Notes that accrue
interest at a variable rate based on the
index described in the related Prospectus
Supplement (the "Floating Rate Notes").
See "Description of the Notes -- Floating
Rate Notes."

While the specific terms of any Series of
Notes (and the Classes thereof, if any)
will be described in the related
Prospectus Supplement, the terms of such
Series and any Classes thereof will not be
subject to prior review by, or consent of,
the Noteholders of any previously issued
Series of Notes.

All Notes of the same Series will be
identical in all respects except for the
denominations thereof, unless such Series
is comprised of two or more Classes, in
which case all Notes of the same Class
will be identical in all respects except
for the denominations thereof.

No additional Notes will be issued or
shall be secured, directly or indirectly,
by the Intangible Transition Property and
the other Note Collateral unless, among
other things, each Rating Agency with
respect to any outstanding Notes shall
have affirmed the then current rating of
all such outstanding Notes in connection
with the issuance of such additional
Notes.

So long as any Notes are outstanding, the
Noteholders will direct the Indenture
Trustee as to matters in which the
Noteholders are permitted or required to
take action; provided, however, that the
Indenture Trustee will be permitted to
take certain actions specified in the
Indenture without the direction of the
Noteholders. See "Security for the
Notes -- Actions by Noteholders."

None of the Notes or the underlying
Intangible Transition Property will be
guaranteed or insured by ComEd or any of
its affiliates. Transitional Funding
Orders authorizing the issuance of the
Notes do not constitute a pledge of the
full faith and credit of the State of
Illinois or of any of its political
subdivisions. The issuance of the Notes
under the Funding Law shall not directly,
indirectly or

12
<PAGE>

contingently obligate the State of
Illinois or any political subdivision
thereof to levy or to pledge any form of
taxation therefor or to make any
appropriation for their payment. Notes
will be payable solely by application of
the proceeds of the Intangible Transition
Property and the other Note Collateral
held by the Indenture Trustee under the
Indenture. If additional Notes are
subsequently issued, the previously issued
and outstanding Notes will be at least
PARI PASSU with such subsequently issued
Notes as to all of the Intangible
Transition Property and the other Note
Collateral. Any and all funds or property
released by the Indenture Trustee pursuant
to the Indenture will cease to be Note
Collateral and will no longer be available
for payment of the Notes.

See "Description of the Notes."

Indenture . . . . . . . . . . . . . The Notes will be issued pursuant to the
terms of the Indenture, and the Intangible
Transition Property and the other Note
Collateral will be pledged under the
Indenture for the benefit of the
Noteholders. The Indenture will be
qualified under the Trust Indenture Act of
1939, as amended.

Indenture Trustee . . . . . . . . . The entity named as trustee under the
Indenture, as set forth in each Prospectus
Supplement (the "Indenture Trustee").

Rating Agency . . . . . . . . . . . Each nationally recognized statistical
rating organization which rates any Series
of Notes upon request of the Trust (each,
a "Rating Agency") as set forth in the
Prospectus Supplement related thereto.

IFC Charges . . . . . . . . . . . . Each Transitional Funding Order obtained
by ComEd from the ICC will create and
establish a certain dollar amount of
Intangible Transition Property and the
rights of the Grantee therein and
authorize the assignment of such
Intangible Transition Property from the
Grantee to the Trust and the issuance of
the Notes by the Trust. The Prospectus
Supplement related to an issuance of Notes
will identify the Transitional Funding
Order and the total dollar amount of
Intangible Transition Property authorized
thereby, which will represent the maximum
dollar amount of IFC Charges which may be
applied and invoiced under such
Transitional Funding Order over time by
the Servicer on behalf of the Trust
without further action by the ICC.

Unlike legislation enacted in certain
other states, the Amendatory Act does not
provide that the IFC Charges constitute
recoveries of ComEd's "stranded costs."

Under the Act, each Transitional Funding
Order will provide for the establishment,
imposition and collection of
nonbypassable, usage-based,
per kilowatt-hour charges on designated
consumers of electricity (the "IFC
Charges"). Specifically, each such order
will provide that IFC Charges will be
imposed on each existing and future retail
customer or class of retail customers in
ComEd's service area in Illinois, or other
person or group of persons obligated, from
time to time, to pay to ComEd or any
successor Applicable Rates

13
<PAGE>

(including any customers who enter into
competitive contracts with ComEd to take
non-tariffed services but would otherwise
have been obligated to pay Applicable
Rates) (collectively, the "Customers"). Of
amounts collected from the Customers, only
the portion of amounts collected that
comprise the IFC Charges, as adjusted from
time to time, will be available to make
payments on the Notes. IFC Charges will
be deducted and stated separately from
Applicable Rates.

"Applicable Rates" means all charges for
tariffed services owed to ComEd (I.E.,
charges owed under any tariffs now or
hereafter filed with the ICC), including,
without limitation, charges for "base
rates", "delivery services" and
"transition charges" (including lump-sum
payments of such charges) as each such
term is defined in the Act. Applicable
Rates do not include late charges or
charges set forth in those tariffs which
are filed specifically and primarily to
collect amounts related to decommissioning
expense, taxes, franchise fees or other
franchise cost additions, costs imposed by
local governmental units which are
allocated and charged to customers within
the boundaries of such governmental units'
jurisdictions, renewable energy resources
and coal technology development assistance
charges, energy assistance charges for the
Supplemental Low-Income Energy Assistance
Fund, reimbursement for the costs of
optional or non-standard facilities and
reimbursement for the costs of optional or
non-standard meters, or monies that will
be paid to third parties (after deduction
of allowable administrative, servicing or
similar fees) (collectively, "Excluded
Amounts"). Payments owed to the Grantee
or the Trust in respect of IFC Charges do
not constitute Excluded Amounts.

To the extent any Applicable Rate reflects
compensation owed by ComEd for power or
energy generated by a person or entity
other than ComEd, the IFC Charge will be
deducted and stated separately from such
Applicable Rates without giving effect to
such compensation. Administrative,
servicing and similar fees referred to in
the parenthetical above means fees which
ComEd is expressly authorized under its
current agreements with third parties by
statute, tariff or otherwise to deduct
from monies owed to such parties to cover
its cost of processing such third-party
payments. Charges associated with
Excluded Amounts are generally the subject
of separate riders to ComEd's rates, such
that increases in such charges are
collected through an increase in the
amount permitted to be collected under
such rider, rather than through an
increased share of the Applicable Rates.
As a result, any increase in Excluded
Amounts should not result in a material
decrease in the amount of Applicable Rates
available to cover the amount of IFC
Charges.

Unless otherwise provided in the related
Prospectus Supplement, each Transitional
Funding Order will provide that neither
ComEd nor any successor Utility may enter
into any contracts with any Customer
obligated (or who would, but for such
contract, be obligated) to pay

14
<PAGE>

IFC Charges if, as a result thereof, such
Customer would not receive services
subject to Applicable Rates, unless the
contract provides that the Customer will
pay an amount to the Grantee or its
assigns, as applicable, equal to the
amount of IFC Charges that would have been
billed if the services provided under such
contract were services subject to
Applicable Rates. Unless otherwise
provided in the related Prospectus
Supplement, each Transitional Funding
Order will further provide that any
revenues received by ComEd or a successor
Utility from such competitive contracts
entered into with Customers paying IFC
Charges, shall, to the extent of the
authorized amount of the IFC Charges
included therein, be deemed to be proceeds
of, and included in, the Intangible
Transition Property created by the related
Transitional Funding Order. See "Electric
Industry Restructuring in Illinois --
Instrument Funding Charges."

If a Customer chooses to take service from
an ARES that provides consolidated
billing, such Customer's IFC Charges are
required to be remitted by such ARES. See
"Risk Factors -- Potential Servicing
Issues -- Reliance on Alternative Retail
Electric Suppliers" and
"Servicing --Alternative Retail Electric
Suppliers and Other Third-Party
Collectors."

The IFC Charges will be calculated and
adjusted from time to time to generate
projected revenues expected to be
sufficient to (a) pay interest and make
Scheduled Payments on the Notes, (b) pay
all related fees and expenses of the
Trust, including the Servicing Fee and any
Quarterly Administration Fee, (c)
replenish the Capital Subaccount up to the
Required Capital Level, and (d) fund and
maintain the Overcollateralization
Subaccount up to the Required
Overcollateralization Level. The IFC
Charges are specific,
separately-identified charges (expressed
in cents per kilowatt-hour) that will be
assessed on all Customers based on the
applicable Customer's consumption of
electricity. In each case, the IFC
Charges will be assessed for the benefit
of the Trust as assignee of all of the
Grantee's right, title and interest in the
Intangible Transition Property. Such IFC
Charges will be collected by the Servicer,
either directly from Customers or from an
ARES or other third-party collection agent
that collects such amounts from Customers,
as part of its normal collection
activities and will be deposited into the
Collection Account under the terms of the
Indenture and the Servicing Agreement on
each Remittance Date or Daily Remittance
Date, as the case may be.

The Funding Law provides that,
notwithstanding any other provision of
law, once a Transitional Funding Order has
become final and nonappealable, none of
such Transitional Funding Order, the
Intangible Transition Property created and
established thereby or the IFC Charges
authorized to be imposed and collected
thereunder shall be subject to any
reduction, postponement, impairment or
termination by any subsequent action of
the ICC.

15
<PAGE>

Intangible Transition Property . . The right to collect payments of the IFC
Charges from the Customers (such payments,
whether collected directly from Customers
or through third-party collection agents,
including ARES, being the "IFC Payments")
gives rise to a separate property right as
set forth in the Funding Law. This
property is created, and vested in the
Grantee, by a Transitional Funding Order
and, together with the related items
described in this paragraph, is referred
to herein generally as the "Intangible
Transition Property." The Intangible
Transition Property includes the right,
title and interest to impose and receive
IFC Charges, and all related revenues,
collections, claims, payments, money, or
proceeds thereof, including all right,
title, and interest under and pursuant to
the Transitional Funding Order which
created such Intangible Transition
Property.

Adjustments to IFC Charges . . . . The Servicing Agreement and each
Transitional Funding Order will require
the Servicer to calculate and implement
adjustments to the IFC Charges which are
designed to enhance the likelihood that
the IFC Collections which are remitted to
the Collection Account will be sufficient
to (a) pay interest and make Scheduled
Payments on the Notes, (b) pay all related
fees and expenses of the Trust, including
the Servicing Fee and any Quarterly
Administration Fee, (c) replenish the
Capital Subaccount up to the Required
Capital Level, and (d) fund and maintain
the Overcollateralization Subaccount up to
the Required Overcollateralization Level.

Unless otherwise provided in the related
Prospectus Supplement, each Transitional
Funding Order will provide for a
"Reconciliation Adjustment" to the IFC
Charges which will be calculated by the
Servicer within the two-week period
preceding every other Payment Date,
commencing on the Payment Date indicated
in the related Prospectus Supplement (each
such Payment Date, a "Reconciliation
Payment Date").

Unless otherwise provided in the related
Prospectus Supplement, each Transitional
Funding Order will also provide for a
"True-Up Adjustment" to the IFC Charges
which will be calculated by the Servicer
within the two-week period preceding every
Payment Date which is not a Reconciliation
Payment Date commencing on the Payment
Date indicated in the related Prospectus
Supplement (each such Payment Date, a
"True-Up Payment Date") only if, as of the
True-Up Payment Date, the aggregate
outstanding principal balance of the Notes
exceeds the scheduled aggregate
outstanding principal balance of the Notes
set forth on the Expected Amortization
Schedule by 5%, or such greater amount as
may be set forth in the related Prospectus
Supplement.

16
<PAGE>

All Adjustments shall be implemented
pursuant to the IFC Tariff filed by ComEd
in connection with the related
Transitional Funding Order. As required by
the Funding Law, if, as a result of any
Adjustment, the IFC Charge, as so
adjusted, will exceed the amount
per kilowatt-hour of the IFC Charge
authorized by the ICC in any Transitional
Funding Order, then ComEd shall be
obligated to file amendatory tariffs
(each, an "Amendatory Tariff") adjusting
the amounts otherwise billed by ComEd for
Applicable Rates, to offset the amount of
such excess (or, if ComEd shall have
previously filed any such Amendatory
Tariffs, the incremental amount of such
excess). However, the failure of such
Amendatory Tariff to become effective for
any reason shall not delay or impair the
effectiveness of any such Adjustments.

See "Description of the Intangible
Transition Property -- Adjustments to the
IFC Charges."

State Pledge. . . . . . . . . . . . Pursuant to the Funding Law, the State of
Illinois pledges to and agrees with the
Noteholders that the State of Illinois
will not in any way limit, alter, impair
or reduce the value of the Intangible
Transition Property created by, or the IFC
Charges approved by, any Transitional
Funding Order so as to impair the terms of
any contract made by ComEd, the Grantee or
the Trust with the Noteholders or in any
way impair their rights and remedies,
until the Notes, together with the
interest, premium and other fees, costs
and charges related thereto, are fully
paid and discharged (the "State Pledge").
The Funding Law authorizes issuers, such
as the Trust, to include these pledges and
agreements of the State in any contract
with the holders of the transitional
funding instruments, and the pledges and
agreements shall be so included in the
Indenture and the Notes for the benefit of
the Noteholders. See "Security for the
Notes -- State Pledge."

Payment Dates . . . . . . . . . . . The payment dates on Notes of each Series
will be the quarterly dates specified in
the related Prospectus Supplement (each, a
"Payment Date"). If such specified date is
not a Business Day, then the Payment Date
shall be the next succeeding Business Day.

Record Dates . . . . . . . . . . . With respect to any Payment Date or date
of any redemption, the Business Day
preceding such Payment Date or other date
if the Notes are Book-Entry Notes or, if
Definitive Notes are issued, the last day
of the preceding calendar month (each, a
"Record Date").

Scheduled Maturity and Final
Maturity Dates . . . . . . . . . . For each Series or Class of Notes, the
related Prospectus Supplement will specify
a Scheduled Maturity Date and a Final
Maturity Date.

17
<PAGE>

The "Scheduled Maturity Date" will be the
date when all principal and interest on
such Series or Class of Notes is expected
to be paid in full by the Trust. The
"Final Maturity Date" corresponds to the
date on which such Series or Class of
Notes may be accelerated for failure to
pay outstanding principal thereon, which
may be up to two years after the Scheduled
Maturity Date for such Series or Class.
The Funding Law provides that the
authority of the Trust to impose and
collect IFC Charges shall continue until
such time as all Notes have been paid in
full.

Issuance of Additional Series . . . The Trust may issue additional Series of
Notes from time to time; provided,
however, the Trust may not issue in excess
of $3.4 billion in aggregate principal
amount of Notes prior to August 1, 1999,
and thereafter may not issue in excess of
$6.8 billion of Notes (less the initial
amount of any previously issued Notes). A
subsequent Transitional Funding Order
would authorize additional Intangible
Transition Property and an increase in the
authorized amount of IFC Charges in
connection with such issuance. See
"Description of the Intangible Transition
Property -- Transitional Funding Order
Issued to ComEd." An additional Series may
be issued only upon satisfaction of the
conditions described under "Description of
the Notes -- Conditions of Issuance of
Additional Series." Each Series of Notes
will be secured solely by the Intangible
Transition Property and the other Note
Collateral. An Event of Default with
respect to one Series of Notes (or one or
more Classes thereof) may adversely affect
other outstanding Classes and Series of
Notes since such event will be considered
an Event of Default with respect to all
Series of Notes and each such Class or
Series will be entitled only to its
ratable portion of the Intangible
Transition Property and the other Note
Collateral as determined under the
Indenture. In addition, all Intangible
Transition Property owned by the Trust
will secure all Series of Notes and any
remedial action taken by Noteholders of
one Series will affect the other Series.

Interest . . . . . . . . . . . . . Unless otherwise specified in the related
Prospectus Supplement, interest on each
Series of Notes (and, if applicable, each
Class thereof) of Notes will accrue and be
payable in arrears at the interest rate
for such Series (or Class), or calculated
in the manner, specified in the related
Prospectus Supplement.

Principal . . . . . . . . . . . . . Principal of each Series of Notes (and, if
applicable, each Class thereof) of Notes
will be paid to the Noteholders of such
Series (or Class) in the amounts and on
the Payment Dates specified in the related
Prospectus Supplement, but only to the
extent that amounts in the Collection
Account are available therefor, and
subject to the other limitations described
herein. See "Security for the Notes --
Allocations; Payments." The related
Prospectus Supplement will set forth a
schedule of the expected amortization of
principal of such Series of Notes and, if
applicable, the Classes thereof (for any
Series or Class, the "Expected
Amortization Schedule"). Unless an Event
of Default has occurred and is continuing
and the Notes have been

18
<PAGE>

declared due and payable, on any Payment
Date, subject to availability of funds in
the Collection Account, the Trust will
make principal payments on the Notes only
until the outstanding principal balances
thereof have been reduced to the principal
balances specified in the applicable
Expected Amortization Schedules for such
Payment Date (each, a "Scheduled
Payment"). However, if insufficient IFC
Collections are received with respect to
any Payment Date, and amounts in the
Collection Account are not sufficient to
make up the shortfall, principal of any
Series or Class of Notes may be paid later
than reflected in the related Expected
Amortization Schedule, as described herein
and in the related Prospectus Supplement.
See "Risk Factors -- Nature of the
Notes -- Uncertain Payment Amounts and
Weighted Average Life" and "Certain
Payment, Weighted Average Life and Yield
Considerations."

Events of Default . . . . . . . . . The Indenture provides that any of the
following events will constitute an "Event
of Default" with respect to any Series of
Notes: (a) a default for five days in the
payment of any interest on any Note; (b) a
default in the payment of the then unpaid
principal of any Note on the Final
Maturity Date for such Note; (c) a default
in the payment of the optional redemption
price for any Note on the optional
redemption date therefor; (d) a default in
the observance or performance in any
material respect of any covenant or
agreement of the Trust made in the
Indenture and the continuation of any such
default for a period of 30 days after
notice thereof is given to the Trust by
the Indenture Trustee or to the Trust and
the Indenture Trustee by the holders of at
least 25 percent in principal amount of
the Notes of such Series then outstanding;
(e) any representation or warranty made by
the Trust in the Indenture or in any
certificate delivered pursuant thereto or
in connection therewith having been
incorrect in a material respect as of the
time made, and such breach not having been
cured within 30 days after notice thereof
is given to the Trust by the Indenture
Trustee or to the Trust and the Indenture
Trustee by the holders of at least
25 percent in principal amount of the
Notes of such Series then outstanding; (f)
certain events of bankruptcy, insolvency,
receivership or liquidation of the Trust;
(g) a breach by the State of Illinois or
any of its agencies (including the ICC),
officers or employees of the State Pledge;
and (h) any other event designated as such
in the trustee's issuance certificate or
series supplement relating to such Series.

If an Event of Default (other than as
specified in clause (g) above) has
occurred and is continuing with respect to
the Notes, the Indenture Trustee may and,
upon the written direction of the holders
of not less than a majority in principal
amount of the Notes then outstanding
shall, declare the unpaid principal amount
of all the Notes of all Series then
outstanding to be immediately due and
payable. If an Event of Default as
specified in clause (g) above has
occurred, then, as the sole and exclusive
remedy for such breach, the Servicer shall
be obligated to institute (and the
Indenture Trustee, for the benefit of the
Noteholders, shall be entitled and
empowered to institute) any suits, actions
or proceedings at law, in equity or
otherwise, to enforce

19
<PAGE>

the State Pledge and to collect any
monetary damages as a result of a breach
thereof, and each of the Servicer and the
Indenture Trustee may prosecute any such
suit, action or proceeding to final
judgment or decree.

See "Security for the Notes -- Events of
Default; Rights Upon Event of Default" and
"Ratings."

Optional Redemption.. . . . . . . . Pursuant to the terms of the Indenture,
any Series of Notes may be redeemed on any
Payment Date if, after giving effect to
payments that would otherwise be made on
such date, the outstanding principal
balance of such Series of Notes has been
reduced to less than five percent (5%) of
the initial principal balance thereof.

If specified in the Prospectus Supplement
related to any Series or Class of Notes,
the Indenture may also permit the
redemption of any such Series or Class of
Notes in full on any Payment Date on or
prior to December 31, 2004 using proceeds
received from the refinancing of any other
Series or Class of Notes, through the
issuance of an additional Series of Notes
(the "New Notes"). The New Notes will be
payable solely out of the Intangible
Transition Property and the other Note
Collateral and will have no more than a
PARI PASSU lien thereon VIS-A-VIS all
existing Series of Notes.

No redemption shall be permitted under the
Indenture unless each Rating Agency with
respect to any Notes that will remain
outstanding after such redemption shall
have affirmed the then current rating of
all such outstanding Notes. Upon any
redemption of any Series or Class of
Notes, the Trust will have no further
obligations under the Indenture with
respect thereto.

See "Description of the Notes -- Optional
Redemption."

Establishment of Collection
Account and Subaccounts . . . . . . Pursuant to the Indenture, a Collection
Account will be established and held by
the Indenture Trustee for the benefit of
the Noteholders. The Collection Account
will consist of four subaccounts: a
general subaccount (the "General
Subaccount"), a reserve subaccount (the
"Reserve Subaccount"), a subaccount for
the Overcollateralization Amount (the
"Overcollateralization Subaccount"), and a
capital subaccount (the "Capital
Subaccount"). Unless the context indicates
otherwise, references herein to the
Collection Account include each of the
subaccounts contained therein. Withdrawals
from and deposits to these subaccounts
will be made as described under "Security
for the Notes -- Allocations; Payments."

General Subaccount . . . . . . . . The General Subaccount will hold all funds
held in the Collection Account that are
not held in the other three subaccounts.
The Servicer will remit all IFC
Collections to the General Subaccount on
each Remittance Date or Daily Remittance
Date, as required under the Servicing
Agreement. On each Payment Date, the
Indenture Trustee will draw on amounts in
the General Subaccount to pay expenses of
the Trust and to pay interest and make
Scheduled Payments on the

20
<PAGE>

Notes and to make other payments and
transfers in accordance with the terms of
the Indenture.

Reserve Subaccount . . . . . . . . IFC Collections available with respect to
any Payment Date in excess of amounts
necessary to (a) pay interest and make
Scheduled Payments on the Notes (or, if
the Notes have been declared due and
payable, to pay the Notes in full), (b)
pay all related fees and expenses of the
Trust, including the Servicing Fee and any
Quarterly Administration Fee, (c)
replenish the Capital Subaccount up to the
Required Capital Level, and (d) fund and
maintain the Overcollateralization
Subaccount up to the Required
Overcollateralization Level (all as
described under "Security for the Notes --
Allocations; Payments"), will be allocated
to the Reserve Subaccount. On each Payment
Date, the Indenture Trustee will draw on
amounts in the Reserve Subaccount, to the
extent amounts available in the General
Subaccount are insufficient to pay
expenses of the Trust and to pay interest
and make Scheduled Payments on the Notes
and to make other payments and transfers
in accordance with the terms of the
Indenture.

Overcollateralization Subaccount. . Each Transitional Funding Order will
provide that the Trust, as the assignee of
all of the Grantee's right, title and
interest in the Intangible Transition
Property created thereby, is entitled to
collect an additional amount (for any
Series, the "Overcollateralization
Amount") specified in the related
Prospectus Supplement which is intended to
enhance the likelihood that payments on
the Notes will be made in accordance with
their Expected Amortization Schedules.
Each Transitional Funding Order will
permit the Servicer to set the IFC Charges
at levels that are expected to produce IFC
Collections in amounts that exceed the
amounts expected to be required to pay
interest and make Scheduled Payments on
the Notes and to pay all related fees and
expenses of the Trust, including the
Servicing Fee and any Quarterly
Administration Fee, in order to collect
the Overcollateralization Amount. The
Overcollateralization Amount established
in connection with each Series of Notes
will be specified in the related
Prospectus Supplement, but will not be
less than 0.50 percent of the initial
principal balance of such Series of Notes,
collected over the expected life of the
Notes of such Series according to a
schedule set forth in the related
Prospectus Supplement. The
Overcollateralization Amount for all
Series of Notes will be held in the
Overcollateralization Subaccount, as
described further under "Security for the
Notes -- Description of Indenture
Accounts -- Overcollateralization
Subaccount." The amount required to be on
deposit in the Overcollateralization
Subaccount as of any Payment Date with
respect to each Series, as specified in
the schedule set forth in the related
Prospectus Supplement, is referred to
herein as the "Required
Overcollateralization Level." On each
Payment Date, the Indenture Trustee will
draw on amounts in the
Overcollateralization Subaccount, if any,
to the extent amounts available in the
General Subaccount and the Reserve
Subaccount are insufficient to pay
expenses of the Trust and to pay interest
and make Scheduled

21
<PAGE>

Payments on the Notes. If amounts on
deposit in the Overcollateralization
Subaccount are used to pay such expenses
and make such payments, subsequent
Adjustments shall take into account, among
other things, such amounts and on
subsequent Payment Dates the
Overcollateralization Subaccount will be
replenished to the extent IFC Collections
exceed amounts required to make payments
or transfers having a higher priority of
payment, as more fully described under
"Security for the Notes -- Allocations;
Payments."

Capital Subaccount . . . . . . . . Prior to or upon the issuance of each
Series of Notes, the Grantee will transfer
capital to the Trust which will equal
0.50 percent of the initial principal
amount of such Series of Notes. Such
amount in the aggregate for all Series of
Notes (with respect to each Series, the
"Required Capital Level") will be
deposited into the Capital Subaccount. On
each Payment Date, the Indenture Trustee
will draw on amounts in the Capital
Subaccount, if any, to the extent amounts
available in the General Subaccount, the
Reserve Subaccount and the
Overcollateralization Subaccount are
insufficient to pay expenses of the Trust
and to pay interest and make Scheduled
Payments on the Notes and to make other
payments and transfers in accordance with
the terms of the Indenture. If amounts on
deposit in the Capital Subaccount are used
to make such payments and transfers,
subsequent Adjustments shall take into
account, among other things, such amounts
and on subsequent Payment Dates the
Capital Subaccount will be replenished to
the extent IFC Collections exceed amounts
required to make such payments and
transfers having a higher priority of
payment, as more fully described under
"Security for the Notes -- Allocations;
Payments."

Collections . . . . . . . . . . . . The IFC Tariffs allow the Trust to begin
to impose and collect the IFC Charges
concurrently with the issuance of the
Notes of any Series (each, a "Series
Issuance Date"). The IFC Charges shall be
imposed and collected based upon the
entire electricity consumption of
Customers included in bills issued to
Customers on and after such Series
Issuance Date, including that portion of
the applicable Billing Period during which
electric service was provided prior to
such Series Issuance Date.

The Servicing Agreement provides, among
other things, that the Servicer will
collect the IFC Payments on behalf of the
Trust, as assignee of the Grantee. The
Servicer will remit to the Collection
Account on the Servicer Business Day
immediately preceding the tenth day of
each month (each such monthly date, a
"Remittance Date"), all IFC Payments
received by the Servicer during the
immediately preceding Billing Period (the
"Monthly IFC Amount") unless the Servicer
fails to meet the Remittance Conditions,
in which case the Servicer will, within
[two] Servicer Business Days of receipt
(each, a "Daily Remittance Date"), remit
all IFC Payments to the Collection
Account. See "Servicing -- Remittances to
Collection Account."

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<PAGE>

Because the Servicer does not track cash
collections on bills rendered within a
particular Billing Period, amounts
remitted to the Collection Account with
respect to IFC Charges included in bills
issued to Customers during each Billing
Period will be based upon the actual
amounts billed for each class of Customers
and the Servicer's estimation of
write-offs and delinquencies for each
class of Customers, all in accordance with
the Servicing Standard.

Beginning with the Remittance Date
following the end of the seventh (7th)
Billing Period and on every Remittance
Date thereafter, the Servicer will
calculate, in a manner which conforms to
the Servicing Standard, the amount of IFC
Payments received (the "Redetermined IFC
Payments") with respect to the Billing
Period which is seven (7) Billing Periods
prior to such Remittance Date (the
"Reconciled Billing Period"), and will
reconcile such amount to the IFC Payments
for such Reconciled Billing Period
previously remitted to the Collection
Account (the "Remitted IFC Payments"). If
the Remitted IFC Payments remitted during
any Reconciled Billing Period exceed the
Redetermined IFC Payments received during
such Reconciled Billing Period (an "Excess
Remittance") or are less than the
Redetermined IFC Payments received during
such Reconciled Billing Period (a
"Remittance Shortfall"), the Servicer
shall (a) in the case of an Excess
Remittance, (i) reduce the amount(s) which
the Servicer remits to the Collection
Account on such Remittance Date and each
Remittance Date (or Daily Remittance Date,
as the case may be) thereafter until the
entire amount of such Excess Remittance
has been recovered or (ii) immediately pay
from the General Subaccount or the Reserve
Subaccount the amount of such Excess
Remittance, and (b) in the case of a
Remittance Shortfall, increase the amount
which the Servicer remits to the
Collection Account on such Remittance Date
by the amount of such Remittance
Shortfall, the increase coming from the
Servicer's own funds.

A "Billing Period" is a period created by
dividing the calendar year into twelve
consecutive periods of approximately
twenty-one (21) Servicer Business Days
each. A "Servicer Business Day" is
generally any day other than a Saturday,
Sunday or holiday on which the Servicer
maintains normal office hours and conducts
business.

The "Servicing Standard" will be set forth
in the Servicing Agreement and shall
require the Servicer to calculate,
collect, apply, remit and reconcile
proceeds of the Intangible Transition
Property, including IFC Payments, and
other Note Collateral for the benefit of
the Trust and the Noteholders (a) with the
same degree of care and diligence as the
Servicer applies with respect to payments
owed to it for its own account, (b) in
accordance with procedures and
requirements established by the ICC for
collection of electric utility tariffs,
and (c) in accordance with the other terms
of the Servicing Agreement.

Allocations and Payments . . . . . On each Payment Date, amounts in the
Collection Account, including net earnings
thereon, will be allocated to the
following (in the priority

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<PAGE>

indicated): (1) all amounts owed by the
Trust to the Delaware Trustee and the
Indenture Trustee will be paid to such
persons; (2) the Servicing Fee and all
unpaid Servicing Fees, if any, from prior
Payment Dates will be paid to the
Servicer, initially ComEd; (3) any
administration fee (not to exceed $25,000
on each such Payment Date) payable to the
Administrator under the Administration
Agreement (the "Quarterly Administration
Fee") and all unpaid Quarterly
Administration Fees (or portions thereof)
from prior Payment Dates will be paid to
the Administrator, initially ComEd; (4) so
long as no default or Event of Default has
occurred and is continuing or would be
caused by such payment, all other fees,
costs, expenses and indemnities of the
Trust ("Operating Expenses") will be paid
to the persons entitled thereto; provided,
that the amount paid on such Payment Date
pursuant to this clause (4) may not exceed
[$100,000]; (5) interest and any overdue
interest with respect to each Series of
Notes will be paid to the Noteholders; (6)
principal on any Series of Notes payable
as a result of an Event of Default or on
the Final Maturity Date for such Series of
Notes will be paid to the Noteholders of
the applicable Series; (7) funds necessary
to make Scheduled Payments will be paid to
the Noteholders; (8) Operating Expenses
not paid pursuant to clause (4) above to
the persons entitled thereto and any
amounts owed under the Administration
Agreement exceeding the Quarterly
Administration Fee described in clause (3)
above; (9) an amount up to the excess of
the Required Capital Level over the amount
in the Capital Subaccount as of such
Payment Date will be allocated to the
Capital Subaccount; (10) an amount up to
the excess of the Required
Overcollateralization Level over the
amount in the Overcollateralization
Subaccount as of such Payment Date will be
allocated to the Overcollateralization
Subaccount; (11) funds up to the net
earnings on amounts in the Collection
Account for the current Payment Period
without cumulation will be released to the
Trust; (12) if no Series of Notes is
outstanding as of such Payment Date, the
excess of the amount in the
Overcollateralization Subaccount over the
aggregate Required Overcollateralization
Level will be released to the Grantee or
as it directs; (13) if no Series of Notes
is outstanding as of such Payment Date,
the excess of the amount in the Capital
Subaccount over the aggregate Required
Capital Level will be released to the
Grantee or as it directs; (14) the
balance, if any, will be allocated to the
Reserve Subaccount for distribution on
subsequent Payment Dates; and (15)
following the repayment of all outstanding
Series of Notes, the balance, if any, will
be released to the Trust.

See "Security for the Notes --
Allocations; Payments."

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<PAGE>

The following diagram provides a general
summary of the flow of funds from the
Customers through the Servicer to the
Collection Account, and the various
allocations therefrom.

ALLOCATIONS AND DISTRIBUTIONS

- --------------------
CUSTOMERS ------------ --------------
AND THIRD PARTY SERVICER COLLECTION
COLLECTORS, Payment to Servicer ------------ Remittance of IFC ACCOUNT
INCLUDING ARES of IFC Charges Payments, net of --------------
- -------------------- Excess Remittance or
Remittance Shortfall
Quarterly application of amounts in
Collection Account (including net
earnings thereon), as follows:

----------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6) (7) (8)

DELAWARE SERVICER: ADMINISTRATOR: TRUST: NOTE HOLDER: TRUST: CAPITAL OVERCOLLATERALIZATION
TRUSTEE AND Servicing fee Quarterly Other Operating - Quarterly Interest Unpaid Operating SUBACCOUNT: SUBACCOUNT:
INDENTURE Administration Fee Expenses - Principal following Expenses Up to Required Up to Required
TRUSTEE: (no default) Event of Default Capital Level Overcollateralization
Fees and expenses or on Final Maturity Level
Date
- Scheduled
Payments

---------------------------------------------------------------------------------------------------------
(11) (10) (9)
RESERVE SUBACCOUNT: GRANTEE: TRUST:
All remaining amounts - Upon retirement of all Series of Notes: - Up to net earnings on amounts in Collection
- Excess amounts in Overcollateralization Account
Subaccount
- Excess amount in Capital Subaccount
</TABLE>

Servicing . . . . . . . . . . . . . The Servicer is responsible for servicing,
managing and receiving IFC Payments in
accordance with the Servicing Standard.
Pending deposit into the Collection
Account, all IFC Payments received by the
Servicer may be invested by the Servicer
at its own risk and for its own benefit,
and need not be segregated from other
funds of the Servicer. See "Servicing --
Remittances to Collection Account."

It is possible that certain third-party
collection agents may collect payments
(including IFC Charges) from Customers and
that certain ARES may also bill charges
for such payments. In this case, the
Servicer will bill each such ARES for the
full amount of IFC Charges, and other
charges owed to the Servicer in its
individual capacity. Unless otherwise
provided in the related Prospectus
Supplement, the ICC will approve in each
Transitional Funding Order, procedures
that would (a) require any third party
(including an ARES that is required to
collect IFC Charges) who bills or collects
IFC Charges on behalf of Customers to
either (i) remit IFC Collections to the
Servicer within seven days of receipt or
(ii) pay such IFC Charges to the Servicer
within fifteen days of billing by ComEd
irrespective of whether payments have been
received from the Customer, (b) allow the
Servicer, within ten days after a default
by any such third-party in remitting IFC
Collections, to give notice thereof to the
defaulting entity and, if it does not
receive payment or a response initiating
dispute resolution within five days
thereafter, to

25
<PAGE>

assume or transfer to another third party
that defaulting entity's billing and
collection responsibilities with respect
to the IFC Charges, (c) grant the Servicer
access to information on total monthly
kilowatt-hour usage by the applicable
Customers not otherwise available to the
Servicer to the extent reasonably required
for the Servicer to calculate and, if
applicable, bill the related IFC Charges
owed by such Customers, and (d) allow the
Servicer, pursuant to a tariff subject to
applicable regulatory approval, to impose
such other terms with respect to credit
and collection policies as may be
reasonably necessary to prevent the then
current rating of the Notes from being
withdrawn or downgraded. Unless otherwise
provided in the related Prospectus
Supplement, each IFC Tariff filed in
connection with a Transitional Funding
Order will require a third-party collector
which assumes payment responsibilities
under clause (a)(ii) above and which does
not have investment-grade credit ratings
(at least BBB- or the equivalent) to post
a deposit or comparable security equal to
one month's estimated IFC Collections
collected by such third-party collector.

To the extent that there is a shortfall in
the amount received by the Servicer from
(a) Customers it bills directly or (b) a
third-party collection agent, including an
ARES, such shortfall will be allocated by
the Servicer FIRST, to the Trust and ComEd
pro rata, based on the amount of
Customers' bills constituting IFC Charges,
and the amount constituting other fees and
charges not constituting IFC Charges owed
to ComEd or any successor, respectively,
until all kilowatt-hour charges, other
than late charges, are paid, and SECOND,
such amount of late charges shall be
allocated to ComEd. In the event that an
ARES or another Utility provides
consolidated billing to Customers for both
the services provided by such ARES or
other Utility and services provided by
ComEd, partial payments made to an ARES by
such Customers are required by the Act to
be credited first to amounts due to
ComEd's tariffed services (including IFC
Charges collected on behalf of
Noteholders), and the Servicer will
allocate such payments as otherwise
described above.

Servicing Compensation . . . . . . The Servicer will be entitled to receive a
servicing fee on each Payment Date (the
"Servicing Fee"), in an amount equal to
(a) $__________, for so long as IFC
Charges are billed concurrently with
charges otherwise billed by the Servicer
to Customers (which ComEd and any
successor thereto are required to do) and
(b) $_____________, if IFC Charges are not
billed concurrently with

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<PAGE>

charges otherwise billed by the Servicer
to Customers. The Servicing Fee in
clause (b) will only be payable if the
Servicer is not ComEd or a successor
thereto. The Servicing Fee will be paid
prior to the payment of any amounts in
respect of interest on and principal of
the Notes. The Servicer will be entitled
to retain as additional compensation net
investment income on IFC Payments received
by the Servicer prior to remittance
thereof to the Collection Account and the
portion of late fees, if any, paid by
Customers relating to the IFC Payments.
See "Servicing -- Servicing Compensation."

No Servicer Advances . . . . . . . The Servicer will not be obligated to make
any advances of interest or principal on
the Notes.

Denominations . . . . . . . . . . . Each Series of Notes (and, if applicable,
each Class thereof) will be issued in the
minimum initial denominations set forth in
the related Prospectus Supplement and in
integral multiples thereof.

Book-Entry Notes . . . . . . . . . Each Series of Notes (and, if applicable,
each Class thereof) may be issued in
definitive form or may be represented by
one or more notes registered in the name
of Cede & Co. ("Cede") (each, a
"Book-Entry Note" and collectively, the
"Book-Entry Notes"), the nominee of The
Depository Trust Company ("DTC"), and
available only in the form of book-entries
on the records of DTC, participating
members thereof ("Participants") and other
entities, such as banks, brokers, dealers
and trust companies, that clear through or
maintain custodial relationships with a
Participant, either directly or indirectly
("Indirect Participant"). If so indicated
in the applicable Prospectus Supplement,
Noteholders may also hold Book-Entry Notes
of a Series through CEDEL or Euroclear (in
Europe), if they are participants in such
systems or indirectly through
organizations that are participants in
such systems. Notes representing
Book-Entry Notes will be issued in
definitive form only under the limited
circumstances described herein and in the
related Prospectus Supplement. With
respect to the Book-Entry Notes, all
references herein to "Noteholders" reflect
the rights of owners of the Book-Entry
Notes as they may indirectly exercise such
rights through DTC and Participants,
except as otherwise specified herein. See
"Risk Factors" and "Description of the
Notes -- Book-Entry Registration."

Ratings . . . . . . . . . . . . . . It is a condition of issuance of each
Series of Notes (and, if applicable, each
Class thereof) that at the time of
issuance such Series (or Class) receive
the rating indicated in the related
Prospectus Supplement, which will be in
one of the four highest categories, from
one or more of the Rating Agencies
specified therein. See "Ratings" in the
related Prospectus Supplement.

27
<PAGE>

rating of any Series (or Class) of Notes
is revised or withdrawn, the liquidity of
such Series (or Class) of Notes may be
adversely affected. In general, the
ratings address credit risk and do not
represent any assessment of the rate of
principal payments on the Notes. See "Risk
Factors -- Nature of the Notes --
Uncertain Payment Amounts and Weighted
Average Life," "Certain Payment, Weighted
Average Life and Yield Considerations" and
"Ratings."

Taxation of the Notes . . . . . . . Interest paid on the Notes generally will
be taxable to a United States Noteholder
(as hereinafter defined) as ordinary
interest income at the time it accrues or
is received in accordance with such
United States Noteholder's method of
accounting for United States federal
income tax purposes.

See "Certain United States Federal Tax
Considerations" herein and in the related
Prospectus Supplement.

ERISA Considerations . . . . . . . A fiduciary of any employee benefit plan
or other plan or arrangement that is
subject to the Employee Retirement Income
Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal
Revenue Code of 1986, as amended (the
"Code"), should carefully review with its
legal advisors whether the purchase or
holding of the Notes of any Class or
Series could give rise to a transaction
prohibited or not otherwise permissible
under ERISA or the Code. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.

Investment Company Act of 1940. . . The Notes will be exempt from the
requirements of the Investment Company Act
of 1940, as amended, in accordance with
Rule 3a-7 thereunder.

28
<PAGE>

RISK FACTORS

INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE FOLLOWING FACTORS IN
CONNECTION WITH THE PURCHASE OF THE NOTES.

UNUSUAL NATURE OF THE INTANGIBLE TRANSITION PROPERTY

The Funding Law establishes the right, title and interest of a Utility, or
grantee, such as the Grantee, pursuant to a transitional funding order, to
impose and receive instrument funding charges, and all related revenues,
collections, claims, payments, money or proceeds thereof. The Funding Law also
allows a Utility or grantee, such as the Grantee, to assign that right to an
assignee, such as the Trust. The Funding Law defines "instrument funding
charge" as a non-bypassable charge expressed in cents per kilowatt-hour
authorized in a transitional funding order to be applied and invoiced to each
retail customer, class of retail customers of a Utility or other person or group
of persons obligated to pay any base rates, transition charges or other rates
for tariffed services from which such instrument funding charges have been
deducted and stated separately pursuant to the Funding Law.

There is no historical performance data for an asset type such as the
Intangible Transition Property in the State of Illinois and the Servicer does
not have any historical experience administering this specific type of asset.
Although energy usage records are available, such records have limited
predictive value with respect to the cash flows expected to be available for
payment of the Notes because of the significant changes to electricity markets
in Illinois that are likely to result from the Amendatory Act. In addition,
although the Funding Law provides that the Noteholders or the Indenture Trustee
may foreclose or otherwise enforce the lien on the Intangible Transition
Property securing the Notes, in the event of a foreclosure, there is likely to
be a limited market, if any, for Intangible Transition Property and, therefore,
foreclosure upon the Intangible Transition Property may not be a realistic or
practical remedy for the Noteholders.

LEGAL CHALLENGES

[TO BE PROVIDED]

POSSIBLE AMENDMENT OR REPEAL OF AMENDATORY ACT; BREACH OF STATE PLEDGE; LIMITED
RIGHTS AND REMEDIES

The Illinois Legislature could amend or repeal the Amendatory Act or take
actions in contravention of the State Pledge which could impair the rights of
the Noteholders and affect the collection of IFC Charges and payments on the
Notes. Sidley & Austin will render an opinion to the effect that, absent a
demonstration by the State of Illinois that an impairment is necessary to
further a significant and legitimate public purpose, the Noteholders could
challenge successfully under the Contract Clause of the United States and
Illinois Constitutions the constitutionality of any law subsequently enacted by
the Illinois Legislature that purports to limit, alter, impair or reduce
materially the value of the rights of the Noteholders or the IFC Charges so as
to impair substantially the Indenture or the Notes or the rights and remedies of
the Noteholders until such time as the Notes are fully paid and discharged.

Unlike other states, Illinois law does not permit citizens to initiate
substantive legislation through referendums. The Illinois Constitution does
permit citizen-initiative amendments; however, those amendments are
constitutionally limited to addressing "structural and procedural subjects"
governing the structure, composition and operation of the Illinois Legislature.
The Illinois Supreme Court has struck down as invalid attempts to use those
provisions to enact substantive legislation.

If the IFC Charges become uncollectible as a result of a repeal or amendment
of the Amendatory Act or an action by the Illinois Legislature in violation of
the State Pledge, the sole remedy of the Noteholders is that the Servicer shall
be obligated to institute (and the Indenture Trustee, for the benefit of the
Noteholders, shall be entitled and empowered to institute) any suits, actions or
proceedings at law, in equity or otherwise, seeking to

29
<PAGE>

overturn any such change in law or to enforce the State Pledge and to collect
any monetary damages which may result therefrom, and each of the Servicer and
the Indenture Trustee may prosecute any such suit, action or proceeding to final
judgment or decree. The Servicer would be required to advance its own funds in
order to bring any such suits, actions or proceedings and for so long as such
legal action were pending, the Servicer would, unless otherwise prohibited by
applicable law or judicial or regulatory order in effect at such time, be
required to bill and collect the IFC Charges, perform Adjustments and discharge
its obligations under the Servicing Agreement. The Servicer would be entitled
to reimbursement of its expenses advanced by it in connection with such legal or
administrative action as an operating expense of the Trust under the Indenture.
Any such litigation might adversely affect the price and liquidity of the Notes
and the rate of repayment thereof, and, accordingly, the weighted average lives
thereof.

LIMIT ON AMOUNT OF INTANGIBLE TRANSITION PROPERTY

The Funding Law requires that each Transitional Funding Order authorize a
specific dollar amount of Intangible Transition Property, which represents the
maximum dollar amount of IFC Charges which may be imposed and collected over
time without further action by the ICC. The Prospectus Supplement related to
each Series of Notes will set forth the maximum aggregate dollar amount of IFC
Charges which may be imposed. In its application for the initial Transitional
Funding Order, ComEd estimated the amount of IFC Charges which would be
necessary to be billed through the Scheduled Maturity Date of all Classes of
Notes described in the related Prospectus Supplement in order to pay interest
and principal on the Notes. Such estimate was based on various assumptions
believed by ComEd to be conservative as to pricing and the level of required
fees to be paid. ComEd would include similar conservative assumptions in any
future applications for Transitional Funding Orders. Accordingly, ComEd
believes that the limit in such Transitional Funding Order on the maximum
aggregate dollar amount of IFC Charges should not impair or otherwise adversely
affect the rights of the Noteholders. If for any reason (E.G., because of
increased servicing costs, operating expenses, changes in technology, defaults
by third-party collectors or any other factors), the amount of IFC Charges
necessary to amortize the Notes in full were to exceed the maximum authorized
dollar amount of IFC Charges which may be imposed by more than the amount in the
Capital Subaccount, then ComEd, as Servicer, would be obligated, in good faith,
to request the ICC to increase the previously authorized dollar amount of
Intangible Transition Property. The ICC is not required under the Funding Law
to approve any such increase, however, except in connection with an issuance of
additional Notes, and the Noteholders could, accordingly, suffer a loss in such
event.

POTENTIAL SERVICING ISSUES

RELIANCE ON SERVICER

The Trust will rely on the Servicer for the determination of any adjustments
to the IFC Charges and for the Customer billing and collection that are
necessary to recover the IFC Payments and, ultimately, to make payments on the
Notes. If, as a result of its insolvency or liquidation or otherwise, ComEd were
to cease servicing the Intangible Transition Property, determining any
adjustments to the IFC Charges or collecting IFC Payments, it may be difficult
to find a substitute servicer and there can be no assurance that a substitute
servicer will be engaged. In such an event, the timing of recovery of payment on
the Intangible Transition Property could be delayed. Any successor servicer may
have less experience than ComEd and less capable systems than those employed by
ComEd, and, given the complexity of the tasks to be performed by the servicer
and the expertise required, a successor servicer may experience difficulties in
collecting IFC Payments and determining appropriate adjustments to IFC Charges.
In addition, the Servicing Agreement and, unless otherwise provided in the
related Prospectus Supplement, each Transitional Funding Order, permit a higher
Servicing Fee to be paid to the Servicer (other than ComEd or a successor
thereto) if IFC Charges are not imposed and collected by the Servicer in
conjunction with billing to, and collecting charges from, the Customers for
electric service. See "Servicing."

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<PAGE>

INACCURATE USAGE AND CREDIT PROJECTIONS

The ability of the Servicer to forecast accurately the electricity usage of
Customers, the related revenues from Applicable Rates, and the delinquency and
write-off experience relating to IFC Payments may affect significantly whether
Noteholders will receive timely payments on the Notes. Actual energy usage may
differ from projections as a result of weather during the relevant period that
is warmer or cooler than expected. In addition, actual energy usage,
delinquencies and write-offs may differ from projections as a result of general
economic conditions, trends in demographics that are not precisely as predicted,
changes in technology, unexpected catastrophes, and other causes. During the
past five years, the Servicer had an average of a 1.5% inaccuracy in its
forecasts of overall kilowatt-hour usage. See "The Servicer - Forecast
Variance." Past accuracy of the Servicer's historical forecasts is not
necessarily indicative of the accuracy of the Servicer's future forecasts and
there can be no assurances that actual usage, delinquencies and write-offs will
not be significantly different from future forecasts thereof.

DELAYS CAUSED BY CHANGES IN PAYMENT TERMS

The Servicer is permitted to alter the terms of billing and collection
arrangements and modify amounts due from Customers all in accordance with the
Servicing Standard. Although the Servicer does not have the right to change the
amount of an individual Customer's IFC Charge, it does have the right to take
actions that in its judgment will maximize actual collections from Customers
with respect to any utility bill. In addition, the Servicer has the right to
write off outstanding bills that it deems uncollectible in accordance with its
customary practices. Such actions might include, for example, agreeing to an
extended payment schedule or agreeing to write off a portion of an outstanding
bill in order to recover a portion thereof. In certain circumstances, ComEd is
required by provisions of the Act or regulations of the ICC to take such actions
or to refrain from normal collection actions. While ComEd has no current
intention of taking actions that would change the billing and collection
arrangements in a manner which would affect adversely the collection of IFC
Payments, there can be no assurance that changes in ComEd's customary and usual
practices for comparable assets it services for itself might not result in a
determination to do so or that a successor servicer may not make such a
determination. ComEd could also be required to modify its billing and
collection arrangements due to changes in ICC regulations governing such
arrangements. See "The Servicer -- Credit Policy; Billing; Collections;
Restoration of Service." Any such changes could delay collections from Customers
or result in lower collections, and accordingly could adversely affect the
timely payment of interest on the Notes or the payment of the principal of the
Notes pursuant to the Expected Amortization Schedules or in full by the
applicable Scheduled Final Payment Dates. See "Certain Payment, Weighted Average
Life and Yield Considerations."

LIMITED CREDIT POLICY AND PROCEDURES

The ability of the Servicer to collect amounts billed to Customers, including
the IFC Charges, will depend in part on the creditworthiness of the Customers.
As a general matter, ComEd is obligated to provide service to new Customers
under Illinois law and performs no outside credit investigations on new
Customers. ComEd's information regarding the credit status of new Customers is
limited to information regarding prior service, if any, by ComEd to such
Customers. ComEd relies on the information provided by Customers and its
customer information system audits to indicate whether a new Customer has had
previous service from ComEd. If ComEd evaluates the creditworthiness of a
significant number of its Customers incorrectly, resulting in significant
increases in delinquencies and write-offs, delays in payments to Noteholders may
occur.

An important element of ComEd's policies and procedures relating to credit
and collections is its right to disconnect service on account of non-payment.
Unless otherwise provided in the related Prospectus Supplement, each
Transitional Funding Order will expressly provide that ComEd may disconnect
service for non-payment of IFC Charges to the same extent as ComEd would be
entitled to take such action because of nonpayment of any other charge for
tariffed services. Nonetheless, ComEd's rights to disconnect service are
subject to and, to a material extent, controlled by Illinois statutory
requirements and the rules and regulations of the ICC which may change from time
to time. See "The Servicer - Credit Policy; Billing; Collections; Restoration
of Service."

31
<PAGE>

RELIANCE ON ALTERNATIVE RETAIL ELECTRIC SUPPLIERS

As part of the restructuring of the Illinois electric industry, certain
Customers will be allowed, beginning October 1, 1999, and all Customers will be
allowed as of May 1, 2002, to purchase electricity and related services from
ARES and from other Utilities rather than from ComEd. See "Electric Industry
Restructuring in Illinois -- Alternative Retail Electric Suppliers." The
Amendatory Act requires ComEd to allow such ARES and other Utilities, pursuant
to a tariff to be filed by ComEd with, and approved by, the ICC, to issue a
single bill to any retail customer purchasing electricity or related services
from the ARES or other Utility and delivery services from ComEd for both the
services provided by the ARES or other Utility and the delivery services
provided by ComEd. The Amendatory Act provides that the tariff to be filed by
ComEd shall (a) require partial payments made by retail customers to be credited
first to ComEd's tariffed services (which would include the IFC Charges),
(b) impose commercially reasonable terms with respect to credit and collection,
including requests for deposits, (c) retain ComEd's right to disconnect retail
customers, if it does not receive payment for its tariffed services, in the same
manner that it would be permitted to if it had billed for the services itself,
and (d) require an ARES or other Utility that elects this billing option to
include on each bill to retail customers an identification of the Utility (I.E.,
ComEd) providing the delivery services and a listing of the charges applicable
to those services. As of the date hereof, the ICC has not promulgated any rules
or regulations or issued any orders relating to the form or content of such
tariffs, and neither ComEd nor any other Utility has filed such a tariff with
the ICC. Accordingly, there is currently no basis to predict what the ICC will
find to be "commercially reasonable terms with respect to credit and collection,
including requests for deposit" or to predict what other terms and conditions of
such tariffs, such as the frequency with which ARES must remit collections to
the Servicer, the ICC will find to be reasonable. Unless otherwise provided in
the related Prospectus Supplement, each Transitional Funding Order will contain
provisions which would allow IFC Charges to be collected by ARES concurrently
with their collection of bills for tariffed services subject, however, to
specific conditions designed to mitigate against these risks. See "Servicing -
Alternative Retail Electric Suppliers and Other Third-Party Collectors." No
assurance can be provided, however, that such mitigants will be effective to
prevent losses resulting from defaults by any ARES or failure of any such ARES
to apply credit and collection policies which are as favorable to the
Noteholders as those applied by ComEd. There can also be no assurance that
changes in billing and payment practices caused by ARES billing will not result
in misdirected or delayed payments due to customer confusion. In addition, the
Servicer will have no meaningful ability to control the payment procedure of
other third-party collection agents who forward payments on behalf of Customers
and not pursuant to contractual arrangements with ComEd. See "Servicing --
Alternative Retail Electric Suppliers and Other Third-Party Collectors."

The Servicer, on behalf of the Trust, will be obligated, in accordance with
the standards set forth in the Servicing Agreement, to pursue any ARES that
fails to remit applicable IFC Charges in accordance with the terms of the
applicable IFC Tariff. However, if an ARES were to default in its obligations
to bill, collect and remit IFC Charges, or were unable despite its best efforts
to collect amounts billed in respect of IFC Charges from Customers, there can be
no assurance that the Servicer would ultimately be able to collect such IFC
Charges. If a substantial number of Customers elect to purchase their
electricity from ARES that elect to provide a single bill, the Servicer may be
relying on a small number of ARES, each of whom is responsible for a substantial
portion of the Servicer's total billings, to collect IFC Charges, rather than
the Servicer collecting IFC Charges directly from Customers. In this
circumstance, a default in the collection and remittance of IFC Charges to the
Servicer by a single ARES that provides electricity to a large number of
Customers may adversely affect the Servicer's ability to make timely remittance
of IFC Collections to the Collection Account, and thus may adversely affect the
timing of payment on the Notes.

COMMINGLING OF IFC PAYMENTS WITH SERVICER'S OTHER FUNDS; INVESTMENT OF IFC
PAYMENTS FOR SERVICER'S ACCOUNT

Except as described under "Servicing - Remittances to Collection Account," on
each Remittance Date the Servicer will remit to the Collection Account IFC
Payments received during the preceding calendar month. Accordingly, IFC Payments
received by the Servicer will not be segregated from the Servicer's general
funds until they are remitted to the Collection Account. The Servicer will
invest IFC Payments received but not yet

32
<PAGE>

remitted for its own account. A failure or inability of the Servicer to remit
the full amount of the estimated IFC Payments on any Remittance Date, whether
voluntary or involuntary, might result in delays in payments to Noteholders. In
the event of a Servicer default, the Funding Law authorizes the ICC, upon
petition from the Indenture Trustee, to order the sequestration and payment of
IFC Collections for the benefit of the Noteholders. However, delays in payments
to Noteholders may occur as a result of delays by the Servicer in implementing
any Adjustments and delays by the ICC in ordering any such relief. Furthermore,
if there has been a Remittance Shortfall (I.E., Redetermined IFC Payments exceed
Remitted IFC Payments), the Servicer is required to increase the amount that it
otherwise would remit on the Remittance Date following the calculation of the
Remittance Shortfall, with such increased amount coming from its own funds. In
the event of the insolvency of the Servicer, payments of the Remittance
Shortfall by the Servicer may be delayed significantly.

The Servicer shall be responsible for monitoring the IFC Collections received
by it and holding such IFC Collections in trust for the benefit of the Trust.
The Funding Law provides that neither the property interest of the Trust nor the
lien of the Indenture Trustee shall be defeated or adversely affected by the
commingling of IFC Collections with other funds of ComEd. In addition, unless
otherwise provided in the related Prospectus Supplement, each Transitional
Funding Order will provide that the portion of commingled collections held by
ComEd and allocable to IFC Charges may be determined by such reasonable means of
estimation as are set forth in the Servicing Agreement. Nonetheless, if ComEd
were unable to trace or otherwise identify the IFC Collections held by it and
were subsequently to become a debtor in a bankruptcy case, a creditor or
bankruptcy trustee of ComEd or ComEd itself as debtor-in-possession could take
the position that the Noteholders' property interest in such commingled and no
longer identifiable IFC Collections had been lost and that the Noteholders' sole
claim in respect of such unidentifiable property would be an unsecured claim
against ComEd.

YEAR 2000 ISSUES

ComEd, like all other companies using computers and automated devices
containing microprocessors, is faced with the task of addressing the ability of
computer hardware and software to handle the date change on January 1, 2000.
See "The Servicer -- Year 2000 Issues." ComEd recently implemented a new
computerized billing system which it believes is Year 2000 compliant.
Nonetheless, the inability to handle the date change issue could affect, among
other things, the ability of ComEd, as Servicer, and any ARES to bill and
collect the IFC Charges, both because of problems with their own systems and
problems that Customers may have in processing bills, and the ability of the
Servicer and ARES to meter usage. The date change issue could also affect usage
if there are problems with the generation or distribution of electricity. There
is no way to predict the impact of the date change issue, but if there are
significant interruptions of service to Customers or significant business
interruptions in general caused by date change issues, there could be
significant delays in IFC Collections and, therefore, in payments to
Noteholders.

UNCERTAINTIES RELATED TO THE ELECTRIC INDUSTRY GENERALLY

UNTRIED NEW ILLINOIS MARKET STRUCTURE

The Illinois electric industry is expected to change dramatically in the near
future as a result of enactment of the Amendatory Act. See "Electric Industry
Restructuring in Illinois." Beginning October 1, 1999, under the new market
structure, certain retail customers will be eligible to purchase electricity
from suppliers other than the local Utility, and by May 2002, all retail
customers of investor-owned Utilities will be eligible to purchase electricity
from other suppliers. Each local Utility, such as ComEd, will be required to
deliver the electricity sold by other suppliers to customers in such Utility's
service area. In addition, as a result of both the Amendatory Act and federal
initiatives, Utilities may be required to turn over control of their
transmission systems to an independent operating entity. Further, under the
Amendatory Act, Utilities, such as ComEd, are entitled to enter into competitive
contracts with customers which are not subject to regulation by the ICC as to
prices, terms and conditions. The new electric market structure has neither
been tested nor implemented on a scale represented by the State of Illinois.
Recent attempts to initiate operations under a similar market structure in
California, as mandated by statute, resulted in a series of delays in
implementation due to difficulties in bringing the necessary new systems and
procedures to an acceptable state of readiness and reliability. In

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addition, the impacts of the implementation of the new market structure on the
pricing of electricity services, customer usage of electricity, and the tariffed
and other revenues received by the Servicer, cannot be predicted with certainty.
If difficulties are experienced in implementing the various aspects of the new
market structure in Illinois, electricity generation, transmission and
distribution may be adversely affected, IFC Payments may not be made as
expected, ComEd's business may be adversely affected, and Noteholders may fail
to receive payments of principal and interest.

TECHNOLOGICAL CHANGE

The continuous processes of technological development may result in
introduction of economically-attractive alternatives to the purchase of
electricity from Utilities, such as ComEd, for increasing numbers of customers.
Previously, only the largest industrial and institutional users with large
process steam requirements in the Servicer's service area were considered
candidates for cost-effective co-generation or self-generation installations.
However, manufacturers of self-generation facilities continue to develop
smaller-scale, more fuel-efficient generating units which can be cost-effective
options for customers with smaller electric energy requirements. For example,
Unicom Energy Services Inc., an affiliate of ComEd, is engaged in a joint
venture with a major electrical equipment manufacturer to market smaller
electric generating units that may be suitable and cost-effective for
installation in smaller commercial establishments. Eventually, such units may
be produced in sizes, at prices and with operating efficiencies that make them
cost-effective for installation in residences. Other types of distributed
generation which could be purchased by customers in order to bypass the local
Utility include fuel cells. In addition, continuing advances in the operating
efficiencies of electricity-consuming devices are a factor reducing the amount
of electricity purchased by consumers from Utilities. Customers who installed
self-generation facilities for their own use and who took no tariffed services
would not be obligated to pay IFC Charges. Within the time period between
issuance and maturity of the Notes, there can be no assurances that
technological developments such as those described in this paragraph will not
result in material reductions in the amount of electricity sold or delivered by
ComEd to its Customers. Reductions in the amount of electricity sold or
delivered by ComEd to its customers will result in higher IFC Charges than would
otherwise exist and could negatively impact the timing of IFC Payments. If the
IFC Charges for any IFC Customer Class increase to an amount such that the
forecasted revenues from Applicable Rates for such IFC Customer Class during a
semiannual or quarterly period are projected to be less than the IFC Charges
allocated to such IFC Customer Class for the same period, the deficiency shall
be ratably allocated among the remaining IFC Customer Classes based on their
percentages of the 1996 base rate revenues, recalculated to exclude such IFC
Customer Class.

MUNICIPALIZATION

The Amendatory Act expressly preserves the rights of municipalities under
certain circumstances to form a municipal utility which can purchase electric
power and energy on a wholesale basis for resale to customers within its
jurisdictional borders. A municipality within ComEd's service area which wanted
to operate a municipal utility would have to form its own distribution system,
either by building one or acquiring (through negotiated purchase or appropriate
condemnation proceedings) the portion of ComEd's distribution system related to
such municipality's service area. Under Order 888 of the Federal Energy
Regulatory Commission ("FERC"), ComEd would have the right to recover its
legitimate and verifiable stranded costs resulting from a municipalization, with
the amount of such recovery to be determined through appropriate proceedings
before FERC. If a municipalization were to occur, a portion of any such
condemnation awards or other recoveries would be allocable to the IFC Charges
and ComEd would be required to pay such portion to the Trust as proceeds of the
Intangible Transition Property. Nonetheless, in the event of a
municipalization, the Customers within such municipal utility's service area
would thereafter cease to be Customers of ComEd obligated to pay IFC Charges and
the loss of such Customers could result in a material reduction in the amount of
electricity sold or delivered by ComEd. Moreover, unless the municipality, in
its capacity as a retail customer under the Act, elected to take tariffed or
contract services from ComEd, the municipality itself would not be a Customer
and would also not be obligated to pay IFC Charges. Reductions in the amount of
electricity sold or delivered by ComEd will result, through Reconciliation
Adjustments and/or True-Up Adjustments, in increased IFC Charges and could
negatively impact the timing of IFC Payments.

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As of ______, 1998, there were only seven municipal utilities operating
within ComEd's service area, the last of which was created several decades ago.
Two other municipalities have approved the formation of municipal utilities, but
only one such municipal utility has been formed and its electricity operations
are currently limited to supplying electricity for the municipality's wastewater
plant. Although there can be no assurance that other municipalities in ComEd's
service area might not seek, prior to the time the Notes are paid in full, to
form a municipal utility, ComEd does not believe there is any material risk of
future municipalizations having an adverse impact on the Noteholders. The
Amendatory Act also allows municipalities, subject to certain conditions, to
build their own electric power generation systems and become ARES. In such an
event, the Customers receiving power and energy from such municipality (or the
municipality on their behalf) would remain obligated to pay IFC Charges in
connection with ComEd's provisions of delivery services to such Customers and in
connection with any payments of transition charges owed by such Customers. The
loss of such Customers could nonetheless result in a material reduction in the
amount of electricity generated by ComEd and, therefore, in the amount of
revenues supporting payment of the IFC Charges. See "-- Reliance on Broad Base
of Customers."

CHANGES IN GENERAL ECONOMIC CONDITIONS AND ELECTRICITY USAGE

General economic conditions and technological changes that would
significantly alter power consumption or reduce the Customer base in ComEd's
service area may affect payments on the Notes. Changes in business cycles,
departures of Customers from ComEd's service area, other demographic changes,
changes in weather, occurrence of natural disasters such as earthquakes and
floods and implementation of energy conservation efforts all affect energy
usage. If a sufficient number of Customers reduce significantly their
electricity consumption or cease consuming electricity altogether, the revenues
supporting payment of the IFC Charges could decrease, and such decreases could
negatively impact the timing of the IFC Payments.

CHANGING REGULATORY AND LEGISLATIVE ENVIRONMENT

Although the Amendatory Act provides for comprehensive changes in the legal
and regulatory framework governing Utilities such as ComEd, in Illinois, there
can be no assurances that, during the term to maturity of the Notes, the
Illinois Legislature will not pass additional laws materially changing the legal
and regulatory framework to which ComEd is subject. In addition to actions
taken by the Illinois Legislature and regulation by the ICC, the electric
industry is also subject to federal law and regulation by the FERC. The National
Energy Policy Act of 1992 was designed to increase competition in the wholesale
electric generation market by easing regulatory restrictions on producers of
wholesale power and by authorizing the FERC to mandate access to electric
transmission systems by wholesale power generators. In addition, at least eight
bills (none of which has passed in committee) have been introduced in the
105th Congress, First Session, mandating the deregulation of the electric
utility industry on the state level. In their current forms, most but not all
of the bills contain provisions recognizing the validity of prior state actions
relating to deregulation. At least one of the bills, H.R. 1230, however, would
prohibit the recovery of stranded costs through charges such as the transition
charges provided for in the Amendatory Act. Although the IFC Charges do not
constitute recoveries for stranded costs, any prohibition on the imposition of
transition charges under the Amendatory Act could have a material adverse impact
on the amount of Applicable Rates from which the IFC Charges are deducted and on
the timing of IFC Charges. In any event, no prediction can be made as to
whether any of these bills, or any future proposed bills to deregulate the
electric industry, will become law or, if they become law, what their final form
or effect will be. Any changes in the existing legal structure regulating the
electric industry might have an impact on the manner in which electricity is
distributed and payments therefor are collected, or on ComEd and its business,
and thus the likelihood that Noteholders will receive payments in the amounts
and at the times scheduled.

RELIANCE ON BROAD BASE OF CUSTOMERS

If one or more of the risks described under the headings "Unusual Nature of
the Intangible Transition Property" or "Uncertainties Related to the Electric
Industry Generally," or an unforeseen catastrophe, were to occur, the number of
Customers on whom or kilowatt-hours on which the IFC Charges would be levied
might be reduced significantly. Such a reduction could, through the
Reconciliation Adjustments and/or True-Up

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Adjustments, increase the amount of the applicable IFC Charges for each
remaining Customer, and, as noted elsewhere, could negatively impact the timing
of the IFC Payments.

If a substantial number of Customers elect to purchase their electricity from
ARES that elect to provide a single bill, the Servicer may be relying on a small
number of ARES, each of whom is responsible for a substantial portion of the
Servicer's total billings, to collect IFC Charges, rather than the Servicer
collecting IFC Charges directly from Customers. In this circumstance, a default
in the collection and remittance of IFC Charges to the Servicer by a single ARES
that provides electricity to a large number of Customers may adversely affect
the Servicer's ability to make timely remittance of IFC Collections to the
Collection Account, and thus may adversely affect the timing of payment on the
Notes. See "-- Potential Servicing Issues -- Reliance on Alternative Retail
Electric Suppliers."

REDUCTION IN AMOUNT OF REVENUE FROM APPLICABLE RATES

Under the Funding Law, the ICC is required to authorize in each Transitional
Funding Order and in each IFC Tariff, and ComEd is entitled to implement, a
procedure for periodic prospective adjustments to the IFC Charges in respect of
any over-collection or shortfall in collections of IFC Charges during prior
periods. See "Description of the Intangible Transition Property C Adjustments
to the IFC Charges." The Funding Law provides that if, as a result of any such
adjustment, the IFC Charge, as so adjusted, will exceed the amount
per kilowatt-hour of the IFC Charge authorized by the ICC in any Transitional
Funding Order, then ComEd shall be obligated to file Amendatory Tariffs
adjusting the amounts otherwise billed by ComEd for Applicable Rates, to offset
the amount of such excess (or, if ComEd shall have previously filed any such
Amendatory Tariffs, the incremental amount of such excess). However, the
failure of such Amendatory Tariff to become effective for any reason shall not
delay or impair the effectiveness of any such adjustments and the obligation of
Customers to pay the IFC Charges, as adjusted, shall not be subject to any
defense, counterclaim or right of set-off arising as a result of either (a) the
failure of ComEd to file such Amendatory Tariff or (b) ComEd's failure to
perform or provide past, future or present services.

The Funding Law provides that instrument funding charges are payable by
customers of a Utility notwithstanding any failure on the part of such Utility
to file an amendatory tariff, but specifically preserves the right of such
customers to bring actions against the Utility for failure to file such
amendatory tariff. The Funding Law also provides (a) that the imposition of
instrument funding charges on any customer will not cause a Utility's rates for
tariffed services, including transition charges, to increase above the levels
which the Utility would have been allowed to charge such customer had the
Utility not been authorized to collect instrument funding charges and (b) that
such instrument funding charges are to be deducted, collected and stated
separately from amounts otherwise billed by such Utility for rates for tariffed
services, including transition charges, as set forth in the related transitional
funding order.

Each Transitional Funding Order will include determinations, with which ComEd
will concur, to the effect that (a) the imposition of IFC Charges will not
increase the total charges to ComEd's Customers over those that the Customers
would pay absent the imposition of IFC Charges and (b) the IFC Charges will be
deducted from and stated separately from the Applicable Rates charged on each
Customer's bill. If the amount of ComEd's Applicable Rates has been reduced to
such a low level that ComEd cannot offset adjusted IFC Charges against such
Applicable Rates and fails to file an Amendatory Tariff, ComEd may become
subject to actions by Customers, as described above.

There are several provisions of the Amendatory Act (including the provision
requiring the filing of Amendatory Tariffs) which will result in reductions to
the amounts of Applicable Rates which ComEd will be allowed to bill to and
collect from Customers and from which ComEd is required to deduct IFC Charges.

The Amendatory Act required ComEd to implement a 15% reduction in base rates
to its residential customers on August 1, 1998, and requires an additional 5%
reduction in base rates to its residential customers on May 1, 2002. The
Amendatory Act also provides that, with one exception, ComEd may not request an
increase in the base rates that it charges its retail customers until January 1,
2005. Commencing January 1, 2005, the ICC may, pursuant to appropriate
proceedings, modify ComEd's base rates in accordance with cost of

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service, and may set the components of any such rates that are intended to
recover power supply costs at the lower of cost of service or 110% of market
price (which modifications could act to reduce such base rates). In addition,
under the Amendatory Act, the ICC, at ComEd's request and subject to
satisfaction of statutory criteria, may declare tariffed services offered by
ComEd to be "competitive." If a tariffed service is declared competitive, ComEd
is obligated to continue to offer the service as a tariffed service for three
years to those customers who were served on the tariff on the date the service
is declared competitive, but is relieved of the obligation to offer or provide
the service as a tariffed service to any new customers who otherwise would have
been eligible for it. In addition, the Amendatory Act allows ComEd to
self-declare a tariffed service "competitive", but only with respect to those
customers not then taking the tariffed service, subject to the authority of the
ICC to thereafter review and revoke such declaration. Charges for a competitive
service are not included in Applicable Rates, thereby reducing the amount of
Applicable Rates from which the IFC Charges must be deducted and available to
ComEd to offset against any increase in the IFC Charges as a result of any
Amendatory Tariff.

The Amendatory Act allows certain non-residential customers of ComEd to
purchase their electricity from other suppliers commencing October 1, 1999, to
allow all other non-residential customers to purchase their electricity from
other suppliers commencing December 31, 2000, and to allow all of ComEd's
residential customers to purchase their electricity from other suppliers
commencing May 1, 2002. It is anticipated that most Customers electing to
purchase electricity from other suppliers will find it necessary to purchase
delivery services, which will be a tariffed service, from ComEd, and may be
required to pay a transition charge to ComEd until December 31, 2006. The
transition charge is calculated according to a formula which is designed to
allow ComEd to recover a portion, but not all, of the revenue requirement
associated with its generation and power supply costs that are above market
prices. The market prices used in the calculation of the transition charge are
redetermined from year-to-year and it is possible that the transition charge for
some Customers may be zero, in which event the amount of Applicable Rates from
which the IFC Charges must be deducted and which are available to ComEd to
offset against any increase in the IFC Charges would be limited by the remaining
tariffed charges imposed on such Customers. Moreover, the transition charge
revenues are designed to decrease over time, and such reductions may further
reduce the amount of such Applicable Rates. See "Electric Industry
Restructuring in Illinois -- Transition Charges."

The ICC, on petition by a Utility and based on application of statutory
criteria set forth in the Amendatory Act, is authorized to extend the period
during which transition charges may be collected until no later than
December 31, 2008. There can be no assurances that the ICC will grant any such
request for extension of this right to collect transition charges. Based on the
manner in which transition charges must be established, as provided in the
Amendatory Act, ComEd, until at least December 31, 2004, expects to receive less
revenue from a retail customer who elects to purchase electricity from another
supplier than ComEd would receive if the customer continued to purchase
electricity from ComEd at base rates. Prior to December 31, 2006, some
customers who have elected to purchase electricity from other suppliers, and
after December 31, 2006, all such customers (unless the ICC grants a ComEd
request for an extension of the authority to collect transition charges) will no
longer pay ComEd transition charges, and may pay ComEd only delivery service
charges as a rate for tariffed services.

In addition, under the Amendatory Act, Utilities (including ComEd) will be
required to offer, as a tariffed service, (a) to their non-residential delivery
service customers, certain power purchase options pursuant to which such
customers may purchase electric power and energy from the Utility at the
market-based prices used in the calculation of transition charges and (b) to all
customers, real-time pricing whereby charges for delivered electric power and
energy may vary on an hour-to-hour basis for non-residential retail customers
and that vary on a periodic basis during the day for residential retail
customers. See "Electric Industry Restructuring in Illinois -- Amendatory Act
Overview." Such pricing options have generally not existed in the past and,
accordingly, there can be no assurance as to how the offering of such options
might affect the amount of Applicable Rates from which the IFC Charges must be
deducted and which are available to ComEd to offset against any increase in the
IFC Charges as a result of an Amendatory Tariff.

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As a result of the statutory provisions and the events described in the
preceding five paragraphs, the total amount of Applicable Rates which ComEd will
be entitled, and can expect, to collect from its Customers may decline
materially over the period between issuance and maturity of the Notes. To the
extent any decline in tariffed revenues is supplanted by revenues from contracts
between ComEd and Customers who would otherwise have been obligated to pay
tariffed revenues and, therefore, would have been obligated to pay IFC Charges,
however, ComEd would continue to impose and collect IFC Charges from such
Customers pursuant to the terms of the related Transitional Funding Order to the
same extent as if the services taken by such Customers under such contracts had
continued to be taken under tariff and such Customers would agree to pay such
amounts to the Trust. There can nonetheless be no assurance that any decline in
revenues from Applicable Rates would not have a negative impact on the timing
and amount of IFC Charges and on the ability of ComEd to offset against any
increase in the IFC Charges as a result of an Amendatory Tariff, nor can there
be any assurance that any decline in overall revenues would not adversely affect
ComEd's financial condition and its ability to perform its obligations as
Servicer.

ComEd does not expect, taking into consideration the current authorized
levels of IFC Charges and anticipated future issuances of Notes, that any
decline in revenues from Applicable Rates would result in a limitation on the
timing and amount of IFC Charges payable by Customers. See "The Servicer --
ComEd Customer Base, Electric Energy Consumption and Base Rates."

BANKRUPTCY AND CREDITORS' RIGHTS ISSUES

POTENTIAL BANKRUPTCY OF COMED OR THE GRANTEE

The Grantee will represent and warrant in each Sale Agreement that the
transfer of the related Intangible Transition Property by the Grantee to the
Trust pursuant to such Sale Agreement is a valid sale and assignment of such
Intangible Transition Property, including amounts deemed to be Intangible
Transition Property pursuant to the related Transitional Funding Order, from the
Grantee to the Trust. ComEd will also represent and warrant in the Basic
Documents that it has no right, title and/or interest in the Intangible
Transition Property and that the vesting of such Intangible Transition Property
in the Grantee shall constitute an absolute sale and assignment of the portion
of the Applicable Rates otherwise to have been received by ComEd to the extent
such portion has become IFC Charges in accordance with the terms and provisions
of the related Transitional Funding Order. ComEd and the Grantee will also
represent and warrant in the other Basic Documents that they will each take all
appropriate actions to perfect the Indenture Trustee's security interest in the
Intangible Transition Property and the other Note Collateral. The Funding Law
provides that a sale, assignment or other transfer of intangible transition
property in a transaction approved by a transitional funding order shall be
treated as an absolute transfer of all the transferor's right, title and
interest in, to and under such intangible transition property which places such
transferred property beyond the reach of the transferor or its creditors. ComEd
and the Grantee will, therefore, treat the transactions as an absolute transfer
under applicable law, although for financial reporting and federal income tax
purposes the transactions will be treated as debt of ComEd. If ComEd were to
become a debtor in a bankruptcy case, and a creditor or bankruptcy trustee of
ComEd or ComEd itself as debtor-in-possession were to take the position that the
Intangible Transition Property nonetheless constituted property of ComEd's
bankruptcy estate, and a court were to adopt such position, then delays or
reductions in payments on the Notes could result. Regardless of any specific
adverse determinations in a ComEd or Grantee bankruptcy proceeding, the mere
fact of a ComEd or Grantee bankruptcy proceeding could have an adverse effect on
the secondary market of the Notes, including an adverse effect on the liquidity
and market value of the Notes. See "-- Potential Servicing Issues--Commingling
of IFC Payments with Servicer's Other Funds; Investment of IFC Payments for
Servicer's Account."

ComEd and the Grantee have taken steps to minimize the risk that in the event
ComEd were to become the debtor in a bankruptcy case, a court would order that
the assets and liabilities of ComEd be substantively consolidated with those of
the Grantee or the Trust. The major step is that, instead of the Intangible
Transition Property being transferred directly from ComEd to the Grantee, the
Funding Law permits, and, unless otherwise provided in the related Prospectus
Supplement, each Transitional Funding Order will provide, that the Intangible

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Transition Property created by such Transitional Funding Order is vested
directly in the Grantee and is not subject to defense, counterclaim or right of
setoff as a result of ComEd's failure to perform or provide past, present or
future services. Additional steps include the fact that the Grantee is a
separate, special purpose limited liability company, subject to the direction of
a management committee, at least one of whose members must be independent from
ComEd, and the organizational documents of which provide that it shall not
commence a voluntary bankruptcy case without the unanimous affirmative vote of
all of its managers. Nonetheless, these steps may not be completely effective,
and thus no assurance can be given that if ComEd or the Grantee were to become a
debtor in a bankruptcy case, a court would not order that the assets and
liabilities of the Trust or the Grantee be consolidated with those of ComEd,
thus resulting in delays or reductions in payments on the Notes.

Should any transfer of Intangible Transition Property to the Trust be
recharacterized in a bankruptcy proceeding as a borrowing by ComEd or the
Grantee, the Funding Law provides that, subject to certain required filings with
the ICC which ComEd must make at the time the Notes are issued, there is a
perfected first priority statutory lien on such Intangible Transition Property
that secures all obligations to the holders of the Notes.

Pursuant to the Funding Law and, unless otherwise provided in the related
Prospectus Supplement, each Transitional Funding Order, upon any issuance of
Notes, the Intangible Transition Property identified in such Transitional
Funding Order constitutes a current property right and thereafter continuously
exists as property for all purposes. Nonetheless, no assurances can be given
that if ComEd or the Grantee were to become the debtor in a bankruptcy case, a
creditor of, or a bankruptcy trustee for, ComEd or the Grantee, or ComEd or the
Grantee itself as debtor in possession would not attempt to take the position
that, because the payments based on the IFC Charges are usage-based charges,
Intangible Transition Property comes into existence only as Customers use
electricity. If a court were to adopt this position, no assurances can be given
that the statutory lien created by the Funding Law would attach to collections
of IFC Payments in respect of electricity consumed after the commencement of a
bankruptcy case by or against ComEd or the Grantee. If it were determined that
any Intangible Transition Property has not been sold to the Trust, and that the
statutory lien created by the Funding Law does not attach to collections of IFC
Payments in respect of electricity consumed after the commencement of a
bankruptcy case for ComEd or the Grantee, then the Indenture Trustee, as trustee
for the Noteholders, would be an unsecured creditor of ComEd or the Grantee, as
the case may be, and delays or reductions in payments on the Notes could result.
Whether or not the court determined that any Intangible Transition Property had
been sold to the Trust, no assurances can be given that the court would not rule
that any IFC Payments relating to electricity consumed after the commencement of
ComEd's or the Grantee's bankruptcy cannot be transferred to the Indenture
Trustee, thus resulting in delays or reductions of payments on the Notes.

Because the IFC Charges are usage-based charges, if ComEd or the Grantee were
to become the debtor in a bankruptcy case, a creditor of, or a bankruptcy
trustee for, ComEd or the Grantee, or ComEd or the Grantee itself as debtor in
possession could take the position that the Trust should pay a portion of the
costs of ComEd associated with the generation, transmission, or distribution by
ComEd of the electricity whose consumption gave rise to the IFC Collections that
are used to make payments on the Notes. If a court were to adopt this position,
the result could initially be a reduction in the amounts paid to the Trust, and
thus to the Noteholders. Although the IFC Charges may be adjusted by the
Servicer, delays in implementation thereof may cause a delay in receipt of IFC
Collections sufficient to pay interest and make Scheduled Payments on the Notes.

Regardless of whether ComEd or the Grantee is the debtor in a bankruptcy
case, if a court were to accept the arguments of a creditor of ComEd or the
Grantee that Intangible Transition Property comes into existence only as
Customers use electricity, a tax or government lien or other nonconsensual lien
on property of ComEd arising before such Intangible Transition Property came
into existence may have priority over the Trust's interest in such Intangible
Transition Property, thereby possibly initially resulting in a reduction of
amounts paid to the Noteholders. Although the IFC Charges may be adjusted by the
Servicer, any delays in implementation thereof may cause a delay in receipt of
IFC Collections sufficient to pay interest and make Scheduled Payments on the
Notes.

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POTENTIAL BANKRUPTCY OF SERVICER

For so long as the Servicer either (a) maintains a short-term debt rating of
at least "____" by Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("S&P"), and "____" by Moody's Investors Service, Inc. ("Moody's"), or
(b) meets certain other financial conditions (collectively, the "Remittance
Conditions"), the Servicer is entitled to commingle IFC Payments with its own
funds until the relevant Remittance Date. In the event of a bankruptcy of the
Servicer, under normal principles of the Uniform Commercial Code in effect in
the State of Illinois (the "UCC"), the Indenture Trustee likely would not have a
perfected interest in such commingled funds and the inclusion thereof in the
bankruptcy estate of the Servicer may result in delays or reductions in payments
due on the Notes. The Funding Law provides that both the property interest of
the Trust in the Intangible Transition Property and the security interest of the
Indenture Trustee in such Intangible Transition Property shall not be defeated
by the commingling of revenues arising from such Intangible Transition Property
with funds of ComEd or the Grantee. Each Transitional Funding Order will provide
that, in the case of any such commingled revenues, collections, claims,
payments, money or proceeds, the portion allocable to the IFC Charges may be
determined by such reasonable methods of estimation as are set forth in the
Servicing Agreement. Nonetheless, there can be no assurance in the event that
ComEd or the Grantee were to become a debtor in a bankruptcy case, that a
bankruptcy court would not take positions inconsistent with the Funding Law so
as to result in delays or reductions in payments on the Notes. Furthermore, if
the Servicer is in bankruptcy, it may stop performing its functions as Servicer
and it may be difficult to find a third party to act as successor servicer. See
"- Potential Servicing Issues - Reliance on Servicer; Commingling of IFC
Payments with Servicer's Other Funds; Investment of IFC Payments for Servicer's
Account."

NATURE OF THE NOTES

LIMITED LIQUIDITY

There is no assurance that a secondary market for any of the Notes will
develop or, if one does develop, that it will provide the Noteholders with
liquidity of investment or that it will continue for the life of such Notes. It
is not anticipated that any Notes will be listed on any securities exchange.

RESTRICTIONS ON BOOK-ENTRY REGISTRATION

The Notes will be initially represented by one or more Notes registered in
Cede's name, as nominee for DTC, and will not be registered in the names of the
Noteholders or their nominees. Therefore, unless and until Definitive Notes are
issued, Noteholders will not be recognized by the Indenture Trustee as
Noteholders. Hence, until such time, Noteholders will only be able to receive
payments from, and exercise the rights of Noteholders indirectly through, DTC
and participating organizations, and, unless a Noteholder requests a copy of any
such report from the Indenture Trustee or the Servicer, will receive reports and
other information provided for under the Servicing Agreement only if, when and
to the extent provided to Noteholders by DTC and its participating
organizations. In addition, the ability of Noteholders to pledge Notes to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such Notes, may be limited due to the lack of physical
notes for such Notes. See "Description of the Notes - Book-Entry Registration."

LIMITED RECOURSE OBLIGATIONS

The Notes will not constitute a debt or liability of the State of Illinois or
any political subdivision thereof and will not represent an interest in or
obligation of ComEd or its affiliates. The Intangible Transition Property owned
by the Trust and the other Note Collateral, which is expected to be relatively
small, are the sole source of payments on the Notes. It is anticipated that the
Note Collateral, which is described under "Security for the Notes C Security
Interest in Note Collateral," will, with the limited exceptions specified
therein, constitute the Trust's only assets. The Trust's organizational
documents will restrict its right to acquire other assets unrelated to the
transactions described herein. The Notes are limited-recourse obligations, and
the sole source of payments thereon is the payments made with respect to the
Intangible Transition Property and the other Note Collateral and, for Floating
Rate Notes, the proceeds of any Swap Agreement. None of the Notes or the
underlying Intangible Transition Property will be guaranteed or insured by ComEd
or its affiliates. Transitional Funding

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Orders authorizing issuance of the Notes do not constitute a pledge of the full
faith and credit of the State of Illinois or of any of its political
subdivisions. The issuance of the Notes under the Funding Law shall not
directly, indirectly or contingently obligate the State of Illinois or any
political subdivision thereof to levy or to pledge any form of taxation therefor
or to make any appropriation for their payment.

EXPECTED ISSUANCE OF ADDITIONAL SERIES OF NOTES; OTHER TRANSITIONAL FUNDING
ORDERS

Under the Basic Documents, the Trust will have the right, subject to ComEd's
seeking and obtaining one or more subsequent Transitional Funding Orders from
the ICC, to issue one or more subsequent Series of Notes on or after August 1,
1999 in an additional amount of up to approximately $3.4 billion in aggregate
principal amount. Any such subsequent Series of Notes would be issued in
connection with the creation of additional Intangible Transition Property under
such subsequent Transitional Funding Order and such subsequent Notes will have
no more than a PARI PASSU lien on the Note Collateral, including all additional
Intangible Transition Property, vis-a-vis all previously issued and outstanding
Series of Notes. The terms of any such Series of Notes will be specified in a
supplement to the Indenture or a trustee's issuance certificate and described in
the related Prospectus Supplement. The provisions of the supplement to the
Indenture or trustee's issuance certificate and the terms of any additional
Series of Notes will not be subject to the prior review or consent of the
Noteholders of any previously issued Series. The terms of an additional Series
of Notes may include, without limitation, the matters described under
"Description of the Notes -- General." The ability of the Trust to issue any
additional Series of Notes is subject to the condition, among others, that such
issuance will not result in any Rating Agency reducing or withdrawing its then
existing rating of the Notes of any outstanding Class. There can be no
assurance, however, that the issuance of any other Series of Notes, including
any Series issued from time to time hereafter, might not have an impact on the
timing or amount of payments received by a Noteholder. See "Description of the
Notes -- Conditions of Issuance of Additional Series." In addition, various
matters relating to the Notes are subject to a vote of all Noteholders for all
Series and Classes of Notes, even though there may be differences in the
interests or positions among such Series or Classes which could result in voting
outcomes adverse to the interests of one or more Series or Classes of Notes.
Moreover, the Basic Documents do not prohibit ComEd from seeking transitional
funding orders under the Funding Law which would create intangible transition
property in favor of a party other than the Grantee.

Issuance of an additional Series of Notes and/or the creation of additional
intangible transition property will require the imposition and collection of
additional instrument funding charges from Customers. This may increase the
risks to Noteholders as described above, in particular those risks described
under "-- Reduction in Amount of Revenue From Applicable Rates" "-- Limit on
Amount of Intangible Transition Property," "-- Potential Servicing Issues,"
"-- Uncertainties Related to the Electric Industry Generally," "-- Reliance
on Broad Base of Customer" and "-- Bankruptcy and Creditors' Rights Issues."

LIMITED NATURE OF RATINGS

It is a condition of issuance of each Class of Notes that they receive from
the Rating Agencies the respective ratings set forth in the applicable
Prospectus Supplement. The ratings of the Notes address the likelihood of the
ultimate payment of principal and the timely payment of interest on the Notes.
The ratings do not represent an assessment of the likelihood that the rate of
IFC Collections might differ from that originally anticipated; as a result of
such differences, any Series or Class of Notes might mature later than
scheduled, resulting in a weighted average life of such Notes which is more than
expected. A security rating is not a recommendation to buy, sell or hold
securities. There can be no assurance that a rating will remain in effect for
any given period of time or that a rating will not be revised or withdrawn
entirely by a Rating Agency if, in its judgment, circumstances so warrant.

UNCERTAIN PAYMENT AMOUNTS AND WEIGHTED AVERAGE LIFE

The actual dates on which principal is paid on each Class of Notes might be
affected by, among other things, the amount and timing of receipt of IFC
Collections. Since each IFC Charge will consist of a charge per kilowatt-hour
allocated to the applicable class of Customers, the aggregate amount and timing
of receipt of IFC Collections (and the resulting amount and timing of principal
amortization on the Notes) will depend, in part, on actual usage of electricity
by Customers and the rate of delinquencies and write-offs. See "-- Potential
Servicing

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Issues -- Inaccurate Usage and Credit Projections." Although the amount of the
IFC Charges will be subject to adjustment from time to time based in part on the
actual rate of IFC Collections, no assurances can be given that the Servicer
will be able to forecast accurately actual Customer energy usage and the rate of
delinquencies and write-offs and implement adjustments to the IFC Charges that
will cause IFC Payments to be made at any particular rate. If IFC Collections
are received at a slower rate than expected, payments on a Note may be made
later than expected. Because principal will only be paid at a rate not to exceed
that set forth in the Expected Amortization Schedules, except if an Event of
Default occurs and the Notes are declared due and payable or in the event of an
early optional redemption, the Notes are not expected to be retired earlier than
scheduled. A payment on a date that is earlier than forecasted will result in a
shorter weighted average life, and a payment on a date that is later than
forecasted will result in a longer weighted average life. See "Certain Payment,
Weighted Average Life and Yield Considerations" and "Description of the
Intangible Transition Property -- Adjustments to the IFC Charges."

EFFECT OF OPTIONAL REDEMPTION ON WEIGHTED AVERAGE LIFE AND YIELD

As described more fully under "Description of the Notes -- Optional
Redemption," any Series of Notes may be redeemed on any Payment Date if, after
giving effect to payments that would otherwise be made on such date, the
outstanding principal balance of such Series of Notes has been reduced to less
than five percent of the initial outstanding principal balance thereof. In
addition, if specified in the Prospectus Supplement related to any Series or
Class of Notes, such Series or Class of Notes may be redeemed in full on any
Payment Date on or prior to December 31, 2004 using proceeds received from the
refinancing of any other Series or Class of Notes through the issuance of an
additional Series of Notes. Redemption will cause such Notes to be retired
earlier than would otherwise be expected, and if the payment schedule otherwise
does not differ from that originally anticipated, will result in a shorter than
expected weighted average life for such Notes. Such a redemption may also
adversely affect the yield to maturity of the Notes. There can be no assurance
as to whether any Series of Notes will be redeemed, or as to whether Noteholders
will be able to receive an equally attractive rate of return upon reinvestment
of the proceeds resulting from any such redemption.

ADDITIONAL RISKS OF FLOATING RATE NOTES.

As described under "Description of the Notes -- Floating Rate Notes," in the
event that Floating Rate Notes are issued, upon the occurrence of an event of
default or termination event under the Swap Agreement, the Swap Agreement
pursuant to which interest will be paid on any Floating Rate Notes will
terminate or may be terminated. In particular, the Swap Agreement will be
terminated if the swap counterparty's rating by either Moody's or S&P falls
below "AAA" (or the equivalent rating) (a "Downgrade Event") and the Swap
Agreement is not assigned to a replacement swap counterparty satisfying such
ratings criteria or such lower ratings criteria as may be permitted by the Swap
Agreement within the time period specified in the related Prospectus Supplement.
In no event will any successor swap counterparty be rated below "A" (or the
equivalent rating) by either of the above-referenced Rating Agencies. Upon the
occurrence of a Downgrade Event and the failure to assign the Swap Agreement, a
termination event will have occurred under the Swap Agreement and, in such event
or upon any other swap termination, the interest rate payable with respect to
the Floating Rate Notes will convert permanently to the fixed swap rate payable
to the swap counterparty, which may be substantially less than the rate
otherwise payable on the Floating Rate Notes. In the event of such conversion to
a fixed interest rate, both the liquidity and the market value of the Floating
Rate Notes may be adversely affected.

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ELECTRIC INDUSTRY RESTRUCTURING IN ILLINOIS

GENERAL

The electric industry is experiencing intensifying competitive pressures in
both the wholesale generation market and, in many states, including Illinois, in
the retail market. Historically, electric utilities have operated as regulated
monopolies in their service territories and were the primary suppliers of
electricity. In Illinois, Utilities' rates were set by the ICC based upon the
Utilities' cost of providing services and a reasonable return on their prudent
capital investments. Changes to the traditional market structure are occurring
at both the federal and state levels.

AMENDATORY ACT OVERVIEW

In Illinois, dramatic changes in the retail electricity market are expected
to occur over the next ten years as a result of enactment of the Amendatory Act,
which became law on December 16, 1997 after being approved by a vote of 108-7 in
the Illinois House of Representatives and 57-2 in the Illinois Senate.
Utilities, such as ComEd, will be required to provide to customers in their
service areas, on a regulated basis, delivery services through which a customer
can purchase electricity from other suppliers and have it delivered by the local
Utility to the customer's premises. Beginning October 1, 1999, Utilities will
be required to offer delivery services to (a) all customers in a Utility's
service area with electric loads at a single site of 4 megawatts or greater,
(b) commercial customers in the Utility's service area with at least 10 sites
under common ownership whose electric loads total at least 9.5 megawatts,
constituting up to 3.5% of the Utility's peak load, and (c) customers in
non-residential service classes whose usage constitutes one-third of the
Utilities' remaining (I.E., excluding customers in groups (a) and (b))
kilowatt-hour sales in each such class, with the customers in groups (b) and (c)
to be selected by lottery. As of December 31, 2000, all non-residential
customers in a Utility's service area will be entitled to delivery services.
All residential customers in a Utility's service area will be entitled to
delivery services beginning May 1, 2002. The local Utility will be required to
provide delivery services to eligible customers on a non-discriminatory basis
regardless of the customer's choice of electricity provider. The Utility will
be compensated for providing delivery services through rates set by the ICC to
recover the costs of owning, operating and maintaining the Utility's
transmission and distribution facilities. Under the Amendatory Act, Utilities
also will be required to offer as a tariffed service to their non-residential
delivery service customers, certain power purchase options pursuant to which
such customers may purchase electric power and energy from the Utility at
market-based rates determined by formulas set forth in the Amendatory Act. In
addition, the Amendatory Act requires Utilities, including ComEd, to offer, as a
tariffed service, real-time pricing to non-residential customers beginning
October 1, 1998, and to residential customers beginning October 1, 2000 pursuant
to which tariff kilowatt-hour charges for delivered electric power and energy
may vary on an hour-to-hour basis for non-residential retail customers and on a
periodic basis during the day for residential retail customers.

TRANSITION CHARGES

Another change involves the ability of a Utility to collect "transition
charges" from those customers in its service area who obtain electricity from an
alternate provider. Until December 31, 2006, the Utility will be entitled,
pursuant to tariff, to collect these transition charges from delivery services
customers and include such transition charges in its bills to such customers.
These periodic transition charges are only applicable to delivery services
customers obtaining electricity from an alternate provider, and are not
applicable to customers taking traditional tariffed service from the Utility, or
to a customer to the extent it obtains its electricity from its own
co-generation or self-generation facility. Transition charges are to be
calculated annually for each customer class and, for larger customers, on an
individual customer basis. The per kilowatt-hour transition charge applicable
to a customer class or an individual customer is calculated as follows using the
class' or customer's usage during a three-year period prior to the date the
customer became eligible for delivery service: (1) the revenues the Utility
would receive based on the applicable tariffed base rate (adjusted for specific
charges set forth in the Act including, in the case of residential customers,
for the mandated rate reductions described below) or contract rate,

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less (2) the revenues the Utility would receive for delivering the same amount
of usage, based on its currently applicable delivery service rates, less (3) the
market value of the capacity and energy of the Utility that it would have used
to supply customers' electric power and energy requirements, with the "market
value" determined through an ICC-approved tariff using market-based data as
determined through a market index or by a neutral fact-finder retained annually
by the ICC, less (4) a further specific deduction, referred to as the
"mitigation factor," which is set forth in the Amendatory Act for each year in
the relevant period and which increases over that period. If the foregoing
calculation results in a negative number, the transition charge will be zero.
The product of the foregoing calculation is divided by the class' or customer's
kilowatt-hour usage during the three-year base period to yield a transition
charge expressed in cents per kilowatt-hour, which is charged on every
kilowatt-hour delivered by the Utility for the delivery services customer until
December 31, 2006. A Utility may petition the ICC to allow it to collect
transition charges for an additional period not to extend beyond December 31,
2008. The ICC must apply criteria specified in the Amendatory Act to the
Utility's request, and may deny the request, may authorize the Utility to
collect transition charges for some or all of the additional two-year period, in
which case the mitigation factor deductions are increased over those applicable
for the year 2006, or may, in granting such authority, impose additional
reductions on the allowable transition charges.

In addition to the periodic transition charge from delivery services
customers who obtain electricity from an alternate provider described above, a
Utility shall also be entitled, pursuant to a tariff, to collect transition
charges from customers in such Utility's service area who obtain electricity
from an alternate provider and do not take delivery services from such Utility.
As with the periodic transition charges described above, these transition
charges are only applicable to customers in its service area obtaining
electricity from an alternate provider and not to customers who obtain their
electricity from their own co-generation or self-generation facility. These
transition charges shall be calculated in the same manner set forth above for
the entire period of time that the customer would be obligated to pay transition
charges if it were taking delivery services, except that no deduction for
delivery services shall be made in such calculation, and usage data from such
customers' class shall be used where historical usage data is not available for
such customer. These customers are obligated to pay such transition charges on a
lump-sum basis on or before the date such customer begins to take electricity
from an alternate provider; provided, however, that the Utility is to offer such
customer the option of paying such transition charges to such Utility ratably
over the period in which the transition charges would otherwise have applied
pursuant to a contract between such customer and such Utility, in which case the
IFC Charges would be deducted and stated separately from the transition charges.

The transition charge formula is designed to allow the Utility to recover a
portion, but not all, of the revenue requirement associated with its generation
and power supply costs that are above market prices. In order to realize the
same overall revenue stream from a customer who switches to another electricity
supplier as it would have realized if the customer had not switched, the Utility
must successfully remarket the electrical capacity and energy that is no longer
needed to serve the customer, at a price at least as high as the "market price"
used to calculate the customer's transition charges; and must otherwise reduce
its costs by, or develop other revenue sources equal to, an amount at least as
high as the amount of the "mitigation factor" used in calculating the customer's
transition charge. Otherwise, the revenue received by the Utility from delivery
charges and transition charges, both of which are tariffed revenues from which
instrument funding charges can be deducted, will be less than the revenue the
Utility would have received from the customer at existing tariffed rates for
traditional tariffed services. On and after the date that the Utility is no
longer able to collect transition charges from delivery services customers, and
may only collect delivery service charges, the Utility's tariffed revenues from
customers previously paying such transition charges will decline. In addition,
beginning in 1999, the ICC is authorized under the Amendatory Act to require a
Utility to unbundle components of its delivery service, such as metering
services and billing services, and offer the unbundled components to customers
separately, thereby enabling the customer to purchase the unbundled service from
an alternate provider. If alternative providers enter the service area to
compete for the provision of unbundled delivery service components, it is likely
that the Utility will be able to obtain an ICC declaration that the unbundled
service is "competitive" through the process described below. Unbundling of
delivery service components and the declaration of such components as
"competitive" may result in further declines in the Utility's tariffed revenues.

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TRANSITION PERIOD

While Utilities are required under the Amendatory Act to offer delivery
services in accordance with the schedule and requirements described above, they
are also required to continue to offer each of their existing, tariffed bundled
services to customers in the Utility's service area until the service is
declared competitive by the ICC. A Utility may petition the ICC to declare a
service "competitive," but may not do so with respect to the provision of power
and energy for residential and small commercial (defined as a nonresidential
using less than 15,000 kilowatt-hours per year) customers until such customers
are no longer paying transition charges, and may not do so for any other
customer class or segment until after such customers are eligible for delivery
services. The ICC is to evaluate the Utility's request based on criteria,
specified in the Amendatory Act, which are tied to the existence of other
providers of the service. If the ICC declares the provision of power and energy
to residential or small commercial customers "competitive," the Utility must
continue to offer tariffed, fully-bundled service to such customers, but may
provide the power and energy component of the fully bundled service on the basis
of market prices determined in a manner specified in the Amendatory Act. If the
ICC declares the provision of a tariffed service provided to any other customer
class or segment "competitive," the Utility (a) is no longer required to offer
the service on a tariffed basis to new customers, (b) must continue to provide
the service on a tariffed basis for three more years to those customers who were
taking the tariffed service on the date it was declared competitive, and (c)
after the three-year period, is no longer required to offer the service on a
tariffed basis to any customers. Accordingly, any such declaration may diminish
the amount of the Utility's tariffed revenues. See "Risk Factors -- Reduction in
Amount of Revenue From Applicable Rates."

During the period that non-residential delivery service customers are paying
transition charges, a Utility is required to offer, by tariff, to sell
electricity to those customers at the same market prices that were used in
determining the customers' transition charges. This service must also be
offered, with some modifications, after payment of transition charges has
stopped, until the sale of electricity to these customers is declared
competitive. This service is a tariffed service; therefore, instrument funding
charges may be deducted from the charges for this service.

During the "mandatory transition period" provided by the Amendatory Act
(which lasts until December 31, 2004), Utilities are precluded, with one
exception, from requesting authority from the ICC to increase their base rates;
and the ICC is precluded from ordering on its own motion a Utility to reduce its
base rates. These prohibitions do not apply to delivery service rates.
However, Utilities are required to reduce their base rates to residential
customers by specified amounts on specified dates. For ComEd, the required
reduction in residential base rates is 15% effective August 1, 1998, and an
additional 5% effective May 1, 2002. Further, during the mandatory transition
period, a Utility is allowed to reduce any rate for tariffed service by giving
seven days notice to the ICC. In addition, during the mandatory transition
period, if a Utility's two-year average rate of return on common equity exceeds
the two-year average of the yields on 30-year U.S. Treasury bonds plus, for the
years 1998-1999, 550 basis points and for the years 2000-2004, 650 basis points,
the Utility must refund 50% of the dollar amount of such excess earnings during
the ensuing year through cents-per-kilowatt-hour credits on the bills of both
its bundled tariff service customers and its delivery services customers.

After December 31, 2004, a Utility may again request increases in its base
rates for bundled tariffed services, and the ICC is again authorized to
investigate and order reductions in the Utility's base rates, in each case based
on cost of service principles. However, if the ICC finds that the rates for the
generation component of a bundled tariffed service of a Utility exceed market
price by more than 10%, the ICC may order such rates reduced to no less than
110% of market price, even if the Utility's cost of service exceeds that level.

ALTERNATIVE RETAIL ELECTRIC SUPPLIERS

The Amendatory Act allows alternative retail electric suppliers, referred to
as ARES, to provide electricity to customers eligible for delivery services, and
other services to customers, in the Utility's service area, thereby terminating
the Utility's historical status as the sole service provider. An ARES may be an
electric utility from another state, an affiliate of an out-of-state utility, an
affiliate of a Utility, a non-utility generator, or a power marketer, reseller
or aggregator unaffiliated with any electric utility. An ARES must obtain a
certificate of

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service authority from the ICC based on satisfaction of statutory criteria. The
prices which an ARES charges to customers for electricity and other services are
not regulated by the ICC, but various other aspects of the ARES' relationships
with incumbent Utilities and with customers, including certain marketing and
billing practices, are regulated. In addition, the Amendatory Act allows other
Utilities to sell electricity to customers eligible for delivery services, and
to sell other services to customers, in each other's service areas. For these
purposes, Utilities are not required to obtain certificates of service authority
as are ARES, but are subject to many of the same requirements as are ARES with
respect to marketing and billing practices and other aspects of their
relationships with customers.

COMPETITIVE SERVICES

The Amendatory Act allows a Utility to provide on a competitive basis
services that were formerly regulated in three respects. First, with one
exception, a Utility and a customer in its service area may at any time enter
into a competitive contract for the provision of services, at prices, terms and
conditions agreed to between the Utility and the customer. The exception is
that a Utility may not enter into a competitive contract to provide delivery
services until such services have been declared competitive by the ICC. Second,
a Utility may provide to customers in its service area, as a competitive service
(and may cease to offer as a tariffed service), a service which has been
declared competitive by the ICC through the procedure described earlier in this
section, and may self-declare a tariffed service to be competitive for new
customers only (subject to the authority of the ICC to revoke such declaration).
Third, services provided by a Utility in the service area of another Utility are
competitive services.

In addition, the Amendatory Act classifies as competitive services those
services, other than tariffed services, which are related to, but not necessary
for, the provision of electric power and energy or delivery services. Under the
Amendatory Act, competitive services are not tariffed services, are provided at
the rates, terms and conditions agreed to between the Utility and the customer.
The contracts or terms agreed to between the Utility and the customer for
competitive services do not have to be filed with or approved by the ICC; and
the ICC is precluded from altering the rates, terms or conditions in such
contracts.

INSTRUMENT FUNDING CHARGES

The Funding Law authorizes the ICC, in a transitional funding order, to
authorize imposition of instrument funding charges on retail customers, groups
of retail customers and certain other persons obligated to pay base rates,
transition charges and other rates for tariffed services from which such
instrument funding charges have been deducted and separately stated. The ICC is
further authorized to specify the manner in which the instrument funding charges
shall be collected, and to authorize the levying of general tariffs on retail
customers of a Utility for the collection of instrument funding charges.
Pursuant to this authority, each Transitional Funding Order will authorize and
require ComEd, as Servicer, to impose and collect IFC Charges on any retail
customer, class of retail customers or other person or group of persons
obligated to pay any Applicable Rates, from which IFC Charges have been
deducted. Unless otherwise provided in the related Prospectus Supplement, each
Transitional Funding Order will provide that neither ComEd nor any successor
Utility may enter into any competitive contracts with any Customer obligated (or
who would, but for such contract, be obligated) to pay IFC Charges if, as a
result thereof, such Customer would not receive tariffed services (I.E.,
services subject to Applicable Rates), unless the contract provides that the
Customer will pay an amount to the Grantee or its assigns, as applicable, equal
to the amount of IFC Charges that would have been billed if the services
provided under such contract were tariffed services. Unless otherwise provided
in the related Prospectus Supplement, each Transitional Funding Order will
further provide that any revenues received by ComEd or a successor Utility from
such competitive contracts entered into with Customers paying IFC Charges,
shall, to the extent of the authorized amount of the IFC Charges included
therein, be deemed to be proceeds of, and included in, the Intangible Transition
Property created by the related Transitional Funding Order.

As a result of the changes imposed on the Illinois retail electric markets by
the Amendatory Act, it is highly possible that by 2007, if not earlier, a
significant portion of electricity purchased by customers in ComEd's service
area, whether obtained from ComEd, another electric utility or an ARES, will be
purchased on a

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competitive basis and not pursuant to a tariff. It is ComEd's belief that by
2008, ComEd will still be the primary provider of delivery services in its
service area, even if its tariffed revenues from provision of such services will
have declined.

FEDERAL INITIATIVES; INCREASED COMPETITION

In addition to the changes which are occurring at the Illinois level
discussed throughout this section, federal legislative efforts may also
significantly alter the national market for electricity. See "Risk Factors --
Changing Regulatory and Legislative Environment." The changes at both the
Illinois and federal level will have a significant impact on ComEd and the other
Utilities, as well as other entities in the industry. ComEd faces increased
competition for resources and for customers, and there can be no assurance that
such competition will not adversely affect ComEd's financial condition and its
ability to perform its obligations as Servicer. Competitors include other
electric utilities; privately owned independent power producers; exempt
wholesale generators; power marketers, brokers, resellers and aggregators;
customers with their own source of generation and developers, equipment
manufacturers, lenders and investment bankers in the business of promoting such
generation sources; suppliers of natural gas and other fuels; and electric
cooperatives and municipally-owned utility systems.

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DESCRIPTION OF THE INTANGIBLE TRANSITION PROPERTY

CREATION OF INTANGIBLE TRANSITION PROPERTY UNDER THE FUNDING LAW

The Funding Law provides the basis and authority for the creation of the
Intangible Transition Property and the issuance of the Notes issued hereunder.
Under the Funding Law, "intangible transition property" is defined as the right,
title and interest of a Utility, grantee or assignee, arising pursuant to a
transitional funding order, to impose and receive instrument funding charges and
all related revenues, collections, claims, payments, money or proceeds thereof,
including all right, title and interest of a Utility, grantee or assignee in,
to, under and pursuant to such transitional funding order. A "grantee" is
defined as any party, other than a Utility or an assignee which acquires its
interest from a Utility, to whom or for whose benefit the ICC creates,
establishes and grants rights in, to and under intangible transition property.
The Funding Law defines "instrument funding charge" as a non-bypassable charge
expressed in cents per kilowatt-hour authorized in a transitional funding order
to be applied and invoiced to each retail customer, class of retail customers of
a Utility or other persons or group of persons obligated to pay any base rates,
transition charges or other rates for tariffed services from which the
instrument funding charges have been deducted and separately stated. Upon the
effectiveness of tariffs filed with the ICC to provide for the deduction and
separate statement and collection of instrument funding charges, instrument
funding charges become intangible transition property as specified in the
transitional funding order.

The Funding Law authorizes the ICC, pursuant to an application filed by a
Utility and in accordance with specific limitations and restrictions which are
described in this Section, to issue a transitional funding order or orders
establishing, creating and granting rights in and to a specific amount of
intangible transition property to or for the benefit of the Utility, a grantee
or an assignee. The Funding Law also empowers the ICC, in the transitional
funding order, to authorize the sale, pledge, assignment or other transfer of
the Utility's, grantee's or assignee's rights in and to the intangible
transition property; the issuance of a specific dollar amount of grantee
instruments and/or transitional funding instruments by or on behalf of the
grantee, an assignee or an issuer; and the imposition and collection of
instrument funding charges. The total amount of intangible transition property
which may be created by, and instrument funding charges which may be imposed
pursuant to, the related transitional funding order is projected to be
sufficient to pay when due principal and interest on the transitional funding
instruments, and to provide for servicing costs and related fees and expenses
and the funding or maintenance of debt service and other reserves as security to
the holders of the transitional funding instruments. The amount of transitional
funding instruments which may be authorized for issuance is subject to certain
limitations and restrictions, and the total dollar amount of intangible
transition property which may be created may not exceed specified limits, as
described below. See "-- Limitations on the Amounts of Transitional Funding
Instruments, Intangible Transition Property and Instrument Funding Charges Which
Can Be Authorized; Permitted Use of Proceeds."

The Funding Law provides that the creation, establishment and granting of
rights in, to and under intangible transition property in and to any grantee,
Utility, issuer or assignee shall include a grant of the power to levy general
tariffs on retail customers of a Utility or other persons required to pay
instrument funding charges in order to collect the instrument funding charges
relating to the intangible transition property in which such party has been
granted rights and in order to facilitate the issuance of transitional funding
instruments by or on behalf of the Utility, grantee, issuer or assignee. The
Funding Law empowers the ICC to authorize the Utility to contract with the
grantee, issuer, assignee or holders to collect the applicable instrument
funding charges for the benefit and account of the grantee, issuer, assignee or
holder, and provides that the Utility will, except as otherwise specified in the
related transitional funding order, account for and remit the applicable
instrument funding charges, without the obligation to remit any investment
earnings thereon, to or for the account of the grantee, issuer, assignee or
holder. The Funding Law further provides that the obligation of the Utility to
collect and remit the applicable instrument funding charges shall continue
irrespective of whether such Utility is providing electric power and/or other
services to the retail customers and other persons obligated to pay the
instrument funding charges. In addition, the Funding Law states that if the
documents creating the transitional funding instruments so provide, the
Utility's obligations, in the event of a default by the Utility in performing
them, shall be undertaken and performed by any other entity selected by the
assignee or any holder, group of

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holders or trustee or agent on behalf of such holder or holders, (i) which
provides electric power or services to a person who was a retail customer of the
Utility, and (ii) from whom such Utility is entitled to recover transition
charges under the Amendatory Act.

The Funding Law provides that the interest of a Utility, assignee, issuer or
grantee in intangible transition property may be assigned, sold or otherwise
transferred, in whole or in part, and may, in whole or in part, be pledged or
assigned as security to or for the benefit of a holder or holders. A "holder"
is defined in the Funding Law as any holder of a transitional funding
instrument, including a trustee, collateral agent, nominee or other such party
acting for the benefit of such a holder. The Funding Law specifies that neither
intangible transition property nor any right, title or interest therein shall
constitute property in which a security interest may be created under the UCC,
that such rights shall not be deemed proceeds of any property which is not
intangible transition property, and that the terms "account" and "general
intangible" as defined under Section 9-106 of the UCC and the term "instrument"
as defined under Section 9-105 of the UCC shall, as used in the UCC, be deemed
to exclude any intangible transition property or any right, title or interest
therein. The Funding Law provides that the granting, perfection and enforcement
of security interests in intangible transition property are governed by the
provisions of the Funding Law rather than by Article 9 of the UCC. The Funding
Law further provides that a sale, assignment or other transfer of intangible
transition property which is expressly stated in the documents governing the
transaction to be a sale or other absolute transfer, in a transaction approved
in a transitional funding order, shall be treated as an absolute transfer of all
of the transferor's right, title and interest in, to and under such intangible
transition property which places the transferred property beyond the reach of
the transferor or its creditors, as in a true sale, and not as a pledge or other
financing of such intangible transition property. The Funding Law states that
the characterization of any such transfer as an absolute transfer and the
corresponding characterization of the transferee's property interest shall not
be defeated or adversely affected by, among other things: (a) the commingling
of revenues arising with respect to intangible transition property with funds of
the Utility or other funds of the assignee, issuer or grantee; (b) granting to
holders of transitional funding instruments a preferred right to the intangible
transition property, whether direct or indirect; (c) the provision by the
Utility, grantee, assignee or issuer of any recourse, collateral or credit
enhancement with respect to transitional funding instruments; (d) the retention
by the assigning party of a partial interest in any intangible transition
property, whether direct or indirect, or whether subordinate or otherwise; or
(e) the Utility's responsibilities for collecting instrument funding charges and
any retention of bare legal title for the purpose of such collection activities.
The Funding Law further states that a sale, assignment or other such transfer of
intangible transition property shall be deemed perfected as against third
persons, including any judicial lien creditors, when (a) the ICC has issued the
transitional funding order creating the intangible transition property, and (b)
a sale, assignment or transfer of the intangible transition property has been
executed and delivered in writing. See "Security for the Notes -- Security
Interest in Note Collateral."

LIMITATIONS ON THE AMOUNTS OF TRANSITIONAL FUNDING INSTRUMENTS, INTANGIBLE
TRANSITION PROPERTY AND INSTRUMENT FUNDING CHARGES WHICH CAN BE AUTHORIZED;
PERMITTED USE OF PROCEEDS

The Funding Law imposes several limitations and restrictions on the power of
the ICC to create intangible transition property and to authorize the issuance
of transitional funding instruments and the imposition and collection of
instrument funding charges.

Under the Funding Law, the ICC, in a transitional funding order, can only
create and establish intangible transition property in an amount (which is
the total dollar amount of instrument funding charges which may be applied
and invoiced over time) not to exceed the sum of: (a) the rate base
established by the ICC in the Utility's last rate case prior to December 16,
1997, PLUS (b) any expenditures required to be undertaken by the Utility by
the provisions of Section 16-128 of the Act, including labor severance costs
and employee retraining costs, PLUS (c) amounts necessary to fund debt
service and other reserves, commercially reasonable costs and fees necessary
in connection with the marketing of the transitional funding instruments,
PLUS (d) commercially reasonable costs incurred from and after December 16,
1997 or to be incurred which are associated with the issuance and
collateralization of the transitional funding instruments, PLUS (e)
commercially reasonable costs incurred from and after December 16, 1997 or to
be incurred which are associated with the issuance of the transitional
funding

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instruments, including costs incurred on and after such date, or to be
incurred in connection with transactions to recapitalize, refinance or retire
stock and/or debt, any associated taxes and the costs incurred to obtain,
collateralize, issue, service and/or administer transitional funding
instruments, including interest and other related fees, costs and charges,
MINUS (f) the amount of any intangible transition property previously created
and established at the request of and for the benefit of the Utility in a
prior transitional funding order.

The Funding Law provides that transitional funding instruments may not be
issued prior to August 1, 1998 or after December 31, 2004. The aggregate dollar
amount of transitional funding instruments which may be authorized, in a
transitional funding order, for issuance, together with the amounts authorized
for issuance in any prior transitional funding order, may not exceed (a) between
August 1, 1998 and July 31, 1999, the Utility's total capitalization at
December 31, 1996, times a percentage equal to 25% multiplied by the ratio of
the Utility's revenues from Illinois retail electric customers during the year
ended December 31, 1996 to its total retail electric revenues for such year, and
(b) subsequent to August 1, 1999, the Utility's total capitalization at
December 31, 1996, times a percentage equal to 50% multiplied by the ratio of
the Utility's revenues from Illinois retail electric customers during the year
ended December 31, 1996 to its total retail electric revenues for such year.

The Funding Law requires as a condition to the issuance of any Transitional
Funding Order that the final date on which the Utility, grantee or assignee
shall be entitled to charge and collect instrument funding charges related to
the intangible transition property shall be set to occur no later than
December 31, 2008 (or December 31, 2010, if requested and approved by the ICC as
being in the public interest); provided, that the authority to impose and
collect instrument funding charges shall continue beyond such date until such
time as the related transitional funding instruments have been paid in full.

Transitional funding instruments may only be authorized for issuance if
the ICC finds, in the related transitional funding order, that the Utility
seeking the transitional funding order will use the proceeds from the sale
and issuance of the transitional funding instruments for one or more of the
following purposes: (a) to refinance debt or equity, or both, in a manner
which the Utility reasonably demonstrates will result in an overall reduction
in its cost of capital, taking into account the costs of financing, and
provided that any proceeds transferred to a parent company through a common
stock repurchase transaction shall be used to retire publicly-traded common
stock of the parent company or to pay commercially reasonable transaction
costs associated with such retirement; (b) to fund debt service and other
reserves, commercially reasonable costs and fees necessary or desirable in
connection with the marketing of the transitional funding instruments; (c) to
pay for commercially reasonable costs associated with issuance and
collateralization of the transitional funding instruments; (d) to pay for the
commercially reasonable costs associated with the issuance of the
transitional funding instruments, including the costs incurred since December
16, 1997, or to be incurred, in connection with transactions to recapitalize,
refinance or retire stock and/or debt, any associated taxes, and the costs
incurred or to be incurred to obtain, collateralize, issue, service and
administer the transitional funding instruments, including interest and other
related fees, costs and charges; and (e) to repay or retire fuel contracts or
obligations related to nuclear spent fuel incurred by the Utility in
providing electric power or energy services prior to December 16, 1997 and to
pay any expenditures required to be undertaken by the Utility by the
provisions of Section 16-128 of the Act, including labor severance costs and
employee retraining costs. Moreover, the transitional funding order must
require the Utility to use at least 80% of the proceeds from issuance of the
transitional funding instruments for the purposes specified in (a) and (e)
above, and to use no more than 20% of the maximum amount of such proceeds
permitted for purposes other than those specified in (a) above. The Funding
Law prohibits a Utility from using the proceeds from issuance of transitional
funding instruments for the purpose of refinancing debt or equity to such an
extent that as of the date of application of such proceeds, the common equity
component of the Utility's capital structure, exclusive of the portion that
consists of obligations representing transitional funding instruments, is
reduced below the lesser of (1) 40% or (2) the common equity percentage as of
December 31, 1996, adjusted to reflect any write-off of assets or common
equity implemented or required to be implemented as a result of the
Amendatory Act. The Funding Law also prohibits the Utility from using the
proceeds from issuance of transitional funding instruments to repay or retire
obligations incurred by an affiliate of the Utility, other than in connection
with any refinancing of transitional funding instruments issued by such
affiliate, without consent of the ICC. Finally, the Funding Law provides
that any use of the proceeds from issuance of transitional

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funding instruments, other than in accordance with the purposes specified in
the related transitional funding order, shall be void.

The Funding Law provides that the instrument funding charges imposed on a
customer or class of customers may not cause the rates for tariffed services,
including delivery charges, to exceed the amounts which the customer otherwise
would have paid, and that the Utility may not, as the result of issuance of
transitional funding instruments, increase any of its rates for tariffed
services, including delivery charges, or its transition charges above the levels
which the Utility would have been authorized to charge if the Utility were not
authorized to impose and collect instrument funding charges.

IMPOSITION AND COLLECTION OF INSTRUMENT FUNDING CHARGES; ADJUSTMENTS THERETO

The Funding Law empowers the ICC, in a transitional funding order, to
authorize the imposition and collection of a specific amount of instrument
funding charges projected to be sufficient to pay when due the principal of and
interest on the corresponding transitional funding instruments, together with
premium, servicing fees and other fees, costs and charges related thereto, and
to maintain any required reserves.

The Funding Law provides that concurrently with the issuance of a
transitional funding order and with the sale, pledge, assignment or other
transfer of, or the establishment, creation and granting of a Utility's,
assignee's or grantee's rights in and to intangible transition property and the
issuance of transitional funding instruments, the Utility shall begin to impose
and collect the specified instrument funding charges from retail customers,
classes of retail customers, and any other person or group of persons as set
forth in the transitional funding order. However, as a precondition to the
imposition of any instrument funding charges authorized in such transitional
funding order, the Utility shall file tariffs directing that the amount of the
instrument funding charges be deducted, stated and collected separately from the
amounts otherwise billed by the Utility for base rates, transition charges and
other rates for tariffed services as set forth in the related transitional
funding order. The total amount of instrument funding charges authorized by the
transitional funding order is to be allocated among the customer classes of the
Utility on the basis of the ratio of each class' base rate revenues for the year
ended December 31, 1996 to the Utility's total base rate revenues for that year,
and are then to be expressed in a cents per kilowatt-hour charge which is to be
deducted and stated separately from the base rates, transition charges and other
rates for tariffed services paid by the customers in each class. The Funding
Law specifies that upon the effectiveness of such tariffs, the amounts of
instrument funding charges thereby deducted and to be deducted shall become
intangible transition property as specified in the related transitional funding
order. The Funding Law expressly provides that the ICC has no authority to
review the tariffs filed by the Utility, except to confirm that the instrument
funding charges authorized in the transitional funding order have been deducted,
stated and collected separately from base rates, transition charges and other
rates for tariffed services otherwise in effect at that time; and that the ICC
may not suspend such tariffs for any other reason.

The Funding Law requires the ICC to provide in any transitional funding order
for a procedure for periodic adjustments to the instrument funding charges
authorized in such transitional funding order in order to ensure the repayment
in accordance with projections set forth in such transitional funding order of
all transitional funding instruments authorized therein and to reconcile the
revenues received from instrument funding charges during the applicable
adjustment period with the revenues projected to be received from such charges
as set forth in such transitional funding order. Unless the transitional
funding order provides otherwise, the Funding Law requires such adjustments
whenever the instrument funding charges actually collected during an adjustment
period are greater or less than the instrument funding charges projected in the
related transitional funding order to be collected during that period. The
Funding Law states that the Utility is to determine, within 90 days (or such
shorter period as may be specified in the documents relating to the transitional
funding instruments) of the end of each adjustment period, whether any such
adjustments are required. If adjustments are required, they are to be
implemented by the Utility, grantee, issuer or assignee, as applicable, with
written notice to the ICC, within such 90-day (or shorter) period after the end
of the adjustment period. The Funding Law provides that any adjustment is to be
calculated to include amounts necessary for recovery of any additional costs
incurred by the grantee, Utility, assignee or issuer as a result of the delay in
collections of instrument funding charges. If, as a result of

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an adjustment, the amount of the instrument funding charges per kilowatt-hour
will exceed the amount per kilowatt-hour initially authorized by the ICC in the
related transitional funding order, the Utility shall file amendatory tariffs
with the ICC correspondingly reducing, by the amount of such excess, the amounts
otherwise billed by the Utility for base rates, transition charges and other
rates for tariffed services. The Funding Law provides that the ICC has no
authority to review any such amendatory tariffs except to confirm that the
instrument funding charges have been deducted, stated and collected separately
from base rates, transition charges and other rates for tariffed services
otherwise in effect at that time; and that the ICC may not suspend such
amendatory tariffs for any other reason. The Funding Law further specifies that
the failure of such amendatory tariff to become effective for any reason shall
not delay or impair the effectiveness of the adjustments otherwise required as
described above.

TRANSITIONAL FUNDING ORDER ISSUED AT THE REQUEST OF COMED

The Funding Law authorizes the ICC to issue one or more transitional funding
orders in favor of the Grantee at the request of ComEd (each, a "Transitional
Funding Order"), in order to create and establish the Intangible Transition
Property which may be financed through the issuance of transitional funding
instruments, such as the Notes. The ICC issued a Transitional Funding Order (the
"Initial TFO") on July 21, 1998. The Initial TFO also permits the sale of Notes
in an aggregate principal amount not to exceed $3.4 billion.

Each Transitional Funding Order will create and establish, among other
things, the related Intangible Transition Property and authorizes the imposition
and collection of the related IFC Charges, which constitute separate
nonbypassable usage-based charges expressed in cents per kilowatt-hour payable
by Customers in an aggregate amount calculated to be sufficient to (a) pay
interest and make Scheduled Payments on the Notes, (b) pay all related fees and
expenses of the Trust, including the Servicing Fee and any Quarterly
Administration Fee, (c) replenish the Capital Subaccount up to the Required
Capital Level, and (d) fund and maintain the Overcollateralization Subaccount up
to the Required Overcollateralization Level. The Funding Law provides that the
right to collect payments based on the IFC Charges is a property right which may
be pledged, assigned or sold.

Unless otherwise provided in the related Prospectus Supplement, each
Transitional Funding Order will entitle the Trust, as the assignee of the
Intangible Transition Property from the Grantee, to receive the payments made
pursuant to the IFC Charges, from all Customers through December 31, 2008 or, if
later, until the Trust has received IFC Collections sufficient to retire all
outstanding Series of Notes and cover related fees and expenses. Such payments
from the Customers are referred to herein as the "IFC Payments." The Funding
Law requires ComEd to submit a statement of the final terms of any Series of
Notes to the ICC within 90 days of the receipt of proceeds from such issuance
and periodically thereafter until all such proceeds are accounted for. Each
Transitional Funding Order will permit the Servicer to calculate and implement
adjustment of the IFC Charges from time to time, in order to enhance the
likelihood of retirement of each Series and Class of Notes on a timely basis.
See "-- Adjustments to the IFC Charges."

The IFC Charges authorized in any Transitional Funding Order (which may be
increased by the ICC in connection with the issuance of any subsequent
Transitional Funding Order) will be based on certain assumptions contained
therein and will be set forth in the related Prospectus Supplement. In
connection with the issuance and pricing of any Series of Notes, ComEd will file
an IFC Tariff with the ICC to provide for, among other things, certain revisions
to the IFC Charges authorized in the related Transitional Funding Order, which
will also be set forth in the related Prospectus Supplement. Each Transitional
Funding Order will provide that as each Series of Notes is issued, ComEd shall
file a tariff deducting and separately stating from other rates for tariffed
services the sum of the cents per kilowatt-hour charges relating to that Series
(plus, in connection with any subsequent Transitional Funding Order increasing
the IFC Charges, the cents per kilowatt-hour charges relating to
previously-issued Series), which shall be calculated using projected
kilowatt-hour sales and deliveries for the succeeding calendar year, from
ComEd's Applicable Rates.

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the Act. Applicable Rates do not include late charges or charges set forth in
those tariffs which are filed specifically and primarily to collect amounts
related to decommissioning expense, taxes, franchise fees or other franchise
cost additions, costs imposed by local governmental units which are allocated
and charged to customers within the boundaries of such governmental units'
jurisdictions, renewable energy resources and coal technology development
assistance charges, energy assistance charges for the Supplemental Low-Income
Energy Assistance Fund, reimbursement for the costs of optional or non-standard
facilities and reimbursement for the costs of optional or non-standard meters,
or monies that will be paid to third parties (after deduction of allowable
administrative, servicing or similar fees) (collectively, "Excluded Amounts").
Payments owed to the Grantee or the Trust in respect of IFC Charges do not
constitute Excluded Amounts. To the extent any Applicable Rate reflects
compensation owed by ComEd for power or energy generated by a person or entity
other than ComEd, the IFC Charge will be deducted and stated separately from
such Applicable Rates without giving effect to such compensation.
Administrative, servicing and similar fees referred to in the parenthetical
above means fees which ComEd is expressly authorized under its current
agreements with third parties by statute, tariff or otherwise to deduct from
monies owed to such parties to cover its cost of processing such third-party
payments. Charges associated with Excluded Amounts are generally the subject of
separate riders to ComEd's rates, such that increases in such charges are
collected through an increase in the amount permitted to be collected under such
rider, rather than through an increased share of the Applicable Rates. As a
result, any increase in Excluded Amounts should not result in a material
decrease in the amount of Applicable Rates available to cover the amount of IFC
Charges.

TRANSACTIONS PURSUANT TO THE TRANSITIONAL FUNDING ORDERS

Pursuant to the authority granted by the Transitional Funding Orders, the
Grantee will assign its rights in the Intangible Transition Property to the
Trust. The Trust will thereafter, at the times and in the amounts permitted by
the Funding Law and authorized by each Transitional Funding Order, issue the
Notes, which shall be secured by the Intangible Transition Property and the
other Note Collateral, to the public. The Trust will remit the proceeds from
the issuance of the Notes, less the expenses of issuance, and such amounts of
the proceeds necessary to fund the Capital Subaccount, to the Grantee as
consideration for the assignment to the Trust of the Grantee's rights in the
Intangible Transition Property. The Grantee will distribute the amount of the
proceeds received from the Trust to the Grantee's sole member, ComEd, in
consideration for ComEd's actions requesting that the Intangible Transition
Property be created and vested in the Grantee.

The Grantee will also enter into the Servicing Agreement with ComEd, as
Servicer, pursuant to which the Servicer, in connection with and upon the
issuance of each Series of Notes, will impose the IFC Charges on Customers, and
will thereafter collect and remit the IFC Charges to the Trust, as assignee of
the Grantee's ownership interest in the Intangible Transition Property. See
"Servicing." The Servicing Agreement provides that the Servicer will file
tariffs with the ICC in connection with each Series of Notes providing for the
deduction of the related IFC Charges.

NONBYPASSABLE IFC CHARGES

Each Transitional Funding Order will provide that the IFC Charges are
nonbypassable, meaning that Customers will still be required to make payments
with respect to the applicable IFC Charges even if a Customer elects to purchase
electricity from another supplier or another entity takes over a portion of
ComEd's existing service; provided, however, that the IFC Charges must be
deducted from Applicable Rates which could otherwise be charged by ComEd to such
Customers. If a Customer ceases to take any tariffed services from ComEd or any
successor Utility within ComEd's service area, for example, by generating its
own electricity or by moving outside of ComEd's service area, then such Customer
will not owe any IFC Charges except that, if such Customer takes electric power
or energy from an ARES or another Utility, then such Customer may be obligated
to pay transition charges under the Act from which the IFC Charges would
continue to be deducted and stated separately.

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ADJUSTMENTS TO THE IFC CHARGES

The Servicing Agreement and each Transitional Funding Order will require the
Servicer to calculate and implement adjustments to the IFC Charges which are
designed to enhance the likelihood that the IFC Collections which are remitted
to the Collection Account will be sufficient to (a) pay interest and make
Scheduled Payments on the Notes, (b) pay all related fees and expenses of the
Trust, including the Servicing Fee and any Quarterly Administration Fee, (c)
replenish the Capital Subaccount up to the Required Capital Level, and (d) fund
and maintain the Overcollateralization Subaccount up to the Required
Overcollateralization Level.

Unless otherwise provided in the related Prospectus Supplement, each
Transitional Funding Order will provide for a "Reconciliation Adjustment" to the
IFC Charges which will be calculated by the Servicer within the two-week period
preceding every other Payment Date, commencing on the Payment Date indicated in
the related Prospectus Supplement (each such Payment Date, a "Reconciliation
Payment Date").

Unless otherwise provided in the related Prospectus Supplement, each
Transitional Funding Order will also provide for a "True-Up Adjustment" to the
IFC Charges which will be calculated by the Servicer within the two-week period
preceding every Payment Date which is not a Reconciliation Payment Date
commencing on the Payment Date indicated in the related Prospectus Supplement
(each such Payment Date, a "True-Up Payment Date") only if, as of the True-Up
Payment Date, the aggregate outstanding principal balance of the Notes exceeds
the scheduled aggregate outstanding principal balance of the Notes set forth on
the Expected Amortization Schedule by 5%, or such greater amount as may be set
forth in the related Prospectus Supplement.

Unless otherwise provided in the related Prospectus Supplement, each
Transitional Funding Order will provide that the changes in IFC Charges, if any,
resulting from a Reconciliation Adjustment and any True-Up Adjustment
(collectively, the "Adjustments") will take effect on the first billing day of
the month following the applicable Reconciliation Payment Date or True-Up
Payment Date. The Servicing Agreement and, unless otherwise provided in the
related Prospectus Supplement, each Transitional Funding Order, require the
Servicer to provide the ICC Staff with (a) in the case of a Reconciliation
Adjustment, at least three business days' prior written notice of such
Reconciliation or True-Up Adjustment and (b) in the case of a True-Up
Adjustment, must also provide at least seven business days' prior telephonic and
facsimile notice whether there will be a True-Up Adjustment.

The IFC Charges will, subject to Adjustment as provided herein, continue to
be imposed and collected until all interest on and principal of all Series of
the Notes have been paid in full, and will be based on expected IFC Collections
which will be calculated in accordance with the Servicer's normal servicing
procedures using data available through the end of the prior monthly period. The
period included in determining the under-recovery of billed IFC Charges for
purposes of performing any True-Up Adjustment will include the quarterly period
commencing on the first billing date of the month during which the immediately
preceding Reconciliation Payment Date occurs and ending on the last billing date
of the month immediately preceding the date on which such True-Up Adjustment is
calculated. The period included in determining the over or under recovery of
billed IFC Charges for purposes of performing any Reconciliation Adjustment will
include the semiannual period commencing on the first billing date of the month
during which the immediately preceding Reconciliation Payment Date occurs (or if
a True-Up Adjustment was required with respect to the True-Up Payment Date
immediately following such Reconciliation Payment Date, the quarterly period
commencing on the first billing date of the month during which the immediately
preceding True-Up Payment Date occurs) and ending on the last billing date of
the month immediately preceding the date on which such Reconciliation Adjustment
is calculated. The data used in all of such calculations will take into account
to the extent available, among other things, (a) updated assumptions by the
Servicer as to projected future usage of electricity by Customers, (b) future
fees and expenses relating to the Intangible Transition Property and the Notes,
(c) amounts available in the General Subaccount and Reserve Subaccount, (d)
amounts necessary to fund and replenish the Overcollateralization Subaccount and
Capital Subaccount to required levels, (e) amounts payable on the Notes, and (f)
expected delinquencies and write-offs, including amounts necessary for recovery
of any additional costs incurred by the Trust as a result of the relevant delay
in collections of IFC Charges, all assuming that there will be no net earnings
on any amounts in the Collection Account.

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The Servicing Agreement and, unless otherwise provided in the related
Prospectus Supplement, each Transitional Funding Order, also require the
Servicer to calculate the "Debt Service Requirement" and the "Debt Service
Billing Requirement" for each applicable period as described below. The "Debt
Service Requirement" for any period means the total dollar amount of IFC
Payments which the Servicer calculates as to be needed to be collected in such
period to: (a) make all required payments (taking into account any prior
shortfalls in such payments) of principal and interest on the Notes as of the
Payment Date immediately following such period; (b) pay all fees and expenses
payable as set forth in the Indenture; (c) replenish the Capital Subaccount for
any prior withdrawals of funds therefrom; and (d) fund the Overcollateralization
Account to its required level (after taking into account amounts available in
the Reserve Subaccount for payment of the Debt Service Requirement and assuming
no net earnings on any amounts in the Collection Account). The "Debt Service
Billing Requirement" for any period means the total dollar amount of IFC
Charges, taking into account delays in collections and write-offs, which the
Servicer calculates will need to be billed during such period in order to
generate IFC Collections in the full amount of the Debt Service Requirement for
such period.

The Debt Service Requirement and the Debt Service Billing Requirement will be
calculated by the Servicer within the two week period preceding each
Reconciliation Payment Date and will be calculated for the next semiannual
period commencing on the first billing date of the month during which such
Reconciliation Payment Date occurs and ending on the last billing date of the
month immediately preceding the date on which the following Reconciliation
Payment Date occurs. If a True-Up Adjustment is required, the Debt Service
Billing Requirement shall be calculated by the Servicer within the two week
period preceding the related True-Up Payment Date and will be calculated for the
quarterly period commencing on the first billing date of the month during which
such True-Up Payment Date occurs and ending on the last billing date of the
month immediately preceding the date on which the following Reconciliation
Payment Date occurs.

The Debt Service Billing Requirement for each semiannual or quarterly period
will be allocated among the IFC Customer Classes on the basis of their
respective 1996 base rate revenues as set forth in "The Servicer -- ComEd
Customer Base, Electric Energy Consumption and Base Rates." The amount so
allocated to each IFC Customer Class will be divided by the number of
kilowatt-hours projected to be sold and delivered to Customers in the class by
ComEd during such semiannual or quarterly period. If, in connection with the
foregoing allocations, the forecasted revenues from Applicable Rates for any IFC
Customer Class during a semiannual or quarterly period is projected to be less
than the IFC Charges allocated to that class for the same period, the deficiency
shall be ratably allocated among the remaining IFC Customer Classes based on
their percentages of the 1996 base rate revenues, recalculated to exclude such
IFC Customer Class.

All Adjustments shall be implemented pursuant to the IFC Tariff filed by
ComEd in connection with the related Transitional Funding Order. As required by
the Funding Law, if, as a result of any Adjustment, the IFC Charge, as so
adjusted, will exceed the amount per kilowatt-hour of the IFC Charge initially
authorized by the ICC in such Transitional Funding Order, then ComEd shall be
obligated to file Amendatory Tariffs adjusting the amounts otherwise billed by
ComEd for Applicable Rates, to offset the amount of such excess (or, if ComEd
shall have previously filed any such Amendatory Tariffs, the incremental amount
of such excess). However, the failure of such Amendatory Tariff to become
effective for any reason shall not delay or impair the effectiveness of any such
Adjustments.

The Servicing Agreement will require the Servicer to deliver promptly a
written copy of all filings made with the ICC in connection with any Adjustment,
together with a copy of all material supporting documents, to the Trust and the
Indenture Trustee.

SALE AND ASSIGNMENT OF INTANGIBLE TRANSITION PROPERTY

On the initial Series Issuance Date, in accordance with the requirements of
the Funding Law and the terms of the Initial TFO and pursuant to the initial
Sale Agreement, the Grantee will sell, transfer and assign to the Trust, without
recourse, its entire right in, to and under the Intangible Transition Property
that is created by the Initial TFO (the "Initial Intangible Transition
Property") and in, to and under the related Basic Documents (such sale, transfer
and assignment to include all revenues, collections, claims, rights, payments,
money or proceeds,

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including, without limitation, any revenues derived from lump-sum payments of
transition charges, condemnation proceedings or FERC stranded cost recoveries
which are allocable to the IFC Charges under the Servicing Agreement). The net
proceeds received by the Trust from the sale of the Notes will be applied to the
purchase of the Initial Intangible Transition Property. Thereafter, the Grantee
may agree with the Trust to sell additional Intangible Transition Property
("Subsequent Intangible Transition Property") to the Trust, subject to the
satisfaction of certain conditions, including the establishment and creation of
such Subsequent Intangible Transition Property (and the vesting thereof in the
Grantee) pursuant to a subsequent Transitional Funding Order. Such Subsequent
Intangible Transition Property will be sold to the Trust effective on a date (a
"Subsequent Transfer Date") specified in a subsequent Sale Agreement between the
Grantee and the Trust. The Trust will issue and sell additional Notes in
connection therewith.

The Grantee's entire right in, to and under the Initial Intangible Transition
Property was granted to the Grantee by the ICC in accordance with the Initial
TFO. The Grantee's rights in, to and under any Subsequent Intangible Transition
Property will, subject to the satisfaction of certain conditions, be granted to
the Grantee by the ICC in accordance with a subsequent Transitional Funding
Order related thereto.

The Trust will appoint the Servicer as custodian of the documentation
relating to the Intangible Transition Property. ComEd's data systems will
reflect the sale and assignment of the Intangible Transition Property from the
Grantee to the Trust. ComEd's financial statements will indicate that the
Intangible Transition Property has been sold by the Grantee to the Trust and
will not be available to creditors of ComEd, although, unless otherwise
specified in the related Prospectus Supplement, for financial reporting purposes
ComEd intends to treat the Notes as representing debt of ComEd.

Subsequent Intangible Transition Property may be sold by the Grantee to the
Trust from time to time, solely in connection with the issuance and sale of
additional Notes by the Trust. Any such conveyance of Subsequent Intangible
Transition Property is subject to the following conditions, among others:

(a) the Grantee shall have entered into a written sale agreement with
the Trust;

(b) ComEd shall have received a subsequent Transitional Funding Order
issued by the ICC relating to such Subsequent Intangible Transition
Property;

(c) as of the applicable Subsequent Transfer Date, the Grantee shall
not be insolvent and shall not be made insolvent by such conveyance;

(d) the Rating Agency Condition shall have been satisfied with
respect to such conveyance;

(e) ComEd shall have delivered to the Grantee, the Trust, the
Delaware Trustee and the Indenture Trustee an opinion of independent tax
counsel and/or a ruling from the IRS (as selected by, and in form and
substance reasonably satisfactory to, ComEd) to the effect that, for
federal income tax purposes, (i) the ICC's issuance of the Transitional
Funding Order creating and establishing the Subsequent Intangible
Transition Property in the Grantee and the assignment pursuant to such
conveyance of such Subsequent Intangible Transition Property will not
result in gross income to the Grantee, the Trust or ComEd, and the future
revenues relating to the Subsequent Intangible Transition Property, and the
assessment of the IFC Charges (except for revenue related to certain
lump-sum payments) will be included in ComEd's gross income in the year in
which the related electrical service is provided to consumers and (ii) such
conveyance will not adversely affect the characterization of the then
outstanding Notes as obligations of ComEd;

(f) as of the applicable Subsequent Transfer Date, no breach by the
Grantee of its representations, warranties or covenants in the applicable
Sale Agreement and no Servicer Default shall exist;

(g) as of the applicable Subsequent Transfer Date, the Trust shall
have sufficient funds available to pay the purchase price for the
Subsequent Intangible Transition Property to be transferred on such date
and all conditions to the issuance of new series of Notes shall have been
satisfied; and

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(h) the Grantee and the Trust shall have taken any action required to
perfect the ownership interest or security interest (as the case may be) of
the Trust in the Subsequent Intangible Transition Property and the proceeds
thereof, free and clear of any liens.

GRANT AGREEMENT

Under each Grant Agreement, the Grantee will agree, in consideration of ComEd
filing an application with the ICC requesting a Transitional Funding Order
creating and vesting in the Grantee the related Intangible Transition Property,
to remit to ComEd the net proceeds remitted to it by the Trust from the sale of
the Notes. To the extent that, notwithstanding the Funding Law and the related
Transitional Funding Order, applicable law provides that ComEd has any interest
in the Intangible Transition Property or any part thereof, ComEd will agree to
sell, transfer, assign, set over and otherwise convey to the Grantee without
recourse all of ComEd's right, title and interest, if any, in, to and under the
Intangible Transition Property (such sale, transfer and assignment to include
all revenues, collections, claims, rights, payments, money or proceeds,
including, without limitation, any revenues derived from lump-sum payments of
transition charges, condemnation proceedings or FERC stranded cost recoveries
which are allocable to the IFC Charges under the Servicing Agreement). Such
sale, transfer, assignment, set over and conveyance by ComEd contemplated under
each Grant Agreement will be expressly stated to be an absolute transfer
pursuant to Section 18-108 of the Funding Law.

In each Grant Agreement, ComEd will also acknowledge and consent to any
transfer, pledge, assignment or grant of a security interest by the Grantee to
the Trust pursuant to the related Sale Agreement, and by the Trust to the
Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture,
of all right, title and interest of the Grantee in, to and under the Intangible
Transition Property and the proceeds thereof, and the assignment of any or all
of the Grantee's rights and obligations under such Grant Agreement to the Trust
and the Indenture Trustee.

REPRESENTATIONS AND WARRANTIES OF COMED

In each Grant Agreement, ComEd will make representations and warranties to
the Grantee to the effect, among other things and with respect to the related
Transitional Funding Order and Intangible Transition Property, that: (a) the
information provided by ComEd to the Grantee with respect to the applicable
Intangible Transition Property (including the related Transitional Funding Order
and the related IFC Tariff) is correct in all material respects; (b) immediately
prior to the sale, transfer, assignment, set over and conveyance contemplated
under such Grant Agreement, ComEd's right, title and interest in and to the
related Intangible Transition Property, if any, is free and clear of all
security interests, liens, charges and encumbrances, no offsets, defenses or
counterclaims exist or have been asserted with respect thereto and ComEd, in its
capacity as Servicer or otherwise, will not at any time assert any lien against
or with respect to any of such Intangible Transition Property; (c) at the
related Series Issuance Date, the applicable Intangible Transition Property has
been validly granted to and vested in the Grantee pursuant to the related
Transitional Funding Order and, to the extent applicable, such Grant Agreement,
the Grantee owns all right, title and interest to such Intangible Transition
Property, free and clear of all liens and rights of any other person (other than
liens created pursuant to the related Sale Agreement and the Indenture) and all
filings to be made by ComEd (including filings with the ICC under the Funding
Law) necessary in any jurisdiction to give the Grantee a perfected ownership
interest in such Intangible Transition Property shall have been made, and no
further action is required under Illinois law to maintain such ownership
interest in such Intangible Transition Property; (d) under the laws of the State
of Illinois and the United States in effect on the related Series Issuance Date:
(i) ComEd was authorized to file the application for the related Transitional
Funding Order; (ii) ComEd filed such application in proper form with the ICC
requesting the issuance of a transitional funding order; (iii) the related
Transitional Funding Order and related IFC Tariff established, created and
granted rights in and to the related Intangible Transition Property and such
Intangible Transition Property and the right to impose and collect the related
IFC Charges constitute current and original property rights vested in the
Grantee; (iv) the Transitional Funding Order pursuant to which any applicable
Intangible Transition Property has been created has been duly entered by the
ICC, is in full force and effect; (v) as of the issuance of the related Notes,
such Notes are entitled to certain protections provided in the Funding Law

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and, accordingly, the related Transitional Funding Order is not revocable by the
ICC; (vi) neither the State of Illinois nor the ICC (or any successor thereto)
may reduce, postpone, impair or terminate the related Intangible Transition
Property or the related Transitional Funding Order; (vii) the process by which
the related Transitional Funding Order was adopted and approved and the related
IFC Tariff was filed, and such Transitional Funding Order and IFC Tariff
themselves, comply with all applicable laws, rules and regulations; and (viii)
no other approval or filing with any other governmental body is required in
connection with the grant of the related Intangible Transition Property, except
those that have been obtained or made; (e) the assumptions used in calculating
the IFC Charges related to the applicable Intangible Transition Property are
reasonable and made in good faith; (f) upon the effectiveness of the applicable
IFC Tariff: (i) all of the related Intangible Transition Property constitutes a
current property right vested in the Grantee; (ii) the related Intangible
Transition Property includes, without limitation, (A) the right, title and
interest in and to the related IFC Charges authorized under the related
Transitional Funding Order, as adjusted from time to time, (B) the right, title
and interest in and to all revenues, collections, claims, payments, money, or
proceeds of or arising from the related IFC Charges set forth in such IFC
Tariff, and (C) all rights to obtain adjustments to the related IFC Charges
pursuant to the related Transitional Funding Order; and (iii) the Grantee is
entitled to impose and collect the related IFC Charges described in the related
Transitional Funding Order and such IFC Tariff in an aggregate amount equal to
the principal amount of the Notes, all interest thereon, all amounts required to
be deposited in the Reserve Subaccount, the Overcollateralization Subaccount and
(to the extent payable from the proceeds of the related IFC Charges) the Capital
Subaccount, and all related fees, costs and expenses in respect of the Notes
until they have been paid in full subject only to the applicable limitation set
forth in the related Transitional Funding Order as to the maximum dollar amount
of Intangible Transition Property created thereunder; (g) ComEd is duly
organized and validly existing as a corporation in good standing under the laws
of the State of Illinois, with power and authority to own its properties and
conduct its business as currently owned or conducted and to execute, deliver and
perform the terms of such Grant Agreement, and had at all relevant times, and
has the requisite power, authority and legal right to request that the ICC issue
the related Transitional Funding Order; (h) the execution, delivery and
performance of such Grant Agreement have been duly authorized by ComEd by all
necessary corporate action; (i) such Grant Agreement constitutes a legal, valid
and binding obligation of ComEd, enforceable against ComEd in accordance with
its terms, subject to applicable insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws relating to or affecting creditors'
rights generally from time to time in effect and to general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law; (j) the consummation of the transactions contemplated by such
Grant Agreement does not conflict with ComEd's Articles of Incorporation,
by-laws or any agreement to which ComEd is a party or bound, result in the
creation or imposition of any lien upon ComEd's properties pursuant to any
agreement or violate any law or any order, rule or regulation applicable to
ComEd; (k) no governmental approvals, authorizations or filings are required for
ComEd to execute, deliver and perform its obligations under such Grant Agreement
except those which have previously been obtained or made and future filings to
be made pursuant to the related Transitional Funding Order and the Funding Law
relating to ComEd's use of proceeds from the transactions contemplated thereby
and to reflect the final terms of the related Series of Notes; and (l) except as
disclosed in such Grant Agreement, no court or administrative proceeding or
investigation is pending or, to ComEd's knowledge, threatened (i) asserting the
invalidity of the Funding Law, such Grant Agreement, any of the other related
Basic Documents or the related Notes, (ii) seeking to prevent the grant of the
related Intangible Transition Property to the Grantee or the consummation of any
of the transactions contemplated by such Grant Agreement or any of the other
related Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect the performance by
ComEd of its obligations under, or the validity or enforceability of, such Grant
Agreement, any of the other related Basic Documents or the related Notes, or
(iv) which could reasonably be expected to adversely affect the federal or state
income tax attributes of the related Notes.

COVENANTS OF COMED

ComEd will covenant in each Grant Agreement, among other things and with
respect to the related Transitional Funding Order and Intangible Transition
Property, that so long as any of the Notes are outstanding:

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(a) it will keep in full force and effect its existence, rights and franchises
as a corporation under the laws of the State of Illinois (or any other State,
the District of Columbia or the United States of America); (b) it will preserve
its qualification to do business to the extent that such existence or
qualification is or shall be necessary to protect the validity and
enforceability of the Grant Agreement and any of the other Basic Documents to
which ComEd is a party; (c) except for the conveyances under the Grant
Agreement, it will not sell, pledge, assign or transfer to any other person, or
grant, create, incur, assume or suffer to exist any lien on, any of the
Intangible Transition Property or any interest therein; (d) it will not at any
time assert any lien against or with respect to any of the Intangible Transition
Property in its capacity as Servicer or otherwise; (e) it will not seek to
limit, alter, impair, reduce or otherwise terminate the property rights of the
Grantee or any assignee of the Grantee; (f) it shall defend the right, title and
interest of the Grantee in, to and under the Intangible Transition Property
against all claims of third parties claiming through or under ComEd; (g) if it
receives collections in respect of the IFC Charges or the proceeds thereof or in
replacement therefor, it will hold such payments in trust for the Servicer and
to pay the Servicer all payments received by it in respect thereof as soon as
practicable after receipt thereof by ComEd, but in no event later than two
Business Days after such receipt; (h) it shall notify the Grantee, the Trust and
the Indenture Trustee promptly after becoming aware of any lien on any of the
Intangible Transition Property other than the conveyances under the Grant
Agreement, the Sale Agreement and the Indenture; (i) it shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality applicable to it, except
to the extent that failure to so comply would not materially adversely affect
the Grantee's, the Trust's or the Indenture Trustee's interests in the
Intangible Transition Property; (j) it shall indicate in its financial
statements that it is not the owner of the Intangible Transition Property and it
shall not own or purchase any Notes; (k) upon the creation and grant of the
Intangible Transition Property to the Grantee pursuant to a Transitional Funding
Order, to the fullest extent permitted by law, including applicable regulations
of the ICC, the Grantee shall have all of the rights of the owner of the
Intangible Transition Property (including all of the rights originally held by
ComEd, if any, with respect to the related Intangible Transition Property),
including the right (subject to the terms of the Servicing Agreement) to
exercise any and all rights and remedies to collect any amounts payable by any
Customer or third party collection agent, including any ARES, in respect of the
Intangible Transition Property, notwithstanding any objection or direction to
the contrary by ComEd; (l) except with respect to federal and other applicable
taxes, it shall not make any statement or reference in respect of the Intangible
Transition Property that is inconsistent with the ownership interest of the
Grantee; (m) it shall execute and file such filings, and cause to be executed
and filed such filings as may be required by law to fully preserve, maintain,
and protect the interests of the Grantee in the Intangible Transition Property,
including all filings required under the Funding Law relating to the grant of
the Intangible Transition Property to the Grantee; (n) it shall institute any
action or proceeding necessary to compel performance by the ICC or the State of
Illinois of any of their obligations or duties under the Funding Law, the
related Transitional Funding Order and related Tariff, and will take such legal
or administrative actions as may be reasonably necessary to protect the Grantee
from claims, state actions or other actions or proceedings of third parties
which, if successfully pursued, would result in a breach of any representation
set forth in the Grant Agreement; (o) it shall not, prior to the date which is
one year and one day after the termination of the Indenture, acquiesce, petition
or otherwise invoke or cause any other Person to invoke the process of any court
or governmental authority for the purpose of commencing or sustaining a case
against the Grantee or the Trust under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of or for the Grantee
or the Trust or any substantial part of the property of the Grantee or the
Trust, or ordering the winding up or liquidation of the affairs of the Grantee
or the Trust; (p) it shall, and shall cause each of its subsidiaries to, pay all
material taxes, assessments and governmental charges imposed upon it or any of
its properties or assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon if the failure to pay any
such taxes, assessments and governmental charges would, after any applicable
grace periods, notices or other similar requirements, result in a lien on the
Intangible Transition Property; (q) neither ComEd nor any successor will cause
or permit the Grantee or the Trust to elect to be classified as an association
taxable as a corporation for federal income tax purposes; (r) neither ComEd nor
any successor thereto will enter into any contract with any Customer obligated
(or who would, but for such contract, be obligated) to pay IFC Charges if, as a
result thereof, such Customer would not

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receive tariffed services, unless the contract provides that the Customer will
pay an amount to the Grantee or its assigns, as applicable, equal to the amount
such Customer would pay in IFC Charges; (s) ComEd shall not initiate any
material changes with respect to its policies and procedures pertaining to
credit (including requirements for deposits from Customers), billing,
collections (including procedures for disconnection of service for non-payment)
and restoration of service after disconnection, and shall not initiate any
changes in any ICC tariffs relating to the foregoing matters, which are likely
to adversely affect ComEd's ability to make timely recovery of amounts billed to
Customers, except for any such changes required by applicable law; and (t) if
ComEd determines that the aggregate dollar amount of IFC Charges to be imposed
and collected is reasonably likely to exceed the maximum dollar amount of
Intangible Transition Property authorized by the Transitional Funding Orders and
any Notes remain outstanding, ComEd shall make a good faith effort to take any
and all subsequent regulatory action with the ICC to obtain an order permitting
the creation of additional Intangible Transition Property in an amount
sufficient to pay such Notes in full.

AMENDMENT OF GRANT AGREEMENTS

Each Grant Agreement may be amended from time to time by ComEd and the
Grantee, with prior written notice given to the Rating Agencies and the prior
written consent of the Trust, but without the consent of any of the Noteholders,
to cure any ambiguity, to correct or supplement any provisions in such Grant
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in such Grant Agreement or of
modifying in any manner the rights of the Noteholders; PROVIDED, HOWEVER, that
such action shall not, as evidenced by an officer's certificate delivered to the
Trust, adversely affect in any material respect the interests of any Noteholder.

Each Grant Agreement may also be amended from time to time by ComEd and the
Grantee, with prior written notice given to the Rating Agencies and the prior
written consent of the Trust, the Indenture Trustee and Noteholders holding not
less than a majority in principal amount of the then outstanding Notes of all
Series affected thereby, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of such Grant Agreement or of
modifying in any manner the rights of the Noteholders; PROVIDED, HOWEVER, that
no such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, IFC Collections relating to the IFC Charges,
or (b) reduce the percentage of the outstanding principal amount of the Notes,
the Noteholders of which are required to consent to any such amendment, without
the consent of the Noteholders of all the outstanding Notes.

INDEMNIFICATION OBLIGATIONS OF COMED

Each Grant Agreement will provide that ComEd will indemnify the Grantee, the
Trust, the Indenture Trustee, the Delaware Trustee and the Noteholders, and each
of their respective officers, directors, employees and agents for, and defend
and hold harmless each such person from and against, (a) any and all taxes
(other than any taxes imposed on the Noteholders) that may at any time be
imposed on or asserted against any such person as a result of the grant of the
Intangible Transition Property to the Grantee, or that may be imposed on or
asserted against any such person under existing law as of the closing date as a
result of the Grantee's ownership and assignment of the Intangible Transition
Property, the Trust's issuance and sale of the Notes, or the other transactions
contemplated herein, including, in each case, any sales, gross receipt, general
corporation, tangible personal property, privilege or license taxes (but
excluding any taxes imposed as a result of a failure of such person to properly
withhold or remit taxes imposed with respect to payments on any Note); (b) any
and all liabilities, obligations, losses, claims, actions, suits, damages,
payments, and reasonable costs or expenses, of any kind whatsoever that may be
imposed on, incurred by or asserted against any such person as a result of
ComEd's willful misconduct, bad faith or gross negligence in the performance of
(or reckless disregard of) its duties or observance of its covenants under each
Grant Agreement, or (c) ComEd's breach of any of its representations or
warranties contained in each Grant Agreement.

Notwithstanding the foregoing, but subject to ComEd's covenant to fully
preserve, maintain and protect the interests of the Grantee in the Intangible
Transition Property, ComEd shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under each Grant Agreement.

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SALE AGREEMENT

Under each Sale Agreement, the Grantee will agree, in consideration of the
Trust remitting to it the net proceeds received from the issuance and sale of
the Notes, to sell, transfer, assign, set over or otherwise convey to the Trust
without recourse all of its right, title and interest in and to the Intangible
Transition Property created in connection with such issuance (such sale,
transfer and assignment to include all revenues, collections, claims, rights,
payments, money or proceeds, including, without limitation, any revenues derived
from lump-sum payments of transition charges, condemnation proceedings or FERC
stranded cost recoveries which are allocable to the IFC Charges under the
Servicing Agreement). Such sale, transfer, assignment, set over and conveyance
by the Grantee contemplated under each Sale Agreement will be expressly stated
to be an absolute transfer pursuant to Section 18-108 of the Funding Law.

In the Sale Agreement, the Grantee will also acknowledge and consent to any
transfer, pledge, assignment or grant of a security interest by the Trust to the
Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture,
of all right, title and interest of the Trust in, to and under the related
Intangible Transition Property and the related assets, and the assignment of any
or all of the Trust's rights and obligations under each Sale Agreement to the
Indenture Trustee.

REPRESENTATIONS AND WARRANTIES OF GRANTEE

In each Sale Agreement, the Grantee will make representations and warranties
to the Trust to the effect, among other things and with respect to the related
Transitional Funding Order and Intangible Transition Property, that: (a) the
information provided by the Grantee to the Trust with respect to the applicable
Intangible Transition Property and Related Assets (as defined in the Basic
Documents) is correct in all material respects; (b) at the related Series
Issuance Date, the applicable Intangible Transition Property is owned by the
Grantee and is free and clear of all security interests, liens, charges and
encumbrances, and no offsets, defenses or counterclaims exist or have been
asserted with respect thereto; (c) at the related Series Issuance Date, the
applicable Intangible Transition Property has been validly transferred and sold
to the Trust and all filings to be made by the Grantee (including filings with
the ICC under the Funding Law) necessary in any jurisdiction to give the Trust a
first perfected ownership interest in the applicable Intangible Transition
Property shall have been made, and no further action is required under Illinois
law to maintain such first priority perfected ownership interest in the
applicable Intangible Transition Property; (d) under the laws of the State of
Illinois and the United States in effect on the related Series Issuance Date:
(i) the Transitional Funding Order pursuant to which any applicable Intangible
Transition Property has been created has been duly entered by the ICC, is in
full force and effect; (ii) the related IFC Tariff is in full force and effect
and is not subject to modification by the ICC except as provided under the
Funding Law, (iii) as of the issuance of the related Notes, such Notes are
entitled to certain protections provided in the Funding Law and, accordingly,
the related Transitional Funding Order is not revocable by the ICC; (iv) neither
the State of Illinois nor the ICC (or any successor thereto) may reduce,
postpone, impair or terminate the related Intangible Transition Property or the
related Transitional Funding Order; (v) the process by which the related
Transitional Funding Order was adopted and approved and the related IFC Tariff
was filed, and such Transitional Funding Order and IFC Tariff themselves, comply
with all applicable laws, rules and regulations; and (vi) no other approval or
filing with any other governmental body is required in connection with the grant
of the related Intangible Transition Property, except those that have been
obtained or made and those described in the related Grant Agreement; (e) the
assumptions used in calculating the IFC Charges related to the applicable
Intangible Transition Property are reasonable and made in good faith; (f) upon
the effectiveness of the applicable IFC Tariff: (i) all of the related
Intangible Transition Property constitutes a current property right vested in
the Grantee; (ii) the related Intangible Transition Property includes, without
limitation, (A) the right, title and interest in and to the related IFC Charges
authorized under the related Transitional Funding Order, as adjusted from time
to time, (B) the right, title and interest in and to all revenues, collections,
claims, payments, money, or proceeds of or arising from the related IFC Charges
set forth in such IFC Tariff, and (C) all rights to obtain adjustments to the
related IFC Charges pursuant to the related Transitional Funding Order; and
(iii) the Grantee is entitled to impose and collect the related IFC Charges
described in the related Transitional Funding Order and such IFC Tariff in an
aggregate amount equal to the principal amount of the Notes, all interest
thereon, all amounts

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required to be deposited in the Reserve Subaccount, the Overcollateralization
Subaccount and (to the extent payable from the proceeds of the related IFC
Charges) the Capital Subaccount, and all related fees, costs and expenses in
respect of the Notes until they have been paid in full subject only to the
applicable limitation set forth in the related Transitional Funding Order as to
the maximum dollar amount of Intangible Transition Property created thereunder;
(g) the Grantee is duly organized and validly existing as a limited liability
company in good standing under the laws of the State of Delaware, with power and
authority to own its properties and conduct its business as currently owned or
conducted and to execute, deliver and perform the terms of such Sale Agreement;
(h) the execution, delivery and performance of such Sale Agreement have been
duly authorized by the Grantee by all necessary company action; (i) such Sale
Agreement constitutes a legal, valid and binding obligation of the Grantee,
enforceable against the Grantee in accordance with its terms, subject to
applicable insolvency, reorganization, moratorium, fraudulent transfer and other
similar laws relating to or affecting creditors' rights generally from time to
time in effect and to general principles of equity (including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing), regardless of whether considered in a proceeding in equity or at law;
(j) the consummation of the transactions contemplated by such Sale Agreement
does not conflict with the Grantee's operating agreement or certificate of
formation or any agreement to which the Grantee is a party or bound, result in
the creation or imposition of any lien upon the Grantee's properties pursuant to
any agreement or violate any law or any order, rule or regulation applicable to
the Grantee; (k) no governmental approvals, authorizations or filings are
required for the Grantee to execute, deliver and perform its obligations under
such Sale Agreement except those which have previously been obtained or made and
future filings to be made pursuant to the related Transitional Funding Order and
the Funding Law relating to ComEd's use of proceeds from the transactions
contemplated thereby and to reflect the final terms of the related Series of
Notes; and (l) except as disclosed in such Sale Agreement, no court or
administrative proceeding or investigation is pending or, to the Grantee's
knowledge, threatened (i) asserting the invalidity of the Funding Law, such Sale
Agreement, any of the other related Basic Documents or the related Notes, (ii)
seeking to prevent the issuance of the related Notes or the consummation of any
of the transactions contemplated by such Sale Agreement or any of the other
related Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect the performance by the
Grantee of its obligations under, or the validity or enforceability of, such
Sale Agreement, any of the other related Basic Documents or the related Notes,
or (iv) which could reasonably be expected to adversely affect the federal or
state income tax attributes of the related Notes.

COVENANTS OF THE GRANTEE

The Grantee will covenant in each Sale Agreement, among other things and with
respect to the related Transitional Funding Order and Intangible Transition
Property, that so long as any of the Notes are outstanding: (a) it will keep in
full force and effect its existence, rights and franchises as a limited
liability company under the laws of the State of Delaware (or any other State,
the District of Columbia or the United States of America); (b) it will preserve
its qualification to do business to the extent that such existence or
qualification is or shall be necessary to protect the validity and
enforceability of the Sale Agreement and any of the other Basic Documents to
which it is a party; (c) except for the conveyances under the Sale Agreement, it
will not sell, pledge, assign or transfer to any other person, or grant, create,
incur, assume or suffer to exist any lien on, any of the Intangible Transition
Property or related assets and it shall defend the right, title and interest of
the Trust and Indenture Trustee in, to and under the Intangible Transition
Property and related assets against all claims of third parties claiming through
or under the Grantee; (d) if it receives collections in respect of the IFC
Charges or the proceeds thereof or in replacement therefor, it will hold such
payments in trust for the Servicer and to pay the Servicer all payments received
by it in respect thereof as soon as practicable after receipt thereof by the
Grantee, but in no event later than two Business Days after such receipt; (e) it
shall notify the Trust and the Indenture Trustee promptly after becoming aware
of any lien on any of the Intangible Transition Property and related assets
other than the conveyances under the Sale Agreement and the Indenture; (f) it
shall comply with its organizational or governing documents and all laws,
treaties, rules, regulations and determinations of any governmental
instrumentality applicable to it, except to the extent that failure to so comply
would not materially adversely affect the Trust's or the Indenture Trustee's
interests in the Intangible Transition Property or related assets or under any

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Basic Document to which it is party, or the Grantee's performance of its
obligations under the Sale Agreement or under any Basic Document to which it is
party; (g) it shall indicate in its financial statements that it is not the
owner of the Intangible Transition Property and it shall not own or purchase any
Notes; (h) upon the sale of the Intangible Transition Property and related
assets to the Trust pursuant to a Sale Agreement, to the fullest extent
permitted by law, including applicable regulations of the ICC, the Trust shall
have all of the rights of the owner of the Intangible Transition Property and
related assets (including all of the rights originally held by the Grantee with
respect to the related Intangible Transition Property and related assets),
including the right (subject to the terms of the Servicing Agreement) to
exercise any and all rights and remedies to collect any amounts payable by any
Customer or third party collection agent, including any ARES, in respect of the
Intangible Transition Property, notwithstanding any objection or direction to
the contrary by the Grantee; (i) except with respect to federal and other
applicable taxes, it shall not make any statement or reference in respect of the
Intangible Transition Property and related assets that is inconsistent with the
ownership interest of the Trust; (j) it shall execute and file such filings, and
cause to be executed and filed such filings as may be required by law to fully
preserve, maintain, and protect the interests of the Trust in the Intangible
Transition Property and related assets, including all filings required under the
Funding Law relating to the grant of the Intangible Transition Property to the
Grantee; (k) it shall institute any action or proceeding necessary to compel
performance by the ICC or the State of Illinois of any of their obligations or
duties under the Funding Law, the related Transitional Funding Order and related
Tariff, and will take such legal or administrative actions as may be reasonably
necessary to protect the Trust and Noteholders from claims, state actions or
other actions or proceedings of third parties which, if successfully pursued,
would result in a breach of any representation set forth in the Sale Agreement;
(l) it shall not, prior to the date which is one year and one day after the
termination of the Indenture, acquiesce, petition or otherwise invoke or cause
any other person to invoke the process of any court or governmental authority
for the purpose of commencing or sustaining a case against the Trust under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of or for the Trust or any substantial part of the property of the Trust, or
ordering the winding up or liquidation of the affairs of the Trust; (m) it
shall, and shall cause each of its subsidiaries to, pay all material taxes,
assessments and governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises, business, income or property
before any penalty accrues thereon if the failure to pay any such taxes,
assessments and governmental charges would, after any applicable grace periods,
notices or other similar requirements, result in a lien on the Intangible
Transition Property or related assets; (n) except as otherwise expressly
permitted, the Grantee shall not waive, amend, modify, supplement or terminate
any Basic Document or any provision thereof without the written consent of the
Trust; (o) without derogating from the absolute nature of the assignment granted
to the Trust under the Sale Agreement or the rights of the Trust, the Grantee
will not, without the prior written consent of the Trust, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any collateral
securing the Notes or the Basic Documents, or waive timely performance or
observance by ComEd or the Servicer under the Grant Agreement or the Servicing
Agreement, respectively; (p) promptly notify the Trust, in writing, of each
default hereunder and each default on the part of ComEd or the Servicer of their
respective obligations under the Grant Agreement or the Servicing Agreement;
(q) the Grantee will not elect, nor cause or permit the Trust to elect, to be
classified as an association taxable as a corporation for federal income tax
purposes; and (r) conduct its affairs separate from those of its members or
affiliates.

In addition, so long as any of the Notes are outstanding, the Grantee will
covenant in each Sale Agreement it shall not, except as otherwise permitted
thereunder: (a) sell, transfer, exchange or otherwise dispose of any of its
properties or assets; (b) assert any claim against the Trust by reason of the
payment of the taxes levied or assessed upon any part of the Intangible
Transition Property or the related assets; (c) terminate its existence or
dissolve or liquidate in whole or in part; (d) permit the sale and transfer
hereunder not to constitute a valid first priority ownership interest in the
Intangible Transition Property and related assets; (d) engage in any business
other than acquiring, owning, financing, transferring, assigning and otherwise
managing the Intangible Transition Property and related assets; (e) incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness; (f) make any loan or advance or credit to, or guarantee (directly
or indirectly or by an

63
<PAGE>

instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other person; (g)
shall not make any expenditure (by long-term or operating lease or otherwise)
for capital assets (either realty or personalty) in an aggregate amount not to
exceed [$25,000].

AMENDMENT OF SALE AGREEMENTS

Each Sale Agreement may be amended from time to time by the Grantee and the
Trust, with prior written notice given to the Rating Agencies and the prior
written consent of the Indenture Trustee, but without the consent of any of the
Noteholders, to cure any ambiguity, to correct or supplement any provisions in
such Sale Agreement or for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions in such Sale Agreement or of
modifying in any manner the rights of the Noteholders; PROVIDED, HOWEVER, that
such action shall not, as evidenced by an officer's certificate delivered to the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder.

Each Sale Agreement may also be amended from time to time by the Grantee and
the Trust, with prior written notice given to the Rating Agencies and the prior
written consent of the Indenture Trustee and Noteholders holding not less than
a majority in principal amount of the then outstanding Notes of all Series
affected thereby, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Sale Agreement or of
modifying in any manner the rights of the Noteholders; PROVIDED, HOWEVER, that
no such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, IFC Collections relating to the IFC Charges,
or (b) reduce the percentage of the outstanding principal amount of the Notes,
the Noteholders of which are required to consent to any such amendment, without
the consent of the Noteholders of all the outstanding Notes.

INDEMNIFICATION OBLIGATIONS OF THE GRANTEE

Each Sale Agreement will provide that the Grantee will indemnify the Trust,
the Indenture Trustee, the Delaware Trustee and the Noteholders, and each of
their respective officers, directors, employees and agents for, and defend and
hold harmless each such person from and against, (a) any and all taxes (other
than any taxes imposed on the Noteholders) that may at any time be imposed on or
asserted against any such person as a result of the grant of the Intangible
Transition Property to the Grantee, or that may be imposed on or asserted
against any such person under existing law as of the closing date as a result of
the Grantee's ownership and assignment of the Intangible Transition Property,
the Trust's issuance and sale of the Notes, or the other transactions
contemplated herein, including, in each case, any sales, gross receipt, general
corporation, tangible personal property, privilege or license taxes (but
excluding any taxes imposed as a result of a failure of such person to properly
withhold or remit taxes imposed with respect to payments on any Note); (b) any
and all liabilities, obligations, losses, claims, actions, suits, damages,
payments, and reasonable costs or expenses, of any kind whatsoever that may be
imposed on, incurred by or asserted against any such person as a result of the
Grantee's willful misconduct, bad faith or gross negligence in the performance
of (or reckless disregard of) its duties or observance of its covenants under
each Sale Agreement, or (c) the Grantee's breach of any of its representations
or warranties contained in each Sale Agreement.

Notwithstanding the foregoing, but subject to the Grantee's covenant to fully
preserve, maintain and protect the interests of the Trust in the Intangible
Transition Property, the Grantee shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under each Sale Agreement.

64
<PAGE>

CERTAIN PAYMENT, WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS

The rate of principal payments on each Class of Notes, the aggregate amount
of each interest distribution on each Class of Notes and the actual maturity
date of each Class of Notes might be related, in part, to the rate and timing of
receipt of IFC Collections. Accelerated receipts of IFC Collections will not
result in principal payments on the Notes earlier than the related Scheduled
Maturity Dates since receipts in excess of the amounts necessary to make any
Scheduled Payment on the Notes will be deposited in the Reserve Subaccount for
payment in accordance with such schedule, except in the event of an early
redemption or the acceleration of the maturity of the Notes after an Event of
Default, in which event such amounts will be released to pay such accelerated
amounts. However, delayed receipts of IFC Collections may result in principal
payments on the Notes that occur later than the related Scheduled Maturity
Dates.

The actual payments on each date for each Class of Notes and the weighted
average life thereof will be affected primarily by the rate of IFC Collections
and the timing of receipt of such IFC Collections, as well as amounts in the
Reserve Subaccount, the Overcollateralization Subaccount and the Capital
Subaccount. Since each IFC Charge will consist of a charge per kilowatt-hour of
usage by the applicable class of Customers, the aggregate amount of IFC
Collections and the rate of principal amortization on the Notes might depend, in
part, on actual electricity usage by Customers and the rate of delinquencies and
write-offs. Although the amounts of the IFC Charges will be adjusted from time
to time based in part on the actual rate of IFC Collections, no assurances are
given that the Servicer will be able to forecast accurately actual energy usage
and the rate of delinquencies and write-offs or implement adjustments to the IFC
Charges that will cause IFC Collections to be received at any particular rate.
See "Risk Factors -- Unusual Nature of the Intangible Transition Property" and
"Description of the Intangible Transition Property -- Adjustments to the IFC
Charges -- Reliance on IFC Adjustments." If IFC Collections are received at a
slower rate than expected, a Note may be retired later than expected. Because
principal will only be distributed at a rate not faster than that contemplated
in the Expected Amortization Schedules, except in the event of an early
redemption or the acceleration of the maturity of the Notes after an Event of
Default, the Notes are not expected to mature earlier than scheduled. A payment
on a date that is earlier than forecasted will result in a shorter weighted
average life, and a payment on a date that is later than forecasted will result
in a longer weighted average life.

No assurances are given that the representations made herein and in the
Prospectus Supplement as to the particular factors that will affect the rate of
IFC Collections, the relative importance of such factors, the percentage of the
principal balance of the Notes that will be paid as of any date or the overall
rate of IFC Collections will be realized.

In addition, pursuant to the terms of the Indenture, any Series of Notes may
be redeemed on any Payment Date if, after giving effect to payments that would
otherwise be made on such date, the outstanding principal balance of such Series
of Notes has been reduced to less than five percent of the initial principal
balance thereof. If specified in the Prospectus Supplement related to any Series
or Class of Notes, the Indenture may also permit the redemption of any such
Series or Class of Notes in full on any Payment Date on or prior to December 31,
2004 using proceeds received from the refinancing of any other Series or Class
of Notes, through the issuance of New Notes. The New Notes will be payable
solely out of the Intangible Transition Property and other Note Collateral.
Redemption will cause such Notes to be retired earlier than would otherwise be
expected and may adversely affect the yield to maturity of the Notes. There can
be no assurance as to whether any Series of Notes will be redeemed, or as to
whether Noteholders will be able to receive an equally attractive rate of return
upon reinvestment of the proceeds resulting from any such redemption.

65
<PAGE>

THE TRUST

The Trust will be created for the specific purpose of issuing the Notes. The
Trust will be formed under the laws of the State of Delaware pursuant to the
Trust Agreement executed by the Delaware Trustee, not in its individual capacity
but solely in its trust capacity under the terms of the Trust Agreement and the
Beneficiary Trustees. The Trust will not be an agency or instrumentality of the
State of Illinois. The Trust will have no significant assets other than the
Intangible Transition Property and the other Note Collateral. The Trust
Agreement will not permit the Trust to engage in any activities not directly
related to the Note financing.

For a description of the Notes to be issued by the Trust, see "Description of
the Notes."

The fiscal year of the Trust will be the calendar year.

The Trust will be formed shortly prior to the Series Issuance Date as a
special purpose Delaware business trust and, as of the date of this Prospectus,
has not carried on any business activities and has no operating history.
Because the Trust does not have any operating history, this Prospectus does not
include any financial statements or related information for the Trust.

66
<PAGE>

THE GRANTEE

The Grantee, ComEd Funding, LLC, a special purpose Delaware limited liability
company, the sole member of which is ComEd, was organized on July 21, 1998 for
the exclusive purposes of (a) initially owning the Intangible Transition
Property established by Transitional Funding Orders, (b) assigning all of its
right, title and interest in the Intangible Transition Property and the
Servicing Agreement to the Trust, (c) entering into the Servicing Agreement with
the Servicer in respect of the Intangible Transition Property, and (d) engaging
in only those other activities incidental thereto and necessary, suitable or
convenient therefor. In addition, the Grantee's limited liability company
agreement and other organizational documents require it to operate in a manner
such that it should not be consolidated in the bankruptcy estate of ComEd in the
event ComEd becomes subject to such a proceeding.

The executive offices of the Grantee are located at Ten South Dearborn
Street, 37th Floor, Chicago, Illinois 60603, and its telephone number is
(312) 394-7937.

The Grantee is a recently formed special purpose limited liability company
and, as of the date of this Prospectus, has not carried on any business
activities and has no operating history. Audited financial statements of the
Grantee are included as an exhibit to this Prospectus.

MANAGERS AND OFFICERS

In accordance with the Certificate of Formation of the Grantee, the Grantee
will be managed by its sole member, ComEd, until the acquisition by the Grantee
of any Intangible Transition Property, whereupon management of the Grantee shall
be vested entirely in the Management Committee.

The following is a list of the principal officers and managers of the
Grantee. All such persons have served in the capacities set forth below since
____________, 1998, unless otherwise indicated, and all managers have served in
such capacity since ____________, 1998. The officers and managers will devote
such time as is necessary to the affairs of the Grantee. The Grantee will have
sufficient officers, managers and employees to carry on its business.

Name Age Title
---- --- -----

No compensation has been paid by the Grantee to any officer or manager of the
Grantee since the Grantee was formed. The officers and managers of the Grantee,
other than the Independent Manager, will not be compensated by the Grantee for
their services on behalf of the Grantee. The initial compensation for the
Independent Manager will be [$5,000]. Each officer serves in such capacity at
the discretion of the Grantee's Management Committee. ComEd is an affiliate of
the Grantee. The Grantee's organizational documents limit, to the extent
permitted by Delaware law, the personal liability of each officer and manager of
the Grantee to the Grantee for monetary damages resulting from breaches of such
officer's or manager's duty of care. The Grantee's organizational documents
provide that officers and managers of the Grantee shall be indemnified against
liabilities incurred in connection with their services on behalf of the Grantee.

67
<PAGE>

THE SERVICER

GENERAL

ComEd is engaged principally in the production, purchase, transmission,
distribution and sale of electricity to a diverse base of residential,
commercial, industrial and wholesale customers within its electric service
territory. ComEd's electric service territory currently consists of
approximately 11,300 square miles with an estimated population of approximately
8 million. During 1997, ComEd provided a total of 79,825 million kilowatt-hours
of electricity to 3.4 million retail customers.

ComEd is regulated by the ICC and the FERC.

COMED CUSTOMER BASE, ELECTRIC ENERGY CONSUMPTION AND BASE RATES

ComEd's customer base consists of five (5) revenue reporting classes (each, a
"Reporting Customer Class"): residential, small commercial and industrial,
large commercial and industrial, public authorities and electric railroads. The
Reporting Customer Classes are broad groups that include accounts with a wide
range of load characteristics served under a variety of rate designs. In order
to align the per kilowatt-hour IFC Charges with the electricity rate currently
paid by a Customer more closely than would occur using the Reporting Customer
Classes, unless otherwise provided in the related Prospectus Supplement, each
Transitional Funding Order will provide that for purposes of billing IFC
Charges, ComEd's customer base will be divided into the thirteen (13) customer
classes (each, an "IFC Customer Class") set forth below, and that the total IFC
Charges billed for each applicable period shall be allocated among the IFC
Customer Classes on the basis of their respective percentage of the 1996 base
rate revenues of ComEd also set forth below. See "Description of the Intangible
Transition Property -- Adjustments to the IFC Charges."

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
PERCENTAGE OF
1996 BASE RATE
IFC CUSTOMER CLASS DESCRIPTION REVENUES(1)
-------------------------------------------------------------------------------------------
<S> <C> <C>
Residential -- No Space Heat Residential accounts without 34.7
space heating
-------------------------------------------------------------------------------------------
Residential -- Space Heat Residential accounts with space 3.8
heating
-------------------------------------------------------------------------------------------
Standby Service Rate 18 -- Standby Service 0.2
accounts
-------------------------------------------------------------------------------------------
Interruptible Service Rider 26 -- Interruptible 1.3
Service accounts
-------------------------------------------------------------------------------------------
Street Lighting -- Fixture Based Rate 23 -- Municipal Street 0.2
Rates Lighting accounts and separately
billed Rate 26 -- Private
Outdoor Lighting accounts
-------------------------------------------------------------------------------------------
Street Lighting -- Dusk to Dawn and Accounts billed under Rate 25 -- 0.4
Traffic Signal Street, Highway and Traffic
Signal Lighting, as well as
contractual agreements for
similar services
-------------------------------------------------------------------------------------------
Railroads Electric railroad customers 0.4
using electricity for traction
power
-------------------------------------------------------------------------------------------
Water-Supply and Sewage Pumping Accounts billed under Rate 24 -- 0.7
Service Water-Supply and Sewage Pumping
Service
-------------------------------------------------------------------------------------------
In Lieu of Demand Non-residential in lieu of 1.9
demand accounts
-------------------------------------------------------------------------------------------
</TABLE>

68
<PAGE>

(1) Total does not equal 100% due to rounding.

If the IFC Charges for any IFC Customer Class increase to an amount such that
the forecasted revenues from Applicable Rates for such IFC Customer Class during
a semiannual or quarterly period are projected to be less than the IFC Charges
allocated to such IFC Customer Class for the same period, the deficiency shall
be ratably allocated among the remaining IFC Customer Classes based on their
percentages of the 1996 base rate revenues, recalculated to exclude such IFC
Customer Class.

The table below shows the electricity sales, billed revenues, number of
customers, and average revenues per kilowatt-hour for each of the five (5)
Reporting Customer Classes for the first six months of 1998 and each of the five
(5) preceding years. There can be no assurances that the electricity sales,
billed revenues, number of customers, average billed revenues per kilowatt-hour
or the composition of any of the foregoing will remain at or near the levels
reflected in the following table.

BILLED ELECTRICITY SALES, BILLED REVENUES AND CUSTOMERS

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997(1) 1998(1)(2)
------ ------ ------ ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
BILLED ELECTRICITY SALES (MILLIONS
OF KILOWATT-HOURS):
Residential 20,818 21,376 23,303 22,310 22,364 10,693
Small commercial and industrial 23,463 24,320 25,313 25,131 26,038 12,693
Large commercial and industrial 22,917 23,450 23,777 23,896 24,253 11,957
Public authorities 6,741 6,885 7,158 7,336 7,387 3,580
Electric railroads 405 397 390 424 423 184
------ ------ ------ ------ ------ -------
Total 74,344 76,428 79,941 79,097 80,465 39,107
------ ------ ------ ------ ------ -------
------ ------ ------ ------ ------ -------

BILLED REVENUES (MILLIONS):
Residential $ 2,341 $ 2,274 $ 2,621 $ 2,542 $ 2,574 $ 1,204
Small commercial and industrial 1,963 1,917 2,074 2,114 2,167 1,018
Large commercial and industrial 1,438 1,381 1,426 1,446 1,475 688
Public authorities 474 453 487 503 510 241
Electric railroads 27 26 27 29 30 14
------ ------ ------ ------ ------ -------
Gross Total $ 6,243 $ 6,051 $ 6,635 $ 6,634 $ 6,756 $ 3,165

Provisions for
revenue refunds(3) (1,282) (16) (46)
------ ------ ------ ------ ------ -------
Net Total $ 4,961 $ 6,035 $ 6,635 $ 6,634 $ 6,710 $ 3,165
------ ------ ------ ------ ------ -------
------ ------ ------ ------ ------ -------
</TABLE>

69
<PAGE>

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NUMBER OF CUSTOMERS
(AT YEAR END)
Residential 3,009,508 3,047,354 3,079,381 3,102,101 3,123,364
Small commercial and industrial 283,764 286,793 288,848 289,803 291,143
Large commercial and industrial 1,503 1,528 1,539 1,550 1,566
Public authorities 12,023 12,059 12,039 12,142 12,180
Electric railroads 2 2 2 2 2
--------- --------- --------- --------- ---------
Total 3,306,800 3,347,736 3,381,809 3,405,598 3,428,255
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
AVERAGE BILLED REVENUE PER
KILOWATT-HOUR: 1993 1994 1995 1996 1997 1998(2)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Residential
(excluding light bulb service) 11.21CENTS 10.60CENTS 11.22CENTS 11.36CENTS 11.47CENTS 11.24CENTS
Small commercial and industrial 8.36CENTS 7.88CENTS 8.19CENTS 8.41CENTS 8.32CENTS 8.02CENTS
Large commercial and industrial 6.27CENTS 5.89CENTS 6.00CENTS 6.05CENTS 6.08CENTS 5.75CENTS
Public authorities 7.03CENTS 6.57CENTS 6.80CENTS 6.86CENTS 6.90CENTS 6.72CENTS
Electric railroads 6.81CENTS 6.60CENTS 6.90CENTS 7.00CENTS 7.16CENTS 7.38CENTS

</TABLE>

(1) In 1997, ComEd changed its method of accounting for revenue
recognition, retroactive to January 1, 1997, to record estimated
revenue for services delivered but not billed at the end of each
accounting period. ComEd reported sales to ultimate consumers for
operating revenues of $6,663.7 million and $3,277.3 million for the
year 1997 and the six months ended June 30, 1998, respectively, and
for electricity sales of 79,825 million kilowatt-hours and 39,773
million kilowatt-hours for the year 1997 and the six months ended
June 30, 1998, respectively.
(2) Data is available for January 1, 1998 through June 30, 1998.
(3) In November, 1993, two settlements (the "Settlements") related to
various proceedings and matters concerning ComEd's rates (the "Rate
Matters Settlement") and its fuel adjustment clause (the "Fuel Matters
Settlement") became final. The recording of the effects of the
Settlements in October 1993 reduced 1993 net income and net income on
common stock by approximately $354 million (after-tax), in addition to
the approximately $160 million (after-tax) effect of the deferred
recognition of revenues and after the partially offsetting effect of
recording approximately $269 million (after-tax) in deferred carrying
charges authorized in the ICC rate order issued in January, 1993.
Refunds related to the Rate Matters Settlement, and reduced fuel
adjustment clause collections related to the Fuel Matters Settlement,
have been completed. The Amendatory Act allowed Utilities the option
to eliminate their fuel adjustment clause ("FAC") as of January 1,
1997. Due to the elimination of the FAC, ComEd recorded a provision
for revenue refunds in the fourth quarter of 1997.

Principal factors influencing the number and electricity usage of residential
customers include population growth, weather (I.E., air conditioning usage and,
to a lesser extent, electric space heating usage), price, increased saturation
of electric appliances, the availability of more energy-efficient appliances,
changes in technology, and customer income. Principal factors influencing the
number and electricity usage of commercial customers (which consist primarily of
wholesale and retail trade establishments) include population growth, service
area economic growth, commercial floor space and commercial employment.
Principal factors influencing industrial electricity usage include overall
economic activity, developments in processes and technologies using electricity,
and increases in the efficiency with which industrial processes use electric
energy.

For the year ended December 31, 1997, the 10 largest Customers represented
approximately 3.0% of ComEd's Billed Revenues. There can be no assurance that
current Customers will remain Customers or that the levels of Customer
concentration in the future will be similar to those set forth above.

The table below shows the average revenue in cents per kilowatt-hour for
fully bundled services owed to ComEd for each of the thirteen (13) IFC Customer
Classes, based on tariffs then in effect but taking into account the fifteen
percent (15%) reduction in base rates for services charged to residential retail
customers, effective as of August 1, 1998:

- ----------------------------------------------------------------------------------------------
AVERAGE REVENUE IN
CENTS PER KILOWATT-HOUR
IFC CUSTOMER CLASS FOR FULLY-BUNDLED SERVICES(1)
- ----------------------------------------------------------------------------------------------
<S> <C>
Residential -- No Space Heat 10.41
- ----------------------------------------------------------------------------------------------
Residential -- Space Heat 6.87
- ----------------------------------------------------------------------------------------------
Standby Service 4.33
- ----------------------------------------------------------------------------------------------
</TABLE>

70
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
AVERAGE REVENUE IN
CENTS PER KILOWATT-HOUR
IFC CUSTOMER CLASS FOR FULLY-BUNDLED SERVICES(1)
- ----------------------------------------------------------------------------------------------
<S> <C>
Interruptible Service 3.85
- ----------------------------------------------------------------------------------------------
Street Lighting -- Fixture Based Rates 16.14
- ----------------------------------------------------------------------------------------------
Street Lighting -- Dusk to Dawn and Traffic Signal 5.17
- ----------------------------------------------------------------------------------------------
Railroads 7.16
- ----------------------------------------------------------------------------------------------
Water-Supply and Sewage Pumping Service 6.82
- ----------------------------------------------------------------------------------------------
In Lieu of Demand 11.86
- ----------------------------------------------------------------------------------------------
0 to and including 100 kW Demand 9.30
- ----------------------------------------------------------------------------------------------
Over 100 to and including 1,000 kW Demand 7.47
- ----------------------------------------------------------------------------------------------
Over 1,000 to and including 10,000 kW Demand 6.96
- ----------------------------------------------------------------------------------------------
Over 10,000 kW Demand 5.09
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Based on year-end 1997 data and derived by dividing total revenue for
each IFC Customer Class (variable energy charge plus fixed
demand/customer charges) by total kilowatt-hour sales for such IFC
Customer Class.

FORECASTING ELECTRICITY CONSUMPTION

ComEd historically has prepared annual forecasts of electric energy
(kilowatt-hour) sales for the following year and several years thereafter. The
principal uses of the electric energy forecasts have been for shorter-term
budgeting and rate-setting purposes. ComEd has also prepared longer-term
forecasts of customer peak demand and energy consumption, primarily for use in
facilities planning. ComEd most recently updated its electric energy
forecasting models in 1997. Econometric and end-use models were developed for
use in forecasting electric energy sales to the residential, commercial and
industrial customer classes. These models forecast electric energy sales as a
function of electricity price, income, employment, weather and other economic
factors that influence electricity sales. Known and measurable industrial plant
additions, expansions and closures are incorporated into the electricity sales
projections, based on information obtained by account managers assigned to the
larger customer accounts. ComEd uses economic and demographic forecasts
prepared by RFA (Regional Financial Associates) as inputs to its forecasting
models. Weather inputs to the forecasting models are based on "normal" weather
conditions which are based on thirty-year averages for heating and cooling
degree days.

FORECAST VARIANCE

ComEd conducts sales forecast variance analyses on a regular basis to monitor
how well forecasts track recorded consumption. This is important for short-term
resource procurement functions as well as budgeting and financial reporting.

Since ComEd updates its forecast on an annual basis, the table below shows
annual variance for forecasts prepared for one year in the future. For example,
the annual 1993 variance is based on a forecast prepared in 1992. The variances
for the aggregate combined Reporting Customer Classes referred to in the table
below, which consist of all Reporting Customer Classes, range from a low of 0.6%
to a high of 4.3% in absolute terms. There can be no assurance that the future
variance between actual and expected consumption in the aggregate or by
Reporting Customer Class will be similar to the historical experience set forth
below.

ANNUAL FORECAST VARIANCES

ELECTRICITY SALES (MILLIONS OF KILOWATT-HOURS): 1993 1994 1995 1996 1997(1)
- ------------------------------------------------ ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Residential
Actual 20,818 21,376 23,303 22,310 22,364
Forecast 20,383 21,138 21,408 22,393 22,827
------- ------- ------- ------- ------
Variance -2.1% -1.1% -8.9% 0.4% 2.0%
</TABLE>

71
<PAGE>

ELECTRICITY SALES (MILLIONS OF KILOWATT-HOURS): 1993 1994 1995 1996 1997(1)
- ------------------------------------------------ ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Small commercial and industrial
Actual 23,463 24,320 25,313 25,131 26,038
Forecast 23,485 23,764 24,082 24,843 25,772
------- ------- ------- ------- ------
Variance 0.1% -2.3% -5.1% -1.2% -1.0%

Large commercial and industrial
Actual 22,917 23,450 23,777 23,896 24,253
Forecast 22,820 23,229 23,567 23,895 24,510
------- ------- ------- ------- ------
Variance -0.4% -1.0% -0.9% 0.0% 1.0%

Public authorities
Actual 6,741 6,885 7,158 7,336 7,387
Forecast 6,721 6,852 6,951 7,078 7,427
------- ------- ------- ------- ------
Variance -0.3% -0.5% -3.0% -3.6% 0.5%

Electric railroads
Actual 405 397 390 424 423
Forecast 442 452 458 395 436
------- ------- ------- ------- ------
Variance 8.4% 12.2% 14.8% -7.3% 3.0%

Aggregate Combined Reporting Customer Classes:
Actual 74,344 76,428 79,941 79,097 80,465
Forecast 73,851 75,435 76,466 78,604 80,972
------- ------- ------- ------- ------
Variance -0.7% -1.3% -4.5% -0.6% 0.6%
</TABLE>

During the last five years, no discernible trend is apparent with respect to
the historical forecast variance relating to any one Reporting Customer Class or
the aggregate combined reporting customer classes referred to in the table
above. The variance for the aggregate combined Reporting Customer Classes has
ranged from a 4.5% underestimate of usage in the unseasonably warm year of 1995
to a 0.6% overestimate of usage, with an average inaccuracy of 1.5%.

CREDIT POLICY; BILLING; COLLECTIONS; RESTORATION OF SERVICE

ComEd's policies and procedures pertaining to credit (including requirements
for deposits from customers), billing, collections (including procedures for
disconnection of service for non-payment) and restoration of service after
disconnection, are subject to and controlled, to a material extent, by Illinois
statutory requirements, rules and regulations of the ICC and ComEd's filed
tariffs. These statutory provisions, ICC regulations and tariffs may change
from time to time. In addition, to the extent permitted by statutory provisions
and regulatory requirements, ComEd may change its policies and procedures and
seek approval of new tariffs governing these activities from time to time.
ComEd will agree, in each Grant Agreement and the Servicing Agreement, not to
initiate any such changes which are likely to adversely affect ComEd's ability
to make timely recovery of amounts billed to Customers, except for any such
changes required by applicable law. Under the Servicing Agreement, any such
changes initiated by ComEd will also apply to the servicing by ComEd, as the
Servicer, of the Intangible Transition Property.

CREDIT POLICY

Under Illinois law, ComEd is generally required to provide electric service
to all retail customers in its service area. ComEd's review of the credit
history of a new applicant for electric service generally consists of a

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review to determine if the applicant has previously received service from ComEd
and, if so, whether there are any delinquent billed amounts outstanding. ComEd
relies on information provided by the applicant, and on its customer information
system, to determine whether ComEd has previously served the customer and
whether any delinquent billed amounts are outstanding. In accordance with ICC
regulations, deposits may be required from certain applicants for service or
existing customer accounts to protect ComEd against losses. Accounts from which
deposits are most frequently obtained are new commercial and industrial
customers (I.E., applicants with limited or no credit history), and residential
customers with poor payment histories (as defined in ICC regulations). The
maximum allowable amount of the deposit is one-sixth of the projected annual
billings to the customer for residential and small business applicants or
customers, and one-third of projected annual billing for other non-residential
customers. One-third of a requested deposit must be paid by the customer within
12 days and the balance within two billing periods. The deposit is refunded to
a new customer after one year if the customer has not been disconnected for
non-payment and has not paid a bill after the due date more than three times
during the year. The deposit is refunded to an existing customer after one year
if the customer has not been disconnected for non-payment, and has not paid a
bill after the due date more than five times during the year.

BILLING PROCESS

ComEd generally bills its customers once every 27 to 33 days, with
approximately an equal number of bills being distributed each Servicer Business
Day. Any day other than a Saturday, a Sunday or a day on which the Servicer's
offices are not open for business is a "Servicer Business Day." For the year
ending December 31, 1997, ComEd mailed out an average of 164,400 bills on each
Servicer Business Day to its various customer categories.

For accounts with potential billing errors exception reports are generated
for manual review. This review examines accounts that have abnormally high or
low bills, potential meter-reading errors and possible meter malfunctions.

ComEd may change its billing policies and procedures from time to time. It is
expected that any such changes would be designed to enhance ComEd's ability to
make timely recovery of amounts billed to customers.

COLLECTION PROCESS

ComEd receives approximately 66 percent (66%) of total bill payments via the
U.S. mail. Approximately 27 percent (27%) of bill payments are received at local
offices and other pay offices. ComEd receives the remainder of payments via
automatic payment service, electronic funds transfer and electronic data
interchange.

Bills are processed and mailed to customers approximately three days after
the customer's meter is scheduled to be read. Bills are considered past due if
not paid within 21 calendar days for residential accounts and within 14 calendar
days for commercial and industrial accounts. Payment is considered timely if
received by mail not more than two days after the due date. These payment
periods are established by ICC regulations. In accordance with statutory
requirements and regulations pertaining to procurement by governmental entities,
certain federal customers are allowed 45 days to make net payment and certain
State, county and municipal customers are allowed 60 days to make net payment
and, in addition, ComEd may be limited under Illinois law in its ability to
impose late payment charges on such customers.

Under Illinois law, ComEd must waive one late payment charge incurred by a
residential customer during each twelve-month period. A reminder notice is
mailed to the customer if payment has not been received on the account by
two days after the due date of the most recent bill. If non-payment continues,
a service disconnection notice may be sent to the customer through operation of
a scoring system calculated by ComEd's customer information system. The scoring
of an account for this purpose is based on factors including the age of the
arrearage and the customer's years of service, non-sufficient funds payment
history, and disconnection history. When dictated by the scoring system, a
service disconnection notice is mailed to notify the customer of disconnection
activity scheduled for seven system days (ten calendar days) after the date of
the notice. If the scoring system does not dictate initiation of a service
disconnection notice, another reminder notice is included with the customer's
next bill.

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Customers are entitled to enter into deferred payment arrangements in
accordance with statutory requirements, ICC regulations and ComEd's filed
tariffs. Such payment agreements allow the customer to make partial payments,
or to extend an arrearage, during periods of financial hardship. Service
disconnection is not implemented against a customer who has entered into and is
abiding by a payment agreement. In addition, Illinois statutory law and ICC
regulations prohibit Utilities from disconnecting service under certain
conditions, such as when the temperature is projected to be below 32 degrees
Fahrenheit or on weekends and holidays.

ComEd sends an unpaid final bill to a database match service (Skip Alert)
40 days after the final bill issue date. An account is charged off as
uncollectible if payment is not received by 90 days after the final bill issue
date. The account is then given to a collection agency for an indefinite
period.

ComEd may change its collection policies and procedures from time to time. It
is expected that any such changes would be designed to enhance ComEd's ability
to make timely recovery of amounts billed to customers.

RESTORATION OF SERVICE

Before restoring service that has been disconnected for non-payment, ComEd
has the right to require the payment of all of the following charges: (a) the
total amount owing on an account including any past-due balance, the current
billing, and a credit deposit, if requested; (b) any miscellaneous charges
associated with the reconnection of service (i.e., reconnection charges, field
collection charges, and/or returned item charges); (c) any charges assessed for
unusual costs incidental to the termination or restoration of service which have
resulted from the customer's action or negligence; and (d) any unpaid closing
bills from other accounts in the name of the customer of record.

ComEd may change its restoration of service policies and procedures from time
to time. It is expected that any such changes would be designed to enhance
ComEd's ability to make timely recovery of amounts billed to customers.

LOSS AND DELINQUENCY EXPERIENCE

The following table sets forth information relating to the total billed
revenues and net write-off experience of ComEd for each Reporting Customer Class
for the first six months of 1998 and each of the five preceding years. Such
historical information is presented herein because ComEd's actual experience
with respect to net write-offs and delinquencies may affect the timing of IFC
Payments. There can be no assurance that the future net write-off experience in
the aggregate or by Reporting Customer Class will be similar to the historical
experience set forth below. In addition, to the extent that an ARES is
providing consolidated billing for ComEd, there is no assurance that such ARES
will apply the same credit and collection policies and procedures to Customers
as would be applied by ComEd, as the Servicer.

TOTAL BILLED REVENUES

(IN MILLIONS)

1993 1994 1995 1996 1997(1) 1998(1)(2)
------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Residential $2,341 $2,274 $2,621 $2,542 $2,574 $1,204
Small commercial and industrial 1,963 1,917 2,074 2,114 2,167 1,018
Large commercial and industrial 1,438 1,381 1,426 1,446 1,475 688
Public authorities 474 453 487 503 510 241
Electric railroads 27 26 27 29 30 14
------ ------ ------ ------ ------ ------
Gross Total $6,243 $6,051 $6,635 $6,634 $6,756 $3,165
Provisions for revenue refunds(3) (1,282) (16) - - (46)
------ ------ ------ ------ ------ ------
Net Total $4,961 $6,035 $6,635 $6,634 $6,710 $3,165
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>

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NET WRITE-OFFS(4)
(IN MILLIONS)

1993 1994 1995 1996 1997 1998(2)
----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Residential $21.6 $17.9 $17.8 $28.1 $34.6 $13.0
Small commercial and industrial 7.1 6.0 6.5 9.1 9.7 5.7
Large commercial and industrial 2.0 2.8 1.6 3.0 2.2 1.4
Public authorities 0.0 0.1 0.2 0.2 0.3 0.2
Electric railroads - - - - - -
----- ----- ----- ----- ----- -----
Total $30.7 $26.8 $26.1 $40.4 $46.8 $20.3
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
</TABLE>

NET WRITE-OFFS AS A PERCENTAGE OF BILLED REVENUE

1993 1994 1995 1996 1997(1) 1998(1)(2)
---- ---- ---- ---- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Residential 0.9% 0.8% 0.7% 1.1% 1.3% 1.1%
Small commercial and industrial 0.4% 0.3% 0.3% 0.4% 0.4% 0.5%
Large commercial and industrial 0.1% 0.2% 0.1% 0.2% 0.1% 0.2%
Public authorities 0.0% 0.0% 0.0% 0.0% 0.1% 0.1%
Electric railroads 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
---- ---- ---- ---- ---- ----
Total 0.5% 0.4% 0.4% 0.6% 0.7% 0.6%
---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ----

</TABLE>
_______________

During the five-year period 1993 through 1997, ComEd's net write-offs have
exhibited a slight upward trend. In 1998, ComEd instituted changes in its
collection process in an effort to reverse this trend.

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DELINQUENCIES

The following table sets forth information relating to the delinquency
experience of ComEd for all Customers as a whole for the first six months of
1998 and each of the five preceding years. There can be no assurance that the
future delinquency experience will be similar to the historical experience set
forth below.

DELINQUENCY DATA(1)
PERCENTAGE OF DELINQUENT CUSTOMERS(2)

_______________

(1) This information is used by ComEd to evaluate delinquency experience
because ComEd does not collect and maintain typical aging data.

(2) This delinquency data is only for customer accounts where service is still
being provided, i.e., open accounts. The write-off data on the previous
table is compiled on a different basis in that it reflects only customer
accounts where service is no longer provided, i.e., closed accounts.
Payment is considered late if received by mail more than two (2) days after
the due date.

(3) Data is available only for January 1, 1998 through June 30, 1998.

During the five-year period 1993 through 1997, ComEd's amount of delinquent
Customers has shown no discernable trend.

YEAR 2000 ISSUES

ComEd uses various software, systems and technology throughout its businesses
that will be affected by the date change in the Year 2000 and any failure to
address Year 2000 issues in a timely manner could result in a material
operational or financial risk. ComEd's approach to addressing Year 2000
compliance issues is to upgrade or remediate software, systems and technology
that are not Year 2000 compliant and that are not otherwise being replaced in
accordance with ComEd's business plans. ComEd is in the process of replacing
certain of its financial, human resources, payroll, and customer service and
billing software with new software that is Year 2000 compliant. In other cases,
ComEd is upgrading or remediating existing software to versions that are Year
2000 compliant. Additionally, ComEd is upgrading or remediating certain software
and engineering systems in its nuclear and fossil electricity generation
business units and in its transmission and distribution and supply management
business units. ComEd is also in the process of evaluating whether Year 2000
compliance issues will affect any of its key suppliers. The total cost of
remediating or upgrading software and engineering systems, that are not being
replaced or upgraded in accordance with business plans, is currently estimated
to be approximately $40-$60 million. The schedule for the implementation of Year
2000 compliant software and systems contemplates that such efforts will be over
50% completed by the end of 1998 and that all software and systems will be
Year 2000 ready by the end of 1999.

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SERVICING

SERVICING PROCEDURES

The Servicer, on behalf of the Trust, will, among other things, manage,
service and administer, and make collections in respect of, the Intangible
Transition Property pursuant to the Servicing Agreement between the Servicer and
the Grantee. The Servicer's duties will also include filing IFC Tariffs with the
ICC to provide for billing and collection of the IFC Charges and the
corresponding adjustments in other charges billed to Customers, calculation and
billing of all amounts based on the IFC Charges, receipt and posting of all IFC
Payments, responding to inquiries of Customers and the ICC with respect to the
Intangible Transition Property and the IFC Charges, accounting for collections
and furnishing monthly, quarterly and annual statements to the Trust and the
Indenture Trustee and taking action in connection with periodic revisions to the
IFC Charges as described below. Pending deposit into the Collection Account, all
IFC Payments received by the Servicer may be invested by the Servicer at its own
risk and for its own benefit, and need not be segregated from other funds of the
Servicer.

Each IFC Charge will be expressed as an amount in cents per kilowatt-hour of
electricity usage by the applicable Customer, regardless of whether the Customer
purchases its electricity from ComEd or from another electricity provider. The
Servicer expects the applicable IFC Charge to be separately identified on each
Customer's bill with an aggregate amount (which includes the applicable IFC
Charge) to be paid to the Servicer. Bills are sent to each Customer every 27 to
33 days.

Except as otherwise required by law with respect to taxes or similar
governmental charges included in bills and invoices to Customers, to the extent
that there is a shortfall in the amounts received by the Servicer from
(a) Customers it bills directly or (b) a third-party collection agent, including
an ARES, such shortfall will be allocated by the Servicer in accordance with the
servicing standards set forth below FIRST, to the Trust and ComEd PRO RATA,
based on the amount of Customers' bills constituting IFC Charges, and the amount
constituting other fees and charges not constituting IFC Charges owed to ComEd
or any successor, respectively, until all kilowatt-hour charges, other than late
charges, are paid, and SECOND, such amount of late charges shall be allocated to
ComEd. If such amounts are billed and collected by ComEd for an ARES pursuant
to a consolidated billing arrangement, the total charges due to the ARES will
also be included in the proportional allocation of any partial payment. In the
event that an ARES or another Utility provides consolidated billing to Customers
for both the services provided by such ARES or other Utility and services
provided by ComEd, partial payments made to an ARES by such Customers are
required by the Act to be credited first to amounts due to ComEd's tariffed
services (including IFC Charges collected on behalf of Noteholders), and the
Servicer will allocate such payments as otherwise described above. The Servicer
will be entitled to disconnect service to any Customer who fails to pay IFC
Charges billed on behalf of the Trust in accordance with the ICC's regulations
and other applicable law pertaining to disconnections, in the same manner as the
Servicer may disconnect the Customer for failure to pay any charges for tariffed
service billed thereby.

In addition, the Servicer will agree to advance its own funds in order to
institute any action or proceeding necessary to compel performance by the ICC or
the State of Illinois of any of their obligations or duties under the Funding
Law, any Transitional Funding Order or any IFC Tariff, and to take such legal or
administrative actions, including defending against or instituting and pursuing
legal actions and appearing or testifying in hearings or similar proceedings, as
may be necessary to block or overturn any attempts to cause a repeal,
modification or supplement to the Amendatory Act or the Transitional Funding
Order or the rights of holders of Intangible Transition Property by legislative
enactment or otherwise that would be adverse to the Grantee, the Trust or any
Noteholders. The Servicer would be entitled to reimbursement of its expenses
advanced by it in connection with such action or proceeding as an operating
expense of the Trust in accordance with the priority of payments as described in
"Security for the Notes -- Allocations; Payments."

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SERVICING STANDARDS AND COVENANTS

The Servicing Agreement will require the Servicer, in servicing and
administering the Intangible Transition Property, to employ or cause to be
employed procedures and exercise the same care it customarily employs and
exercises in servicing and administering bill collections for its own account.

Consistent with the foregoing, in addition to certain requirements described
in "The Servicer -- Credit Policy; Billing; Collections; Restoration of Service"
above, the Servicer may, in its own discretion, waive any late payment charge or
any other fee or charge relating to delinquent payments, if any, and may waive,
vary or modify any terms of payment of any amounts payable by a Customer, in
each case, if such waiver or action (a) would be in accordance with the
Servicer's customary practices or those of any successor Servicer with respect
to comparable assets that it services for itself, (b) would not materially
adversely affect the Noteholders and (c) would comply with applicable law. In
addition, the Servicer may write off any amounts that it deems uncollectible in
accordance with its customary practices.

In the Servicing Agreement, the Servicer will covenant that, in servicing the
Intangible Transition Property, it will: (a) manage, service, administer and
make collections in respect of the Intangible Transition Property with
reasonable care and in accordance with applicable law, including all applicable
guidelines of the ICC, using the same degree of care and diligence that the
Servicer exercises with respect to bill collections for its own account; (b)
follow customary standards, policies and procedures for the industry in
performing its duties as Servicer; (c) use all reasonable efforts, consistent
with its customary servicing procedures, to enforce, and maintain rights in
respect of, the Intangible Transition Property; (d) comply with all laws
applicable to and binding on it relating to the Intangible Transition Property;
and (e) make all required submissions and provide all required notifications to
the ICC with respect to Adjustments to the IFC Charges as described herein;
provided, however, that any breach of the State Pledge that is being contested,
or any subsequent invalidation of the Funding Law, any Transitional Funding
Order, and/or the related IFC Tariff filed in connection therewith shall not act
to excuse any breach of any covenant by the Servicer under the Servicing
Agreement.

In addition, the Servicer will covenant that it will deduct and remit IFC
Charges paid by Customers under any competitive contracts which provide that
such Customer is obligated thereunder to pay an amount equal to the amount of
IFC Charges that would be billed if the services provided under such contract
were services subject to Applicable Rates.

In the Servicing Agreement, the Servicer will indemnify, defend and hold
harmless the Grantee, the Indenture Trustee, the Delaware Trustee and the
Noteholders against any costs, expenses, losses, claims, damages and liabilities
that may be imposed on, incurred by or asserted against any such person as a
result of (a) the Servicer's willful misconduct, bad faith or gross negligence
in the performance of its duties or observance of its covenants under the
Servicing Agreement or (b) the Servicer's breach of any of its representations
or warranties thereunder.

REMITTANCES TO COLLECTION ACCOUNT

Under the terms of the IFC Tariff filed in connection with each Transitional
Funding Order, the Trust will begin to impose and collect the related IFC
Charges concurrently with the issuance of the Notes of any Series (each, a
"Series Issuance Date") and such right shall exist continuously thereafter in
accordance with the related Transitional Funding Order. The IFC Charges shall
be imposed and collected based upon the entire electricity consumption of
Customers included in bills issued to Customers on and after the related Series
Issuance Date, including that portion of the applicable Billing Period during
which electric service was provided prior to such Series Issuance Date.

The Servicing Agreement provides, among other things, that the Servicer will
collect the IFC Payments on behalf of the Trust, as assignee of the Grantee. The
Servicer will remit to the Collection Account on the Servicer Business Day
immediately preceding the tenth day of each month (each such monthly date, a
"Remittance Date"), all IFC Payments received by the Servicer during the
immediately preceding Billing Period (the "Monthly IFC Amount") unless the
Servicer fails to meet the Remittance Conditions, in which case the Servicer
will, within

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[two] Servicer Business Days of receipt (each, a "Daily Remittance Date"), remit
all IFC Payments to the Collection Account.

Because the Servicer does not track cash collections on bills rendered within
a particular Billing Period, amounts remitted to the Collection Account with
respect to IFC Charges included in bills issued to Customers during each Billing
Period will be based upon the actual amounts billed for each class of Customers
and the Servicer's estimation of write-offs and delinquencies for each class of
Customers, all in accordance with the servicing standards set forth above.

Beginning with the Remittance Date following the end of the seventh (7th)
Billing Period and on every Remittance Date thereafter, the Servicer will
calculate, in a manner which conforms to the servicing standards set forth
above, the amount of IFC Payments received (the "Redetermined IFC Payments")
with respect to the Billing Period which is seven (7) Billing Periods prior to
such Remittance Date (the "Reconciled Billing Period"), and will reconcile such
amount to the IFC Payments for such Reconciled Billing Period previously
remitted to the Collection Account (the "Remitted IFC Payments"). If the
Remitted IFC Payments remitted during any Reconciled Billing Period exceed the
Redetermined IFC Payments received during such Reconciled Billing Period (an
"Excess Remittance") or are less than the Redetermined IFC Payments received
during such Reconciled Billing Period (a "Remittance Shortfall"), the Servicer
shall (a) in the case of an Excess Remittance, (i) reduce the amount(s) which
the Servicer remits to the Collection Account on such Remittance Date and each
Remittance Date (or Daily Remittance Date, as the case may be) thereafter until
the entire amount of such Excess Remittance has been recovered or (ii)
immediately pay from the General Subaccount or the Reserve Subaccount the amount
of such Excess Remittance, and (b) in the case of a Remittance Shortfall,
increase the amount which the Servicer remits to the Collection Account on such
Remittance Date by the amount of such Remittance Shortfall, the increase coming
from the Servicer's own funds.

A "Billing Period" is a period created by dividing the calendar year into
twelve consecutive periods of approximately twenty-one (21) Servicer Business
Days each.

The Servicing Agreement will require the Servicer to monitor ComEd's receipt
of any lump-sum payments of transition charges under Section 16-108(h) of the
Act, and, concurrently with such receipt, to set aside and allocate for the
benefit of the Trust, as proceeds of the Intangible Transition Property, an
amount equal to the product of (a) the IFC Charge which is then in effect for
such Customer at the time of receipt and (b) the total number of kilowatt-hours
utilized to compute the amount of such lump-sum transition charges. The
Servicing Agreement will also require the Servicer to monitor ComEd's receipt of
any revenues derived from condemnation proceedings, FERC stranded cost
recoveries or any other amounts which reflect compensation for lost revenues
which would otherwise have been attributable to Applicable Rates (collectively,
"Lost Revenue Recoveries"), and, concurrently with the receipt thereof, to set
aside and allocate for the benefit of the Trust, as proceeds of the Intangible
Transition Property, an amount equal to the product of (a) the total dollar
amount of such Lost Revenue Recoveries and (b) [a fraction, (1) the numerator of
which equals the weighted average of the IFC Charges applicable to all classes
of Customers the revenues from which are included in the calculation of such
Lost Revenue Recoveries and (2) the denominator of which equals the weighted
average of the Applicable Rates charged to such Customers, with such weighted
averages to be in each case calculated based on the respective IFC Charges and
revenues applicable to such classes for the most recent calendar year then
ended).]

NO SERVICER ADVANCES

The Servicer will not be obligated to, and consequently will not, make any
advances of interest or principal on the Notes.

SERVICING COMPENSATION

On each Payment Date, the Servicer will be entitled to receive an amount
equal to [one-fourth] of the annual Servicing Fee specified in the related
Prospectus Supplement. The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Payment Dates) will be paid solely
to the extent funds are available therefor as described under "Security for the
Notes -- Allocations; Payments." The Servicing Fee will be paid

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prior to the distribution of any amounts in respect of interest on and principal
of the Notes. The Servicer will be entitled to retain as additional compensation
net investment income on IFC Payments received by the Servicer prior to
remittance thereof to the Collection Account and the portion of late fees, if
any, paid by Customers relating to the IFC Payments.

ALTERNATIVE RETAIL ELECTRIC SUPPLIERS AND OTHER THIRD-PARTY COLLECTORS

Under ComEd's current practices, customers are allowed to pay their
electricity bills indirectly through use of third-party collection agents such
as currency exchanges, grocery stores, banks and similar entities which offer
payment of utility bills as a convenience to their customers. Unless otherwise
provided in the related Prospectus Supplement, the ICC will approve procedures
in each Transitional Funding Order that would (a) require any third party
(including the collection agents described above and any ARES that is required
to collect IFC Charges) who bills or collects IFC Charges on behalf of Customers
to either (i) remit IFC Collections to the Servicer within seven days of receipt
or (ii) pay such IFC Charges to the Servicer within fifteen days of billing by
ComEd irrespective of whether payments have been received from the ultimate
customer, (b) allow the Servicer, within ten days after a default by any such
third-party in remitting IFC Collections, to give notice thereof to the
defaulting entity and, if it does not receive payment or other response
initiating dispute resolution within five days thereafter, to assume or transfer
to another third party that defaulting entity's billing and collection
responsibilities with respect to the IFC Charges, (c) grant the Servicer access
to information on total monthly kilowatt usage by the applicable Customers not
otherwise available to the Servicer to the extent reasonably required for the
Servicer to calculate and, if applicable, bill the related IFC Charges owed by
such Customers, and (d) allow the Servicer, pursuant to a tariff subject to
applicable regulatory approval, to impose such other terms with respect to
credit and collection policies as may be reasonably necessary to prevent the
then current rating of the Notes from being withdrawn or downgraded. Unless
otherwise provided in the related Prospectus Supplement, each IFC Tariff filed
in connection with the related Transitional Funding Order will require a
third-party collection agent, including any ARES, which assumes payment
responsibilities under clause (a)(ii) above and which does not have
investment-grade credit ratings (at least BBB- or the equivalent) to post a
deposit or comparable security equal to one month's estimated IFC Collections
collected by such third-party collector.

In addition, unless otherwise provided in the related Prospectus Supplement,
each Transitional Funding Order will provide that (a) a third-party collector
who is or otherwise becomes obligated to remit payments to ComEd on a more
frequent basis than as set forth above, shall remit the IFC Charges at the same
time as such other payments and (b) a third-party collector disputing payments
shall pay the disputed amount under protest (or make other suitable financial
arrangements) pending a hearing. Unless otherwise provided in the related
Prospectus Supplement, such procedures will be described in each Transitional
Funding Order and in the related IFC Tariff filed by ComEd under the Act to
authorize the imposition and collection of the related IFC Charges.
Nonetheless, there can be no assurance that an ARES or other third party
collection agent will apply the same credit and collection policies and
procedures to Customers as would be applied by ComEd. In addition, the Servicer
will have no meaningful ability to control the collection procedures of
third-party collection agents who simply forward payments on behalf of Customers
and not pursuant to contractual arrangements with ComEd or pursuant to
consolidated billing procedures. See "Risk Factors -- Potential Servicing
Issues--Reliance on Alternative Retail Electric Suppliers."

SERVICER REPRESENTATIONS AND WARRANTIES

In the Servicing Agreement, the Servicer will make representations and
warranties to the Grantee, which will be assigned to the Trust, to the effect,
among other things, that: (a) the Servicer is a corporation duly organized and
in good standing under the laws of the State of Illinois, with power and
authority to own its properties and conduct its business as currently owned or
conducted and to execute, deliver and carry out the terms of the Servicing
Agreement; (b) the execution, delivery and carrying out of the Servicing
Agreement have been duly authorized by the Servicer by all necessary corporate
action; (c) the Servicing Agreement constitutes a legal, valid and binding
obligation of the Servicer, enforceable against the Servicer in accordance with
its terms, subject to applicable insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws relating

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to or affecting creditors' rights generally from time to time in effect, and to
general principles of equity; (d) the consummation of the transactions
contemplated by the Servicing Agreement does not conflict with the Servicer's
articles of incorporation or bylaws or any agreement to which the Servicer is a
party or bound, result in the creation or imposition of any lien upon the
Servicer's properties or violate any law or any order, rule or regulation
applicable to the Servicer; (e) the Servicer has all licenses necessary for it
to perform its obligations under the Servicing Agreement (except where the
failure to have such licenses would not be reasonably likely to have a material
adverse effect on the Servicer or an adverse effect on the Intangible Transition
Property); (f) no governmental approvals, authorizations or filings are required
for the Servicer to execute, deliver and perform its obligations under the
Servicing Agreement except those which have previously been obtained or made and
those which the Servicer is required to make in the future; (g) except as
disclosed in the Servicing Agreement, no court or administrative proceeding or
investigation is pending or, to the Servicer's knowledge, threatened (i)
asserting the invalidity of, or seeking to prevent the consummation of the
transactions contemplated by, the Servicing Agreement, (ii) seeking a
determination that might materially and adversely affect the performance by the
Servicer of its obligations thereunder, or (iii) relating to the Servicer which
could reasonably be expected to adversely affect the federal or state income tax
attributes of the Notes; and (h) that the collection curve used to calculate the
remittance amounts of IFC is correct in all material respects.

In the event of a breach by the Servicer of any of its representations and
warranties described in the preceding paragraph, the Servicer will indemnify,
defend and hold harmless the Grantee, the Trust, the Indenture Trustee, the
Delaware Trustee and the Noteholders against any losses, claims, damages,
liabilities and reasonable costs or expenses incurred as a result thereof.

STATEMENTS BY SERVICER

On or before each Remittance Date, the Servicer will prepare and furnish to
the Grantee, the Trust, the Indenture Trustee and the Rating Agencies a
statement for the applicable calendar month (the "Monthly Servicer's Statement")
setting forth the aggregate amount of IFC Payments remitted by the Servicer to
the Collection Account and the Excess Remittance or the Remittance Shortfall
during the Billing Period immediately preceding such Remittance Date. In
addition, the Servicer will prepare, and the Indenture Trustee will furnish to
the Noteholders on each Payment Date the quarterly Servicer's Statement
described under "Security for the Notes -- Reports to Noteholders."

EVIDENCE AS TO COMPLIANCE

The Servicing Agreement will provide that a firm of independent public
accountants retained by the Servicer at the Servicer's expense will furnish to
the Grantee, the Trust, the Indenture Trustee and the Rating Agencies on or
before [____________] of each year, beginning [____________, 1999], a statement
as to compliance by the Servicer during the preceding twelve months ended
[____________] with certain standards relating to the servicing of the
Intangible Transition Property. This report (the "Annual Accountant's Report")
shall state that such firm has performed certain procedures in connection with
the Servicer's compliance with the servicing procedures of the Servicing
Agreement, identifying the results of such procedures and including any
exceptions noted. The Annual Accountant's Report will also indicate that the
accounting firm providing such report is independent of the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.

The Servicing Agreement will also provide for delivery to the Grantee, the
Trust, the Indenture Trustee and the Rating Agencies, on or before
[____________] of each year, commencing [____________, 1999], of a certificate
signed by an officer of the Servicer stating that the Servicer has fulfilled its
obligations in all material respects under the Servicing Agreement throughout
the preceding twelve months ended [____________] (or in the case of the first
such certificate, the period from the Closing Date to [____________, 1999]) or,
if there has been a default in the fulfillment of any such material obligation,
describing each such material default. The Servicer has agreed to give the
Grantee, the Trust, the Indenture Trustee and the Rating Agencies notice of
certain Servicer Defaults under the Servicing Agreement.

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Copies of such statements and certificates may be obtained by Noteholders by
a request in writing addressed to the Indenture Trustee.

CERTAIN MATTERS REGARDING THE SERVICER

The Servicing Agreement will provide that ComEd may not resign from its
obligations and duties as Servicer thereunder, except upon (a) either (i) a
determination that ComEd's performance of such duties is no longer permissible
under applicable law, disregarding any breach of the State Pledge that is being
contested, or any subsequent invalidation of the Funding Law, any Transitional
Funding Order and/or the related IFC Tariff filed in connection therewith or
(ii) satisfaction of the Rating Agency Condition and (b) to the extent required
under any Transitional Funding Order, the approval by the ICC of such
resignation. No such resignation will become effective until a successor
Servicer has assumed ComEd's servicing obligations and duties under the
Servicing Agreement.

The Servicing Agreement will further provide that neither the Servicer nor
any of its directors, officers, employees, and agents will be under any
liability to the Grantee, the Indenture Trustee, the Trust, the Delaware
Trustee, the Noteholders or any other person, except as provided under the
Servicing Agreement, for taking any action or for refraining from taking any
action pursuant to the Servicing Agreement, or for errors in judgment; provided,
however, that neither the Servicer nor any such person will be protected against
any liability that would otherwise be imposed by reason of willful misconduct,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties thereunder. In addition, the
Servicing Agreement will provide that the Servicer is under no obligation to
appear in, prosecute, or defend any legal action that is not related or
incidental to its servicing responsibilities under the Servicing Agreement and
that, in its opinion, may cause it to incur any expense or liability.

Under the circumstances specified in the Servicing Agreement, any entity into
which the Servicer may be merged or consolidated, or any entity resulting from
any merger or consolidation to which the Servicer is a party, or any entity
succeeding to the properties and assets of the Servicer substantially as a whole
or, with respect to its obligations as Servicer, which corporation or other
entity in each of the foregoing cases assumes the obligations of the Servicer,
will be the successor of the Servicer under the Servicing Agreement.

SERVICER DEFAULTS

"Servicer Defaults" under the Servicing Agreement will include, among other
things, (a) any failure by the Servicer to make any required deposit into the
Collection Account, which failure continues unremedied for three Servicer
Business Days after written notice from the Grantee, the Trust or the Indenture
Trustee is received by the Servicer or after discovery by the Servicer; (b) any
failure by the Servicer or ComEd, as the case may be, duly to observe or perform
in any material respect any other covenant or agreement in the Servicing
Agreement or any other Basic Document to which it is a party, which failure
materially and adversely affects the rights of Noteholders and which continues
unremedied for 30 days after the giving of notice of such failure (i) to the
Servicer or ComEd, as the case may be, by the Grantee or the Trust or (ii) to
the Servicer or ComEd, as the case may be, by holders of Notes evidencing not
less than 25 percent in principal amount of the outstanding Notes of all Series;
(c) any representation or warranty made by the Servicer in the Servicing
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Grantee, the Trust or the Noteholders and which material
adverse effect continues unremedied for a period of 60 days after the giving of
notice to the Servicer by the Grantee, the Trust or the Indenture Trustee; and
(d) certain events of insolvency or similar proceedings with respect to the
Servicer or the Grantee and certain actions by the Servicer or the Grantee
indicating its insolvency, reorganization pursuant to bankruptcy proceedings, or
inability to pay its obligations.

RIGHTS UPON SERVICER DEFAULT

As long as a Servicer Default under the Servicing Agreement remains
unremedied, either the Indenture Trustee or Noteholders evidencing not less than
25 percent in principal amount of then outstanding Notes of all Series may by
written notice terminate all the rights and obligations of the Servicer (other
than the Servicer's

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indemnity obligation) under the Servicing Agreement, whereupon a successor
servicer appointed by the Grantee, with the Trust's prior written consent, will
succeed to all the responsibilities, duties and liabilities of the Servicer
under the Servicing Agreement and will be entitled to similar compensation
arrangements. In addition, upon a Servicer Default, each of the following shall
be entitled to apply to the ICC for sequestration and payment of revenues
arising with respect to the Intangible Transition Property: (1) the Noteholders
and the Indenture Trustee as beneficiary of any statutory lien permitted by the
Funding Law; (2) the Grantee or its assignees; (3) the Trust; or (4) pledgees or
transferees of the Intangible Transition Property. If, however, a bankruptcy
trustee or similar official has been appointed for the Servicer, and no Servicer
Default other than such appointment has occurred, such trustee or official may
have the power to prevent the Indenture Trustee or the Noteholders from
effecting a transfer of servicing. The Indenture Trustee may appoint, or
petition the ICC or a court of competent jurisdiction for the appointment of, a
successor servicer which satisfies criteria specified by the Rating Agencies if,
within 30 days after notice of termination is given, the Grantee shall not have
appointed a successor servicer. The Indenture Trustee may make such arrangements
for compensation to be paid.

WAIVER OF PAST DEFAULTS

Noteholders holding at least a majority in principal amount of the then
outstanding Notes of all Series, on behalf of all Noteholders, may waive any
default by the Servicer in the performance of its obligations under the
Servicing Agreement and its consequences, except a default in making any
required deposits to the Collection Account in accordance with the Servicing
Agreement. The Servicing Agreement provides that no such waiver will impair the
Noteholders' rights with respect to subsequent defaults.

SUCCESSOR SERVICER

If for any reason a third party assumes the role of the Servicer under the
Servicing Agreement (such third party in such role, the "Successor Servicer"),
the Servicing Agreement will require the Servicer being replaced to cooperate
with the Grantee, the Trust, the Indenture Trustee and the Successor Servicer in
terminating such replaced Servicer's rights and responsibilities under the
Servicing Agreement, including the transfer to the Successor Servicer of all
cash amounts then held by the Servicer for remittance or subsequently acquired.
The Servicing Agreement will provide that the Servicer shall be liable for all
reasonable out-of-pocket costs and expenses (including attorneys' fees and
expenses) incurred in transferring its servicing responsibilities to the
Successor Servicer.

AMENDMENT

The Servicing Agreement may be amended by the parties thereto, without the
consent of the Noteholders, but with five Business Days' prior written notice to
the Rating Agencies and the consent of the Indenture Trustee, to cure any
ambiguity, to correct or supplement any provision or for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of that agreement or of modifying in any manner the rights of the Noteholders,
provided that such action will not, as certified in a certificate of an officer
of the Servicer delivered to the Indenture Trustee, the Grantee and the Delaware
Trustee, adversely affect in any material respect the interest of any
Noteholder. The Servicing Agreement may also be amended by the Servicer and the
Grantee with the consent of the Indenture Trustee and the holders of Notes
evidencing at least a majority in principal amount of the then outstanding Notes
of all Series and Classes for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such agreement or
of modifying in any manner the rights of the Noteholders; provided, however,
that no such amendment may (a) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, IFC Collections or (b) reduce the
aforesaid percentage of the Notes the holders of which are required to consent
to any such amendment, without the consent of the holders of all the outstanding
Notes.

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TERMINATION

The obligations of the Servicer and the Grantee pursuant to the Servicing
Agreement will terminate upon the payment to the Noteholders and corresponding
distribution to the Noteholders of all amounts required to be paid or
distributed to them pursuant to the Servicing Agreement, the Notes and the
Indenture.

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DESCRIPTION OF THE NOTES

GENERAL

The Trust will issue the Notes pursuant to the terms of an Indenture (the
"Indenture") between the Trust and the Indenture Trustee. The particular terms
of the Notes of any Series will be established in a supplement to the Indenture
or a trustee's issuance certificate and, in either case, the material terms
thereof will be described in the related Prospectus Supplement. This summary
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the terms and provisions of the Indenture and related
supplements or trustee's issuance certificates thereto, forms of which are filed
as exhibits to the Registration Statement.

The Notes may be issued in one or more Series, any one or more of which may
be comprised of one or more Classes. Classes of Notes may differ as to the
interest rate and the timing, sequential order and amount of payments of
principal or interest, or both. Each Series of Notes may include one or more
Classes of Notes that accrue interest at a variable rate based on the index
described in the related Prospectus Supplement. Each such Series will be secured
by a Swap Agreement, in addition to the security provided under the Indenture.
See "Floating Rate Notes" below. While the specific terms of only the Series of
Notes (and the Classes of such Series (if any)) in respect of which this
Prospectus is being delivered will be described in the related Prospectus
Supplement, the terms of such Series and any Classes thereof will not be subject
to prior review of or consent of the holders of outstanding Notes. All Notes of
the same Series will be identical in all respects except for the denominations
thereof, unless such Series is comprised of more than one Class, in which case
all Notes of the same Class will be identical in all respects except for the
denominations thereof.

All Notes issued under the Indenture will be payable solely from, and secured
solely by, a pledge of and lien on the Intangible Transition Property and the
other Note Collateral as provided in the Indenture. See "Security for the
Notes -- Pledge of Note Collateral." All Notes issued under the Indenture,
irrespective of when issued, shall have a parity lien on the Note Collateral,
although Floating Rate Notes shall also be secured by a Swap Agreement which
relates solely to such Series. See "-- Conditions of Issuance of Additional
Series."

The Prospectus Supplement for a Series of Notes will describe the following
terms of such Series of Notes and, if applicable, the Classes thereof: (a) the
designation of the Series and, if applicable, the Classes thereof, (b) the
principal amount, (c) the annual rate at which interest accrues (the "Note
Interest Rate"), (d) the Payment Dates, (e) the scheduled maturity date (the
"Scheduled Maturity Date") and the final termination date of the Series (the
"Final Maturity Date"), (f) the initial Reconciliation Payment Date and the
initial True-Up Payment Date, (g) the Series Issuance Date of such Series, (h)
the place or places for the payment of principal, (i) the authorized
denominations, (j) the provisions for optional redemption of such Series or
Class, (k) the Expected Amortization Schedule for principal of such Series and,
if applicable, the Classes thereof, (l) the IFC Charges as of the Series
Issuance Date of such Series of Notes and the portion of total IFC Charges
authorized and initially imposed in connection with such issuance, (m) the total
dollar amount of Intangible Transition Property authorized by the related
Transitional Funding Order, (n) any other terms of such Class that are not
inconsistent with the provisions of the Notes and that will not result in any
Rating Agency reducing or withdrawing its then current rating of any outstanding
Class of Notes (the notification in writing by each Rating Agency to the
Servicer, the Grantee, the Indenture Trustee and the Delaware Trustee that any
action will not result in such a reduction or withdrawal is referred to herein
as the "Rating Agency Condition"), (o) the identity of the Indenture Trustee and
the Delaware Trustee, and (p) the terms of any Swap Agreement executed solely to
permit the issuance of Floating Rate Notes.

The Notes do not constitute a debt or liability of the State of Illinois or
any political subdivision thereof and do not represent an interest in or
obligation of ComEd or any of its affiliates. The Notes will not be guaranteed
or insured by ComEd or any of its affiliates. Transitional Funding Orders
authorizing issuance of the Notes do not constitute a pledge of the full faith
and credit of the State of Illinois or of any of its political subdivisions.
The issuance of the Notes under the Funding Law shall not directly, indirectly
or contingently obligate the State of Illinois or any political subdivision
thereof to levy or to pledge any form of taxation therefor or to make any
appropriation for their payment.

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INTEREST AND PRINCIPAL

Interest will accrue on the principal balance of a Class of Notes at the per
annum rate either specified in or determined in the manner specified in the
related Prospectus Supplement and will be payable on the Payment Dates specified
in the related Prospectus Supplement. IFC Collections, including such amounts as
are available in the Reserve Subaccount, the Overcollateralization Subaccount
and, if necessary, the amounts available in the Capital Subaccount, will be used
to make interest payments to the Noteholders of each Class on each Payment Date
with respect thereto. See "Security for the Notes -- Allocations; Payments."

Principal of the Notes of each Class will be payable in the amounts and on
the Payment Dates specified in the related Prospectus Supplement, but only to
the extent that amounts in the Collection Account are available therefor, and
subject to the other limitations described below. See "Security for the Notes --
Allocations; Payments." Each Prospectus Supplement will set forth the Expected
Amortization Schedule for each Series of Notes and, if applicable, the Classes
of such Series. On any Payment Date, unless an Event of Default has occurred and
is continuing and the Notes have been declared due and payable, the Indenture
Trustee will make payments on the Notes only until the outstanding principal
balances thereof have been reduced to the principal balances specified in the
applicable Expected Amortization Schedule for such Payment Date (each, a
"Scheduled Payment"). Any IFC Collections in excess of amounts payable as
(a) expenses of the Grantee, the Delaware Trustee and the Indenture Trustee,
(b) payments of interest on and principal of the Notes, (c) allocations to the
Capital Subaccount, and (d) allocations to the Overcollateralization Subaccount
(all as described under "Security for the Notes -- Allocations; Payments") will
be retained by the Indenture Trustee in the Reserve Subaccount for payment on
subsequent Payment Dates. However, if insufficient IFC Collections are received
with respect to any Payment Date, and amounts in the Collection Account are not
sufficient to make up the shortfall, principal of any Class of Notes may be
payable later than expected as described herein. See "Risk Factors -- Unusual
Nature of the Intangible Transition Property" and "Risk Factors -- Uncertain
Payment Amounts and Weighted Average Life." The entire unpaid principal amount
of the Notes of all Series will be due and payable on the date on which an Event
of Default (other than a breach by the State of Illinois of the State Pledge)
has occurred and is continuing, if the Indenture Trustee or the holders of not
less than a majority in principal amount of the Notes of all Series then
outstanding have declared the Notes to be immediately due and payable. See
"Security for the Notes -- Events of Default; Rights Upon Event of Default."

Unless the context requires otherwise, all references in this Prospectus to
principal of the Notes of a Series includes any premium that might be payable
thereon if Notes of such Series are redeemed, as described in the related
Prospectus Supplement.

PAYMENTS ON THE NOTES

The Indenture Trustee will distribute on each Payment Date to the holders of
each Class of Notes all payments of principal and interest with respect thereto
(other than Special Payments, as defined in the Indenture) or, in lieu of such
interest, payments under any related Swap Agreement with respect to interest.
Each such payment other than the final payment with respect to any Note will be
made by the Indenture Trustee to the holders of record of the Notes of the
applicable Class on the Record Date in respect of such Payment Date. The final
payment with respect to any Note, however, will be made only upon presentation
and surrender of such Note at the office or agency of the Indenture Trustee
specified in the notice given by the Indenture Trustee with respect to such
final payment.

If interest on the Notes of any Series is not paid when due, such defaulted
interest shall be paid (plus interest on such defaulted interest at the
applicable Note Interest Rate to the extent lawful) to the persons who are
Noteholders on a subsequent Special Record Date (as defined in the Indenture),
which date shall be at least five Business Days prior to the Special Payment
Date (as defined in the Indenture). The Trust shall fix or cause to be fixed
any such Special Record Date and Special Payment Date, and, at least 20 days
before any such Special Record Date, the Trust shall mail to each affected
Noteholder a notice that states the Special Record Date, the Special Payment
Date and the amount of defaulted interest (plus interest on such defaulted
interest) to be paid.

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At such time, if any, as the Notes of any Class are issued in the form of
Definitive Notes and not to DTC or its nominee, payments by the Indenture
Trustee with respect to such Class on a Payment Date or a Special Payment Date
will be made by check mailed to each holder of a Definitive Note of such Class
of record on the applicable Record Date at its address appearing on the register
maintained with respect to the Notes of such Series, or, upon application by a
holder of any Class of Notes in the principal amount of $10,000,000 or more to
the Indenture Trustee not later than the applicable Record Date, by wire
transfer to an account maintained by the payee in New York, New York. The final
payment for each Class of Notes, however, will be made only upon presentation
and surrender of the Notes of such Class at the office or agency of the
Indenture Trustee specified in the notice given by the Indenture Trustee of such
final payment. The Indenture Trustee will mail such notice of the final payment
to the Noteholders of such Class, specifying the date set for such final payment
and the amount of such payment.

If any Special Payment Date or other date specified herein for distribution
of any payments to Noteholders is not a Business Day, payments scheduled to be
made on such Special Payment Date or other date may be made on the next
succeeding Business Day and no interest shall accrue upon such payment during
the intervening period. "Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions or trust companies in New York,
New York , Wilmington, Delaware, or Chicago, Illinois are, or DTC is, authorized
or obligated by law, regulation or executive order to remain closed.

FLOATING RATE NOTES

If any Floating Rate Notes of any Class are offered, the Trust will enter
into one or more swap agreements (each, a "Swap Agreement") with a swap
counterparty identified and having the terms described in the related Prospectus
Supplement. Generally, pursuant to a Swap Agreement, on each Payment Date, the
Trust will be obligated to pay to the swap counterparty, solely from payments
received with respect to such Class of Notes, an amount equal to the interest
due on such Class of Notes on such Payment Date, and the swap counterparty will
be obligated to pay to the Trust an amount equal to the product of (a) the
floating rate and (b) the principal balance of the Floating Rate Notes as of the
close of business on the preceding Payment Date after giving effect to all
payments of principal made to the Floating Rate Noteholders on such preceding
Payment Date. See "Risk Factors -- Additional Risks of Floating Rate Notes."

REGISTRATION AND TRANSFER OF THE NOTES

If so specified in the related Prospectus Supplement, one or more Classes of
Notes will be issued in definitive form and will be transferable and
exchangeable at the office of the registrar identified in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement, no
service charge will be made for any such registration or transfer of such Notes,
but the owner may be required to pay a sum sufficient to cover any tax or other
governmental charge.

Each Class of Notes will be issued in the minimum initial denominations set
forth in the related Prospectus Supplement and, except as otherwise provided in
the related Prospectus Supplement, in integral multiples thereof.

Payments of interest and principal will be made on each Payment Date to the
Noteholders in whose names the Notes were registered on the related Record Date.

BOOK-ENTRY REGISTRATION

If so specified in the related Prospectus Supplement, one or more Classes of
Notes initially may be Book-Entry Notes, which are initially represented by one
or more Notes registered in the name of Cede, as nominee of DTC, or another
securities depository, and are available only in the form of book-entries. Any
Book-Entry Notes will initially be registered in the name of Cede, the nominee
of DTC. Holders may also hold Notes of a Class through Centrale de Livraison
de Valeurs Mobilieres S.A. ("CEDEL") or the Euroclear System ("Euroclear") (in
Europe), if they are participants in such systems or indirectly through
organizations that are participants in such systems.

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Cede, as nominee for DTC, will hold the global Note or Notes. CEDEL and
Euroclear will hold omnibus positions on behalf of their participants through
customers' securities accounts in CEDEL's and Euroclear's names on the books of
their respective Depositaries (as defined herein) which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC. Citibank, N.A. will act as depositary for CEDEL and Morgan
Guaranty Trust Company of New York will act as depositary for Euroclear (in such
capacities, the "Depositaries").

DTC is a limited-purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York UCC, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. DTC was created to hold securities for its participating
organizations, which are the Participants, and facilitate the settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of securities. Participants include underwriters, securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system also is
available to Indirect Participants, which are others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly.

Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants (as defined herein) and Euroclear
Participants (as defined herein) will occur in accordance with their respective
rules and operating procedures.

Cross-market transfers between persons holding directly or indirectly through
DTC, on the one hand, and directly or indirectly through CEDEL or Euroclear
Participants, on the other, will be effected in DTC in accordance with DTC rules
on behalf of the relevant European international clearing system by its
Depositary. Cross-market transactions will require delivery of instructions to
the relevant European international clearing system by the counterparty in such
system in accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international clearing system
will, if the transaction meets its settlement requirements, deliver instructions
to its Depositary to take action to effect final settlement on its behalf by
delivering or receiving bonds in DTC, and making or receiving distributions in
accordance with normal procedures for same-day funds settlement applicable to
DTC. CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.

Because of time-zone differences, credits of securities received in CEDEL or
Euroclear as a result of a transaction with a Participant will be made during
subsequent settlement processing and dated the Business Day following the DTC
settlement date. Such credits or any transactions in such Notes settled during
such processing will be reported to the relevant Euroclear or CEDEL Participant
on such Business Day. Cash received in CEDEL or Euroclear as a result of sales
of Notes by or through a CEDEL Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant CEDEL or Euroclear cash account only as of the
Business Day following settlement in DTC.

Noteholders that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in, Notes
may do so only through Participants and Indirect Participants. In addition,
Noteholders will receive all payments of principal of and interest on the Notes
from the Indenture Trustee through DTC and its Participants. Under a book-entry
format, Noteholders will receive payments after the related Payment Date, as the
case may be, because, while payments are required to be forwarded to Cede, as
nominee for DTC, on each such date, DTC will forward such payments to its
Participants, which thereafter will be required to forward them to Indirect
Participants or holders of beneficial interests in the Notes. The Indenture
Trustee, the Grantee, the Servicer and any paying agent, transfer agent or
registrar may treat the registered holder in whose name any Note is registered
(expected to be Cede) as the absolute owner thereof (whether or not such Note is
overdue and notwithstanding any notice of ownership or writing thereon or any
notice to the contrary) for the purpose of making payments and for all other
purposes.

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Unless and until Definitive Notes (as defined below) are issued, it is
anticipated that the only "holder" of Book-Entry Notes of any Series will be
Cede, as nominee of DTC. Noteholders will only be permitted to exercise their
rights as Noteholders indirectly through Participants and DTC. All references
herein to actions by Noteholders thus refer to actions taken by DTC upon
instructions from its Participants, and all references herein to payments,
notices, reports and statements to Noteholders refer to payments, notices,
reports and statements to Cede, as the registered holder of the Notes, for
distribution to the beneficial owners of the Notes in accordance with DTC
procedures.

While any Book-Entry Notes of a Series are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC is required to
make book-entry transfers among Participants on whose behalf it acts with
respect to the Book-Entry Notes and is required to receive and transmit payments
of principal of, and interest on, the Book-Entry Notes. Participants with whom
Noteholders have accounts with respect to Book-Entry Notes are similarly
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Noteholders. Accordingly, although Noteholders will
not possess physical notes, the Rules provide a mechanism by which Noteholders
will receive payments and will be able to transfer their interests.

Because DTC can only act on behalf of Participants, who in turn act on behalf
of Indirect Participants and certain banks, the ability of holders of beneficial
interests in the Notes to pledge Notes to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Notes, may be limited due to the lack of a Definitive Note for such Notes.

DTC has advised the Indenture Trustee that it will take any action permitted
to be taken by a Noteholder under the Indenture and the related Prospectus
Supplement only at the direction of one or more Participants to whose account
with DTC the Notes are credited. Additionally, DTC has advised the Indenture
Trustee that it may take actions with respect to the Noteholders' Interest that
might conflict with other of its actions with respect thereto.

CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of securities. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include any underwriters, agents or dealers with respect
to a Series of Notes offered hereby. Indirect access to CEDEL is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a CEDEL Participant, either
directly or indirectly.

Euroclear was created in 1968 to hold securities for participants of the
Euroclear System ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
securities and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 29 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing, and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC described above. The Euroclear System is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office (the "Euroclear
Operator"), under contract with Euroclear Clearance System S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on behalf of
Euroclear Participants. Euroclear Participants include banks

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(including central banks), securities brokers and dealers and other professional
financial intermediaries. Indirect access to Euroclear is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.

The Euroclear Operator is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.

Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of Euroclear and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific securities to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.

Payments with respect to Notes held through CEDEL or Euroclear will be
credited to the cash accounts of CEDEL Participants or Euroclear Participants in
accordance with the relevant systems' rules and procedures, to the extent
received by its Depositary. Such payments will be subject to tax reporting in
accordance with relevant United States federal tax laws and regulations. See
"Certain United States Federal Income Tax Considerations" herein. CEDEL or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Noteholder under the Indenture or the relevant Prospectus
Supplement on behalf of a CEDEL Participant or Euroclear Participant only in
accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.

Although DTC, CEDEL and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Notes among participants of DTC, CEDEL and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.

DEFINITIVE NOTES

Notes of a Class will be issued in registered form to Noteholders, or their
nominees, rather than to DTC (such Notes being referred to herein as "Definitive
Notes") only under the circumstances provided in the Indenture, which will
include, (a) the Administrator (initially, ComEd) advising the Indenture Trustee
in writing that DTC is no longer willing or able to properly discharge its
responsibilities as nominee and depository with respect to the Book-Entry Notes
of such Class and the Administrator being unable to locate a qualified
successor, (b) the Administrator (with written notice to the Indenture Trustee)
electing to terminate the book-entry system through DTC, or (c) after the
occurrence of a Servicer Default, holders of Notes representing not less than
50 percent of the aggregate outstanding principal amount of the Notes of any
Series maintained as Book-Entry Notes advising the Indenture Trustee,
Administrator, Trust and DTC in writing that the continuation of a book-entry
system through DTC (or a successor thereto) is no longer in the best interests
of Noteholders of such Series. Upon issuance of Definitive Notes of a Class,
such Notes will be transferable directly (and not exclusively on a book-entry
basis) and registered holders will deal directly with the Indenture Trustee with
respect to transfers, notices and payments.

Upon surrender by DTC of the definitive securities representing the Notes and
instructions for registration, the Indenture Trustee will issue the Notes in the
form of Definitive Notes, and thereafter the Indenture Trustee will recognize
the holders of such Definitive Notes as Noteholders under the Indenture.

Payment of principal of and interest on the Notes will be made by the
Indenture Trustee directly to Noteholders in accordance with the procedures set
forth herein and in the Indenture and the related Prospectus Supplement.
Interest payments and principal payments will be made to Noteholders in whose
names the Definitive Notes were registered at the close of business on the
related Record Date. Payments will be made by check mailed to the address of
such Noteholder as it appears on the register maintained by the Indenture
Trustee

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or in such other manner as may be provided in the related trustee's issuance
certificate or supplement to the Indenture and except that with respect to
Book-Entry Notes, payments will be made by wire transfer as described in the
Indenture. The final payment on any Note (whether Definitive Notes or Notes
registered in the name of Cede), however, will be made only upon presentation
and surrender of such Note on the final payment date at such office or agency as
is specified in the notice of final payment to Noteholders. The Indenture
Trustee will provide such notice to registered Noteholders not later than the
fifth day prior to the Final Payment Date.

Definitive Notes will be transferable and exchangeable at the offices of the
transfer agent and registrar, which initially will be the Indenture Trustee. No
service charge will be imposed for any registration of transfer or exchange, but
the transfer agent and registrar may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.

OPTIONAL REDEMPTION

Pursuant to the terms of the Indenture, a Series of Notes may be redeemed on
any Payment Date if, after giving effect to payments that would otherwise be
made on such date, the outstanding principal balance of such Series of Notes has
been reduced to less than five percent of the initial principal balance thereof.
If specified in the Prospectus Supplement related to any Series or Class of
Notes, the Indenture may also permit the redemption of such Series or Class of
Notes in full on any Payment Date on or prior to December 31, 2004 using
proceeds received from the refinancing of any other Series or Class of Notes,
through the issuance of an additional Series of Notes (the "New Notes"). The
New Notes will be payable solely out of the Intangible Transition Property and
other Note Collateral. No redemption shall be permitted under the Indenture
unless each Rating Agency with respect to any Notes that will remain outstanding
after such redemption shall have affirmed the then current rating of all such
outstanding Notes. Upon any redemption of any Series or Class of Notes, the
Trust will have no further obligations under the Indenture with respect thereto.
The Notes may be so redeemed upon payment of the outstanding principal amount of
the Notes and accrued but unpaid interest thereon as of the date of redemption,
together with all outstanding fees and expenses related thereto. Unless
otherwise specified in the related Prospectus Supplement, notice of such
redemption will be given by the Trust to the Indenture Trustee, the Rating
Agencies and each holder of Notes to be redeemed by first-class mail, postage
prepaid, mailed not less than 25 days nor more than 50 days prior to the date of
redemption.

CONDITIONS OF ISSUANCE OF ADDITIONAL SERIES

The issuance of any additional Series of Notes is subject to the following
conditions, among others:

(a) appropriate documentation required by the Indenture and Trust
Agreement, including supplements thereto, shall have been authorized,
executed and delivered by all parties required to do so by the terms of the
relevant documents;

(b) the Grantee shall have irrevocably assigned all of its right,
title and interest in the Intangible Transition Property to the Trust and a
filing required by Section 18-107 of the Act shall have been made with
respect to such assignment;

(d) ComEd shall have delivered to the Grantee, the Trust, the
Delaware Trustee and the Indenture Trustee an opinion of independent tax
counsel and/or a ruling from the IRS (as selected by, and in form and
substance reasonably satisfactory to, ComEd) to the effect that, for
federal income tax purposes, (i) such issuance, and the transfer of the
Note proceeds to ComEd, will not result in gross income to the Grantee, the
Trust or ComEd and (ii) such issuance will not adversely affect the
characterization of the then outstanding Notes as obligations of ComEd;

(e) no Event of Default shall have occurred and be continuing under
the Indenture;

(f) as of the date of issuance, the Trust shall have sufficient
funds available to pay the purchase price for the Intangible Transition
Property, as well as the costs of issuance of the Series of Notes (to the
extent

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not payable from Note proceeds) and all conditions to the issuance of a new
series of Notes shall have been satisfied or waived; and

(g) delivery by the Trust to the Indenture Trustee of certain
certificates and opinions specified in the Indenture.

LIST OF NOTEHOLDERS

Upon written request of any Noteholder or group of Noteholders of any Series
or of all outstanding Series of Notes evidencing not less than 10 percent of the
aggregate outstanding principal amount of the Notes of such Series or all
Series, as applicable, the Indenture Trustee will afford such Noteholder or
Noteholders access during business hours to the current list of Noteholders of
such Series or of all outstanding Series, as the case may be, for purposes of
communicating with other Noteholders with respect to their rights under the
Indenture.

The Indenture does not provide for any annual or other meetings of
Noteholders.

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SECURITY FOR THE NOTES

GENERAL

The Notes issued under the Indenture are payable solely from and secured
solely by a pledge of and lien of the Intangible Transition Property and the
other Note Collateral as provided in the Indenture. See "Description of the
Intangible Transition Property." As noted under the heading, "Description of
the Notes," the Trust will issue the Notes pursuant to the terms of the
Indenture. The particular terms of the Notes of any Series will be established
in a supplement to the Indenture or a trustee's issuance certificate and
material terms thereof will be described in the Prospectus Supplement for the
related Series of Notes.

This summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the terms and provisions of the
Indenture and supplements or trustee's issuance certificate related thereto,
forms of which are filed as exhibits to the Registration Statement.

PLEDGE OF NOTE COLLATERAL

To secure the payment of principal of and interest on the Notes, the Trust
will grant to the Indenture Trustee a security interest in all of the Trust's
right, title and interest in and to (a) all of the Intangible Transition
Property and, to the fullest extent permitted by law, all proceeds thereof,
(b) the Grant Agreements, Sale Agreements and Servicing Agreement, (c) the
Collection Account and all amounts of cash or investment property on deposit
therein or credited thereto from time to time, (d) with respect to Floating Rate
Notes only, any Swap Agreement entered into with respect to the issuance of such
Floating Rate Notes, (e) all rights to compel ComEd, as Servicer (or any
successor) to file for and obtain adjustments to the IFC Charges in accordance
with Section 18-104(d) of the Act, the Transitional Funding Orders and all IFC
Tariffs filed with the ICC in connection therewith, (f) all present and future
claims, demands, causes and choses in action in respect of any or all of the
foregoing and all payments on or under the foregoing and (g) all proceeds in
respect of any or all of the foregoing; provided, however, that (1) the cash
transferred to the Trust by the Grantee which is not held in the Capital
Subaccount, including cash that has been released to the Grantee or as it
directs following retirement of all Series of Notes, (2) net investment earnings
which have been released to the Trust by the Indenture Trustee pursuant to the
terms of the Indenture, (3) the Overcollateralization Amount that has been
released to the Grantee or as it directs following retirement of all Series of
Notes, and (4) amounts deposited with the Trust on any Series Issuance Date for
payment of costs of issuance with respect to the related Series of Notes
(together with any interest earnings thereon) will not be covered by the
foregoing security interest. The foregoing assets to which the Trust, as
assignee of the Grantee, will grant the Indenture Trustee a security interest
are referred to collectively as the "Note Collateral" herein.

SECURITY INTEREST IN NOTE COLLATERAL

CREATION AND PERFECTION OF SECURITY INTEREST UNDER THE ACT

Section 18-107 of the Act provides that neither Intangible Transition
Property, nor any right, title or interest in Intangible Transition Property,
shall constitute property in which a security interest may be created under the
UCC, nor shall any such rights be deemed proceeds of any property which is not
Intangible Transition Property. Rather, Section 18-107(c) of the Act provides
that a valid and enforceable security interest in Intangible Transition Property
shall attach and be perfected only by the means set forth in that
Section 18-107(c). Specifically, Section 18-107(c) provides that, to the extent
that transitional funding instruments, such as the Notes, are purported to be
secured by Intangible Transition Property, as specified in the applicable
Transitional Funding Order, the lien of the transitional funding instruments
shall attach automatically to such Intangible Transition Property from the time
of issuance of the transitional funding instruments. Section 18-107(c) of the
Act provides that such lien shall be a valid and enforceable security interest
in Intangible Transition Property, securing the transitional funding
instruments, and shall be continuously perfected if, before the date of issuance
of the applicable transitional funding instruments, or within no more than
10 days thereafter, a filing has been made

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by or on behalf of the holder with the Chief Clerk of the ICC stating that such
transitional funding instruments have been issued.

The liens provided under Section 18-107(c) of the Act are enforceable against
the Utility, any assignee, grantee or issuer and all third parties, including
judicial lien creditors. Moreover, a perfected lien in Intangible Transition
Property is a continuously perfected security interest in all then existing or
thereafter arising revenues and proceeds arising with respect to such Intangible
Transition Property, whether or not the electric power and energy included in
the calculation of such revenues and proceeds have been provided. The lien
created by Section 18-107(c) of the Act is perfected and ranks prior to any
other lien, including any judicial lien, which subsequently attaches to the
Intangible Transition Property, and to any other rights created by the
Transitional Funding Orders or any revenues or proceeds of the foregoing.

The relative priority of the lien created by Section 18-107(c) of the Act is
not defeated or adversely affected by (a) changes to the transitional funding
order or to the related instrument funding charges payable by any retail
customer, class of retail customers or other person or group of persons
obligated to pay such charges or (b) (subject to the tracing requirements of
federal bankruptcy law) the commingling of revenues arising with respect to any
intangible transition property with funds of the Utility or other funds of the
assignee, issuer or grantee.

Section 18-107(c)(5) of the Act provides that the ICC shall maintain
segregated records which reflect the date and time of receipt of all filings
made under Section 18-107(c). See "Filings Made With Respect to the Intangible
Transition Property" below.

RIGHT OF FORECLOSURE

Section 18-107(c)(4) of the Act provides that, if an event of default occurs
under the transitional funding instruments, the holders thereof or their
authorized representatives, as secured parties, may foreclose or otherwise
enforce the lien in the intangible transition property securing the transitional
funding instruments, subject to the rights of any third parties holding prior
security interests therein (perfected in the manner described in such
subsection). Upon application by such holders or their authorized
representatives, the ICC shall order the sequestration and payment to the
holders or their authorized representatives of revenues arising with respect to
the intangible transition property pledged to the holders. Section 18-107(c)(4)
of the Act provides that any such order shall remain in full force and effect
notwithstanding any bankruptcy, reorganization or other insolvency proceedings
with respect to the Utility, grantee, assignee or issuer. See "Risk Factors --
Bankruptcy and Creditors' Rights Issues -- Potential Bankruptcy of ComEd or the
Grantee."

FILINGS MADE WITH RESPECT TO THE INTANGIBLE TRANSITION PROPERTY

ComEd, as Servicer, pledges in the Servicing Agreement to file with the ICC
on or before the date of issuance of any Series of Notes the filing required by
Section 18-107(c)(1) of the Act to perfect the lien of the Indenture Trustee in
the Intangible Transition Property. The Grantee will represent, at the time of
issuance of any Series of Notes, that no prior filing has been made under the
terms of Section 18-107 of the Act with respect to such Intangible Transition
Property, other than a filing which provides the Indenture Trustee with a first
priority perfected security interest in such Intangible Transition Property on a
parity basis with that securing any outstanding Notes, if any.

DESCRIPTION OF INDENTURE ACCOUNTS

COLLECTION ACCOUNT

Pursuant to the Indenture, a segregated identifiable account (the "Collection
Account") will be established with an Eligible Institution. The Collection
Account will be held by the Indenture Trustee for the benefit of the Noteholders
and the Trust. The Collection Account will consist of four subaccounts: a
general subaccount (the "General Subaccount"), a reserve subaccount (the
"Reserve Subaccount"), a subaccount for the Overcollateralization Amount with
respect to each Series of Notes (the "Overcollateralization Subaccount"), and a
capital subaccount (the "Capital Subaccount"). All amounts in the Collection
Account not allocated to any other

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subaccount will be allocated to the General Subaccount. Unless the context
indicates otherwise, references herein to the Collection Account include each of
the subaccounts contained therein.

An "Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) has either (A) a
long-term unsecured debt rating of "AAA" by S&P and "A2" by Moody's or (B) a
certificate of deposit rating of "A-1+" by S&P and "P-1" by Moody's, or any
other long-term, short-term or certificate of deposit rating acceptable to the
Rating Agencies and (ii) whose deposits are insured by the Federal Deposit
Insurance Corporation (the "FDIC").

Funds in the Collection Account may be invested in any of the following
(subject to additional restrictions in the Indenture): (a) direct obligations
of, or obligations fully and unconditionally guaranteed as to timely payment by,
the United States of America, (b) demand deposits, time deposits, certificates
of deposit or bankers' acceptances of Eligible Institutions which are described
in clause (b) of the preceding paragraph, (c) commercial paper (other than
commercial paper issued by ComEd or any of its affiliates) having, at the time
of investment or contractual commitment to invest, a rating in the highest
rating category from each Rating Agency from which a rating is available, (d)
money market funds which have the highest rating from each Rating Agency from
which a rating is available, (e) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United
States of America or certain agencies or instrumentalities thereof, entered into
with certain depository institutions or trust companies, or (f) any other
investment permitted by each Rating Agency (collectively, the "Eligible
Investments"), in each case which mature on or before the Business Day preceding
the next Payment Date. The Indenture Trustee will have access to the Collection
Account for the purpose of making deposits in and withdrawals from the
Collection Account in accordance with the Indenture.

The Servicer will remit to the Collection Account, on each Remittance Date,
IFC Payments as described under "Servicing -- Remittances to Collection
Account."

GENERAL SUBACCOUNT

The General Subaccount will hold all funds held in the Collection Account
that are not held in the other three subaccounts. The Servicer will remit all
IFC Payments to the General Subaccount. On each Payment Date, the Indenture
Trustee will draw on amounts in the General Subaccount to pay expenses of the
Trust and to pay interest and make Scheduled Payments on the Notes and to make
other payments and transfers in accordance with the terms of the Indenture.

RESERVE SUBACCOUNT

IFC Collections available with respect to any Payment Date in excess of
amounts necessary to (a) pay interest and make Scheduled Payments on the Notes
(or, if the Notes have been declared due and payable, to pay the Notes in full),
(b) pay all related fees and expenses of the Trust, including the Servicing Fee
and any Quarterly Administration Fee, (c) replenish the Capital Subaccount up to
the Required Capital Level, and (d) fund and maintain the Overcollateralization
Subaccount up to the Required Overcollateralization Level, will be allocated to
the Reserve Subaccount.

OVERCOLLATERALIZATION SUBACCOUNT

Each Transitional Funding Order will provide that the Trust, as the assignee
of the Intangible Transition Property created thereby, is entitled to collect an
additional amount (for any Series, the "Overcollateralization Amount") specified
in the related Prospectus Supplement which is intended to enhance the likelihood
that payments on the Notes will be made in accordance with their Expected
Amortization Schedules. Each Transitional Funding Order will permit the
Servicer to set the IFC Charges at levels that are expected to produce IFC
Collections in amounts that exceed the amounts expected to be required to pay
interest and make Scheduled Payments on the Notes, and to pay all related fees
and expenses of the Trust, including the Servicing Fee and any Quarterly
Administration Fee in order to collect the Overcollateralization Amount. The
Overcollateralization Amount established in connection with each Series of Notes
will be specified in the related Prospectus

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Supplement, but will not be less than 0.50 percent of the initial principal
balance of such Series of Notes, and will be collected over the expected life of
the Notes of such Series (I.E., over the period from the Series Issuance Date of
the Notes of such Series through the latest Scheduled Maturity Date for any Note
in such Series). The Overcollateralization Amount for all Series of Notes will
be held in the Overcollateralization Subaccount. The amount required to be on
deposit in the Overcollateralization Subaccount as of any Payment Date with
respect to each Series, as specified in the schedule set forth in the related
Prospectus Supplement, is referred to herein as the "Required
Overcollateralization Level".

Amounts in the Overcollateralization Subaccount will be invested in Eligible
Investments, and the Trust will be entitled to earnings thereon, subject to the
limitations described under "-- Allocations; Payments." Amounts in the
Overcollateralization Subaccount are intended to cover any shortfall in IFC
Collections that might otherwise occur on any Payment Date or at the last
Scheduled Maturity Date for any Series or Class of Notes.

CAPITAL SUBACCOUNT

Prior to or upon the issuance of each Series of Notes, the Grantee will
transfer capital to the Trust in an amount which will be at least equal to
0.50 percent of the initial principal amount of such Series of Notes. Such
amount in the aggregate for all Series of Notes (with respect to each Series,
the "Required Capital Level") will be deposited into the Capital Subaccount.

ALLOCATIONS; PAYMENTS.

On each Payment Date, the Indenture Trustee will apply, at the direction of
the Servicer, all amounts on deposit in the Collection Account (including net
earnings thereon), which have accumulated from the first billing date of the
month in which the prior Payment Date occurred until the final billing date of
the month immediately preceding the month of the relevant Payment Date, to pay
the following amounts in the following priority:

(a) all amounts owed by the Trust to the Delaware Trustee and the
Indenture Trustee will be paid to such persons;

(b) the Servicing Fee and all unpaid Servicing Fees from any prior
Payment Dates will be paid to the Servicer;

(c) the Quarterly Administration Fee, if any, and all unpaid Quarterly
Administration Fees (or any portions thereof) from prior Payment Dates will
be paid to the Administrator;

(d) so long as no Event of Default has occurred and is continuing or
would be caused by such payment, all other Operating Expenses will be paid
to the persons entitled thereto, provided that the amount paid on each
Payment Date pursuant to this clause (d) may not exceed $[100,000];

(e) any overdue Quarterly Interest (together with, to the extent
lawful, interest on such overdue Quarterly Interest at the applicable Note
Interest Rate) and then Quarterly Interest with respect to each Series of
Notes will be paid to the Noteholders;

(f) principal on any Series of Notes payable as a result of an Event of
Default or on the Final Maturity Date for such Series of Notes will be paid
to the Noteholders of the applicable Series;

(g) the Scheduled Payments for any Series of Notes based on priorities
described in each Prospectus Supplement will be paid to the Noteholders of
the applicable Series;

(h) unpaid Operating Expenses (including any amounts owed under the
Administration Agreement exceeding the Quarterly Administration Fee) will
be paid to the persons entitled thereto;

(i) the amount, if any, by which the Required Capital Level with
respect to all outstanding Series of Notes exceeds the amount in the
Capital Subaccount as of such Payment Date will be allocated to the Capital
Subaccount;

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(j) the amount, if any, by which the Required Overcollateralization
Level exceeds the amount in the Overcollateralization Subaccount as of such
Payment Date will be allocated to the Overcollateralization Subaccount;

(k) funds up to the net earnings on amounts in the Collection Account
for the prior quarter without cumulation will be released to the Trust;

(l) if no Series of Notes is outstanding as of such Payment Date, the
excess of the amount in the Overcollateralization Subaccount over the
aggregate Required Overcollateralization Level will be released to the
Grantee or as it directs;

(m) if no Series of Notes is outstanding as of such Payment Date, the
excess of the amount in the Capital Subaccount over the aggregate Required
Capital Level will be released to the Grantee or as it directs;

(n) the balance, if any, will be allocated to the Reserve Subaccount
for distribution on subsequent Payment Dates; and

(o) following the repayment of all outstanding Series of Notes, the
balance, if any, will be released to the Trust.

If on any Payment Date funds on deposit in the General Subaccount are
insufficient to make the transfers contemplated by clauses (a) through (g)
above, the Indenture Trustee will (x) first, draw from amounts on deposit in the
Reserve Subaccount, (y) second, draw from amounts on deposit in the
Overcollateralization Subaccount, and (z) third, draw from amounts on deposit in
the Capital Subaccount, up to the amount of such shortfall, in order to make the
transfers described above. If amounts on deposit in the Capital Subaccount or
the Overcollateralization Subaccount are used to pay such amounts or make such
transfers, as the case may be, subsequent Adjustments shall take into account,
among other things, such amounts and on subsequent Payment Dates the Capital
Subaccount or the Overcollateralization Subaccount, as the case may be, will be
replenished to the extent IFC Collections exceed amounts required to pay amounts
having a higher priority of payment, as more fully described above. In addition,
if on any Payment Date funds on deposit in the General Subaccount are
insufficient to make the transfers described in clauses (i) and (j) above, the
Indenture Trustee will draw from amounts on deposit in the Reserve Subaccount to
make such transfers notwithstanding the fact that, on such Payment Date, the
allocation contemplated by clause (h) above may not have been fully satisfied.
If on any Payment Date when there is more than one Series of Notes outstanding,
funds on deposit in the Collection Account are insufficient to make the
transfers contemplated by clauses (e) and (f) above, such funds will be
allocated among the various Series and Classes pro rata, as specified in the
related Prospectus Supplement.

For purposes of the foregoing allocations:

"Quarterly Administration Fee" means the $25,000 fee payable
quarterly to ComEd (or any successor Administrator) as the Administrator
under the Administration Agreement among ComEd, the Grantee and the Trust.

"Quarterly Interest" means, with respect to any Payment Date and any
Series of Notes, the quarterly interest for such date and Series as
specified in the related Prospectus Supplement.

Payments to the Noteholders of a Series will be made to such holders as
specified in the related Prospectus Supplement.

STATE PLEDGE

The Funding Law provides: "The State [of Illinois] pledges to and agrees
with the holders of any transitional funding instruments who may enter into
contracts with an electric utility, grantee, assignee or issuer pursuant to this
Article XVIII [of the Act] that the State will not in any way limit, alter,
impair or reduce the value of intangible transition property created by, or
instrument funding charges approved by, a transitional funding order so as to
impair the terms of any contract made by such electric utility, grantee,
assignee or issuer

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with such holders or in any way impair the rights and remedies of such holders
until the pertinent grantee instruments or, if the related transitional funding
order does not provide for the issuance of grantee instruments, the pertinent
transitional funding instruments and interest, premium and other fees, costs and
charges related thereto, as the case may be, are fully paid and discharged.
Electric utilities, grantees and issuers are authorized to include these pledges
and agreements of the State in any contract with the holders of transitional
funding instruments or with any assignees pursuant to this Article XVIII [of the
Act] and any assignees are similarly authorized to include these pledges and
agreements of the State [of Illinois] in any contract with any issuer, holder or
any other assignee. Nothing in this Article XVIII [of the Act] shall preclude
the State of Illinois from requiring adjustments as may otherwise be allowed by
law to the electric utility's base rates, transition charges, delivery services
charges, or other charges for tariffed services, so long as any such adjustment
does not directly affect or impair any instrument funding charges previously
authorized by a transitional funding order issued by the [ICC]."

Each Transitional Funding Order will provide that the Noteholders and the
Indenture Trustee for the benefit of the Noteholders shall be entitled to the
benefit of the pledges and agreements of the State of Illinois set forth in
Section 18-105(b) of the Act and that each of ComEd, the Grantee and the Trust
is authorized to include such pledges and agreements in any contract with the
Noteholders, the Indenture Trustee or with any assignees pursuant to Section
18-105(b) of the Act. The Grantee will include these pledges and agreements of
the State of Illinois in each Sale Agreement to the Trust, and the Trust, in
turn, has included these pledges and agreements in the Indenture and the Notes
for the benefit of the Indenture Trustee and the Noteholders.

REPORTS TO NOTEHOLDERS

On or prior to each Payment Date, Special Payment Date or any other date
specified in the Indenture for payments with respect to any Class of Notes, the
Indenture Trustee will deliver to the Noteholders of such Class a statement with
respect to such payment to be made on such Payment Date, Special Payment Date or
other date, as the case may be, setting forth the following information:

(a) the amount of the payment to Noteholders allocable to (i)
principal and (ii) interest;

(b) the aggregate outstanding principal balance of the Notes, after
giving effect to payments allocated to principal reported under (a) above;
and

(c) the difference, if any, between the amount specified in (b)
above and the principal amount scheduled to be outstanding on such date
according to the related Expected Amortization Schedule.

Within the prescribed period of time for tax reporting purposes after the end
of each calendar year during the term of the Notes, the Indenture Trustee will
mail to each person who at any time during such calendar year has been a
Noteholder and received any payment thereon, a statement containing certain
information for the purposes of such Noteholder's preparation of United States
federal and state income tax returns. See "Certain United States Federal Income
Tax Considerations."

SUPPLEMENTAL INDENTURES

The Trust and the Indenture Trustee may, from time to time, and without the
consent of the Noteholders of any Series, enter into one or more agreements
supplemental to the Indenture for various purposes described in the Indenture,
including (1) to add to the covenants for the benefit of the Noteholders; (2) to
cure any ambiguity or correct or supplement any provision in the Indenture or in
any supplemental indenture which may be inconsistent with any other provision in
the Indenture or in any supplemental indenture or to make any other provisions
with respect to matters or questions arising under the Indenture; provided that
any such action shall not adversely affect the interests of the Noteholders; (3)
to evidence the succession of another person to the Trust or the Indenture
Trustee in accordance with the terms of the Indenture; (4) to effect
qualification under the Trust Indenture Act of 1939, as amended; or (5) to set
forth the terms of any additional Series of Notes or to provide for the terms of
any Swap Agreement.

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In addition, the Trust and the Indenture Trustee will, with the consent of
Noteholders holding not less than a majority of the aggregate outstanding
principal amount of the Notes of all affected Series or Classes, enter into one
or more indentures supplemental to the Indenture for the purpose of, among other
things, adding any provisions to or changing in any manner or eliminating any of
the provisions of the Indenture. No such supplement, however, may, without the
consent of each Noteholder of each Series or Class affected thereby, take
certain actions enumerated in the Indenture, including (a) reduce in any manner
the amount of, or delay the timing of, deposits or payments on any Note, (b)
reduce the aforesaid percentage of the aggregate outstanding principal amount of
the Notes the holders of which are required to consent to any such supplement,
(c) modify the provisions in the Indenture relating to amendments with the
consent of Noteholders to decrease any minimum percentage of Noteholders
required to approve such amendments, or (d) cause any material adverse federal
income tax consequences to ComEd, the Grantee, the Trust, the Delaware Trustee,
the Indenture Trustee or the then existing Noteholders. Promptly following the
execution of any such supplement to the Indenture, the Indenture Trustee will
furnish written notice of the substance of such supplement to each Noteholder.

Any supplement to the Indenture or trustee's issuance certificate executed in
connection with the issuance of one or more additional Series of Notes will not
be considered an amendment to the Indenture.

CERTAIN COVENANTS OF THE DELAWARE TRUSTEE AND THE TRUST

The Trust may not consolidate with or merge into any other entity, unless (a)
the entity formed by or surviving such consolidation or merger is organized
under the laws of the United States, any state thereof or the District of
Columbia, (b) such entity expressly assumes by an indenture supplemental to the
Indenture the Trust's obligation to make due and punctual payments upon the
Notes and the performance or observance of every agreement and covenant of the
Trust under the Indenture, (c) no Default (as defined in the Indenture) or Event
of Default will have occurred and be continuing immediately after such merger or
consolidation, (d) the Rating Agency Condition will have been satisfied with
respect to such transaction, (e) ComEd shall have delivered to the Grantee, the
Trust, the Delaware Trustee and the Indenture Trustee an opinion of independent
tax counsel (as selected by, and in form and substance reasonably satisfactory
to, ComEd, and which may be based on a ruling from the IRS) to the effect that
such consolidation or merger will not result in a material adverse federal
income tax consequence to ComEd, the Grantee, the Trust, the Delaware Trustee,
the Indenture Trustee or the then existing Noteholders and such consolidation or
merger complies with the Indenture, (f) the Trust shall have delivered to the
Indenture Trustee an officer's certificate and an opinion of counsel, each
stating that all conditions precedent in the Indenture provided for relating to
such transaction have been complied with and (g) any action as is necessary to
maintain the lien and security interest created by the Indenture will have been
taken.

The Trust may not sell, convey, exchange or transfer or otherwise dispose of
any of the properties or assets of the Trust to any person or entity, unless (a)
the person or entity acquiring the properties and assets (i) is a United States
citizen or an entity organized under the laws of the United States, any state
thereof or the District of Columbia, (ii) expressly assumes by an indenture
supplemental to the Indenture the Trust's obligation to make due and punctual
payments upon the Notes and the performance or observance of every agreement and
covenant of the Trust under the Notes, (iii) expressly agrees by such
supplemental indenture that all right, title and interest so conveyed or
transferred will be subject and subordinate to the rights of Noteholders, (iv)
unless otherwise specified in the supplemental indenture referred to in clause
(ii) above, expressly agrees to indemnify, defend and hold harmless the Trust
against and from any loss, liability or expense arising under or related to the
Indenture and the Notes, and (v) expressly agrees by means of such supplemental
indenture that such person (or if a group of persons, then one specified person)
shall make all filings with the Commission (and any other appropriate person)
required by the Exchange Act in connection with the Notes, (b) no Event of
Default will have occurred and be continuing immediately after such transaction,
(c) the Rating Agency Condition will have been satisfied with respect to such
transaction, (d) ComEd shall have delivered to the Grantee, the Trust, the
Delaware Trustee and the Indenture Trustee an opinion of independent tax counsel
(as selected by, and in form and substance reasonably satisfactory to, ComEd,
and which may be based on a ruling from the IRS) to the effect that such
disposition will not result in a material adverse federal income tax consequence
to ComEd, the Grantee, the Trust, the Delaware Trustee, the Indenture Trustee or
the then existing Noteholders, (e) the Trust shall have

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delivered to the Indenture Trustee an officer's certificate and an opinion of
counsel, each stating that such conveyance or transfer complies with the
Indenture and all conditions precedent therein provided for relating to such
transaction have been complied with and (f) any action as is necessary to
maintain the lien and security interest created by the Indenture shall have been
taken.

The Trust will not, among other things, for so long as any Notes are
outstanding, (a) except as expressly permitted by the Indenture, sell, transfer,
exchange or otherwise dispose of any of the assets of the Trust, unless directed
to do so by the Indenture Trustee, (b) claim any credit on, or make any
deduction from the principal or interest payable in respect of, the Notes (other
than amounts properly withheld under the Code) or assert any claim against any
present or former Noteholder because of the payment of taxes levied or assessed
upon any part of the Intangible Transition Property and the other Note
Collateral, (c) to the extent permitted by applicable law, terminate the
existence of, or dissolve or liquidate in whole or in part, the Trust, (d)
permit the validity or effectiveness of the Indenture to be impaired, (e) permit
the lien of the Indenture to be amended, hypothecated, subordinated, terminated
or discharged or permit any person to be released from any covenants or
obligations with respect to the Notes except as may be expressly permitted by
the Indenture, (f) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance, other than the lien and security interest granted
under the Indenture, to be created on or extend to or otherwise arise upon or
burden the Note Collateral or any part thereof or any interest therein or the
proceeds thereof (other than tax liens arising by operation of law with respect
to amounts not yet due) or (g) permit the lien granted under the Indenture not
to constitute a valid first priority security interest in the Note Collateral.

The Trust may not engage in any business other than financing, purchasing,
owning and managing the Intangible Transition Property and the other Note
Collateral and the issuance of the Notes in the manner contemplated by the
Notes, the Sale Agreements, the Servicing Agreement, the Trust Agreement, the
Grant Agreements, or certain related documents (collectively, the "Basic
Documents") and activities incidental thereto.

The Trust will not issue, incur, assume, guarantee or otherwise become liable
for any indebtedness except for the Notes.

The Trust will not, except as contemplated by the Basic Documents, make any
loan or advance or credit to, or guarantee, endorse or otherwise become
contingently liable in connection with the obligations, stocks or dividends of,
or own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other person. The Trust will not, except as
contemplated by the Basic Documents, make any expenditure (by long-term or
operating lease or otherwise) for capital assets (either realty or personalty).
The Trust will not, directly or indirectly, make payments to or distributions
from the Collection Account except in accordance with the Basic Documents.

The Trust will not make any payments, distributions or dividends to any
holder of beneficial interests in the Trust in respect of such beneficial
interest for any calendar month unless no Event of Default shall have occurred
and be continuing and any such distributions do not cause the book value of the
remaining equity in the Trust to decline below 0.50 percent of the initial
principal amount of all Series of Notes issued and outstanding pursuant to the
Indenture.

The Delaware Trustee will cause the Servicer to deliver to the Indenture
Trustee the annual accountant's certificates, compliance certificates, reports
regarding distributions and statements to Noteholders required by the Servicing
Agreement.

EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT

An "Event of Default" with respect to any Series of Notes is defined in the
Indenture as being: (a) a default for five days in the payment of any interest
on any Note; (b) a default in the payment of the then unpaid principal of any
Note on the Final Maturity Date; (c) a default in the payment of the optional
redemption price for any Note on the optional redemption date therefor; (d) a
default in the observance or performance in any material respect of any covenant
or agreement of the Trust made in the Indenture (other than a default under
clauses (a) through (c) above) and the continuation of any such default for a
period of 30 days after notice thereof is given to

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the Trust by the Indenture Trustee or to the Trust and the Indenture Trustee by
the holders of at least 25 percent in principal amount of the Notes of such
Series then outstanding; (e) any representation or warranty made by the Trust in
the Indenture or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect in a material respect as of the time made, and
such breach not having been cured within 30 days after notice thereof is given
to the Trust by the Indenture Trustee or to the Trust and the Indenture Trustee
by the holders of at least 25 percent in principal amount of the Indenture of
such Series then outstanding; (f) certain events of bankruptcy, insolvency,
receivership or liquidation of the Trust; (g) a breach by the State of Illinois
or any of its agencies (including the ICC), officers or employees of the State
Pledge; or (h) any other event designated as such in a trustee's issuance
certificate or series supplement relating to such Series.

If an Event of Default (other than as specified in clause (g) above) should
occur and be continuing with respect to any Series of Notes, the Indenture
Trustee or holders of not less than a majority in principal amount of the Notes
of all Series then outstanding may declare the principal of the Notes of all
Series to be immediately due and payable. Such declaration may, under certain
circumstances set forth in the Indenture, be rescinded by the holders of a
majority in principal amount of the Notes of all Series then outstanding. If an
Event of Default as specified in clause (g) above has occurred, then, as the
sole and exclusive remedy for such breach, the Servicer shall be obligated to
institute (and the Indenture Trustee, for the benefit of the Noteholders, shall
be entitled and empowered to institute) any suits, actions or proceedings at
law, in equity or otherwise, to enforce the State Pledge and to collect any
monetary damages as a result of a breach thereof, and each of the Servicer and
the Indenture Trustee may prosecute any such suit, action or proceeding to final
judgment or decree. The Servicer would be required to advance its own funds in
order to bring any such suits, actions or proceedings and, for so long as such
legal actions were pending, the Servicer would, unless otherwise prohibited by
applicable law or court or regulatory order in effect at such time, be required
to bill and collect the IFC Charges, perform Adjustments and discharge its
obligations under the Servicing Agreement. The Servicer would be entitled to
reimbursement of its expenses advanced by it in connection with such legal or
administrative action as an operating expense of the Trust under the Indenture.

If the Notes of all Series have been declared to be due and payable following
an Event of Default, the Indenture Trustee may, in its discretion, either sell
the Intangible Transition Property or elect to have the Trust maintain
possession of the Intangible Transition Property and continue to apply IFC
Collections as if there had been no declaration of acceleration. There is likely
to be a limited market, if any, for the Intangible Transition Property following
a foreclosure thereon, in light of the preceding default, the unique nature of
the Intangible Transition Property as an asset and other factors discussed
herein. In addition, the Indenture Trustee is prohibited from selling the
Intangible Transition Property following an Event of Default with respect to any
Series, other than a default in the payment of any principal or redemption price
or a default for five days or more in the payment of any interest on any Note of
any Series unless (a) the holders of all the outstanding Notes of all Series
consent to such sale, (b) the proceeds of such sale are sufficient to pay in
full the principal of and the accrued interest on the outstanding Notes of all
Series or (c) the Indenture Trustee determines that the proceeds of the Note
Collateral would not be sufficient on an ongoing basis to make all payments on
the Notes of all Series as such payments would have become due if the Notes had
not been declared due and payable, and the Indenture Trustee obtains the consent
of the holders of 66-2/3 percent of the aggregate outstanding amount of the
Notes of all Series.

Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing, the
Indenture Trustee will be under no obligation to exercise any of the rights or
powers under the Notes at the request or direction of any of the holders of
Notes of any Series if the Indenture Trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities which might
be incurred by it in complying with such request. Subject to such provisions for
indemnification and certain limitations contained in the Indenture, the holders
of not less than a majority in principal amount of the outstanding Notes of all
Series (or, if less than all Series or Classes are affected, the affected
Series, Class or Classes) will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee and the holders of not less than a majority in principal amount of the
Notes of all Series then outstanding may, in certain cases, waive any default
with respect thereto, except a default in the

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payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the consent of all of
the holders of the outstanding Notes of all Series or Classes affected thereby.

With respect to the Notes, no holder of any Note of any Series will have the
right to institute any proceeding with respect to the Notes, unless (a) such
holder previously has given to the Indenture Trustee written notice of a
continuing Event of Default with respect to such Series, (b) the holders of not
less than 25 percent in principal amount of the outstanding Notes of all Series
have made written request of the Indenture Trustee to institute such proceeding
in its own name as Indenture Trustee, (c) such holder or holders have offered
the Indenture Trustee satisfactory indemnity, (d) the Indenture Trustee has for
60 days failed to institute such proceeding and (e) no direction inconsistent
with such written request has been given to the Indenture Trustee during such
60-day period by the holders of a majority in principal amount of the
outstanding Notes of all Series.

In addition, the Servicer will covenant that it will not, prior to the date
which is one year and one day after the termination of the Indenture, institute
against the Grantee, the Trust or the Delaware Trustee any bankruptcy,
reorganization or other proceeding under any Federal or state bankruptcy or
similar law, subject to the right of the ICC to order sequestration and payment
of revenues arising with respect to the Intangible Transition Property.

Neither the Delaware Trustee nor the Indenture Trustee in its individual
capacity, nor any holder of any ownership interest in the Trust, nor any of
their respective owners, beneficiaries, agents, officers, directors, employees,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the Notes of any Series or for the agreements of the Trust contained in the
Indenture.

ACTIONS BY NOTEHOLDERS

Subject to certain exceptions, the holders of not less than a majority of the
aggregate outstanding amount of the Notes of all Series (or, if less than all
Series or Classes are affected, the affected Series or Class or Classes) shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee, or exercising any trust or
power conferred on the Indenture Trustee under the Indenture; provided that: (1)
such direction shall not be in conflict with any rule of law or with the
Indenture and would not involve the Indenture Trustee in personal liability or
expense; (2) the Indenture Trustee shall not have determined that the action
might materially adversely affect the rights of any Noteholder not consenting to
such action; and (3) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee which is not inconsistent with such direction.
In circumstances under which the Indenture Trustee is required to seek
instructions from the holders of the Notes of any Class with respect to any such
action or vote, the Indenture Trustee will take such action or vote for or
against any proposal in proportion to the principal amount of the corresponding
Class, as applicable, of Notes taking the corresponding position.

ANNUAL COMPLIANCE STATEMENT

The Trust will be required to file annually with the Indenture Trustee and
the Rating Agencies a written statement as to the fulfillment of its obligations
under the Notes.

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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

The following discussion is a summary of certain United States federal
income and estate tax considerations relevant to the purchase, ownership and
disposition of the Notes by the beneficial owners thereof ("Noteholders").
The discussion is limited to Noteholders and, except as specifically
addressed herein, does not address the tax consequences to subsequent
purchasers of Notes. This summary does not purport to be a complete analysis
of all the potential United States federal income and estate tax effects
relating to the purchase, ownership and disposition of the Notes. There can
be no assurance that the IRS will take a similar view of such consequences.
Further, the discussion does not address all aspects of taxation that might
be relevant to particular purchasers in light of their individual
circumstances (including the effect of any state, local, non-United States or
other tax laws) or to certain types of purchasers (including dealers in
securities, insurance companies, financial institutions and tax-exempt
entities) subject to special treatment under United States federal tax law.

The discussion below is based on the Code, administrative pronouncements,
judicial decisions, existing, proposed and temporary United States Treasury
Regulations, all in effect as of the date hereof, all of which are subject to
change at anytime, and any such change may be applied retroactively. Because
individual circumstances may differ, each prospective purchaser of a Note is
strongly urged to consult its own tax advisor with respect to its particular tax
situation and the particular tax effects of any state, local, non-United States
or other tax laws and possible changes in the tax laws. The discussion below
assumes that the Notes are held as capital assets within the meaning of Section
1221 of the Code.

PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR TAX ADVISORS
WITH REGARD TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME AND ESTATE
TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES TO THEM
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-UNITED STATES TAXING
JURISDICTION.

With respect to each Series of Notes, ComEd expects to receive a ruling from
the IRS to the effect that, among other things, (a) the Trust's issuance and
sale of the Notes and the transfer of the Note proceeds to ComEd will not result
in gross income to the Grantee, the Trust or ComEd and (b) because neither the
Trust nor the Grantee will elect to be classified as an association taxable as a
corporation for federal income tax purposes, the Notes will constitute
obligations of ComEd. For a given Series of Notes, however, ComEd may decide
that, in lieu of obtaining a ruling from the IRS, ComEd will rely on an opinion
from its tax counsel to the effect that, among other things, the Notes will
constitute obligations of ComEd. The IRS ruling or the tax opinion will be
discussed in the related Prospectus Supplement. The following discussion
assumes that, based on such ruling or tax opinion, the Notes will constitute
indebtedness of ComEd for federal income and estate tax purposes.

TAX CONSEQUENCES TO UNITED STATES NOTEHOLDERS

UNITED STATES NOTEHOLDER

As used herein, the term "United States Noteholder" means a Noteholder who or
which is, for United States federal income tax purposes, (a) a citizen or
resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any State
thereof (including the District of Columbia) or (c) an estate or trust described
in Section 7701(a)(30) of the Code. The term also includes certain Noteholders
who are former citizens or residents of the United States whose income and gain
from the Notes will be subject to United States taxation.

PAYMENTS OF INTEREST

Interest paid on a Note will generally be taxable to a United States
Noteholder as ordinary interest income at the time it accrues or is received in
accordance with the United States Noteholder's method of accounting for United
States federal income tax purposes. The preceding sentence assumes that, in the
case of Floating Rate Notes, the Floating Rate Notes will qualify as "variable
rate debt instruments" as defined in Treasury Regulation Section 1.1275-5(a) and
that interest on such Floating Rate Notes will be unconditionally payable, or
will be constructively received under Section 451 of the Code, in cash or in
property at least annually at a single

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"qualified floating rate" or "objective rate". If such assumption is incorrect
with respect to a Floating Rate Note, the taxation of interest on such Floating
Rate Note will be addressed in the related Prospectus Supplement.

"ORIGINAL ISSUE DISCOUNT"

Because it is expected that the stated principal amount of the Notes will not
exceed the issue price of such Notes by more than a statutory DE MINIMIS amount
(I.E., 0.25% of the principal amount of a Note multiplied by the weighted
average maturity of such Note), the Notes should not be issued with "original
issue discount." Any amount by which the issue price to the public of a Series
or Class of Notes is less than the stated principal amount of the Notes by such
DE MINIMIS amount will be taken into income by a United States Noteholder as
gain from the retirement of a Note (as described below under "--Sale, Exchanges,
Redemption or Retirement of the Notes"), in proportion to principal payments
made on the Notes, subject to special rules for taxpayers making certain
elections otherwise.

MARKET DISCOUNT AND PREMIUM

A Noteholder attempting to sell a Note in the secondary market should be
aware that a subsequent Noteholder who purchases a Note at a discount might be
subject to the "market discount" rules of the Code. Also, a subsequent
Noteholder who purchases a Note at a premium may elect to amortize and deduct
the premium over the remaining term of the Note in accordance with rules set
forth in Section 171 of the Code.

SALE, EXCHANGES, REDEMPTION OR RETIREMENT OF THE NOTES

Upon the sale, exchange, redemption or retirement of a Note, a United States
Noteholder will recognize taxable gain or loss equal to the difference between
the amount realized on such sale, exchange, redemption or retirement (not
including any amount attributable to accrued but unpaid interest) and such
Noteholder's adjusted tax basis in the Note. To the extent the amount realized
is attributable to accrued but unpaid interest, the amount recognized by the
United States Noteholder will be treated as a payment of interest. See "--
Payments of Interest" above. A United States Noteholder's adjusted tax basis in
a Note generally will equal the cost of the Note to such Noteholder, reduced by
any principal payments received by such Noteholder.

Gain or loss recognized on the sale, exchange, redemption or retirement of a
Note will be capital gain or loss. For non-corporate taxpayers, capital gain
recognized on the disposition of an asset (including a Note) held for more than
one year is subject to United States federal income tax at a maximum rate of 20%
(recently enacted legislation eliminated the long-term capital gain tax rate
differential between capital assets held for more than 18 months and capital
assets held for more than one year but not more than 18 months). Capital gain
on the disposition of an asset (including a Note) held for not more than one
year is taxed at the rates applicable to ordinary income (i.e., up to 39.6%).
The distinction between capital gain or loss and ordinary income or loss is
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.

TAX CONSEQUENCES TO NON-UNITED STATES NOTEHOLDERS

Under present United States federal income and estate tax law, and subject to
the discussion below concerning backup withholding:

(a) payments of principal and interest (including original issue
discount, if any) on a Note by the Trust or any paying agent to a
Noteholder that is not a United States Noteholder, as defined above
(hereinafter, "Non-United States Noteholder"), will not be subject to
withholding of United States federal income tax, provided that, in the case
of interest, (i) such Noteholder does not own, actually or constructively,
10 percent or more of the total combined voting power of all classes of
stock of ComEd entitled to vote, (ii) such Noteholder is not, for United
States federal income tax purposes, a controlled foreign corporation
related, directly or indirectly, to ComEd through stock ownership, (iii)
such Noteholder is not a bank receiving interest described in
Section 881(c)(3)(A) of the Code, and (iv) the certification requirements
under Section 871(h) or Section 881(c) of the Code and Treasury Regulations
thereunder (summarized below) are met;

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(b) a Non-United States Noteholder will not be subject to United
States federal income tax on gain recognized on the sale, exchange,
redemption, retirement or other disposition of such Note, unless (i) such
Noteholder is a non-resident alien individual who is present in the United
States for 183 days or more in the taxable year of disposition, and certain
conditions are met or (ii) such gain is effectively connected with the
conduct by such Noteholder of a trade or business in the United States; and

(c) a Note held by an individual who is not a citizen or resident
(as defined for United States federal estate tax purposes) of the United
States at the time of his death will not be subject to United States
federal estate tax as a result of such individual's death, provided that,
at the time of such individual's death, (i) the individual does not own,
actually or constructively, 10 percent or more of the total combined voting
power of all classes of stock of ComEd entitled to vote and (ii) payments
with respect to such Note, if received at the time of the individual's
death, would not have been effectively connected with the conduct by such
individual of a trade or business in the United States.

Sections 871(h) and 881(c) of the Code and United States Treasury Regulations
thereunder require that, in order to obtain the exemption from withholding tax
described in paragraph (a) above, either (a) the beneficial owner of a Note must
certify, under penalties of perjury, to the Trust or paying agent, as the case
may be, that such owner is a Non-United States Noteholder and must provide such
owner's name and address, or (b) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution") and holds the Note
on behalf of the beneficial owner thereof must certify, under penalties of
perjury, to the Trust or paying agent, as the case may be, that such certificate
has been received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and must furnish the payor with a copy
thereof. A certificate described in this paragraph is effective only with
respect to payments of interest made to the certifying Non-United States
Noteholder after issuance of the certificate in the calendar year of its
issuance and the two immediately succeeding calendar years. Under temporary
United States Treasury Regulations, the foregoing certification may be provided
by the beneficial owner of a Note on IRS Form W-8.

Notwithstanding the foregoing, interest described in Section 871(h)(4) of the
Code is subject to United States withholding tax at a 30% rate (or such lower
rate as may be provided by an applicable treaty). In general, interest
described in Section 871(h)(4) of the Code includes (subject to certain
exceptions) any interest, the amount of which is determined by reference to
receipts, sales or other cash flow of the issuer or a related person, any income
or profits of the issuer or a related person, any change in the value of any
property of the issuer or a related person or any dividends, partnership
distribution or similar payments made by the issuer or a related person.
Interest described in Section 871(h)(4) of the Code may include other types of
contingent interest identified by the IRS in future Treasury Regulations. The
Trust does not currently expect to issue Notes, the interest on which is
described in Section 871(h)(4) of the Code. However, if such Notes are issued,
the taxation of such Notes will be addressed in the related Prospectus
Supplement.

On October 14, 1997, the IRS published in the Federal Register final
Regulations (the "1997 Final Regulations") which affect the United States
taxation of Non-United States Noteholders. As promulgated, the 1997 Final
Regulations will be effective for payments after December 31, 1998, regardless
of the issue date of the instrument with respect to which such payments are
made, subject to certain transition rules. The IRS thereafter announced its
intention to amend the 1997 Final Regulations to extend this date to December
31, 1999, subject to certain transition rules. The discussion under this
heading and under "--Backup Withholding and Information Reporting," below, is
not intended to be a complete discussion of the provisions of the 1997 Final
Regulations or the subsequent IRS announcement, and prospective purchasers of
the Notes are urged to consult their tax advisors concerning the tax
consequences of their acquiring, holding and disposing of the Notes in light of
the 1997 Final Regulations.

The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one

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or more beneficial owners (or other intermediaries) without having to obtain the
beneficial owner certificate described above. "Qualified intermediaries"
include: (a) foreign financial institutions or foreign clearing organizations
(other than a United States branch or United States office of such institution
or organization) or (b) foreign branches or offices of United States financial
institutions or foreign branches or offices of United States clearing
organizations, which, as to both (a) and (b), have entered into withholding
agreements with the IRS. In addition to certain other requirements, qualified
intermediaries must obtain withholding certificates, such as revised IRS Form
W-8 (see below), from each beneficial owner. Under another option, an
authorized foreign agent of a United States withholding agent will be permitted
to act on behalf of the United States withholding agent, provided certain
conditions are met.

For purposes of the certification requirements, the 1997 Final Regulations
generally treat, as the beneficial owners of payments on a Note, those persons
that, under United States tax principles, are the taxpayers with respect to such
payments, rather than persons such as nominees or agents legally entitled to
such payments. In the case of payments to an entity classified as a foreign
partnership under United States tax principles, the partners, rather than the
partnership, generally will be required to provide the required certifications
to qualify for the withholding exemption described above. A payment to a United
States partnership, however, is treated for these purposes as payment to a
United States payee, even if the partnership has one or more foreign partners.
The 1997 Final Regulations provide certain presumptions with respect to
withholding for Noteholders not furnishing the required certifications to
qualify for the withholding exemption described above. In addition, the 1997
Final Regulations will replace a number of current tax certification forms
(including IRS Form W-8 and IRS Form 4224, discussed below) with a single,
revised IRS Form W-8 (which, in certain circumstances, requires information in
addition to that previously required). Under the 1997 Final Regulations, this
Form W-8 will remain valid until the last day of the third calendar year
following the year in which the certificate is signed. The 1997 Final
Regulations contained detailed rules, which might be changed in light of the
recent IRS announcement that the effective date will be postponed, governing tax
certifications during the transition period prior to and immediately following
the effectiveness of the 1997 Final Regulations.

If a Non-United States Noteholder is engaged in a trade or business in the
United States, and if interest on the Note, or gain recognized on the sale,
exchange, redemption, retirement or other disposition of a Note, is effectively
connected with the conduct of such trade or business, the Non-United States
Noteholder, although exempt from withholding of United States income tax, will
generally be subject to regular United States income tax on such interest or
gain in the same manner as if it were a United States Noteholder. See "--Tax
Consequences to United States Noteholders" above. In lieu of the certificate
described above, such a Noteholder must provide to the withholding agent a
properly executed IRS Form 4224 (or successor form) in order to claim an
exemption from withholding. In addition, if such Non-United States Noteholder
is a foreign corporation, it may be subject to a branch profits tax equal to 30%
(or such lower rate provided by an applicable treaty) of its effectively
connected earnings and profits for the taxable year, subject to certain
adjustments. For purposes of the branch profits tax, interest on, and any gain
recognized on the sale, exchange, redemption, retirement or other disposition
of, a Note will be included in the effectively connected earnings and profits of
such Non-United States Noteholder if such interest or gain is effectively
connected with the conduct by the Non-United States Noteholder of a trade or
business in the United States.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Under current United States federal income tax law, a 31% backup withholding
tax and information reporting requirements apply to certain payments of
principal and interest made to, and to the proceeds of sale before maturity by,
certain Noteholders.

In the case of a non-corporate United States Noteholder, backup withholding
will apply only if (a) such Noteholder fails to furnish its Taxpayer
Identification Number ("TIN") (which, for an individual, is his or her Social
Security number) to the payor in the manner required, (b) such Noteholder
furnishes an incorrect TIN and the payor is so notified by the IRS, (c) the
payor is notified by the IRS that such Noteholder has failed properly to report
payments of interest or dividends or (d) under certain circumstances, such
Noteholder fails to certify,

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under penalties of perjury, that it has furnished a correct TIN and has not been
notified by the IRS that it is subject to backup withholding for failure to
report interest or dividend payments. Backup withholding does not apply with
respect to payments made to certain exempt recipients, such as a corporation
(within the meaning of Section 7701(a) of the Code) and tax-exempt
organizations. United States Noteholders should consult their tax advisors
regarding their qualification for exemption from backup withholding and the
procedure for obtaining such an exemption if applicable.

The amount of any backup withholding from a payment to a United States
Noteholder will be allowed as a credit against such Noteholder's United States
federal income tax liability and may entitle such Noteholder to a refund,
provided that the required information is furnished to the IRS.

In the case of a Non-United States Noteholder, under currently applicable
United States Treasury Regulations, backup withholding and information reporting
will not apply to payments of principal or interest made by the Trust or any
paying agent thereof on a Note (absent actual knowledge that the Noteholder is a
United States Noteholder) if such Noteholder has provided the required
certification under penalties of perjury that it is not a United States
Noteholder (as defined above) or has otherwise established an exemption. If
such Noteholder does not provide the required certification, such Noteholder may
nevertheless avoid backup withholding or information reporting in the
circumstances described below, but might be subject to withholding of United
States federal income tax as described above under "--Tax Consequences to
Non-United States Noteholders."

Under currently applicable United States Treasury Regulations, if payments of
principal or interest are collected outside the United States by a foreign
office of a custodian, nominee or other agent acting on behalf of a beneficial
owner of a Note, such custodian, nominee or other agent will not be required to
apply backup withholding to such payments made to such beneficial owner, and
generally will not be subject to information reporting requirements. However,
if such custodian, nominee or other agent is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, information
reporting (but not backup withholding) will be required unless such custodian,
nominee or other agent has in its records documentary evidence that the
beneficial owner is not a United States Noteholder and certain other conditions
are met or the beneficial owner otherwise establishes an exemption.

Under currently applicable United States Treasury Regulations, payments on
the sale, exchange, redemption, retirement or other disposition of a Note made
to or through a foreign office of a broker generally will not be subject to
backup withholding, and generally will not be subject to information reporting
requirements. Such payments, however, will be subject to information reporting
(but not backup withholding) if the broker is, for United States federal income
tax purposes, a United States person, a controlled foreign corporation or a
foreign person 50% or more of whose gross income is effectively connected with a
United States trade or business for a specified three-year period, unless the
broker has in its records documentary evidence that the beneficial owner is not
a United States Noteholder and certain other conditions are met or the
beneficial owner otherwise establishes an exemption. Payments made to or
through the United States office of a broker will be subject to backup
withholding and information reporting unless the Non-United States Noteholder
certifies, under penalties of perjury, that it is not a United States person or
otherwise establishes an exemption.

In general, the 1997 Final Regulations do not significantly alter the
substantive backup withholding and information reporting requirements described
above. As under current law, backup withholding and information reporting will
not apply to (a) payments to a Non-United States Noteholder of principal and
interest and (b) payments to a Non-United States Noteholder on the sale,
exchange, redemption, retirement or other disposition of a Note, in each case if
such Non-United States Noteholder provides the required certification to
establish an exemption from the withholding of United States federal income tax
or otherwise establishes an exemption. Similarly, even if a Non-United States
Noteholder does not provide such certification or otherwise establish an
exemption, unless the payor has actual knowledge that the payee is a United
States Noteholder, backup withholding will not apply to (a) payments of

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interest made outside the United States to certain offshore accounts and (b)
payments on the sale, exchange, redemption, retirement or other disposition of a
Note effected outside the United States. However, information reporting (but
not backup withholding) will apply to (a) payments of interest made by a payor
outside the United States and (b) payments on the sale, exchange, redemption,
retirement or other disposition of a Note effected outside the United States if
payment is made by a broker that is, for United States federal income tax
purposes, (i) a United States person, (ii) a controlled foreign corporation,
(iii) a United States branch of a foreign bank or foreign insurance company,
(iv) a foreign partnership controlled by United States persons or engaged in a
United States trade or business or (v) a foreign person 50% or more of whose
gross income is effectively connected with the conduct of a United States trade
or business for a specified three-year period, in each case unless such payor or
broker has in its records documentary evidence that the beneficial owner is not
a United States Noteholder and certain other conditions are met or the
beneficial owner otherwise establishes an exemption (in which case neither
information reporting nor backup withholding will apply). As noted above, the
IRS has announced that the 1997 Final Regulations will be amended to be
effective generally for payments after December 31, 1999, subject to certain
transition rules.

Non-United States Noteholders should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of an exemption therefrom, and the procedure for
obtaining such an exemption, if available. Any amounts withheld from a payment
to a Non-United States Noteholder under the backup withholding rules will be
allowed as a credit against such Noteholder's United States federal income tax
liability and may entitle such Noteholder to a refund, provided that the
required information is furnished to the IRS.

THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND MAY NOT BE
APPLICABLE DEPENDING UPON A NOTEHOLDER'S PARTICULAR SITUATION. PROSPECTIVE
NOTEHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER FEDERAL, STATE, LOCAL, NON-UNITED STATES
AND OTHER TAX LAWS AND THE EFFECTS OF CHANGES IN SUCH LAWS.

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ERISA CONSIDERATIONS

ERISA and/or Section 4975 of the Code impose certain requirements on employee
benefit plans and certain other plans and arrangements, including individual
retirement accounts and annuities, Keogh plans and certain collective investment
funds or insurance company general or separate accounts in which such plans,
accounts or arrangements are invested, that are subject to the fiduciary
responsibility and prohibited transaction provisions of ERISA and/or
Section 4975 of the Code (collectively, "Plans"), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of assets
that are treated as "plan assets" of any Plan for purposes of applying Title I
of ERISA and Section 4975 of the Code ("Plan Assets"). ERISA imposes on Plan
fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
Generally, any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to Plan Assets for a fee or other consideration, is a
fiduciary with respect to such Plan Assets.

ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons who have certain specified relationships to a
Plan or its Plan Assets ("parties in interest" under ERISA and "disqualified
persons" under the Code (collectively, "Parties in Interest")), unless a
statutory or administrative exemption is available. Parties in Interest and Plan
fiduciaries that participate in a prohibited transaction may be subject to
penalties imposed under ERISA and/or excise taxes imposed pursuant to Section
4975 of the Code, unless a statutory or administrative exemption is available.
These prohibited transactions generally are set forth in Section 406 of ERISA
and Section 4975 of the Code.

Certain transactions involving the purchase, holding or transfer of the Notes
might be deemed to constitute prohibited transactions under ERISA and/or Section
4975 of the Code if assets of the Trust were deemed to be Plan Assets.
Regulations issued by the United States Department of Labor, set forth in 29
C.F.R. Section 2510.3-101 (the "Plan Asset Regulations"), provide rules
regarding when assets of an entity, such as the Trust, would be treated as Plan
Assets. Under those rules, the assets of the Trust would be treated as Plan
Assets of a Plan for the purposes of ERISA and Section 4975 of the Code only if
the Plan acquires an equity interest in the Trust and none of the exceptions
contained in the Plan Asset Regulations is applicable. An equity interest is
defined under the Plan Asset Regulations as an interest in an entity other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. Although there is no authority
directly on point, it is anticipated that the Notes should be treated as
indebtedness under local law without any substantial equity features for
purposes of the Plan Asset Regulations. Accordingly, the assets of the Trust
should not be treated as Plan Assets.

Without regard to whether the Notes are treated as an equity interest for
such purposes, the acquisition or holding of Notes by or on behalf of a Plan or
with Plan Assets could be considered to give rise to a prohibited transaction if
ComEd, the Trust, the Indenture Trustee, the Delaware Trustee, the Grantee, the
Administrator, the Servicer, any swap counterparty, any Underwriter or any of
their respective affiliates is or becomes a Party in Interest with respect to
such Plan. In this event, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and circumstances of the
fiduciary making the decision to acquire Notes. Included among these exemptions
are Prohibited Transaction Class Exemption ("PTCE") 75-1, which exempts certain
transactions involving Plans and certain broker-dealers, reporting dealers and
banks, PTCE 90-1, which exempts certain transactions between insurance company
separate accounts and Parties in Interest, PTCE 91-38, which exempts certain
transactions between bank collective investment funds and Parties in Interest,
PTCE 84-14, which exempts certain transactions effected on behalf of a Plan by a
"qualified professional asset manager", PTCE 95-60, which exempts certain
transactions between insurance company general accounts and Parties in Interest
and PTCE 96-23, which exempts certain transactions effected on behalf of a Plan
by an "in-house asset manager" (collectively, the "Exemptions"). Even if the
conditions specified in one or more of the Exemptions are met, the scope of the
relief provided by the Exemptions might or might not cover all acts which might
be construed as prohibited transactions.

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Nevertheless, a Plan generally should not purchase Notes if ComEd, the
Indenture Trustee, the Delaware Trustee, the Grantee, the Administrator, the
Servicer, any swap counterparty, any Underwriter or any of their respective
affiliates either (a) has investment discretion with respect to the investment
of assets of such Plan; (b) has authority or responsibility to give or regularly
gives investment advice with respect to assets of such Plan for a fee and
pursuant to an agreement or understanding that such advice will serve as a
primary basis for investment decisions with respect to such assets and that such
advice will be based on the particular investment needs of such Plan; or (c) is
an employer maintaining or contributing to such Plan. A party that is described
in clause (a) or (b) of the preceding sentence is a fiduciary under ERISA with
respect to the Plan, and any such purchase might result in a "prohibited
transaction" under ERISA or the Code for which no exemption may be available.

ANY FIDUCIARY OR OTHER PLAN INVESTOR CONSIDERING WHETHER TO PURCHASE THE
NOTES OF ANY CLASS OR SERIES ON BEHALF OR WITH PLAN ASSETS OF ANY PLAN SHOULD
CONSULT WITH ITS LEGAL ADVISORS.

Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA), are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, except as provided in the applicable Prospectus Supplement,
assets of such plans may be invested in the Notes of any Class or Series without
regard to the ERISA considerations described herein, subject to the provisions
of other applicable federal and state law. However, any such plan that is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code
is subject to the prohibited transaction rules set forth in Section 503 of the
Code.

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USE OF PROCEEDS

The Trust will pay over the proceeds received from each sale of a Series of
Notes (net of the expenses of issuance and amounts required to fund the Capital
Subaccount) to the Grantee as the consideration for the Grantee's assignment of
its ownership rights in the related Intangible Transition Property and Related
Assets (as defined in the Basic Documents) to the Trust. The Grantee will
declare distributions to its sole member, ComEd, in the amount of the proceeds
received from the Trust net of the expenses of issuance and amounts required to
fund the Capital Subaccount and thereby transfer such proceeds to ComEd in
consideration for ComEd's request in each application for a Transitional Funding
Order that the related Intangible Transition Property be granted to and vested
in the Grantee.

Subject to the limitations on the use of proceeds described in "Description
of the Intangible Transition Property--Limitations on the Amounts of
Transitional Funding Instruments, Intangible Transition Property and Instrument
Funding Charges Which Can Be Authorized; Permitted Uses of Proceeds," ComEd
anticipates using the aggregate net proceeds which it receives from the Grantee
to redeem, retire or refinance mortgage bonds and notes, together with certain
premia anticipated in connection with such redemptions, to redeem preference
stock and securities, to repurchase common equity from its parent company,
including commissions in connection with such repurchases, and to pay any
transaction costs incurred in connection with such redemptions, retirements,
refinancings and repurchases. ComEd's parent company will use the proceeds it
receives from any repurchase of ComEd common equity to repurchase the parent
company's publicly-traded common stock, including payment of commissions
thereon.

PLAN OF DISTRIBUTION

The Notes of each Series may be sold to or through underwriters named in the
related Prospectus Supplement (the "Underwriters") by a negotiated firm
commitment underwriting and public reoffering by the Underwriters or such other
underwriting arrangement as may be specified in the related Prospectus
Supplement or may be offered or placed either directly or through agents. The
Grantee and the Trust intend that Notes will be offered through such various
methods from time to time and that offerings may be made concurrently through
more than one of such methods or that an offering of a particular Series of
Notes may be made through a combination of such methods.

The distribution of Notes may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or in negotiated transactions or otherwise at varying prices to be
determined at the time of sale.

In connection with the sale of the Notes, Underwriters or agents may receive
compensation in the form of discounts, concessions or commissions. Underwriters
may sell Notes to certain dealers at prices less a concession. Underwriters may
allow and such dealers may reallow a concession to certain other dealers.
Underwriters, dealers and agents that participate in the distribution of the
Notes of a Series may be deemed to be underwriters and any discounts or
commissions received by them from the Trust and any profit on the resale of the
Notes by them may be deemed to be underwriting discounts and commissions under
the Securities Act. Any such Underwriters or agents will be identified, and any
such compensation received from the Trust will be described in the related
Prospectus Supplement.

Under agreements which may be entered into by the Grantee and the Trust,
Underwriters and agents who participate in the distribution of the Notes may be
entitled to indemnification by the Grantee and ComEd and against certain
liabilities, including liabilities under the Securities Act.

The Underwriters may, from time to time, buy and sell Notes, but there can be
no assurance that an active secondary market will develop and there is no
assurance that any such market, if established, will continue.

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RATINGS

It is a condition of issuance of each Class of Notes that at the time of
issuance such Class receive the rating indicated in the related Prospectus
Supplement, which will be in one of the four highest categories, from at least
one Rating Agency.

A security rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time by the assigning Rating
Agency. No person is obligated to maintain the rating on any Note, and,
accordingly, there can be no assurance that the ratings assigned to any Class of
Notes upon initial issuance will not be lowered or withdrawn by a Rating Agency
at any time thereafter. If a rating of any Class of Notes is revised or
withdrawn, the liquidity of such Class of Notes may be adversely affected. In
general, ratings address credit risk and do not represent any assessment of the
rate of principal payments on the Notes.

LEGAL MATTERS

Certain legal matters relating to the Notes and certain United States federal
income tax consequences of the issuance of the Notes will be passed upon by
Sidley & Austin, counsel to ComEd, the Grantee and the Trust. Certain legal
matters relating to the Notes will be passed upon by Richards, Layton & Finger,
special Delaware counsel to the Trust, and by Winston & Strawn, Chicago,
Illinois, counsel to the Underwriters. Winston & Strawn acts from time to time
as counsel to ComEd and its affiliates in certain matters unrelated to the
offering of the Notes.

EXPERTS

The financial statements included in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.

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INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>

DEFINED
DEFINED TERM ON PAGE
- ------------ -------
<S> <C>
1997 Final Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 105

Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16, 54
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . .10
Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Amendatory Tariff. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Annual Accountant's Report . . . . . . . . . . . . . . . . . . . . . . . .81
Applicable Rates . . . . . . . . . . . . . . . . . . . . . . . . . . .14, 52

Basic Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Beneficiary Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Billing Period . . . . . . . . . . . . . . . . . . . . . . . . . . . .23, 79
Book-Entry Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

Capital Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . .20, 94
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
CEDEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
CEDEL Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
ComEd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 8
Cooperative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Daily Remittance Date. . . . . . . . . . . . . . . . . . . . . . . . .22, 79
Debt Service Billing Requirement . . . . . . . . . . . . . . . . . . . . .55
Debt Service Requirement . . . . . . . . . . . . . . . . . . . . . . . . .55
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90
Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
Downgrade Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 27

Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . .95
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . .95
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Euroclear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . .89
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 100
Excess Remittance. . . . . . . . . . . . . . . . . . . . . . . . . . .23, 79
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Excluded Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . .14, 53
Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

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DEFINED
DEFINED TERM ON PAGE
- ------------ -------

Expected Amortization Schedule . . . . . . . . . . . . . . . . . . . . . .18

FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Final Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . .18, 85
Financial Institution. . . . . . . . . . . . . . . . . . . . . . . . . . 105
Floating Rate Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Funding Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

General Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . .20, 94
Grant Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Grant Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Grantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

ICC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
IFC Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
IFC Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
IFC Customer Class . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
IFC Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16, 52
IFC Tariff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11, 85
Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Indirect Participant . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Initial Intangible Transition Property . . . . . . . . . . . . . . . . . .55
Initial TFO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Intangible Transition Property . . . . . . . . . . . . . . . . . . . . . .16

Lost Revenue Recoveries. . . . . . . . . . . . . . . . . . . . . . . . . .79

Monthly IFC Amount . . . . . . . . . . . . . . . . . . . . . . . . . .22, 78
Monthly Servicer's Statement . . . . . . . . . . . . . . . . . . . . . . .81
Moody's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

New Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20, 91
Non-United States Noteholder . . . . . . . . . . . . . . . . . . . . . . 104
Note Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
Note Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 103

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Overcollateralization Amount . . . . . . . . . . . . . . . . . . . . .21, 95
Overcollateralization Subaccount . . . . . . . . . . . . . . . . . . .20, 94

Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Plan Asset Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 109
Plan Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
PTCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Quarterly Administration Fee . . . . . . . . . . . . . . . . . . . . .24, 97

114
<PAGE>

DEFINED
DEFINED TERM ON PAGE
- ------------ -------

Quarterly Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .97

Rating Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Rating Agency Condition. . . . . . . . . . . . . . . . . . . . . . . . . .85
Reconciled Billing Period. . . . . . . . . . . . . . . . . . . . . . .23, 79
Reconciliation Payment Date. . . . . . . . . . . . . . . . . . . . . .16, 54
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Redetermined IFC Payments. . . . . . . . . . . . . . . . . . . . . . .23, 79
Remittance Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . .40
Remittance Date. . . . . . . . . . . . . . . . . . . . . . . . . . . .22, 78
Remittance Shortfall . . . . . . . . . . . . . . . . . . . . . . . . .23, 79
Remitted IFC Payments. . . . . . . . . . . . . . . . . . . . . . . . .23, 79
Reporting Customer Class . . . . . . . . . . . . . . . . . . . . . . . . .68
Required Capital Level . . . . . . . . . . . . . . . . . . . . . . . .22, 96
Required Overcollateralization Level . . . . . . . . . . . . . . . . .21, 96
Reserve Subaccount . . . . . . . . . . . . . . . . . . . . . . . . . .20, 94
Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

S&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Sale Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Sale Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Scheduled Maturity Date. . . . . . . . . . . . . . . . . . . . . . . .18, 85
Scheduled Payment. . . . . . . . . . . . . . . . . . . . . . . . . . .19, 86
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Series Issuance Date . . . . . . . . . . . . . . . . . . . . . . . . .22, 78
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Servicer Business Day. . . . . . . . . . . . . . . . . . . . . . . . .23, 73
Servicer Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Servicing Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Servicing Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
State Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Subsequent Intangible Transition Property. . . . . . . . . . . . . . . . .56
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . .56
Successor Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
Swap Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 87

Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . .90
TIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Transitional Funding Order . . . . . . . . . . . . . . . . . . . . . . 8, 52
True-Up Payment Date . . . . . . . . . . . . . . . . . . . . . . . . .16, 54
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Unicom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
United States Noteholder . . . . . . . . . . . . . . . . . . . . . . . . 103
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

</TABLE>
115

<PAGE>

INDEX TO FINANCIAL STATEMENTS

Page
----
<S> <C>
FINANCIAL STATEMENTS:
Report of Independent Public Accountants . . . . . . . . . . . . . . . . .F-2
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . .F-3
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-4
Statement of Changes in Member's Equity. . . . . . . . . . . . . . . . . .F-5
Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . .F-6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . .F-7

</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Member of
ComEd Funding, LLC:

We have audited the accompanying balance sheet of ComEd Funding, LLC (a
special purpose Delaware limited liability company) as of July 31, 1998, and the
related statements of operations, changes in member's equity and cash flows for
the period from inception (July 21, 1998) to July 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We have conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ComEd Funding, LLC as of
July 31, 1998, and the results of its operations and its cash flows for the
period from inception (July 21, 1998) to July 31, 1998, in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
August 3, 1998

F-2

<PAGE>

COMED FUNDING, LLC

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM INCEPTION (JULY 21, 1998) TO JULY 31, 1998

<TABLE>
<S> <C>
Revenues $ -
------------

Expenses:
Administration and General $ 16,000
------------

Net Loss $(16,000)
------------
------------

</TABLE>

THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THIS STATEMENT.

F-3

<PAGE>

COMED FUNDING, LLC

BALANCE SHEET

JULY 31, 1998

ASSETS

<S> <C>
Accounts Receivable from Commonwealth Edison $ 1,000
--------

Total Assets $ 1,000
--------
--------

LIABILITIES AND MEMBER'S EQUITY

Member's Equity $ 1,000
--------

Total Liabilities and Member's Equity $ 1,000
--------
--------

</TABLE>

THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.

F-4

<PAGE>

COMED FUNDING, LLC

STATEMENT OF CHANGES IN MEMBER'S EQUITY

FOR THE PERIOD FROM INCEPTION (JULY 21, 1998) TO JULY 31, 1998

<TABLE>
<S> <C>
Member's Equity at Inception $ -

Add: Net Loss (16,000)
Contributed Equity 17,000
---------

Member's Equity at End of Period $ 1,000
---------
---------

</TABLE>

THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.

F-5

<PAGE>

COMED FUNDING, LLC

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM INCEPTION (JULY 21, 1998) TO JULY 31, 1998

<TABLE>
<S> <C>
Cash Flows From Operating Activities:
Net Loss $ (16,000)
Net Effect on Cash Flow of Change in Receivables (1,000)
---------------
$ (17,000)
---------------

Cash Flows From Investing Activities:
Equity Contribution in ComEd Transitional Funding Trust $ -
---------------

Cash Flows From Financing Activities:
Equity Contribution from Commonwealth Edison Company $ 17,000
---------------

Net Increase/(Decrease) in Cash $ -
Cash at Inception -
---------------
Cash at End of Period $ -
---------------
---------------

</TABLE>

THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.

F-6

<PAGE>

COMED FUNDING, LLC

NOTES TO FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

The financial statements include the accounts of ComEd Funding, LLC (CE
Funding), a special purpose Delaware limited liability company, whose sole
member is Commonwealth Edison Company (ComEd). ComEd, the principal
subsidiary of Unicom Corporation (Unicom), is engaged in the production,
purchase, transmission, distribution and sale of electricity to a diverse
base of customers. CE Funding was formed on July 21, 1998, for the
exclusive purposes of (i) initially owning the "intangible transition
property" (described below), (ii) assigning all of its right, title and
interest in the intangible transition property and the servicing agreement
to ComEd Transitional Funding Trust (Trust), and (iii) entering into the
servicing agreement with the servicer in respect to the intangible
transition property. The Trust is a special purpose Delaware business
trust which will issue Transitional Funding Trust Notes (Notes) secured by
the intangible transition property to investors and will remit the proceeds
to CE Funding in consideration for the transferring of its interest in the
intangible transition property. CE Funding, in turn, will remit the net
proceeds to ComEd in consideration for the intangible transition property
that will be vested in CE Funding. ComEd anticipates that the Notes will
be issued sometime in the fourth quarter of 1998.

CE Funding was organized solely to acquire, own, hold, administer, service
or enter into agreements regarding the receipt and servicing of intangible
transition property, along with certain other related assets. The Trust
will be organized with the sole purpose of limited business activities as
are necessary or reasonably related to the issuance of the Notes. CE
Funding and the Trust are structured and are to be operated in a manner
such that even in the event of bankruptcy proceedings against ComEd, the
assets of CE Funding and the Trust will not be consolidated into the
bankruptcy estate of ComEd.

The intangible transition property is the separate property right, as
created under the Transitional Funding Order issued by the Illinois
Commerce Commission on July 21, 1998, including, without limitation, the
right, title and interest to impose and receive instrument funding charges
(IFC). IFC's are non-bypassable, usage-based, per kilowatt-hour charges to
be imposed on designated consumers of electricity.

F-7

<PAGE>

COMED FUNDING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

(2) SUMMARY OF ACCOUNTING POLICIES

(a) GENERAL

CE Funding follows the accrual method of accounting. Administrative
and general expenses associated with CE Funding will be paid by
ComEd and have been recorded as member's equity.

(b) INVESTMENT IN THE TRUST

CE Funding will have an investment in and 100% ownership of the Trust.

As a limited liability company, the member intends for CE Funding to
be treated as a partnership for tax purposes. Income and losses are
passed through to the member and, accordingly, there is no
provision for income taxes.

(d) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.

(3) SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS

Notwithstanding the non-recourse nature of the transactions, ComEd
(individually, as Servicer or otherwise) will be required under the
transaction documents (i) to make certain representations and warranties
with respect to, among other things, the validity of CE Funding's and its
assignees' title to the intangible transition property and (ii) to observe
certain covenants for the benefit of CE Funding and its assignees. ComEd
will also be required to indemnify CE Funding and its assignees against any
breaches of such representations, warranties and covenants and to protect
such parties against certain other losses, which result from actions or
inactions of ComEd.

ComEd will act as the initial servicer (in such capacity, together with any
successor-in-interest, the "Servicer") for CE Funding under the transaction
documents. CE

F-8

<PAGE>

COMED FUNDING, LLC

NOTES TO FINANCIAL STATEMENTS (Concluded)

Funding's rights under the Servicing Agreement will be assigned to the
Trust. The transaction documents will contain provisions allowing the
Servicer to be replaced under limited circumstances. The Servicer will be
paid a servicing fee in consideration for billing and collecting the IFCs
on behalf of the Trust, calculating the reconciliation and true-up
adjustments and performing related services. Such servicing fees shall be
paid to the Servicer from the IFC collections.

F-9

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF INSURANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
Securities and Exchange Commission filing fee . . . $295
Blue sky fees and expenses . . . . . . . . . . . . *
Printing and engraving expenses . . . . . . . . . . *
Accountants' fees and expenses . . . . . . . . . . *
Trustees' fees and expenses . . . . . . . . . . . . *
Legal fees and expenses . . . . . . . . . . . . . . *
Rating Agency fees . . . . . . . . . . . . . . . . *
Miscellaneous fees and expenses . . . . . . . . . *
---------
Total . . . . . . . . . . . . . . . $ *
---------
---------
</TABLE>

- --------------------------
All of the fees, costs and expenses set forth above will be paid by the Trust.
*To be provided by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Title 12, Section 3817 of the Delaware Code (the "Delaware Act") provides
that subject to such standards and restrictions, if any, as are set forth in its
governing instrument, a Delaware Business Trust may and has the power to
indemnify and hold harmless any trustee or beneficial owner or other person from
and against any and all claims and demands. The Delaware Act also provides that
the absence of a provision for indemnity in the governing instrument of a
business trust shall not be construed to deprive any trustee or beneficial owner
or other person of any right to indemnity which is otherwise available to such
person under the laws of the State of Delaware.

Section 6.07 of the Indenture provides that the Trust shall indemnify the
Indenture Trustee and its officers, directors, employees and agents against any
loss, liability or expense incurred by it in connection with the administration
of the trust and the performance of its duties under the Indenture, except for
any loss, liability or expense incurred as a result of the Indenture Trustee's
own willful misconduct, negligence or bad faith.

Section 18-108 of the Delaware Limited Liability Company Act provides that
subject to such standards and restrictions, if any, as are set forth in its
limited liability company agreement, a limited liability company may and has the
power to indemnify and hold harmless any member or other person from and against
any and all claims and demands whatsoever. Section 10.1 of the Limited
Liability Company Agreement of the Grantee provides that the Grantee shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Grantee) by reason of the fact that he is or was a manager,
officer, employee or agent of the Grantee, or is or was serving at the request
of the Grantee as a manager, director, officer, employee or agent of another
company, partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Grantee, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.

II-1
<PAGE>

Certain provisions of the Illinois Business Corporation Act of 1983 (the
"BCA") provide that the sole member of the Grantee, Commonwealth Edison Company
("ComEd") may, and in some circumstances must, indemnify the directors and
officers of ComEd and of each subsidiary company against liabilities and
expenses incurred by any such person by reason of the fact that such person was
serving in such capacity, subject to certain limitations and conditions set
forth in the statute. ComEd's By-laws provide that ComEd will indemnify its
directors and officers, and any person serving as a director or officer of
another business entity at ComEd's request, to the extent permitted by the
statute. In addition, ComEd's Restated Articles of Incorporation provide, as
permitted by the BCA, that directors shall not be personally liable for monetary
damages for breach of fiduciary duty as a director, except (i) for breaches of
their duty of loyalty to ComEd or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law (iii) under Section 8.65 of the BCA, and (iv) for transactions from which
a director derived an improper personal benefit.

ComEd has purchased liability insurance policies which indemnify ComEd's
directors and officers, the directors and officers of subsidiaries of ComEd, the
trustees of the Service Annuity Funds, and officers of ComEd serving as
directors and officers on behalf of ComEd with certain other entities, against
loss arising from claims by reason of their legal liability for acts as such
directors, officers or trustees, subject to certain limitations and conditions
set forth in the policies.

ComEd indemnifies assistant officers and certain other employees against
liabilities and expenses incurred by reason of acts performed in connection with
the operations of the various employee benefit systems of ComEd and its
subsidiaries.

The indemnification provided by the Delaware Code, the Delaware Limited
Liability Company Act, the Grantee's Limited Liability Company Agreement and the
Indenture is not exclusive of any other rights to which the Delaware Trustee,
the Indenture Trustee, the members and managers of the Grantee, the officers and
directors of ComEd and any beneficial owner of the Trust may be entitled.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<S> <C>
*1.1 Form of Underwriting Agreement.
3.1 Certificate of Formation of the Registrant.
3.2 Limited Liability Company Agreement of the Registrant.
4.1 Form of Trust Agreement
4.2 Form of Transitional Funding Trust Note
4.3 Form of Indenture
*5.1 Opinion of Sidley & Austin
10.1 Form of Sale Agreement
10.2 Form of Grant Agreement
10.3 Form of Servicing Agreement
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<S> <C>
10.4 Form of Administration Agreement
*23.1 Consent of Sidley & Austin (included in Exhibit 5.1).
*23.2 Consent of Arthur Andersen, LLP
25 Form T-1
99.1 Application for Transitional Funding Order
99.2 Transitional Funding Order
</TABLE>

*To be filed by amendment.

ITEM 17. UNDERTAKINGS.

The Registrant, on behalf of the ComEd Transitional Funding Trust (the
"Trust") hereby undertakes as follows:

(a)(1) To do, or, pursuant to the Administration Agreement, to cause
Commonwealth Edison Corporation (the "Administrator") to do the following: (i)
to file, during any period in which offers or sales are being made, a post-
effective amendment to this Registration Statement; (ii) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (iii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement (Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of a prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum offering price set
forth in the "Calculation of Registration Fee" table in the effective
Registration Statement); and (iv) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that (a)(1)(ii) and (a)(1)(iii) will not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering hereof.

(3) To remove, or to cause Administrator to remove, from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.

(b) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Trust's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934), with respect to the Trust that is incorporated
by reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities to be offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

II-3
<PAGE>

(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to the Delaware Trustee, the Indenture
Trustee, the managers and members of the Grantee and the directors and officers
of the Administrator pursuant to the provisions described in Item 15 above, or
otherwise, the Registrant, the Grantee and the Administrator have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Delaware Trustee, Indenture Trustee, the
managers or members of the Grantee, or the directors or officers of the
Administrator in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of each issue.

(d) That, for purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(i) or
(4) or 497(h) under the Securities Act of 1933, as amended, shall be deemed to
be part of this Registration Statement as of the time it was declared effective.

(e) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act of 1939, as amended, in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Trust Indenture Act of 1939, as amended.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on this 7th day of
August, 1998.

COMED FUNDING, LLC

By: COMMONWEALTH EDISON COMPANY

Its: Sole Member

By: /s/ Ruth Ann M. Gillis
-------------------------------------
Ruth Ann M. Gillis, Vice President

II-5
<PAGE>

EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
Exhibit PAGE
Number EXHIBIT DESCRIPTION NUMBER
------ ------------------- --------
<S> <C> <C>
*1.1 Form of Underwriting Agreement.

3.1 Certificate of Formation of the Registrant.

3.2 Limited Liability Company Agreement of the Registrant.

4.1 Form of Trust Agreement

4.2 Form of Transitional Funding Trust Note

4.3 Form of Indenture

*5.1 Opinion of Sidley & Austin

10.1 Form of Sale Agreement

10.2 Form of Grant Agreement

10.3 Form of Servicing Agreement

10.4 Form of Administration Agreement

*23.1 Consent of Sidley & Austin (included in Exhibit 5.1).

*23.2 Consent of Arthur Andersen, LLP

25. Form T-1

99.1 Application for Transitional Funding Order

99.2 Transitional Funding Order

</TABLE>

*To be filed by amendment

II-6

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH THEY RELATE OR ANY OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
SUCH SECURITIES IN ANY JURISDICTIONS IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF COMED SINCE THE
DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

-------------------------

TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-3
Prospectus Supplement Summary. . . . . . . . . . . . . . . . . . . . . . .S-4
Description of the Offered Notes . . . . . . . . . . . . . . . . . . . . S-15
Description of the Intangible Transition Property. . . . . . . . . . . . S-19
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Servicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Certain United States Federal Tax Considerations . . . . . . . . . . . . S-21
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Index of Principal Definitions . . . . . . . . . . . . . . . . . . . . . S-25

PROSPECTUS
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Reports to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . .4
Prospectus Supplement. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Electric Industry Restructuring in Illinois. . . . . . . . . . . . . . . . 43
Description of the Intangible Transition Property. . . . . . . . . . . . . 48
Certain Payment, Weighted Average Life and
Yield Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 65
The Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
The Grantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Servicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . 85
Security for the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Certain United States Federal Tax Considerations . . . . . . . . . . . . .103
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . .109
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . .111
Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
Index of Principal Definitions . . . . . . . . . . . . . . . . . . . . . .113
Index of Financial Statements. . . . . . . . . . . . . . . . . . . . . . .F-1

</TABLE>

UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

$______________

COMMONWEALTH EDISON COMPANY
COMED TRANSITIONAL FUNDING TRUST

$____________
CLASS A-1
_____% TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998

$____________
CLASS A-2
_____% TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998

$____________
CLASS A-3
_____% TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998

$____________
CLASS A-4
_____% TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998

$____________
CLASS A-5
_____% TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998

$____________
CLASS A-6
_____% TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998

$____________
CLASS A-7
_____% TRANSITIONAL FUNDING TRUST NOTES, SERIES 1998

---------------------------

PROSPECTUS SUPPLEMENT

---------------------------

[UNDERWRITERS]

--------------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

EXHIBIT 3.1
CERTIFICATE
OF FORMATION

CERTIFICATE OF FORMATION
OF
COMED FUNDING, LLC
A DELAWARE LIMITED LIABILITY COMPANY

This CERTIFICATE OF FORMATION ("Certificate of Formation") of ComEd
Funding, LLC (the "Company"), is being duly executed and filed by Teresa W.
Harmon, as an authorized person, as of July 17, 1998, to form a limited
liability company under the Delaware Limited Liability Company Act (6 Del. C.
Sections 18-101 ET SEQ.) (the "Act").

ARTICLE I
NAME

The name of the Company is ComEd Funding, LLC.

ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT

The address of the registered office of the Company in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent at such
address is The Corporation Trust Company.

ARTICLE III
DURATION

The Company is to have perpetual duration, unless dissolved in
accordance with the LLC Agreement (as hereinafter defined).

<PAGE>

ARTICLE IV
BUSINESS AND PURPOSE

The purpose for which the Company is organized is limited solely to:

(a) acquire, own, hold, administer, service or enter into agreements
regarding the receipt and servicing of "intangible transition property" as
such term is defined in Article XVIII of the Illinois Public Utilities Act
as of the date hereof ("Intangible Transition Property"), which Article is
also known as the Electric Utility Transitional Funding Law of 1997, along
with certain other related assets;

(b) manage, sell, assign, pledge, collect amounts due on or otherwise
deal with the intangible transition property and related assets to be so
acquired in accordance with the terms of the "Sale Agreements" as defined
below;

(c) enter into, perform and comply with one or more sale agreements,
assignment agreements, or other agreements providing for the sale of the
aforementioned intangible transition property and related assets
(collectively, the "SALE AGREEMENTS") and to enter into, perform and comply
with such servicing agreements, interest rate swap agreements,
administration agreements, collection account agreements and other similar
agreements as may be necessary or desirable in connection with such Sale
Agreements;

(d) enter into, perform and comply with one or more declarations of
trust related to the creation of one or more Delaware business trusts to be
formed in connection with the transactions contemplated by the Sale
Agreements; and

(e) engage in any lawful act or activity and to exercise any powers
permitted to limited liability companies organized under the laws of the
State of Delaware that, in either case, are incidental to and necessary,
suitable or convenient for the accomplishment of the above-mentioned
purposes.

ARTICLE V
MEMBERS

The sole member of the Company is Commonwealth Edison Company, an
Illinois corporation (the "Member"). The admission of additional members shall
be accomplished only by the

2
<PAGE>

unanimous consent of the Management Committee (as hereinafter defined) unless
otherwise stated in the LLC Agreement.

ARTICLE VI
CONTINUATION OF BUSINESS

(a) In accordance with the LLC Agreement: (i) the Company shall not
be dissolved upon the resignation, expulsion or dissolution of the Independent
Manager or the Member, nor upon the occurrence of any Termination Event (as
hereinafter defined) with respect to the Independent Manager, the Member or any
affiliate of the Member, but the Member hereby agrees to continue the business
of the Company in each such instance; and (ii) the Company shall dissolve upon
the written direction of the Member, but only with the further unanimous consent
of the Management Committee (as provided in Article VII(c) hereof).
Notwithstanding Section 18-304 of the Act, the Member shall continue to be a
member of the Company upon the occurrence of any Termination Event.

(b) As used herein, "ComEd Affiliated Group" means the Member;
Unicom Corporation, an Illinois corporation and each affiliate of such companies
(other than the Company).

ARTICLE VII
MANAGEMENT OF BUSINESS

(a) The management of the Company shall be vested initially in the
Member. From and after the acquisition by the Company of Intangible Transition
Property, the management of the Company shall be vested entirely in the
Management Committee. The Management Committee shall have at all times during
its existence at least one manager who is an "Independent Manager" as defined
below.

(b) As used herein, the "Independent Manager" shall mean a natural
person who is familiar with and has experience with asset securitization and is
not at the time of appointment, has not been at any time preceding such
appointment and is not during the term of such appointment (other than as
incidental to such person's role as Independent Manager): (i) a member,
stockholder, partner, director, manager, officer or employee of any member of
the ComEd Affiliated Group; (ii) a customer, supplier or other person who
derives more than ten percent (10%) of its purchases or revenues from its
activities with the Company or any member of the ComEd Affiliated Group; or
(iii) a member of the family of any such member, stockholder, partner, director,
manager, officer, employee, customer or supplier.

(c) As used herein, "Management Committee" shall mean a committee
formed upon or prior to the acquisition by the Company of Intangible Transition
Property and composed of not less than three nor more than five individuals, at
least one of whom at all times must qualify as

3
<PAGE>

an Independent Manager. The Company shall be without authority to take the
actions specified herein as requiring the vote or consent of the Management
Committee absent the currently effective appointment of an Independent Manager
to the Management Committee.

(d) Notwithstanding any other provisions of this Certificate of
Formation or the LLC Agreement, the Company shall not:

(i) engage in any business or activity other than as set forth in
Article IV hereof;

(ii) without the affirmative vote of its Member and (at any time
after the formation of the Management Committee) the Management Committee,
(which vote must include the affirmative vote of the Independent Manager),
(A) dissolve or liquidate, in whole or in part, or institute proceedings to
be adjudicated bankrupt or insolvent, (B) consent to the institution of
bankruptcy or insolvency proceedings against it, (C) file a petition
seeking or consent to reorganization or relief under any applicable federal
or state law relating to bankruptcy, (D) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or a substantial part of its property, (E) make a
general assignment for the benefit of creditors, (F) admit in writing its
inability to pay its debts generally as they become due (each of the
foregoing an "Event of Bankruptcy" or a "Termination Event") or (G) take
any company action in furtherance of the actions set forth in clauses (A)
through (F) of this paragraph;

(iii) merge or consolidate with any other corporation, company, or
entity or, except to the extent permitted by each Sale Agreement, sell all
or substantially all of its assets or acquire all or substantially all of
the assets or capital stock or other ownership interest of any other
corporation, company or entity; or

(iv) incur any indebtedness or assume or guarantee any indebtedness
of any person (other than the indebtedness incurred under the Sale
Agreements).

To the fullest extent permitted by applicable law, including without limitation
Section 18-1101(c) of the Act, the fiduciary duty of each Manager, including the
Independent Manager, in respect of any decision on any matter referred to in
this Section (c) of Article VII shall be owed solely to the Company (including
its creditors) and not to the Member or any other holders of equity interest in
the Company as may exist at such time.

ARTICLE VIII
SEPARATENESS PROVISION

Notwithstanding anything herein to the contrary, the Company shall at
all times: (a) conduct its business from an office or offices that are separate
and distinct from those of the Member

4
<PAGE>

and each other member of the ComEd Affiliated Group even if such office space is
subleased from, or is on or near premises occupied by, the Member or any member
of the ComEd Affiliated Group; (b) maintain separate corporate records and books
of account from those of the Member and each member of the ComEd Affiliated
Group; (c) refrain from commingling its assets with those of the Member or any
member of the ComEd Affiliated Group (except as contemplated by any Sale
Agreement and any servicing or administration agreements entered into in
connection therewith); (d) pay each of its employees, consultants and agents
and all other operating expenses incurred by it from the assets of the Company,
as applicable; and (e) not hold itself out, or permit itself to be held out, as
having agreed to pay or as being liable for the debts of ComEd or any other
member of the ComEd Affiliated Group.

ARTICLE IX
LLC AGREEMENT

The power to alter, amend or repeal the Operating Agreement of the Company
(the "LLC Agreement"), shall be only on the consent of the Management Committee
(which consent must include the consent of the Independent Manager) or, prior to
the formation of the Management Committee, the Member.

The LLC Agreement of the Company shall be entered into on or before the
Company's acquisition of any Intangible Transition Property. Such LLC Agreement
shall provide for the government of the Company and may contain any provisions
or requirements for the management or conduct of the affairs and business of the
Company, provided the same are not inconsistent with the provisions of this
Certificate of Formation or contrary to the laws of the State of Delaware or of
the United States.

ARTICLE X
AMENDMENT OF CERTIFICATE OF FORMATION

The Company reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Formation in the manner now or
hereafter provided herein or by statute, and all rights, preferences and
privileges conferred by this Certificate of Formation upon members, directors or
any other person are granted subject to such right; PROVIDED, HOWEVER, that from
and after the acquisition by the Company of Intangible Transition Property, the
Company shall not amend, alter, change or repeal any provision of this Article X
or of Articles IV, VI, VII, VIII or IX of this Certificate of Formation (the
"RESTRICTED ARTICLES") without the unanimous affirmative vote of the Management
Committee, which vote must include the affirmative vote of the Independent
Manager; and PROVIDED, FURTHER, that the Company shall not amend or change any
provision of any Article other than the Restricted Articles so as to be
inconsistent with the Restricted Articles.

5
<PAGE>

IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the 17 day of July, 1998.

/s/ Teresa W. Harmon
------------------------------------
Name: Teresa W. Harmon
Authorized Person

<PAGE>

EXHIBIT 3.2
LIMITED
LIABILITY COMPANY
AGREEMENT

LIMITED LIABILITY COMPANY AGREEMENT
OF
COMED FUNDING, LLC
A DELAWARE LIMITED LIABILITY COMPANY

THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of ComEd
Funding, LLC, a Delaware limited liability company (the "Company"), is made and
entered into as of July 21, 1998, by and between the Company and Commonwealth
Edison Company, an Illinois corporation, as the sole member of the Company (the
"Sole Member"). Pursuant to Section 18-201(d) of the Act (as defined herein)
this Agreement shall be effective as of July 21, 1998.

WHEREAS, the Sole Member has caused to be filed a Certificate of
Formation with the Secretary of State of the State of Delaware (the "Secretary")
to organize the Company under and pursuant to the Act (as herein defined);

WHEREAS, upon the terms and subject to the conditions set forth
herein, the Sole Member is concurrently with the execution of this Agreement
acquiring a Membership Interest (as herein defined) in the Company; and

WHEREAS, in accordance with the Act, each of the Company and the Sole
Member desires to enter into this Agreement to set forth the respective rights,
powers and interests of the Sole Member with respect to the Company and its
Membership Interest therein and to provide for the management of the business
and operations of the Company.

NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the Sole
Member and the Company, intending to be legally bound, hereby agree as follows:

ARTICLE 1
DEFINITIONS

1.1 DEFINITIONS. Except as otherwise herein expressly provided,
the following terms and phrases shall have the meanings as set forth below:

<PAGE>

"ACT" shall mean the Delaware Limited Liability Act, 6 Del. C.
Sections 18-101 ET SEQ., as the same may hereafter be amended from time to time.

"AFFILIATE" shall mean, when used with reference to a specific
Person, any other Person that, directly or indirectly, through one or more
intermediaries, Controls, is Controlled by or is under common Control with such
specific Person.

"AGREEMENT" shall mean this instrument comprising the Limited
Liability Company Agreement of the Company, as amended, modified, supplemented
or restated from time to time in accordance with this Agreement.

"BASIC DOCUMENTS" shall mean all agreements, instruments and
other documents entered into from time to time by the Company in connection with
the acquisition and sale of intangible transition property under the Funding
Law, and the issuance of transitional funding instruments by the Company or by
any assign of such intangible transition property including, but not limited to,
any Agreement Relating to Grant of Intangible Transition Property, any
Intangible Transition Property Sale Agreement, the Intangible Transition
Property Servicing Agreement, any Declaration of Trust, the Administration
Agreement and all other documents and certificates delivered in connection
therewith.

"BUSINESS DAY" shall mean any day that is not a Saturday,
Sunday or a day on which banking institutions in the State of Illinois, the
State of New York or the Depository Trust Company are authorized or obligated by
law or executive order to close.

"CAPITAL CONTRIBUTION" shall mean, with respect to the Sole
Member, the amount of cash and the initial value of any Contributed Property
(net of liabilities to which such property is subject).

"CERTIFICATE" shall mean the Certificate of Formation of the
Company originally filed with the Secretary on July 21, 1998 as described in
Section 2.1, and as further amended, modified, supplemented, or restated from
time to time.

"COMPANY" shall have the meaning assigned to such term in the
preamble hereto.

"COMED AFFILIATED GROUP" shall mean the Sole Member, Unicom
Corporation, an Illinois corporation and any Affiliate of such companies (other
than the Company).

"CONTRIBUTED PROPERTY" shall mean any property or other
assets, in such form as may be permitted by the Act, but excluding cash,
contributed or deemed contributed to the Company with respect to the Membership
Interest held by the Sole Member.

2
<PAGE>

"CONTROL" shall mean any of the following: (a) in the case of
a corporation, ownership, directly or through ownership of other Entities, of at
least ten percent (10%) of all the voting stock (exclusive of stock which is
voting only as required by applicable law or in the event of nonpayment of
dividends and pays dividends only on a nonparticipating basis at a fixed or
floating rate); (b) in the case of any other Entity, ownership, directly or
through ownership of other Entities, of at least ten percent (10%) of all of the
beneficial equity interests therein, (calculated by a method that excludes from
equity interests, ownership interests that are nonvoting (except as required by
applicable law or in the event of nonpayment of dividends or distributions) and
pay dividends or distributions only on a non-participating basis at a fixed or
floating rate); (c) in any case, the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to select the managing
partner of a partnership, to select a manager of a limited liability company, or
otherwise to select, or have the power to remove and then select, a majority of
those Persons exercising governing authority over an Entity or to exercise
governing authority over an Entity; (d) in the case of a limited partnership,
being the sole general partner, any of the general partners to the extent each
has equal management control and authority, or the managing general partner or
managing general partners thereof; (e) in the case of a limited liability
company that has one or more managers, being a manager; or (f) in the case of a
trust, being trustee thereof or any Person having the right to select any such
trustee.

"ENTITY" shall mean any general partnership, limited
partnership, limited liability company, corporation, joint venture, foundation,
trust, business trust, real estate investment trust or association.

"EVENT OF BANKRUPTCY" shall mean, with respect to any Person,
that such Person shall (A) institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of such Person or a substantial part of
its property, (E) make a general assignment for the benefit of creditors or (F)
admit in writing its inability to pay its debts generally as they become due.

"FUNDING LAW" shall mean the Electric Utility Transitional
Funding Law of 1997, 220 ILCS 5/18-101 ET SEQ.

"GAAP" shall mean generally accepted accounting principles in
effect in the United States from time to time.

"INDEPENDENT MANAGER" shall mean a natural person who is
familiar with and has experience with asset securitization and is not at the
time of appointment, has not been at any time preceding such appointment and is
not during the term of such appointment (other than as incidental to such
person's role as Independent Manager): (i) a member, stockholder, partner,
director, manager, officer or employee of any member of the ComEd Affiliated
Group; (ii) a customer, supplier or other person who derives more than ten
percent (10%) of its purchases or revenues from its activities with

3
<PAGE>

the Company or any member of the ComEd Affiliated Group; or (iii) a member of
the family of any such member, stockholder, partner, director, manager, officer,
employee, customer or supplier.

"INTANGIBLE TRANSITION PROPERTY" shall have the meaning
specified in Section 2.3.

"MANAGEMENT AGREEMENT" shall mean the agreement of the members
of the Management Committee in the form attached hereto as Exhibit B. The
Management Agreement shall be deemed incorporated into, and part of, this
Agreement.

"MANAGEMENT COMMITTEE" shall mean a committee formed upon or
prior to the acquisition by the Company of Intangible Transition Property and
composed of not less than three nor more than five individuals, at least one of
whom at all times must qualify as an Independent Manager. The Company shall be
without authority to take the actions specified herein as requiring the vote or
consent of the Management Committee absent the currently effective appointment
of an Independent Manager to the Management Committee.

"MANAGER" shall mean a member of the Management Committee.

"MEMBER" shall mean a member of the Company.

"MEMBERSHIP INTEREST" shall mean, with respect to the Sole
Member, the limited liability company interest of the Sole Member in the
Company.

"NET CASH FLOWS" shall mean the excess of revenue over
expenses less any reserves the Management Committee considers appropriate or
necessary for the conduct of business.

"PERSON" shall mean any natural person or Entity.

"SALE AGREEMENTS" shall have the meaning specified in
Section 2.3.

"SECRETARY" shall have the meaning assigned to such term in
the first recital of this Agreement.

"SOLE MEMBER" shall have the meaning assigned to such term in
the preamble hereto.

4
<PAGE>

ARTICLE 2
FORMATION AND BUSINESS OF THE COMPANY

2.1 FORMATION. The Company has been organized as a Delaware
limited liability company under and pursuant to the Act by filing on July 21,
1998 a Certificate of Formation with the Secretary as required by the Act by
Teresa W. Harmon, as an authorized person under the Act. To the extent that the
rights or obligations of the Sole Member are different by reason of any
provision of this Agreement than they would be in the absence of such provision,
this Agreement shall, to the extent permitted by the Act, control.

2.2 NAME. The name of the Company shall be "ComEd Funding, LLC."
The business of the Company may be conducted under that name or, upon compliance
with applicable laws, any other name that the Sole Member deems appropriate or
advisable. The Sole Member shall cause to be filed any fictitious name
certificates and similar filings, and any amendments thereto that the Management
Committee considers appropriate or advisable.

2.3 PURPOSE. The purpose for which the Company is formed is
limited solely to:

(a) acquire, own, hold, administer, service or enter into
agreements regarding the receipt and servicing of "intangible transition
property" as such term is defined in the Funding Law as of the date hereof
("INTANGIBLE TRANSITION PROPERTY"), which Article is also known as the
Electric Utility Transitional Funding Law of 1997, along with certain other
related assets;

(b) manage, sell, assign, pledge, collect amounts due on or
otherwise deal with the intangible transition property and related assets
to be so acquired in accordance with the terms of the "Sale Agreements" as
defined below;

(c) enter into, perform and comply with one or more sale
agreements, assignment agreements, or other agreements providing for the
sale of the aforementioned intangible transition property and related
assets (collectively, the "SALE AGREEMENTS") and to enter into, perform and
comply with such servicing agreements, interest rate swap agreements,
administration agreements, collection account agreements and other similar
agreements as may be necessary or desirable in connection with such Sale
Agreements;

(d) enter into, perform and comply with one or more declarations
of trust related to the creation of one or more Delaware business trusts to
be formed in connection with the transactions contemplated by the Sale
Agreements; and

(e) engage in any lawful act or activity and to exercise any
powers permitted to limited liability companies formed under the laws of
the State of Delaware that, in either case, are incidental to and
necessary, suitable or convenient for the accomplishment of the
above-mentioned purposes.

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The Company shall not engage in any activity other than in connection with
the foregoing or other than as required or authorized by the terms of any Sale
Agreements or other agreement referenced above. The Company shall have all
powers reasonably necessary or convenient to effect the foregoing purposes,
including all powers granted under the Act. The Company, and the Sole Member or
any Manager, including the Independent Manager, on behalf of the Company, may
enter into and perform the Basic Documents and all documents, agreements,
certificates or financing statements contemplated thereby or related thereto,
all without any further act, vote or approval of any Member, Manager or other
person or entity, notwithstanding any other provision of this Agreement, the
Act, or other applicable law, rule or regulation. The authorization set forth
in the preceding sentence shall not be deemed a restriction on the power and
authority of the Sole Member or any Manager, including the Independent Manager,
to enter into other agreements or documents on behalf of the Company.

2.4 PRINCIPAL OFFICE. The location of the principal place of
business of the Company shall be at such location as shall be selected from time
to time by the Sole Member.

2.5 REGISTERED AGENT AND REGISTERED OFFICE. The registered agent
of the Company shall be the initial registered agent named in the Certificate or
such other Person or Persons as the Sole Member may designate from time to time
in the manner provided by the Act. The registered office of the Company
required by the Act to be maintained in the State of Delaware shall be the
initial registered office named in the Certificate or such other office (which
need not be a place of business of the Company) as the Sole Member may designate
from time to time in the manner provided by the Act.

2.6 SEPARATE EXISTENCE. The Company shall:

(i) Maintain in full effect its existence, rights and franchises
as a limited liability company under the laws of the State of Delaware and
obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement and each other instrument or
agreement necessary or appropriate to the proper administration hereof and
to permit and effectuate the undertakings contemplated hereby.

(ii) Maintain with commercial banking institutions its own deposit
account or accounts separate from those of any Affiliate of the ComEd
Affiliated Group.

(iii) Ensure that, to the extent that it shares the same officers or
other employees with its Sole Member or any Affiliate of the ComEd
Affiliated Group, the salaries of and the expenses related to providing
benefits to such officers and other employees shall be fairly allocated
among such entities, and each such entity shall bear its fair share of the
salary and benefit costs associated with all such common officers and
employees.

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(iv) Pay all of its operating expenses incurred by it from the
assets of the Company, and ensure that, to the extent that it jointly
contracts with its Sole Member or any Affiliate of the ComEd Affiliated
Group to do business with vendors or service providers or to share overhead
expenses, the costs incurred in so doing shall be allocated fairly among
such entities, and each such entity shall bear its fair share of such
costs.

(v) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its Sole
Member and any Affiliate of the ComEd Affiliated Group. To the extent that
the Company and its Sole Member or any Affiliate of the ComEd Affiliated
Group have offices in contiguous space, there shall be fair and appropriate
allocation of overhead costs among them, and each such entity shall bear
its fair share of such expenses.

(vi) Observe all necessary, appropriate and customary formalities,
including, but not limited to, holding all regular and special Members'
meetings, and meetings of the Company's Management Committee, appropriate
to authorize all action on behalf of the Company, keeping all resolutions
or consents necessary to authorize actions taken or to be taken, and
maintaining accurate and separate books, records and accounts, including,
but not limited to, payroll and intercompany transaction accounts.

(vii) At all times from and after the entry into any Sale Agreement
and the acquisition of any Intangible Transition Property, vest the
management of the Company in the Management Committee and ensure that its
Management Committee shall at all times include at least one Independent
Manager.

(viii) Refrain from commingling its assets with those of the Sole
Member or any member of the ComEd Affiliated Group (except as contemplated
by any Sale Agreement and any servicing or administration agreements
entered into in connection therewith).

(ix) Act solely in its own name and through its own authorized
managers and agents, and no Affiliate of the ComEd Affiliated Group shall
be appointed to act as agent of the Company, except as expressly
contemplated by the Basic Documents.

(x) Ensure that no Affiliate of the ComEd Affiliated Group shall
advance funds to the Company, or otherwise guaranty debts of, the Company,
except as provided in the Basic Documents; PROVIDED, HOWEVER, that any
Affiliate of the ComEd Affiliated Group may provide funds to the Company in
connection with the initial capitalization of the Company or as thereafter
permitted by the Basic Documents with any subsequent capitalization.

(xi) Not enter into any guaranty, or otherwise become liable, with
respect to any obligation of any Affiliate of the ComEd Affiliated Group
and not hold itself out, or permit itself to be held out, as having agreed
to pay or as being liable for the debts of ComEd or any other member of the
ComEd Affiliated Group.

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(xii) Comply with all restrictions on its business and operations as
set forth in the Section 2.3.

2.7 LIMITATION ON CERTAIN ACTIVITIES. Notwithstanding any other
provisions of this Agreement or the Certificate, the Company, and the Sole
Member or Management Committee on behalf of the Company, shall not:

(i) engage in any business or activity other than as set forth in
Article II hereof;

(ii) without the affirmative vote of its Sole Member and (at any
time after the formation of the Management Committee) the affirmative vote
of all of the Managers , initiate any Event of Bankruptcy with respect to
the Company or take any company action in furtherance of any such Event of
Bankruptcy;

(iv) incur any indebtedness or assume or guarantee any indebtedness
of any person (other than the indebtedness incurred under the Sale
Agreements); or

(v) to the fullest extent permitted by law, without the
affirmative vote of its Member and (at any time after the formation of the
Management Committee) the affirmative vote of all Managers, execute any
dissolution, liquidation, or winding up of the Company.

To the fullest extent permitted by applicable law, including without limitation
Section 18-1101(c) of the Act, the fiduciary duty of each Manager, including the
Independent Manager, in respect of any decision on any matter referred to in
this Section 2.7 shall be owed solely to the Company (including its creditors)
and not to the Sole Member or any other holders of equity interest in the
Company as may exist at such time.

2.8 NO STATE LAW PARTNERSHIP. No provisions of this Agreement
(including, without limitation, the provisions of Article 6) shall be deemed or
construed to constitute a partnership (including, without limitation, a limited
partnership) or joint venture, or the Sole Member a partner or joint venturer of
or with any Manager or the Company, for any purposes.

2.9 ADDRESS OF THE SOLE MEMBER. The address of the Sole Member is
set forth on EXHIBIT A, as amended from time to time, attached hereto and made a
part hereof.

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ARTICLE 3
TERM

3.1 COMMENCEMENT. The Company's term commenced upon the filing of
the Certificate with the Secretary on July 21, 1998.

3.2 CONTINUATION. Notwithstanding any provision of this Agreement,
the bankruptcy (as defined in Section 18-101(1) of the Act and including any
event described in Section 18-304 (a) of the Act) of the Sole Member will not
cause the Sole Member to cease to be a Member of the Company, and upon the
occurrence of such an event, the business of the Company shall continue without
dissolution. Notwithstanding any other provision of this Agreement, the Sole
Member waives any right it might have under Section 18-801 of the Act to agree
in writing to dissolve the Company upon the occurrence of the bankruptcy (as
defined in Section 18-101(1) of the Act and including any event described in
Section 18-304(a) of the Act) of the Member or the occurrence of any other event
which under the Act would otherwise cause the Sole Member to cease to be a
Member of the Company.

ARTICLE 4
CAPITAL CONTRIBUTIONS

4.1 CAPITAL CONTRIBUTION. The Sole Member has made an initial
capital contribution of $1,000. The Sole Member may be required or shall be
permitted to contribute additional Capital Contributions in cash or property to
the Company on such terms and conditions as may be agreed to by the Sole Member
from time to time. The amounts so contributed by the Sole Member shall be
credited to the Sole Member's capital account, as provided in Section 4.2 below.
The Sole Member shall have a Membership Interest of one hundred percent (100%)
of the Company.

4.2 CAPITAL ACCOUNT. The Company shall establish an individual
Capital Account for the Sole Member.

4.3 NO INTEREST ON OR RETURN OF CAPITAL CONTRIBUTION. The Sole
Member shall not be entitled to interest on its Capital Contribution or Capital
Account. Except as provided herein or by law, the Sole Member shall have no
right to demand or receive the return of its Capital Contribution.

ARTICLE 5
ALLOCATIONS; BOOKS

5.1 ALLOCATIONS OF INCOME AND LOSS.

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(a) BOOK ALLOCATIONS. The net income and net loss of the
Company shall be allocated entirely to the Sole Member.

(b) TAX ALLOCATIONS. Because the Company is not making (and
will not make) an election to be treated as an association taxable as a
corporation under Section 301.7701-3(a) of the U.S. Treasury Regulations, and
because the Company is a business entity that has a single owner and is not a
corporation, it shall be disregarded as an entity separate from its owner for
federal income tax purposes under Section 301.7701-3(b)(1) of the U.S. Treasury
Regulations. Accordingly, all items of income, gain, loss, deduction and credit
of the Company for all taxable periods will be treated for federal income tax
purposes, and for state and local income and other tax purposes to the extent
permitted by applicable law, as realized or incurred directly by the Sole
Member. To the extent not so permitted, all items of income, gain, loss,
deduction and credit of the Company shall be allocated entirely to the Sole
Member.

5.2 BOOKS OF ACCOUNT. At all times during the continuance of the
Company, the Company shall maintain or cause to be maintained full, true,
complete and correct books of account in accordance with GAAP, using the fiscal
year and taxable year of the Sole Member. In addition, the Company shall keep
all records required to be kept pursuant to the Act.

5.3 DISTRIBUTIONS. The Company may distribute all or any portion
of Net Cash Flows to the Sole Member upon the unanimous vote of the Management
Committee; provided that the Management Committee shall not authorize such
distributions more frequently than monthly. Notwithstanding any provision to
the contrary contained in this Agreement, the Company shall not be required to
make a distribution to any Member on account of its interest in the Company if
such distribution would violate Section 18-607 of the Act or any other
applicable law or any Basic Documents.

ARTICLE 6
MANAGEMENT OF THE COMPANY

6.1 MANAGEMENT OF COMPANY. At all times from and after the
Company's entry into any Sale Agreement or acquisition of any Intangible
Transition Property, the property and business of the Company shall be
controlled and managed by the Management Committee; PROVIDED, however, that
except as otherwise provided in this Agreement, the Sole Member acting alone can
bind or execute any instrument on behalf of the Company, and may sign all
checks, drafts, and other instruments obligating the Company to pay money.
Prior to the entry into any Sale Agreement and the acquisition of any Intangible
Transition Property, the Sole Member shall appoint an Independent Manager . In
the event that the Independent Manager withdraws, resigns or is removed as
Independent Manager, the Sole Member shall appoint, as soon as reasonably
practicable, a successor Independent Manager. The Company shall pay the
Independent Manager an annual fee of not less than $3,500 per year. Each
Manager, including the Independent Manager, is hereby deemed to be a "manager"
within the meaning of Section 18-101(10) of the Act.

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6.2 WITHDRAWAL OF MANAGER. Notwithstanding anything herein to the
contrary, the Independent Manager may not withdraw or resign as a Manager of the
Company without the consent of the Sole Member.

6.3 DUTIES OF MANAGERS. To the fullest extent permitted by
applicable law, including without limitation Section 18-1101(c) of the Act, the
fiduciary duty of each Manager, including the Independent Manager, in respect of
any decision on any matter referred to in Section 2.7 shall be owed solely to
the Company (including its creditors) and not to the Member or any other holders
of equity interest in the Company as may exist at such time. Each Manager
shall execute and deliver the Management Agreement.

6.4 REMOVAL OF MANAGERS. A Manager (including the Independent
Manager) may be removed at any time, with or without cause, upon the written
election of the Sole Member.

ARTICLE 7
DISSOLUTION, LIQUIDATION AND WINDING-UP

7.1 DISSOLUTION. The Company shall continue until dissolved and
terminated upon the occurrence of the earliest of the following events:

(a) the election to dissolve the Company made in writing by
the Sole Member and each Manager, including without limitation the Independent
Manager, as permitted by the Basic Documents;

(b) the sale or other disposition of all or substantially
all of the assets of the Company in accordance with the Basic Documents;

(c) the occurrence of any event that causes the last
remaining Member of the Company to cease to be a Member of the Company unless
the business of the Company is continued without dissolution in a manner
permitted by the Act; or

(d) the entry of a decree of judicial dissolution of the
Company pursuant to Section 18-802 of the Act.

7.2 ACCOUNTING. In the event of the dissolution, liquidation and
winding-up of the Company, a proper accounting shall be made of the Capital
Account of the Sole Member and of the net income or net loss of the Company from
the date of the last previous accounting to the date of dissolution.

7.3 CERTIFICATE OF CANCELLATION. As soon as possible following
the occurrence of any of the events specified in Section 7.1 and the completion
of the winding up of the Company, the person or entity winding up the business
and affairs of the Company shall cause to be executed

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a Certificate of Cancellation of the Certificate in such form as shall be
prescribed by the Secretary and file the Certificate of Cancellation of the
Certificate as required by the Act.

7.4 WINDING UP. Upon the occurrence of any event specified in
Section 7.1, the Company shall continue solely for the purpose of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the claims
of its creditors. The Sole Member shall be responsible for overseeing the
winding up and liquidation of the Company, shall take full account of the
liabilities of the Company and its assets, shall either cause its assets to be
sold or distributed, and if sold as promptly as is consistent with obtaining the
fair market value thereof, shall cause the proceeds therefrom, to the extent
sufficient therefor, to be applied and distributed as provided in Section 7.5.

7.4 ORDER OF PAYMENT OF LIABILITIES UPON DISSOLUTION. After
determining that all known debts and liabilities of the Company, including all
contingent, conditional or unmatured liabilities of the Company, in the process
of winding-up, including, without limitation, debts and liabilities to the Sole
Member in the event it is a creditor of the Company to the extent otherwise
permitted by law, have been paid or adequately provided for, the remaining
assets shall be distributed in cash or in kind to the Sole Member.

7.5 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Except as
otherwise specifically provided in this Agreement, the Sole Member shall only be
entitled to look solely to the assets of Company for the return of its positive
Capital Account balance and shall have no recourse for its Capital Contribution
and/or share of net income (upon dissolution or otherwise) against any of the
Independent Manager or the Management Committee.

7.6 LIMITATION ON LIABILITY. Except as otherwise provided by the
Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Member or Manager shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member or a Manager.

ARTICLE 8
TRANSFER AND ASSIGNMENT

8.1. TRANSFER OF MEMBERSHIP INTERESTS.

(a) The Sole Member may transfer its Membership Interest, but the
transferee shall not be admitted as a Member except in accordance with SECTION
8.2. Until the transferee is admitted as a Member, the Sole Member shall
continue to be the sole member of the Company and to be entitled to exercise any
rights or powers of a Member of the Company with respect to the Membership
Interest transferred.

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(b) Any purported transfer of any Membership Interest in violation of
the provisions of this Agreement shall be wholly void and shall not effectuate
the transfer contemplated thereby. Notwithstanding anything contained herein to
the contrary, the Sole Member may not transfer any Membership Interest in
violation of any provision of this Agreement or in violation of any applicable
Federal or state securities laws.

8.2. ADMISSION OF TRANSFEREE AS MEMBER. A transferee of a Membership
Interest desiring to be admitted as a Member must execute a counterpart of, or
an agreement adopting, this Agreement and shall not be admitted without the
unanimous affirmative vote of the Management Committee, which vote must include
the affirmative vote of the Independent Manager. Upon admission of the
transferee as a Member, the transferee shall have, to the extent of the
Membership Interest transferred, the rights and powers and shall be subject to
the restrictions and liabilities of the Sole Member under this Agreement and the
Act. The transferee shall also be liable, to the extent of the Membership
Interest transferred, for the unfulfilled obligations, if any, of the transferor
Member to make Capital Contributions, but shall not be obligated for liabilities
unknown to the transferee at the time such transferee was admitted as a Member
and that could not be ascertained from this Agreement. Whether or not the
transferee of a Membership Interest becomes a Member, the Sole Member is not
released from any liability to the Company under this Agreement or the Act.

ARTICLE 9
GENERAL PROVISIONS

9.1 NOTICES. All notices, offers or other communications required
or permitted to be given pursuant to this Agreement shall be in writing and may
be personally served or sent by United States mail and shall be deemed to have
been given when delivered in person or three business days after deposit in
United States mail, registered or certified, postage prepaid, and properly
addressed, by or to the appropriate party. For purposes of this Section 9.1,
the addresses of the parties hereto shall be as set forth on EXHIBIT A hereto.
The address of any party hereto may be changed by a notice in writing given in
accordance with the provisions of this Section 9.1.

9.2 CONTROLLING LAW. This Agreement and all questions relating to
its validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the State of Delaware,
notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary.

9.3 EXECUTION OF COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.

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9.4 SEVERABILITY. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

9.5 ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained.

9.6 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS.

(a) The power to alter, amend or repeal this Agreement shall be only
on the consent of the Sole Member, PROVIDED, that the Company shall not adopt a
new Limited Liability Company Agreement or alter, amend or repeal any provision
of Sections 2.3, 2.6, 2.7, 3.2, 6.2, 7.1, 8.2 , 9.6 and 9.11 of this Agreement
without the unanimous affirmative vote of the Management Committee, which vote
must include the affirmative vote of the Independent Manager.

(b) The Company's power to alter, amend or repeal the Certificate
shall be vested in the Sole Member; PROVIDED, that the Company shall not amend,
alter, change or repeal any provision of the Restricted Articles (as defined in
the Certificate) without the unanimous affirmative vote of the Management
Committee, which vote must include the affirmative vote of the Independent
Manager; and PROVIDED, FURTHER, that the Company shall not amend or change any
provision of any article of the Certificate other than the Restricted Articles
so as to be inconsistent with the Restricted Articles. Upon obtaining the
approval of any amendment, supplement or restatement as to the Certificate, the
Company shall cause a Certificate of Amendment or Amended and Restated
Certificate to be prepared, executed and filed in accordance with the Act.

9.7 PARAGRAPH HEADINGS. The paragraph headings in this Agreement
are for convenience and they form no part of this Agreement and shall not affect
its interpretation.

9.8 GENDER, ETC. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate. The term "including" shall mean
"including, but not limited to."

9.9 NUMBER OF DAYS. In computing the number of days (other than
Business Days) for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays and holidays; PROVIDED, HOWEVER, that if the final
day of any time period falls on a Saturday, Sunday or holiday on which national
banks are or may elect to be closed, then the final day shall be deemed to be
the next day which is not a Saturday, Sunday or such holiday.

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9.10 ASSURANCES. The Sole Member shall hereafter execute and
deliver such further instruments and do such further acts and things as may be
reasonably required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.

9.11 ENFORCEMENT BY INDEPENDENT MANAGER. Notwithstanding any other
provision of this Agreement, the Sole Member agrees that this Agreement,
(including without limitation, Sections 2.3, 2.6, 2.7, 3.2, 6.2, 7.1, 8.2, 9.6
and 9.11) constitutes a legal, valid and binding agreement of the Sole Member,
and is enforceable against the Sole Member by the Independent Manager in
accordance with its terms. The Independent Manager is an intended beneficiary
of this Agreement.

ARTICLE 10
INDEMNIFICATION

10.1 INDEMNIFICATION. Subject to Section 10.3 of this Article, the
Company shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Company) by reason of the fact that he is or was a
manager, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a manager, director, officer, employee or agent of
another company, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

10.2 INDEMNIFICATION FOR SUITS BY OR IN RIGHT OF COMPANY. Subject to
Section 10.3 of this Article, the Company shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that he is or was a manager, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a manager, director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of

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Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

10.3 AUTHORIZATION. Any indemnification under this Article (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the manager, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 10.1 or Section 10.2, of
this Article, as the case may be. Such determination shall be made (i) by
independent legal counsel in a written opinion or (ii) by the Sole Member. To
the extent, however, that a manager, officer, employee or agent of the Company
has been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.

10.4 GOOD FAITH. For purposes of any determination under Section
10.3 of this Article, a person shall be deemed to have acted in good faith and
in a manner he/she reasonably believed to be in or not opposed to the best
interests of the Company, or, with respect to any criminal action or proceeding,
to have had no reasonable cause to believe his/her conduct was unlawful, if the
action is based on the records or books of account of the Company or another
enterprise, or on information supplied to him by the officers of the Company or
another enterprise in the course of their duties, or on the advice of legal
counsel for the Company or another enterprise or on information or records given
or reports made to the Company or another enterprise by an independent certified
public accountant or by an appraiser or other expert selected with reasonable
care by the Company or another enterprise. The term "another enterprise" as
used in this Section 10.4 shall mean any other Company or any partnership, joint
venture, trust or other enterprise of which such person is or was serving at the
request of the Company as a manager, director, officer, employee or agent. The
provisions of this Section 10.4 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
applicable standard of conduct set forth in Sections 10.1 or 10.2 of this
Article, as the case may be.

10.5 COURT ACTION. Notwithstanding any contrary determination in the
specific case under Section 10.3 of this Article, and notwithstanding the
absence of any determination thereunder, any manager, officer, employee or agent
may apply to any court of competent jurisdiction in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 10.1 and 10.2
of this Article. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the manager, officer,
employee or agent is proper in the circumstances because he has met the
applicable standards of conduct set forth in Section 10.1 and 10.2 of this
Article, as the case may be. Notice of any application for indemnification
pursuant to this Section 10.5 shall be given to the Company promptly upon the
filing of such application.

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10.6 EXPENSES. Expenses incurred in defending or investigating a
threatened or pending action, suit or proceeding may be paid by the Company in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the manager, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Company as authorized in this Article.

10.7 NON-EXCLUSIVITY. The indemnification and advancement of
expenses provided by or granted pursuant to this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, contract,
vote or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Company that indemnification of the persons specified in Sections 10.1 and 10.2
of this Article shall be made to the fullest extent permitted by law. The
provisions of this Article shall not be deemed to preclude the indemnification
of any person who is not specified in Section 10.1 or 10.2 of this Article but
who the Company has the power of obligation to indemnify under the provisions of
the Act, or otherwise.

10.8 INSURANCE. The Company may purchase and maintain insurance on
behalf of any person who is or was a manager, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a manager,
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise against any liability asserted against
him/her and incurred by him/her in any such capacity, or arising out of his/her
status as such, whether or not the Company would have the power or the
obligation to indemnify him/her against such liability under the provisions of
this Article.

10.9 CONSOLIDATION/MERGER. For purposes of this Article, references
to "the Company" shall include, in addition to the resulting Company, any
constituent Company (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its managers, directors, officers,
and employees or agents, so that any person who is or was a manager, director,
officer, employee or agent of such constituent Company, or is or was serving at
the request of such constituent Company as a manager, director, officer,
employee or agent of another Company, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving Company as he would have with
respect to such constituent Company if its separate existence had continued.

10.10 HEIRS, EXECUTORS, AND ADMINISTRATORS. The indemnification and
advancement of expenses provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a manager, director, office, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Sole Member hereto have executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first above written.

COMMONWEALTH EDISON COMPANY

By: /s/ Ruth Ann M. Gillis
-------------------------------------
Name: Ruth Ann M. Gillis
Title: Vice-President and Treasurer

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EXHIBIT A

NOTICE ADDRESS OF SOLE MEMBER

Name of Member Notice Address
- -------------- --------------

Commonwealth Edison Company 10 South Dearborn Street, 37th Floor
Chicago, Illinois 60603
Attn: Treasury Department

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<PAGE>

EXHIBIT B

MANAGEMENT AGREEMENT

August ___, 1998

ComEd Funding, LLC
c/o Commonwealth Edison Company
10 South Dearborn Street
37th Floor
Chicago, Illinois 60603

Re: Management Agreement --
ComEd Funding, LLC
-----------------------

Ladies and Gentlemen:

For good and valuable consideration, each of the undersigned persons,
who have been designated as members of the management committee of ComEd
Funding, LLC, a Delaware limited liability company (the "Company"), in
accordance with the Limited Liability Company Agreement of the Company, dated as
of July 21, 1998, as it may be amended or restated from time to time (the "LLC
Agreement"), hereby agree:

1. To accept such person's rights and authority as a member of
the Management Committee (as defined in the LLC Agreement) under the LLC
Agreement and to perform and discharge such person's duties and obligations as a
member of the Management Committee under the LLC Agreement and agrees that such
rights, authority, duties and obligations under the LLC Agreement shall continue
until such person's successor as a member of the Management Committee is
designated or until such person's resignation or removal as a member of the
Management Committee in accordance with the LLC Agreement. A member of the
Management Committee is designated as a "manager" of the Company within the
meaning of the Delaware Limited Liability Company Act.

2. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND
REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.

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<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Management
Agreement as of the day and year first above written.

-----------------------------------
Name:

<PAGE>

EXHIBIT 4.1
FORM OF DECLARATION
OF TRUST

- --------------------------------------------------------------------------------

COMED TRANSITIONAL FUNDING TRUST

DECLARATION OF TRUST

Dated as of ____, 1998

FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION

As Delaware Trustee

- --------------------------------------------------------------------------------

<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE

<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE. . . . . . . . . . . . . 1
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3 Purposes and Powers. . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.4 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.5 Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.6 Liability of the Grantee.. . . . . . . . . . . . . . . . . . . 4
SECTION 2.7 Title to Trust Estate. . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.8 Situs of Trust . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III DELIVERY OF CERTAIN DOCUMENTS . . . . . . . . . . . . . . . . . . . 5
SECTION 3.1 Documents Relating to Registration of Notes. . . . . . . . . . 5
SECTION 3.2 Documents Relating to Issuance of Notes. . . . . . . . . . . . 5
SECTION 3.3 Documents Relating to Sale Agreements. . . . . . . . . . . . . 6
SECTION 3.4 Subsequent Sale Agreements.. . . . . . . . . . . . . . . . . . 6

ARTICLE IV ACTIONS BY TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.1 Prior Notice to the Grantee with Respect to Certain Matters. . 8
SECTION 4.2 Action by the Grantee with Respect to Certain Matters. . . . . 8
SECTION 4.3 Action by the Grantee with Respect to Bankruptcy.. . . . . . . 9
SECTION 4.4 Restrictions on Grantee Power. . . . . . . . . . . . . . . . . 9
SECTION 4.5 Application of Trust Funds . . . . . . . . . . . . . . . . . . 9

ARTICLE V THE TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.1 Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.2 Rights of the Delaware Trustee . . . . . . . . . . . . . . . . 11
SECTION 5.3 Acceptance of Trusts and Duties. . . . . . . . . . . . . . . . 11
SECTION 5.4 Action upon Instruction by the Grantee.. . . . . . . . . . . . 13
SECTION 5.5 Furnishing of Documents. . . . . . . . . . . . . . . . . . . . 13
SECTION 5.6 Representations and Warranties of Delaware Trustee . . . . . . 14
SECTION 5.7 Reliance: Advice of Counsel. . . . . . . . . . . . . . . . . . 14
SECTION 5.8 Trustees May Own Notes . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.9 Compensation and Indemnity . . . . . . . . . . . . . . . . . . 15
SECTION 5.10 Replacement of a Trustee. . . . . . . . . . . . . . . . . . . 16
SECTION 5.11 Merger or Consolidation of Delaware Trustee . . . . . . . . . 17
SECTION 5.12 Appointment of Co-Trustee or Separate Trustee . . . . . . . . 17
</TABLE>

i
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
SECTION 5.13 Eligibility Requirements for Delaware Trustee . . . . . . . . 18

ARTICLE VI TERMINATION OF DECLARATION. . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.1 Termination of Declaration.. . . . . . . . . . . . . . . . . . 19
SECTION 6.2 [RESERVED].. . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.1 No Legal Title to Trust Estate . . . . . . . . . . . . . . . . 19
SECTION 7.2 Limitations on Rights of Others. . . . . . . . . . . . . . . . 20
SECTION 7.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.5 Amendments Without Consent of Holders. . . . . . . . . . . . . 20
SECTION 7.6 Amendments With Consent of Holders.. . . . . . . . . . . . . . 21
SECTION 7.7 Form of Amendments . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.10 No Petition Covenant. . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.11 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.12 Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>

EXHIBITS:

Exhibit A Form of Certificate of Trust

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<PAGE>

THIS IS A DECLARATION OF TRUST, dated as of ______, 1998, by FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association
acting hereunder not in its individual or corporate capacity but solely as
Delaware trustee (the "Delaware Trustee"), and ___________________ and
___________________, each as a Beneficiary Trustee and acting hereunder
solely for the limited purposes specified in SECTION 3.1 (collectively, the
"Beneficiary Trustees" and, together with the Delaware Trustee, the
"Trustees"), created for the purpose of holding assets (the "Trust Estate" as
herein defined) assigned and transferred to the Trust by ComEd Funding, LLC,
a Delaware special purpose limited liability company (the "Grantee") pursuant
to the terms of the Sale Agreement or a Subsequent Sale Agreement and
pledging and assigning the same in accordance with the terms hereof for the
benefit of the Grantee and, at the direction of the Grantee, for the benefit
of the holders of Notes to be issued by the trust created hereby, as provided
herein and in the other Basic Documents.

NOW, THEREFORE, the Delaware Trustee hereby agrees to hold all assets
and funds in trust transferred to it hereunder, to assign and pledge the same as
Note Collateral for Notes, as follows:

ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1 DEFINITIONS. All references herein to "the Declaration"
or "this Declaration" are to this Declaration of Trust, all references herein to
the "Note Issuer" are to the trust created hereunder as issuer of the Notes and
all references herein to Articles, Sections, subsections, Schedules and Exhibits
are to Articles, Sections, subsections, Schedules and Exhibits of this
Declaration, unless otherwise specified. Unless otherwise defined herein,
capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in [that certain Indenture (including Appendix A thereto)
dated as of the date hereof between ComEd Transitional Funding Trust, as the
Note Issuer, and Harris Trust and Savings Bank, as the Indenture Trustee],
[Appendix A hereto,] as the same may be amended, supplemented or modified from
time to time.

ARTICLE II
ORGANIZATION

SECTION 2.1 NAME. The Trust created hereby shall be known as "ComEd
Transitional Funding Trust," the "Note Issuer" or "CTFT," in which name the
Delaware Trustee may conduct the business of the Trust, make and execute
contracts and other instruments on behalf of the Trust and sue and be sued on
behalf of the Trust. In addition, the Delaware Trustee may conduct the business
of the Trust in its own name, as trustee hereunder, to the extent deemed
necessary or appropriate by the Delaware Trustee, in its sole discretion.

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<PAGE>

SECTION 2.2 OFFICE. The office of the Trust shall be in care of the
Delaware Trustee at the Corporate Trust Office or at such other address in
Delaware as the Delaware Trustee may designate by written notice to the Grantee.

SECTION 2.3 PURPOSES AND POWERS. The purpose of the Trust is to
engage in the following activities:

(a) to acquire, manage, administer, pledge, assign, sell and collect
Intangible Transition Property and all other Note Collateral or other
assets constituting the Trust Estate;

(b) to retain and pledge as security the Capital Contribution;

(c) to register, or cause the registration, of the Notes as
contemplated by SECTION 3.1 for purposes of issuance and sale;

(d) to issue and sell Notes in accordance with a Trustee's Issuance
Certificate pursuant to the Indenture and any supplemental indenture or
Trustee's Issuance Certificate thereunder or to another indenture, note
purchase agreement or similar agreement that may be described in the Sale
Agreement or any Subsequent Sale Agreement entered into in accordance with
the terms hereof, and to sell, transfer or exchange Notes pursuant to the
terms of any underwriting agreement or other agreement entered into
pursuant to the terms of the Sale Agreement or any Subsequent Sale
Agreement;

(e) to acquire property and assets from the Grantee pursuant to the
Sale Agreement or any Subsequent Sale Agreement, to make payments on the
Notes, to make distributions of any amounts released to the Trust and
forever discharged from the terms of the Indenture and to pay the
organizational, start-up and transactional expenses of the Trust;

(f) to establish, acquire, hold and terminate any Swap Agreements
upon the terms of and as provided in the Sale Agreement or any Subsequent
Sale Agreement;

(g) to assign, grant, transfer, pledge, mortgage and convey the
Intangible Transition Property and all other Note Collateral pursuant to
the terms of the Indenture;

(h) to enter into and perform its obligations and exercise its rights
under the Basic Documents to which it is a party;

(i) to execute and deliver any Trustee's Issuance Certificate
authorized pursuant to the Sale Agreement or any Subsequent Sale Agreement;

2
<PAGE>

(j) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and

(k) subject to compliance with the Basic Documents and the
requirements of any related Sale Agreement, to engage in such other
activities as may be required in connection with conservation of the Trust
Estate and the making of payments to the holders of Notes from time to
time.

The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of the Basic
Documents or as required by applicable law.

SECTION 2.4 DECLARATION OF TRUST. The Delaware Trustee hereby
declares that it shall hold the Trust Estate in trust as herein provided for the
benefit of the Grantee and the holders of the Notes, from and after the date
hereof until termination of this Trust as herein provided, subject to the
obligations of the Trust under the Basic Documents. It is the intention that
the Trust shall constitute a business trust under the Business Trust Act and
that this Declaration shall constitute the governing instrument of such business
trust. The Delaware Trustee shall have all rights, powers and duties set forth
herein and, to the extent not inconsistent herewith, in the Business Trust Act
with respect to accomplishing the purposes of the Trust. The Delaware Trustee
agrees to file the Certificate of Trust pursuant to Section 3810 ET SEQ. of the
Business Trust Act in connection with the formation of the Trust as a business
trust under the Business Trust Act.

SECTION 2.5 TRUST ESTATE. Prior to the issuance of each Series of
Notes:

(a) the Grantee and the Trust shall enter into a Sale Agreement
pursuant to which the Grantee shall assign to the Trust the related
Intangible Transition Property and the Related Assets which the Trust shall
accept and pledge, pursuant to the Indenture, as collateral for such Series
of Notes that the Trust will issue and sell (the proceeds of such sale
shall be applied, under the terms of the related Sale Agreement, to pay
obligations of the Grantee incurred for the purpose of inducing ComEd to
request the ICC's issuance to the Grantee of the related Intangible
Transition Property); and;

(b) the Grantee shall transfer, convey and set over to the Delaware
Trustee on behalf of the Trust capital in an amount sufficient to fund the
Capital Subaccount up to the Required Capital Level with respect to each
Series of Notes to be held in trust hereunder, such amount to be deposited
directly to the Capital Subaccount.

The Grantee shall pay organizational expenses (including all fees and expenses
associated with the preparation, filing and prosecution of the documents
referred to in SECTION 3.1) of the Trust as

3
<PAGE>

they may arise or shall, upon the request of the Delaware Trustee, promptly
reimburse the Delaware Trustee for any such expenses paid by the Delaware
Trustee.

SECTION 2.6 LIABILITY OF THE GRANTEE.

(a) Other than to the extent it specifically agrees, the Grantee
shall not have any personal liability for any liability or obligation of the
Trust. The Grantee shall be liable directly to and shall indemnify any
injured party for all losses, claims, damages, liabilities and expenses of
the Trust to the extent that the Grantee would be liable if the Trust were a
partnership under the Delaware Revised Uniform Limited Partnership Act in
which the Grantee were a general partner (and the Grantee shall be liable to
and indemnify the Trust for any such losses, claims, damages, liabilities and
expenses paid or otherwise borne by the Trust to the extent that the Grantee
would have been so liable if the Trust had no assets and the injured party
had made a claim directly against the Grantee); PROVIDED, HOWEVER, that the
Grantee shall not be liable for: (i) any obligations which by their terms or
nature are nonrecourse to the Grantee, including, without limitation, any
losses incurred by a holder of a Note in its capacity as an investor in the
Notes; or (ii) any losses, claims, damages, liabilities and expenses arising
out of the imposition by any taxing authority of any federal, state or local
income or franchise taxes or any other taxes imposed on or measured by gross
or net income, gross or net receipts, capital, net worth and similar items
(including any interest, penalties or additions with respect thereto) upon
the Delaware Trustee, in its individual capacity, either of the Beneficiary
Trustees, any Holder, the Indenture Trustee, or any other Person acting as
depositary, trustee or agent with respect to any Note (including any
liabilities, costs or expenses with respect thereto) with respect to the
Intangible Transition Property not specifically indemnified or represented to
hereunder. Any third party creditors of the Trust (other than in connection
with the obligations described in the proviso to the preceding sentence, for
which the Grantee shall not be liable) shall be deemed third party
beneficiaries of this SECTION 2.6.

(b) Except as otherwise provided in the Servicing Agreement, any
property of the Trust not necessary for the payment of the Trust's obligations
or required to be set aside or paid to any account and which is released to the
Note Issuer free from the lien of the Indenture as provided in Section 8.02
thereof shall be released to the Grantee as specified in an officer's
certificate of the Grantee.

SECTION 2.7 TITLE TO TRUST ESTATE. Legal title to the Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Trust
Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Delaware Trustee, a co-trustee and/or a separate
trustee, as the case may be.

SECTION 2.8 SITUS OF TRUST. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the
Delaware Trustee on behalf of the Trust shall be located in the State of
Delaware or Illinois. The Trust shall not have any employees in

4
<PAGE>

any state other than Delaware; PROVIDED, HOWEVER, that nothing herein shall
restrict or prohibit the Delaware Trustee (in its individual capacity but not as
Delaware Trustee) from having employees within or without the State of Delaware.
Payments shall be received by the Trust only in Delaware or Illinois, and
payments shall be made by the Trust only from Delaware or Illinois. The only
office of the Trust shall be the Corporate Trust Office in Delaware. To the
greatest extent possible, the Delaware Trustee shall conduct the Trust's
activities from Delaware, sign documents on behalf of the Trust in Delaware and
maintain bank accounts (other than those accounts maintained under the
Indenture) and business records on behalf of the Trust in Delaware.

ARTICLE III
DELIVERY OF CERTAIN DOCUMENTS

SECTION 3.1 DOCUMENTS RELATING TO REGISTRATION OF NOTES. The
Beneficiary Trustees are hereby authorized and directed to:

(a) execute and file on behalf of the Trust with the SEC a
registration statement on Form S-3, including any pre-effective or
post-effective amendments to such registration statement (including the
prospectus, the prospectus supplement and the exhibits contained therein),
relating to the Notes;

(b) determine the states in which to take appropriate action to
qualify or register for sale all or part of the Notes and to take any and
all such acts as they deem necessary or advisable to comply with the
applicable laws of any of those states, including the execution and filing
on behalf of the Trust of such applications, reports, surety bonds,
irrevocable consents, appointments of attorney for service of process and
other papers and documents as shall be necessary or desirable in connection
therewith;

(c) to do or cause to be done all such other acts or things and to
execute and deliver all such instruments and documents that any Beneficiary
Trustee shall deem necessary or appropriate to carry out the intent of this
Section.

In the event that any filing referred to above is required by the rules and
regulations of the SEC or any state securities or "Blue Sky" laws, to be
executed on behalf of the Trust by the Delaware Trustee, then the Delaware
Trustee, not in its individual capacity, but solely in its capacity as trustee
of the Trust, is hereby authorized and directed to join in any such filing and
to execute on behalf of the Trust any and all of the foregoing.

SECTION 3.2 DOCUMENTS RELATING TO ISSUANCE OF NOTES. The Delaware
Trustee is hereby directed to execute and deliver from time to time, in
accordance with the terms of a Sale Agreement, and as instructed in writing by
the Grantee, Trustee's Issuance Certificates and all other documents and
instruments as may be necessary or desirable to issue each Series of Notes
pursuant to the provisions of the Indenture.

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<PAGE>

SECTION 3.3 DOCUMENTS RELATING TO SALE AGREEMENTS. The Delaware
Trustee is hereby directed to execute and deliver all agreements, documents,
certificates, and other instruments as may be required under and pursuant to the
terms of the Sale Agreement and any Subsequent Sale Agreements.

SECTION 3.4 SUBSEQUENT SALE AGREEMENTS. The Delaware Trustee on
behalf of the Trust shall from time to time execute and deliver Subsequent Sale
Agreements at the written direction of the Grantee upon delivery by the Grantee
to the Delaware Trustee, and receipt by the Delaware Trustee, or the causing to
occur by the Grantee, of the following:

(a) GRANTEE ACTION. The Grantee shall authorize and direct the
execution, authentication and delivery of such Subsequent Sale Agreement by
the Delaware Trustee.

(b) AUTHORIZATIONS. An Opinion of Counsel that no authorization,
approval or consent of any governmental body or bodies at the time having
jurisdiction in the premises is required for the valid execution and
delivery by the Grantee of such Subsequent Sale Agreement, except for such
authorizations, approvals or consents of governmental bodies that have been
obtained and copies of which have been delivered with such Opinion of
Counsel.

(c) AUTHORIZING CERTIFICATE. A certificate of a Responsible Officer
of the Grantee certifying that the Grantee has duly authorized the
execution and delivery of such Subsequent Sale Agreement.

(d) CERTIFICATE OF THE GRANTEE. A certificate of a Responsible
Officer of the Grantee, dated as of the Series Issuance Date, to the effect
that, in the case of the Intangible Transition Property to be sold pursuant
to such Subsequent Sale Agreement immediately prior to the conveyance
thereof to the Trust pursuant to such Subsequent Sale Agreement:

(i) the Grantee is the owner of such Intangible Transition
Property, free and clear of any lien, mortgage, pledge, charge,
security interest, adverse claim or other encumbrance; the Grantee has
not assigned any interest or participation in such Intangible
Transition Property and the proceeds thereof other than to the Trust
pursuant to such Subsequent Sale Agreement (or, if assigned, it has
been released); the Grantee has the power and right to convey such
Intangible Transition Property and the proceeds thereof to the Trust;
and the Grantee, subject to the terms of such Subsequent Sale
Agreement, has validly conveyed to the Trust all of its right, title
and interest in and to such Intangible Transition Property and the
proceeds thereof, free and clear of any lien, mortgage, pledge,
charge, security interest, adverse claim or other encumbrance; and

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<PAGE>

(ii) the copy of the Subsequent Funding Order attached to such
Subsequent Sale Agreement creating such Intangible Transition Property
is true and correct.

(e) OPINION OF COUNSEL. An Opinion of Counsel dated the Series
Issuance Date, subject to the customary exceptions, qualifications and
assumptions contained therein, to the effect that:

(i) the Grantee is duly formed and is validly existing in good
standing under the laws of the jurisdiction of its organization;

(ii) the Grantee has the power and authority to execute and
deliver such Subsequent Sale Agreement, and such Subsequent Sale
Agreement has been duly authorized, executed and delivered by the
Grantee;

(iii) such Subsequent Sale Agreement is a valid and binding
agreement of the Grantee, enforceable in accordance with its terms,
except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting the rights
of creditors generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law);

(iv) upon the delivery of such fully executed Subsequent Sale
Agreement to the Trust and the payment of the purchase price of the
Intangible Transition Property and the Related Assets conveyed thereby
by the Trust to the Grantee pursuant to such Subsequent Sale
Agreement, then (I) the transfer of the Intangible Transition Property
and the Related Assets by the Grantee to the Trust pursuant to such
Subsequent Sale Agreement conveys the Grantee's right, title and
interest in such Intangible Transition Property and the Related Assets
to the Trust and will be treated under state law as an absolute
transfer of all of the Grantee's right, title, and interest in such
Intangible Transition Property and the Related Assets, other than for
federal and state income and franchise tax purposes, (II) such
transfer of such Intangible Transition Property and the Related Assets
is perfected, (III) such transfer has priority over any other
assignment of the Intangible Transition Property and the Related
Assets and (IV) such Intangible Transition Property and the Related
Assets is free and clear of all liens created prior to its transfer to
the Trust pursuant to such Subsequent Sale Agreement; and

(v) such other matters as the Delaware Trustee may reasonably
require.

(f) RATING AGENCY CONDITION. The Delaware Trustee shall receive
evidence reasonably satisfactory to it that the Rating Agency Condition
will be satisfied upon the

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execution and delivery of any Notes to be issued in connection with the
execution and delivery of such Subsequent Sale Agreement.

(g) OTHER REQUIREMENTS. Such other documents, certificates,
agreements, instruments or opinions as the Delaware Trustee may reasonably
require.

ARTICLE IV
ACTIONS BY TRUSTEES

SECTION 4.1 PRIOR NOTICE TO THE GRANTEE WITH RESPECT TO CERTAIN
MATTERS. Except as otherwise provided in this ARTICLE IV, the Delaware Trustee
shall not take action with respect to the following matters, unless (i) the
Delaware Trustee shall have notified the Grantee in writing of the proposed
action at least 30 days before the taking of such action, and (ii) the Grantee
shall not have notified the Delaware Trustee in writing prior to the 30th day
after such notice is given that the Grantee has withheld consent or provided
alternative direction:

(a) the initiation of any action, claim or lawsuit by the Trust and
the compromise of any action, claim or lawsuit brought by or against the
Trust (other than any action, claim or lawsuit brought by the Servicer in
the name of the Trust to enforce the terms of any Intangible Transition
Property or other related right);

(b) the election by the Trust to file an amendment to the Certificate
of Trust (except in such cases where such amendment is required by the
Business Trust Statute);

(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Holder is required;

(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Holder is not required and such
amendment materially adversely affects the interest of the Grantee; or

(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture or this Declaration, as applicable.

SECTION 4.2 ACTION BY THE GRANTEE WITH RESPECT TO CERTAIN MATTERS.

(a) The Delaware Trustee shall have the power to consent to the
appointment of a successor Servicer only in accordance with the provisions of
Section 7.02 of the Servicing Agreement and subject to any approval required by
the terms of the Indenture.

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(b) Except as otherwise expressly agreed by the Grantee (or, with
respect to CLAUSE (ii), the amendment provisions of any Basic Document), the
Delaware Trustee shall not (i) take any action with respect to any election by
the Trust to file an amendment to the Certificate of Trust, (ii) amend, change,
modify or terminate any Basic Document, or (iii) sell the Intangible Transition
Property transferred to the Trust pursuant to the Sale Agreement or any
Subsequent Sale Agreement or any interest therein after termination of the
Indenture.

SECTION 4.3 ACTION BY THE GRANTEE WITH RESPECT TO BANKRUPTCY. No
Trustee shall have any power to commence a voluntary proceeding in bankruptcy
relating to the Trust; PROVIDED, HOWEVER, the Delaware Trustee may commence a
voluntary proceeding in bankruptcy relating to the Trust with the prior approval
of the Grantee and the delivery to the Delaware Trustee of a certificate signed
by the Grantee and certifying that the Grantee reasonably believes that the
Trust is insolvent.

SECTION 4.4 RESTRICTIONS ON GRANTEE POWER. The Grantee shall not
direct any of the Trustees to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust, the
Delaware Trustee or a Beneficiary Trustee (as the case may be) under this
Declaration or any other Basic Document or would be contrary to SECTION 2.3, nor
shall any Trustee be obligated to follow any such direction, if given.

SECTION 4.5 APPLICATION OF TRUST FUNDS. Pursuant to the terms of the
Indenture, for so long as there are any outstanding Notes, the Trust shall cause
the Indenture Trustee to establish and maintain the Collection Account and all
subaccounts thereof under the Indenture for the benefit of holders of the Notes
and the Trust. The funds held in the Collection Account and such subaccounts
shall be deposited, invested, administered, allocated and distributed in the
manner set forth in the Indenture.

ARTICLE V
THE TRUSTEES

SECTION 5.1 DUTIES.

(a) Each Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth for such Trustee in this Declaration,
including, in the case of the Delaware Trustee, the administration of the Trust
in the interest of holders of the Notes and the Grantee, subject to the Basic
Documents and the provisions of this Declaration. No implied covenants or
obligations shall be read into this Declaration.

(b) Notwithstanding the foregoing, the Delaware Trustee shall be
deemed to have discharged all of its duties and responsibilities hereunder and
under the Basic Documents to the extent the Servicer has agreed in the Servicing
Agreement or the Administrator has agreed in the Administration Agreement to
perform any act or to discharge any duty of the Delaware Trustee or the Trust
hereunder or under any other Basic Document, and the Delaware Trustee

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shall not be liable for the default or failure of the Servicer or the
Administrator, as applicable, to carry out its obligations under such
agreements.

(c) In the absence of bad faith on its part, a Trustee may
conclusively rely upon certificates or opinions furnished to such Trustee and
conforming to the requirements of this Declaration in determining the truth of
the statements and the correctness of the opinions contained therein; PROVIDED,
HOWEVER, that such Trustee shall have examined such certificates or opinions so
as to determine compliance of the same with the requirements of this
Declaration.

(d) A Trustee may not be relieved from liability for its own
grossly negligent action, its own grossly negligent failure to act or its own
willful misconduct, except that:

(i) this SECTION 5.1(d) shall not limit the effect of SECTIONS
5.1(a) or 5.1(b);

(ii) the Delaware Trustee shall not be liable (x) for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Delaware Trustee was grossly negligent in ascertaining
the pertinent facts or (y) with respect to any action it takes or
omits to take in good faith in accordance with a direction received by
it hereunder or pursuant to any Basic Document; and

(iii) a Beneficiary Trustee shall not be liable (x) for any
error of judgment made in good faith by such Beneficiary Trustee
unless it is proved that such Beneficiary Trustee was grossly
negligent in ascertaining the pertinent facts or (y) with respect to
any action such Beneficiary Trustee takes or omits to take in good
faith in accordance with a direction received by such Beneficiary
Trustee hereunder or pursuant to any Basic Document.

(e) Monies received by the Delaware Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Basic
Documents, may be deposited under such general conditions as may be prescribed
by law, and the Delaware Trustee shall not be liable for any interest thereon.

(f) No Trustee shall take any action that (i) is inconsistent with
the purposes of the Trust set forth in SECTION 2.3, or (ii) would, to the actual
knowledge of such Trustee, if such Trustee is a Beneficiary Trustee, or to the
actual knowledge of a Responsible Officer of the Delaware Trustee, result in the
Trust's becoming taxable as a corporation. The Grantee shall not direct or
cause the Trustees to take action that would violate the provisions of this
SECTION 5.1(f).

(g) The Delaware Trustee shall maintain an office or offices or
agency or agencies where notices and demands to or upon the Trust or the
Delaware Trustee in respect of the Basic Documents may be served. The Delaware
Trustee initially designates the Corporate Trust Office as its principal office
for such purposes. The Delaware Trustee shall give prior

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written notice to the Grantee of any change in the location of any such office
or agency. In no event, however, shall the Delaware Trustee change the office
or agency designated for the foregoing purposes to any other jurisdiction unless
the Delaware Trustee has received an opinion of independent tax counsel (as
selected by, and in form and substance reasonably satisfactory to, ComEd) that
such jurisdiction will not impose any additional tax upon the Trust solely as a
result of the maintenance of such office or agency in such jurisdiction.

(h) The Delaware Trustee shall keep or cause to be kept, at its
Corporate Trust Office at One Rodney Square, 920 King Street, 1st Floor,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration, a
register or registers for the purpose of registering the name and address of the
beneficial owner of the Trust (the "Certificate Register"). The Delaware
Trustee shall be the registrar (the "Certificate Registrar") and shall, with the
consent of the Administrator, provide for the registration of the identity of
the beneficial owner and, subject to such reasonable regulations as it may
prescribe, registration of transfers of such beneficial interest. The
provisions of this SECTION 5.1(h) shall apply to the Delaware Trustee in its
role as Certificate Registrar, for so long as the Delaware Trustee shall act as
Certificate Registrar hereunder.

SECTION 5.2 RIGHTS OF THE DELAWARE TRUSTEE. The Delaware Trustee is
hereby authorized and directed to execute and deliver, on behalf of the Trust,
the Basic Documents and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to be a
party, in such form as the Grantee shall approve as evidenced conclusively by
the Delaware Trustee's execution thereof. In addition to the foregoing, the
Delaware Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents. The Delaware Trustee is
further authorized from time to time to take such action as the Servicer shall
request with respect to any Basic Document that the Servicer shall determine to
be necessary or appropriate in connection with its servicing obligations under
the Servicing Agreement.

SECTION 5.3 ACCEPTANCE OF TRUSTS AND DUTIES. Except as otherwise
provided in this ARTICLE V, in accepting the trusts hereby created, each Trustee
acts solely as a trustee hereunder and not in its individual capacity and all
Persons having any claim against a Trustee by reason of the transactions
contemplated by this Declaration or any other Basic Document shall look only to
the Trust Estate for payment or satisfaction thereof. Each Trustee accepts the
trusts hereby created and agrees to perform such Trustee's duties hereunder with
respect to such trusts but only upon the terms of this Declaration and the other
Basic Documents. The Delaware Trustee also agrees to disburse all moneys
actually received by it constituting part of the Trust Estate upon the terms of
this Declaration and the other Basic Documents. No Trustee shall be liable or
accountable hereunder or under any Basic Document under any circumstances,
except for (i) such Trustee's grossly negligent action, such Trustee's negligent
failure to act or such Trustee's own willful misconduct or (ii) the inaccuracy
of any representation or warranty made by such Trustee in its individual
capacity to the Grantee. In particular, but not by way of limitation:

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(a) no Trustee shall at any time have any responsibility or
liability for or with respect to the legality, validity and enforceability
of any Intangible Transition Property, or the perfection and priority of
any security interest created in the Note Collateral (or any portion
thereof) or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Note Collateral or its ability to
generate the payments to be distributed to the holders of any Note or any
other creditors of the Trust, including, without limitation: the existence
and ownership of any Intangible Transition Property; the validity of the
assignment of any Intangible Transition Property to the Trust or of any
intervening assignment; or the compliance by the Grantee or the Servicer
with any representation or warranty made under any Basic Document or in any
related document or the accuracy of any such representation or warranty or
any action of the Servicer, the Administrator, the Grantee or any other
Person taken in the name of such Trustee;

(b) no Trustee shall be liable with respect to any action taken or
omitted to be taken by such Trustee in accordance with the instructions of
the Servicer, the Administrator or the Grantee;

(c) no provision of this Declaration or any other Basic Document
shall require a Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of such Trustee's rights or
powers hereunder or under any other Basic Document, if such Trustee shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
or provided to such Trustee;

(d) under no circumstances shall any Trustee be liable for
indebtedness evidenced by or other obligations of the Trust arising under
any of the Basic Documents, including, without limitation, the principal of
and interest on any outstanding Notes;

(e) no Trustee shall be responsible for or in respect of nor makes
any representation as to the validity or sufficiency of any provision of
this Declaration or for the due execution hereof by the Grantee or for the
form, character, genuineness, sufficiency, value or validity of either the
Trust or the Trust Estate or for or in respect of the validity or
sufficiency of the Basic Documents, the Notes (other than the execution of
the Notes), the Note Collateral or any Intangible Transition Property or
related documents, and no Trustee shall in any event assume or incur any
liability, duty or obligation to any holder of Notes, other than as
expressly provided for herein and in the other Basic Documents;

(f) no Trustee shall be liable for the default or misconduct of the
Servicer, the Administrator, the Indenture Trustee or the Grantee under any
of the Basic Documents or otherwise, and no Trustee shall have any
obligation or liability to perform the obligations of the Trust under this
Declaration or the other Basic Documents that are required to be performed
by the Servicer under the Servicing Agreement or the Administrator under
the

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Administration Agreement, the Indenture Trustee under the Indenture or the
Grantee hereunder;

(g) no Trustee shall be under any obligation to exercise any of the
rights or powers vested in such Trustee by this Declaration, or to
institute, conduct or defend any litigation under this Declaration or any
other Basic Document or in relation to this Declaration or any other Basic
Document, at the request, order or direction of the Grantee unless the
Grantee has offered to such Trustee security or indemnity satisfactory to
such Trustee against the costs, expenses and liabilities that may be
incurred by such Trustee (including, without limitation, the reasonable
fees and expenses of such Trustee's counsel) therein or thereby; the right
of a Trustee to perform any discretionary act enumerated in this
Declaration or in any other Basic Document shall not be construed as a
duty, and such Trustee shall only be answerable for such Trustee's
negligence or willful misconduct in the performance of any such act; and

(h) the provisions of this Declaration, to the extent that they
restrict the duties and liabilities of a Trustee otherwise existing at law
or in equity, are agreed and accepted by the Trust, the Grantee, the
Servicer, the Administrator, the Indenture Trustee, the Holders and all
other Persons who may succeed to any duties and liabilities of a Trustee.

SECTION 5.4 ACTION UPON INSTRUCTION BY THE GRANTEE.

(a) The Grantee may by written instruction direct a Trustee in the
management of the Trust PROVIDED that, so long as any Notes remain outstanding,
the operation and management of the Trust will be restricted as provided in the
Indenture.

(b) Notwithstanding the foregoing, a Trustee shall not be required
to take any action hereunder or under any other Basic Document if such Trustee
shall have reasonably determined, or shall have been advised by counsel, that
such action is likely to result in liability on the part of such Trustee or is
contrary to the terms hereof or of any other Basic Document or is otherwise
contrary to law.

(c) Whenever a Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Declaration or any
other Basic Document, or is unsure as to the application, intent, interpretation
or meaning of any provision of this Declaration or the other Basic Documents,
such Trustee shall promptly give notice (in such form as shall be appropriate
under the circumstances) to the Grantee requesting instruction as to the course
of action to be adopted, and, to the extent such Trustee acts in good faith in
accordance with any such instruction received, such Trustee shall not be liable
on account of such action to any Person. If a Trustee shall not, in the
reasonable judgment of such Trustee, have received appropriate instructions
within ten days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances), such Trustee may, but shall be under no duty to, take or refrain
from taking such action which is consistent, in such

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<PAGE>

Trustee's view, with this Declaration or the other Basic Documents, and as such
Trustee shall deem to be in the best interests of the Grantee, and such Trustee
shall have no liability to any Person for any such action or inaction.

SECTION 5.5 FURNISHING OF DOCUMENTS. A Trustee shall furnish to the
Grantee, promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to such Trustee under the Basic
Documents.

SECTION 5.6 REPRESENTATIONS AND WARRANTIES.

(a) REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE. First Union
Trust Company, National Association hereby represents and warrants to the
other parties hereto that:

(i) It is a national banking association duly organized, validly
existing and in good standing under the federal laws of the United States.

(ii) It has full power, authority and legal right to execute,
deliver and perform this Declaration, and has taken all necessary action to
authorize the execution, delivery and performance by it of this
Declaration.

(iii) The execution, delivery and performance by it of this
Declaration (i) shall not violate any requirement of Federal law or the law
of the State of Delaware governing its banking and trust powers or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority applicable to it or any of its assets, (ii) shall not violate any
provision of its corporate charter or by-laws, or (iii) shall not violate
any provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any Lien on any
properties included in the Trust pursuant to the provisions of any
mortgage, indenture, contract, agreement or other undertaking to which it
is a party, which violation, default or Lien could reasonably be expected
to have a materially adverse effect on its performance or its ability to
perform its duties as a Trustee under this Declaration or on the
transactions contemplated in this Declaration.

(iv) Its execution, delivery and performance of this Declaration
shall not require the authorization, consent or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of banks or trust companies in the
jurisdiction in which the Trust was formed (except for the filing of the
Certificate of Trust with the Delaware Secretary of State).

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<PAGE>

(v) This Declaration has been duly executed and delivered by it and
constitutes the legal, valid and binding agreement of it, enforceable
against it in accordance with the terms of such agreement, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
and other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.

(b) REPRESENTATIONS AND WARRANTIES OF BENEFICIARY TRUSTEES. Each
Beneficiary Trustee hereby represents and warrants to the other partes
hereto that:

(i) The execution, delivery and performance by it of this
Declaration (i) shall not violate any Requirement of Law or any order,
writ, judgment or decree of any court, arbitrator or governmental authority
applicable to such Beneficiary Trustee or any of such Beneficiary Trustee's
assets and (ii) shall not violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation
or imposition of any Lien on any properties included in the Trust pursuant
to the provisions of any mortgage, indenture, contract, agreement or other
undertaking to which it is a party, which violation, default or Lien could
reasonably be expected to have a materially adverse effect on its
performance or its ability to perform its duties as a Trustee under this
Declaration or on the transactions contemplated in this Declaration.

(ii) The execution, delivery and performance of this Declaration by
such Beneficiary Trustee shall not require the authorization, consent or
approval of, the giving of notice to, the filing or registration with, or
the taking of any other action in respect of, any governmental authority or
agency (except for the filing of the Certificate of Trust with the Delaware
Secretary of State).

(v) This Declaration has been duly executed and delivered by such
Beneficiary Trustee and constitutes the legal, valid and binding agreement
of such Beneficiary Trustee, enforceable against it in accordance with the
terms of such agreement, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, and other similar laws affecting
the enforcement of creditors' rights in general and by general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.

SECTION 5.7 RELIANCE: ADVICE OF COUNSEL.

(a) A Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper believed by such Trustee to be
genuine and believed by such Trustee to be signed by the proper party or parties
and need not investigate any fact or matter pertaining to or in any such
document. A Trustee may accept a certified copy of a resolution of the board of

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<PAGE>

directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, a Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer or other authorized officers of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to such
Trustee for any action taken or omitted to be taken by such Trustee in good
faith in reliance thereon.

(b) In the exercise or administration of the trusts hereunder and
in the performance of its duties and obligations under this Declaration and the
other Basic Documents, the Delaware Trustee: (i) may, at the expense of
[Grantee], act directly or through its agents, attorneys, custodians or nominees
(including the granting of a power of attorney to its officers to execute and
deliver any Basic Document, Note or other documents related thereto and to take
any action in connection therewith on behalf of the Delaware Trustee) pursuant
to agreements entered into with any of them, and the Delaware Trustee shall not
be liable for the conduct or misconduct of such agents, attorneys, custodians or
nominees if such agents, attorneys, custodians or nominees shall have been
selected by the Delaware Trustee with reasonable care; and (ii) may, at the
expense of [Grantee], consult with counsel, accountants and other professionals
to be selected with reasonable care by it. The Delaware Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the opinion or advice of any such counsel, accountant or other such Persons
and which, according to such opinion or advice, is not contrary to this
Declaration or any other Basic Document.

SECTION 5.8 TRUSTEES MAY OWN NOTES. A Trustee in such Trustee's
individual or any other capacity may become the owner or pledgee of Notes and
may deal with ComEd, the Grantee, the Indenture Trustee, the Servicer and their
respective Affiliates in transactions in the same manner as such Trustee would
have if such Trustee were not a trustee under this Agreement.

SECTION 5.9 COMPENSATION AND INDEMNITY. A Trustee shall receive as
compensation for services hereunder such fees as have been separately agreed
upon before the date hereof between the Servicer and such Trustee, and such
Trustee shall be entitled to be reimbursed by the Servicer for such Trustee's
other reasonable expenses hereunder including the reasonable compensation
expenses and disbursements of such agents, custodians, nominees,
representatives, experts and counsel as such Trustee may employ in connection
with the exercise and performance of such Trustee's rights and duties hereunder.
The Servicer shall indemnify each Trustee and such Trustee's successors,
assigns, agents and servants in accordance with the provisions of a separate
agreement or agreements to be entered into from time to time by and between the
Servicer and such Trustee. The indemnities contained in this SECTION 5.9 shall
survive the resignation or termination of a Trustee or the termination of this
Declaration. Any amounts paid to a Trustee pursuant to this ARTICLE V shall be
deemed not to be a part of the Trust Estate immediately after such payment.
Each Trustee acknowledges that no recourse may be had against the Grantee, the
Trust or the Trust Estate with respect to this SECTION 5.9.

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SECTION 5.10 REPLACEMENT OF A TRUSTEE.

(a) A Trustee may resign at any time and be discharged from the
trusts hereby created by giving 30 days' prior written notice thereof to the
Servicer. The Servicer may appoint a successor Trustee by delivering a written
instrument to the resigning Trustee and the successor Trustee. If no successor
Trustee shall have been appointed and have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee. The Servicer shall remove a Trustee if:

(i) in the case of the Delaware Trustee, such Trustee shall
cease to be eligible in accordance with the provisions of SECTION 5.13
and shall fail to resign after written request therefor by the
Servicer;

(ii) such Trustee shall be adjudged bankrupt or insolvent;

(iii) a receiver or other public officer shall be appointed or
take charge or control of such Trustee or of such Trustee's property
or affairs for the purpose of rehabilitation, conservation or
liquidation; or

(iv) such Trustee shall otherwise be incapable of acting.

(b) If a Trustee resigns or is removed or if a vacancy exists in
the office of a Trustee for any reason, the Servicer shall promptly appoint a
successor Trustee by written instrument, in duplicate (one copy of which
instrument shall be delivered to the outgoing Trustee so removed and one copy to
the successor Trustee) and shall pay any fees and expenses owed to the outgoing
Trustee.

(c) Any resignation or removal of a Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this SECTION 5.10 shall
not become effective until a written acceptance of appointment is delivered by
the successor Trustee to the outgoing Trustee and the Servicer and any fees and
expenses due to the outgoing Trustee are paid. Any successor Trustee appointed
pursuant to this SECTION 5.10 to serve as Delaware Trustee shall be eligible to
act in such capacity in accordance with SECTION 5.13 and, following compliance
with the preceding sentence, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor under this Declaration, with
like effect as if originally named as Delaware Trustee. The Servicer shall
provide notice of such resignation or removal of the Delaware Trustee to the
Rating Agencies. Such successor Delaware Trustee shall promptly file an
amendment to the Certificate of Trust with the Secretary of State identifying
the name and principal place of business of such successor Delaware Trustee in
the State of Delaware.

(d) The predecessor Trustee shall upon payment of such Trustee's
fees and expenses deliver to the successor Trustee all documents and statements
and monies held by such

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Trustee under this Declaration. The Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations.

(e) Upon acceptance of appointment by a successor Delaware Trustee
pursuant to this SECTION 5.10 the Servicer shall mail notice of the successor of
such Delaware Trustee to the Rating Agencies, the Indenture Trustee and the
Holders.

(f) No Trustee shall be personally liable for any action or
omission of any successor Trustee.

SECTION 5.11 MERGER OR CONSOLIDATION OF DELAWARE TRUSTEE. Any
corporation into which the Delaware Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Delaware Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Delaware Trustee, shall be the successor of the Delaware Trustee
hereunder, provided such corporation shall be eligible pursuant to SECTION 5.13,
and without the execution or filing of any instrument or any further act on the
part of any of the parties hereto; PROVIDED, HOWEVER, that the Delaware Trustee
shall mail notice of such merger or consolidation to the Servicer, the Rating
Agencies and the Indenture Trustee and PROVIDED FURTHER that the Delaware
Trustee shall file an amendment to the Certificate of Trust as required under
SECTION 5.10.

SECTION 5.12 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

(a) Notwithstanding any other provisions of this Declaration, at
any time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust Estate may at the time be located, the Servicer
and the Delaware Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Delaware Trustee to act as co-trustee or co-trustees, jointly with the Delaware
Trustee, or as separate trustee or trustees, of all or any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity, such title to
the Trust Estate, or any part thereof, and, subject to the other provisions of
this SECTION 5.12, such powers, duties, obligations, rights and trusts as the
Servicer and the Delaware Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Delaware Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Declaration shall be required to meet the terms of eligibility as a successor
trustee pursuant to SECTION 5.13 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to SECTION 5.10.

(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

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(i) all rights, powers, duties and obligations conferred or
imposed upon the Delaware Trustee shall be conferred upon and
exercised or performed by the Delaware Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Delaware Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed, the Delaware Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust
Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Delaware Trustee;

(ii) no trustee under this Declaration shall be personally
liable by reason of any act or omission of any other trustee under
this Declaration; and

(iii) the Servicer and the Delaware Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee
or co-trustee.

(c) Any notice, request or other writing given to the Delaware
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Declaration
and the conditions of this ARTICLE V. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Delaware Trustee or separately, as may be provided therein, subject to all of
the provisions of this Declaration, specifically including every provision of
this Declaration relating to the conduct of, affecting the liability of or
affording protection to the Delaware Trustee. Each such instrument shall be
filed with the Delaware Trustee and a copy thereof given to the Servicer.

(d) Any separate trustee or co-trustee may at any time appoint the
Delaware Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Declaration on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Delaware Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.

SECTION 5.13 ELIGIBILITY REQUIREMENTS FOR DELAWARE TRUSTEE. The
Delaware Trustee shall at all times: (a) be a corporation satisfying the
provisions of Section 3807(a) of the Business Trust Act; (b) be authorized to
exercise corporate trust powers; (c) have a combined capital and surplus of at
least $[50,000,000] and be subject to supervision or examination by federal or
state authorities; and (d) have (or have a parent which has) a long-term
unsecured debt rating of at least "BBB-" by S&P and at least "Baa3" by Moody's.
If such corporation shall publish reports of condition at least annually,
pursuant to law or the requirements of the aforesaid

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<PAGE>

supervising or examining authority, then for the purpose of this SECTION 5.13,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Delaware Trustee shall cease to be eligible in
accordance with the provisions of this SECTION 5.13, the Delaware Trustee shall
resign immediately in the manner and with the effect specified in SECTION 5.10.

ARTICLE VI
TERMINATION OF DECLARATION

SECTION 6.1 TERMINATION OF DECLARATION.

(a) This Declaration (other than SECTION 5.9) and the Trust shall
terminate and be of no further force or effect on the earlier of: (i) the final
distribution by the Delaware Trustee or the Indenture Trustee of all monies or
other property or proceeds of the Trust Estate in accordance with the terms of
this Declaration and the other Basic Documents; (ii) December 31, 2020; or (iii)
if the Grantee so elects, the day following the date on which the aggregate
Outstanding Amount of the Notes is zero (the "Trust Termination Date").

(b) To the extent permitted by applicable law, the Grantee shall
not be entitled to revoke or terminate the Trust.

(c) Any funds remaining in the Trust after such Trust Termination
Date shall be deemed property of the Grantee, and, upon the Grantee's request,
shall be distributed by the Indenture Trustee or the Delaware Trustee to the
Grantee.

(d) Upon the winding up of the Trust and its termination, the
Delaware Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Act.

SECTION 6.2 [RESERVED].

ARTICLE VII
MISCELLANEOUS

SECTION 7.1 NO LEGAL TITLE TO TRUST ESTATE. The Grantee shall not
have legal title to any part of the Trust Estate. The Grantee shall be entitled
to receive distributions with respect to its ownership interest therein to the
extent not inconsistent with this Declaration and in accordance with the other
Basic Documents. No transfer, by operation of law or otherwise, of any right,
title, and interest of the Grantee to and in its ownership interest in the Trust
Estate shall

20
<PAGE>

operate to terminate this Declaration or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Trust Estate.

SECTION 7.2 LIMITATIONS ON RIGHTS OF OTHERS. Except as otherwise
provided in SECTION 2.7, the provisions of this Declaration are solely for the
benefit of the Trustees, the Grantee, the Servicer and, to the extent expressly
provided herein, the Indenture Trustee and the Holders, and nothing in this
Declaration, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Declaration or any covenants, conditions or
provisions contained herein.

SECTION 7.3 NOTICES. All demands, notices and communications upon or
to the Grantee, the Servicer, the Delaware Trustee, the Beneficiary Trustees or
the Rating Agencies under this Declaration shall be in writing, personally
delivered, sent by electronic facsimile (with hard copy to follow via first
class mail) or mailed by first class mail or sent by overnight courier, and
shall be deemed to have been duly given upon receipt: (a) in the case of the
Grantee at the following address: c/o Commonwealth Edison Company, 10 South
Dearborn Street, 37th Floor, Chicago, Illinois 60603 with a copy to Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, Attention: Kevin J.
Hochberg; (b) in the case of the Servicer, at the following address: c/o
Commonwealth Edison Company, 10 South Dearborn Street, 37th Floor, Chicago,
Illinois 60603 with a copy to Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603, Attention: Kevin J. Hochberg; (c) in the case of the
Trust or the Delaware Trustee, to the Delaware Trustee at its Corporate Trust
Office, with a copy to Richards Layton & Finger, One Rodney Square, 920 King
Street, Wilmington, Delaware 19801, Attention Doneene Damon; (d) in the case of
the Beneficiary Trustees, to _______________________; and (e) in the case of any
Rating Agencies, at the address for notices set forth in the Indenture.

SECTION 7.4 SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Declaration shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Declaration and shall in no way affect the validity or
enforceability of the other provisions of this Declaration.

SECTION 7.5 AMENDMENTS WITHOUT CONSENT OF HOLDERS. This Declaration
may be amended by the Delaware Trustee, the Beneficiary Trustees and the Grantee
with the prior written consent of the Indenture Trustee but without the consent
of any of the Holders (but with prior notice to the Rating Agencies) to (i) cure
any ambiguity; (ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision in this Declaration;
(iii) add or supplement any liquidity, credit or other enhancement arrangement
for the benefit of any Holders (provided that if any such addition shall affect
any series of Holders differently than any other series of Holders, then such
addition shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any series of Holders); (iv) add to the
covenants, restrictions or obligations of the Delaware Trustee for the benefit
of the Holders; (v) evidence and provide for the acceptance of the appointment
of a successor trustee

21
<PAGE>

with respect to the Trust Estate and add to or change any provisions as shall be
necessary to facilitate the administration of the trusts hereunder by more than
one trustee pursuant to ARTICLE V; or (vi) add, change or eliminate any other
provision of this Declaration in any manner that shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
the Holders; provided, that the Delaware Trustee shall not amend this
Declaration in any manner which affects the rights of the Grantee hereunder or
under the Basic Documents without the prior written consent of the Grantee or
receipt of an Opinion of Counsel to the Grantee to the effect that such
amendment does not adversely affect, in any manner, the interests of the Grantee
under this Declaration.

SECTION 7.6 AMENDMENTS WITH CONSENT OF HOLDERS. This Declaration may
be amended from time to time by the Delaware Trustee with the consent of the
Indenture Trustee and the Holders whose Notes evidence not less than a majority
of the Outstanding Amount of the Notes as of the close of business on the
preceding Payment Date (which consent, whether given pursuant to this SECTION
7.6 or pursuant to any other provision of this Declaration, shall be conclusive
and binding on such Person and on all future holders of such Notes and of any
Notes issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Notes) for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Declaration, or of modifying in any manner the rights of the
Holders; PROVIDED, HOWEVER, that no such amendment shall (a) increase or reduce
in any manner the amount of, or accelerate or delay the timing of, payments that
shall be required to be made on any Note without the consent of the holder
thereof (it being understood that the issuance of any Note after the Closing
Date as contemplated by this Declaration and the Indenture and the specification
of the terms and provisions thereof pursuant to a Trustee's Issuance Certificate
shall not be deemed to have such effect for purposes hereof); (b) adversely
affect the rating of any series of Notes without the consent of the holders of
two-thirds of the Outstanding Amount of such series of Notes; or (c) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the holders of all of the Notes then outstanding. Prior to the
execution of any such amendment, supplement or consent, the Delaware Trustee
shall furnish written notification of the substance of such amendment,
supplement or consent to the Rating Agencies.

SECTION 7.7 FORM OF AMENDMENTS.

(a) Promptly after the execution of any amendment, supplement or
consent pursuant to SECTION 7.5 OR 7.6, the Delaware Trustee shall furnish
written notification of the substance of such amendment or consent to the
Indenture Trustee.

(b) It shall not be necessary for the consent of the Indenture
Trustee pursuant to SECTION 7.6 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Holders provided for in this Declaration or in any other Basic

22
<PAGE>

Document) and of evidencing the authorization of the execution thereof by
Holders shall be subject to such reasonable requirements as the Delaware Trustee
may prescribe.

(c) Promptly after the execution of any amendment to the
Certificate of Trust, the Delaware Trustee shall cause the filing of such
amendment with the Secretary of State.

(d) Prior to the execution of any amendment to this Declaration or
the Certificate of Trust, the Delaware Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Declaration. The Delaware Trustee may, but
shall not be obligated to, enter into any such amendment that affects the
Delaware Trustee's own rights, duties or immunities under this Declaration or
otherwise.

SECTION 7.8 COUNTERPARTS. This Declaration may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.

SECTION 7.9 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of the Grantee,
the Trust and the Trustees and their respective successors and permitted
assigns, all as herein provided.

SECTION 7.10 NO PETITION COVENANT. Notwithstanding any other
provision of this Declaration or any other Basic Document and notwithstanding
any prior termination of this Declaration, the Trust (or any of the Trustees on
behalf of the Trust) and the Grantee shall not, prior to the date which is one
year and one day after the termination of this Declaration with respect to the
Grantee acquiesce, petition or otherwise invoke or cause the Grantee or the
Trust to invoke the process of any governmental authority for the purpose of
commencing or sustaining a case against the Grantee under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Grantee or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Grantee.

SECTION 7.11 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

SECTION 7.12 GOVERNING LAW. THIS DECLARATION SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

23
<PAGE>

IN WITNESS WHEREOF, the Delaware Trustee has caused this Declaration of
Trust to be duly executed by its officer hereunto duly authorized and the
Beneficiary Trustees have duly executed this Declaration of Trust, as of the day
and year first above written.

DELAWARE TRUSTEE:

FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION

By:
------------------------------

Name:
----------------------------

Title:
---------------------------

BENEFICIARY TRUSTEES:

----------------------------------
Name:

Acknowledged, accepted and agreed
on this ___ day of ____________, 1998

COMED FUNDING, LLC

By:
---------------------------------

Name:
-----------------------------

Title:
----------------------------

24
<PAGE>

EXHIBIT A TO THE
DECLARATION OF TRUST

CERTIFICATE OF TRUST OF
COMED TRANSITIONAL FUNDING TRUST

THIS CERTIFICATE OF TRUST of ComEd Transitional Funding Trust (the
"Trust"), dated as of ____, 1998, is being duly executed and filed by FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as
trustee, to form a business trust under the Delaware Business Trust Act (12 DEL.
CODE, Section 3801 ET SEQ.).

(i) NAME. The name of the business trust formed hereby is ComEd
Transitional Funding Trust.

(ii) DELAWARE TRUSTEE. The name and business address of the trustee
of the Trust in the State of Delaware is FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, ________________________________________.

(iii) EFFECTIVE DATE. This Certificate of Trust shall be effective
on _____, 1998.

IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.

FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual capacity but solely as
Delaware Trustee under a Declaration of
Trust, dated as of ______, 1998.

By:
--------------------------
Name:
Title:

<PAGE>

EXHIBIT 4.2
FORM OF TRANSITIONAL
FUNDING TRUST NOTE

SEE EXHIBIT B ATTACHED TO EXHIBIT 4.3 TO REGISTRATION STATEMENT,
FORM OF INDENTURE

<PAGE>

EXHIBIT 4.3
FORM OF INDENTURE

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

COMED TRANSITIONAL FUNDING TRUST,

Note Issuer,

and

HARRIS TRUST AND SAVINGS BANK,

Indenture Trustee

------------------------------

INDENTURE

Dated as of [ ], 1998

------------------------------

Issuable in Series

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Definitions and Incorporation by Reference. . . . . . . . . . . . . . . . 3
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. . . . . 3
SECTION 1.03. Rules of Construction. . . . . . . . . . . . . . . . . . . 4

ARTICLE II
The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.01. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Denominations; Notes Issuable in Series. . . . . . . . . . 4
SECTION 2.03. Execution, Authentication and Delivery . . . . . . . . . . 6
SECTION 2.04. Temporary Notes. . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.05. Registration; Registration of Transfer and
Exchange of Notes. . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . . 8
SECTION 2.07. Persons Deemed Owner . . . . . . . . . . . . . . . . . . . 9
SECTION 2.08. Payment of Principal, Premium, if any, and Interest;
Interest on Overdue Principal; Principal, Premium,
if any, and Interest Rights Preserved. . . . . . . . . . . 9
SECTION 2.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 2.10. Outstanding Amount; Authentication and Delivery of Notes .11
SECTION 2.11. Book-Entry Notes . . . . . . . . . . . . . . . . . . . . .17
SECTION 2.12. Notices to Clearing Agency . . . . . . . . . . . . . . . .18
SECTION 2.13. Definitive Notes . . . . . . . . . . . . . . . . . . . . .18
SECTION 2.14. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 2.15. Letter of Representations. . . . . . . . . . . . . . . . .19
SECTION 2.16. Release of Note Collateral . . . . . . . . . . . . . . . .19
SECTION 2.17 Special Terms Applicable to Subsequent Transfers of
Certain Notes. . . . . . . . . . . . . . . . . . . . . . .19
SECTION 2.18. Tax Treatment. . . . . . . . . . . . . . . . . . . . . . .20
SECTION 2.19. State Pledge . . . . . . . . . . . . . . . . . . . . . . .20

ARTICLE III
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
SECTION 3.01. Payment of Principal, Premium, if any, and Interest. . . .21
SECTION 3.02. Maintenance of Office or Agency. . . . . . . . . . . . . .21
SECTION 3.03. Money for Payments To Be Held in Trust . . . . . . . . . .21
SECTION 3.04. Existence. . . . . . . . . . . . . . . . . . . . . . . . .23
SECTION 3.05. Protection of Note Collateral. . . . . . . . . . . . . . .23
SECTION 3.06. Opinions as to Note Collateral . . . . . . . . . . . . . .24
SECTION 3.07. Performance of Obligations; Servicing; SEC Filings . . . .25
SECTION 3.08. Certain Negative Covenants . . . . . . . . . . . . . . . .27
SECTION 3.09. Annual Statement as to Compliance. . . . . . . . . . . . .27
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
SECTION 3.10. Note Issuer May Consolidate, etc., Only on Certain Terms .28
SECTION 3.11. Successor or Transferee. . . . . . . . . . . . . . . . . .30
SECTION 3.12. No Other Business. . . . . . . . . . . . . . . . . . . . .30
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 3.14. Servicer's Obligations . . . . . . . . . . . . . . . . . .30
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. . . . .30
SECTION 3.16. Capital Expenditures . . . . . . . . . . . . . . . . . . .30
SECTION 3.17. Restricted Payments. . . . . . . . . . . . . . . . . . . .31
SECTION 3.18. Notice of Events of Default. . . . . . . . . . . . . . . .31
SECTION 3.19. Further Instruments and Acts . . . . . . . . . . . . . . .31
SECTION 3.20. Purchase of Subsequent Intangible Transition Property. . .31

ARTICLE IV
Satisfaction and Discharge; Defeasance. . . . . . . . . . . . . . . . . .33
SECTION 4.01. Satisfaction and Discharge of Indenture; Defeasance. . . .33
SECTION 4.02. Conditions to Defeasance . . . . . . . . . . . . . . . . .35
SECTION 4.03. Application of Trust Money . . . . . . . . . . . . . . . .36
SECTION 4.04. Repayment of Moneys Held by Paying Agent . . . . . . . . .36

ARTICLE V
Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 5.01. Events of Default. . . . . . . . . . . . . . . . . . . . .36
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment . . . .38
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee . . . . . . . . . . . . . . . . . . .39
SECTION 5.04. Remedies; Priorities . . . . . . . . . . . . . . . . . . .40
SECTION 5.05. Optional Preservation of the Note Collateral . . . . . . .42
SECTION 5.06. Limitation of Suits. . . . . . . . . . . . . . . . . . . .42
SECTION 5.07. Unconditional Rights of Holders To Receive Principal,
Premium, if any, and Interest. . . . . . . . . . . . . . .43
SECTION 5.08. Restoration of Rights and Remedies . . . . . . . . . . . .43
SECTION 5.09. Rights and Remedies Cumulative . . . . . . . . . . . . . .43
SECTION 5.10. Delay or Omission Not a Waiver . . . . . . . . . . . . . .43
SECTION 5.11. Control by Holders . . . . . . . . . . . . . . . . . . . .43
SECTION 5.12. Waiver of Past Defaults. . . . . . . . . . . . . . . . . .44
SECTION 5.13. Undertaking for Costs. . . . . . . . . . . . . . . . . . .45
SECTION 5.14. Waiver of Stay or Extension Laws . . . . . . . . . . . . .45
SECTION 5.15. Action on Notes. . . . . . . . . . . . . . . . . . . . . .45
SECTION 5.16. Performance and Enforcement of Certain Obligations . . . .45

ARTICLE VI
The Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . .46
SECTION 6.01. Duties of Indenture Trustee. . . . . . . . . . . . . . . .46
SECTION 6.02. Rights of Indenture Trustee. . . . . . . . . . . . . . . .47
SECTION 6.03. Individual Rights of Indenture Trustee . . . . . . . . . .48
</TABLE>

ii
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
SECTION 6.04. Indenture Trustee's Disclaimer . . . . . . . . . . . . . .48
SECTION 6.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . .48
SECTION 6.06. Reports by Indenture Trustee to Holders. . . . . . . . . .49
SECTION 6.07. Compensation and Indemnity . . . . . . . . . . . . . . . .49
SECTION 6.08. Replacement of Indenture Trustee . . . . . . . . . . . . .50
SECTION 6.09. Successor Indenture Trustee by Merger. . . . . . . . . . .51
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. . . . . . .51
SECTION 6.11. Eligibility; Disqualification. . . . . . . . . . . . . . .52
SECTION 6.12. Preferential Collection of Claims Against Note Issuer. . .53
SECTION 6.13. Representations and Warranties of Indenture Trustee. . . .53

ARTICLE VII
Holders' Lists and Reports. . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 7.01. Note Issuer To Furnish Indenture Trustee Names and
Addresses of Holders . . . . . . . . . . . . . . . . . . .53
SECTION 7.02. Preservation of Information; Communications to Holders. .53
SECTION 7.03. Reports by Note Issuer . . . . . . . . . . . . . . . . . .54
SECTION 7.04. Reports by Indenture Trustee . . . . . . . . . . . . . . .54

ARTICLE VIII
Accounts, Disbursements and Releases. . . . . . . . . . . . . . . . . . .55
SECTION 8.01. Collection of Money. . . . . . . . . . . . . . . . . . . .55
SECTION 8.02. Collection Account . . . . . . . . . . . . . . . . . . . .55
SECTION 8.03. General Provisions Regarding the Collection Account. . . .58
SECTION 8.04. Release of Note Collateral . . . . . . . . . . . . . . . .59
SECTION 8.05. Opinion of Counsel . . . . . . . . . . . . . . . . . . . .59
SECTION 8.06. Reports by Independent Accountants . . . . . . . . . . . .59

ARTICLE IX
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . .60
SECTION 9.01. Supplemental Indentures Without Consent of Holders . . . .60
SECTION 9.02. Supplemental Indentures with Consent of Holders. . . . . .61
SECTION 9.03. Execution of Supplemental Indentures . . . . . . . . . . .63
SECTION 9.04. Effect of Supplemental Indenture . . . . . . . . . . . . .63
SECTION 9.05. Conformity with Trust Indenture Act. . . . . . . . . . . .63
SECTION 9.06. Reference in Notes to Supplemental Indentures. . . . . . .64

ARTICLE X
Redemption of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 10.01. Optional Redemption by Note Issuer. . . . . . . . . . . .64
SECTION 10.02. Form of Optional Redemption Notice. . . . . . . . . . . .64
SECTION 10.03. Notes Payable on Optional Redemption Date . . . . . . . .65

ARTICLE XI
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
</TABLE>

iii
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
SECTION 11.01. Compliance Certificates and Opinions, etc.. . . . . . . .65
SECTION 11.02. Form of Documents Delivered to Indenture Trustee. . . . .67
SECTION 11.03. Acts of Holders . . . . . . . . . . . . . . . . . . . . .68
SECTION 11.04. Notices, etc., to Indenture Trustee, Note Issuer
and Rating Agencies . . . . . . . . . . . . . . . . . . .68
SECTION 11.05. Notices to Holders; Waiver. . . . . . . . . . . . . . . .69
SECTION 11.06. Conflict with Trust Indenture Act . . . . . . . . . . . .70
SECTION 11.07. Effect of Headings and Table of Contents. . . . . . . . .70
SECTION 11.08. Successors and Assigns. . . . . . . . . . . . . . . . . .70
SECTION 11.09. Separability. . . . . . . . . . . . . . . . . . . . . . .70
SECTION 11.10. Benefits of Indenture . . . . . . . . . . . . . . . . . .70
SECTION 11.11. Legal Holidays. . . . . . . . . . . . . . . . . . . . . .70
SECTION 11.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . .70
SECTION 11.13. Counterparts. . . . . . . . . . . . . . . . . . . . . . .70
SECTION 11.14. Recording of Indenture. . . . . . . . . . . . . . . . . .71
SECTION 11.15. Trust Obligation. . . . . . . . . . . . . . . . . . . . .71
SECTION 11.16. No Recourse to Note Issuer. . . . . . . . . . . . . . . .71
SECTION 11.17. Inspection. . . . . . . . . . . . . . . . . . . . . . . .71
SECTION 11.18 No Petition. . . . . . . . . . . . . . . . . . . . . . . .72
</TABLE>

EXHIBIT A-1 -- Form of Sale Agreement (See Exhibit 10.1 to Registration
Statement)
EXHIBIT A-2 -- Form of Servicing Agreement (See Exhibit 10.3 to Registration
Statement)
EXHIBIT B -- Form of Notes
EXHIBIT C -- Form of Trustee's Issuance Certificate (*to be filed by
amendment)
EXHIBIT D -- Form of Series Supplement

iv
<PAGE>

CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TIA SECTION INDENTURE SECTION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C>
310 (a)(1) 6.11
- --------------------------------------------------------------------------------
(a)(2) 6.11
- --------------------------------------------------------------------------------
(a)(3) 6.10
- --------------------------------------------------------------------------------
(a)(4) N.A.
- --------------------------------------------------------------------------------
(a)(5) 6.11
- --------------------------------------------------------------------------------
(b) 6.11
- --------------------------------------------------------------------------------
(c) N.A.
- --------------------------------------------------------------------------------
311 (a) 6.12
- --------------------------------------------------------------------------------
(b) 6.12
- --------------------------------------------------------------------------------
(c) N.A.
- --------------------------------------------------------------------------------
312 (a) 7.01, 7.02
- --------------------------------------------------------------------------------
(b) 7.02
- --------------------------------------------------------------------------------
(c) 7.02
- --------------------------------------------------------------------------------
313 (a) 7.04
- --------------------------------------------------------------------------------
(b)(1) 7.04
- --------------------------------------------------------------------------------
(b)(2) 7.04
- --------------------------------------------------------------------------------
(c) 7.04
- --------------------------------------------------------------------------------
(d) 7.04
- --------------------------------------------------------------------------------
314 (a) 7.03(a), 3.09
- --------------------------------------------------------------------------------
(b) 3.06
- --------------------------------------------------------------------------------
(c)(1) 2.10,4.01,11.01(a)
- --------------------------------------------------------------------------------
(c)(2) 2.10,4.01,11.01(a)
- --------------------------------------------------------------------------------
(c)(3) 2.10,4.01,11.01(a)
- --------------------------------------------------------------------------------
(d) 2.10, 11.01(b)
- --------------------------------------------------------------------------------
(e) 11.01(a)
- --------------------------------------------------------------------------------
(f) 11.01(a)
- --------------------------------------------------------------------------------
315 (a) 6.01(b)
- --------------------------------------------------------------------------------
(b) 6.05
- --------------------------------------------------------------------------------
(c) 6.01 (a)
- --------------------------------------------------------------------------------
(d) 6.02, 6.01(c)
- --------------------------------------------------------------------------------
(e) 5.13
- --------------------------------------------------------------------------------
316 (a)last
- --------------------------------------------------------------------------------
sentence Appendix A "Outstanding"
- --------------------------------------------------------------------------------
(a)(1)(A) 5.11
- --------------------------------------------------------------------------------
(a)(1)(B) 5.12
- --------------------------------------------------------------------------------
(a)(2) Omitted
- --------------------------------------------------------------------------------
(b) 5.07
- --------------------------------------------------------------------------------
(c) Appendix a "Record Date"
- --------------------------------------------------------------------------------
317 (a)(1) 5.03(b)
- --------------------------------------------------------------------------------
(a)(2) 5.03(c)
- --------------------------------------------------------------------------------
(b) 3.03
- --------------------------------------------------------------------------------
318 (a) 11.07
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>

N.A. means Not Applicable.
Note: This cross reference table shall not, for any purpose, be deemed to be
part of this Indenture.
- --------------------------------------------------------------------------------

<PAGE>

INDENTURE dated as of [ ], 1998, between COMED TRANSITIONAL FUNDING
TRUST, a Delaware business trust (the "Note Issuer"), and Harris Trust and
Savings Bank, as trustee (the "Indenture Trustee").

In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other and each of the Holders:

RECITALS OF THE NOTE ISSUER

The Note Issuer has duly authorized the execution and delivery of this
Indenture and the creation and issuance of Notes issuable in Series hereunder,
each Series to be of substantially the tenor set forth herein and in the
respective Trustee's Issuance Certificate or Series Supplement relating to each
such Series of Notes.

The Notes shall be non-recourse obligations and shall be secured by
and payable solely out of the proceeds of the Intangible Transition Property and
the other Note Collateral. If and to the extent that such proceeds of
Intangible Transition Property and the other Note Collateral are insufficient to
pay all amounts owing with respect to the Notes, then, except as otherwise
expressly provided hereunder, the Holders of the Notes shall have no Claim in
respect of such insufficiency against the Note Issuer, and the Holders, by their
acceptance of the Notes, waive any such Claim.

All things necessary to (a) make the Notes, when executed by the Note
Issuer and authenticated and delivered by the Indenture Trustee hereunder and
duly issued by the Note Issuer, valid obligations, and (b) make this Note
Indenture a valid agreement of the Note Issuer, in each case, in accordance with
their respective terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That the Note Issuer, in consideration of the premises herein
contained and of the purchase of the Notes by the Holders and of other good and
lawful consideration, the receipt and sufficiency of which are hereby
acknowledged, and to secure, equally and ratably without prejudice, priority or
distinction, except as specifically otherwise set forth in this Indenture, the
payment of the Notes, the payment of all other amounts due under or in
connection with this Indenture and the performance and observance of all of the
covenants and conditions contained herein or in such Notes, has hereby executed
and delivered this Indenture and by these presents does hereby convey, grant and
assign, transfer and pledge, in each case, in and unto the Indenture Trustee,
its successors and assigns forever, for the benefit of the Holders, all and
singular in the property hereinafter described (hereinafter referred to as the
"NOTE COLLATERAL"), to wit:

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<PAGE>

GRANTING CLAUSE

The Note Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as Indenture Trustee for the benefit of the Holders of the Notes from time
to time issued and outstanding, all of the Note Issuer's right, title and
interest in and to (a) the Intangible Transition Property created under and
pursuant to the 1998 Funding Order, and transferred by the Grantee to the Note
Issuer pursuant to the Sale Agreement (including, to the fullest extent
permitted by law, all revenues, collections, claims, rights, payments, money or
proceeds of or arising from the IFCs authorized in the 1998 Funding Order and
any tariffs filed pursuant thereto and any Allocable IFC Revenue Amounts), (b)
all Intangible Transition Property created under and pursuant to any Subsequent
Funding Order , and transferred by the Grantee to the Note Issuer pursuant to a
Subsequent Sale Agreement (including, to the fullest extent permitted by law,
all revenues, collections, claims, rights, payments, money or proceeds of or
arising from the IFCs authorized in such Subsequent Funding Order and any
tariffs filed pursuant thereto), (c) the Grant Agreement, the Sale Agreement and
all property and interests in property transferred under the Sale Agreement, (d)
each Subsequent Grant Agreement, Subsequent Sale Agreement and all property and
interests in property transferred under any Subsequent Sale Agreement, (e) the
Servicing Agreement, (f) the Collection Account, all subaccounts thereof and all
amounts of cash or investment property on deposit therein or credited thereto
from time to time, (g) any interest rate exchange agreement which is executed in
connection with the issuance of Floating Rate Notes, (h) all rights to compel
the Servicer to file for and obtain adjustments to the IFCs in accordance with
Section 18-104(d) of the Funding Law, the 1998 Funding Order or any Subsequent
Funding Order or any Tariff filed in connection therewith, (i) all present and
future claims, demands, causes and chooses in action in respect of any or all of
the foregoing, and (j) all payments on or under, and all proceeds in respect of,
any or all of the foregoing; IT BEING UNDERSTOOD THAT THE FOLLOWING DO NOT
CONSTITUTE NOTE COLLATERAL: (i) the cash contributed to the Note Issuer by the
Grantee which is not held in the Capital Subaccount, including cash that has
been released to the Grantee or as it directs pursuant to Section 8.02(d)
following retirement of a Series of Notes, (ii) net investment earnings which
have been released to the Note Issuer pursuant to Section 8.02(d), (iii) the
Overcollateralization Amount with respect to a Series of Notes that has been
released to the Grantee or as it directs pursuant to Section 8.02(d), following
retirement of such Series of Notes and (iv) amounts deposited with the Note
Issuer on any Series Issuance Date, including the Closing Date, for payment of
costs of issuance with respect to the related Series (together with any interest
earnings thereon), it being understood that such amounts described in clauses
(i) and (iv) above shall not be subject to Section 3.18.

The foregoing Grant is made in trust to secure the payment of
principal of and premium, if any, interest on, and any other amounts owing in
respect of, the Notes equally and ratably without prejudice, priority or
distinction, except as expressly provided in this Indenture, and to secure
compliance with the provisions of this Indenture with respect to the Notes, all
as provided in this Indenture. This Indenture constitutes a security agreement
within the meaning of the UCC to the extent that, under Illinois law, the
provisions of the UCC are applicable hereto.

2
<PAGE>

The Indenture Trustee, as trustee on behalf of the Holders,
acknowledges such Grant and accepts the trusts under this Indenture in
accordance with the provisions of this Indenture.

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties
hereto that all Notes are to be issued, countersigned and delivered and that all
of the Note Collateral is to be held and applied, subject to the further
covenants, conditions, releases, uses and trusts hereinafter set forth, and the
Note Issuer, for itself and any successor, does hereby covenant and agree to and
with the Indenture Trustee and its successors in said trust, for the benefit of
the Holders, as follows:

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. DEFINITIONS. Except as otherwise specified herein or
as the context may otherwise require, the capitalized terms used herein shall
have the respective meanings set forth in Appendix A attached hereto and made a
part hereof for all purposes of this Indenture.

SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:

"indenture securities" means the Notes.

"indenture security holder" means a Holder.

"indenture to be qualified" means this Indenture.

"indenture trustee" or "institutional trustee" means the Indenture
Trustee.

"obligor" on the indenture securities means the Note Issuer and any
other obligor on the indenture securities.

All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.

SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:

(i) a term has the meaning assigned to it;

3
<PAGE>

(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;

(iii) "or" is not exclusive;

(iv) "including" means including without limitation;

(v) words in the singular include the plural and words in the plural
include the singular; and

(vi) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

ARTICLE II

THE NOTES

SECTION 2.01. FORM. The Notes and the Indenture Trustee's
certificate of authentication shall be in substantially the forms set forth in
Exhibit B, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture or by the related
Trustee's Issuance Certificate or Series Supplement, if any, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of such Notes.
Any portion of the text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Note.

The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.

Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit B are part of the terms of this Indenture.

SECTION 2.02. DENOMINATIONS; NOTES ISSUABLE IN SERIES. The Notes
shall be issuable in the Minimum Denomination specified in the applicable
Trustee's Issuance Certificate or Series Supplement, if any, and, except as
otherwise provided in such Trustee's Issuance Certificate or Series Supplement,
if any, in integral multiples thereof.

The Notes may, at the election of and as authorized by a Responsible
Officer of the Note Issuer, be issued in one or more Series (each comprised of
one or more Classes), and shall be designated generally as the "Notes" of the
Note Issuer, with such further particular designations added or incorporated in
such title for the Notes of any particular Series or Class as a

4
<PAGE>

Responsible Officer of the Note Issuer may determine. Each Note shall bear upon
its face the designation so selected for the Series or Class to which it
belongs. All Notes of the same Series shall be identical in all respects except
for the denominations thereof, unless such Series is comprised of one or more
Classes, in which case all Notes of the same Class shall be identical in all
respects except for the denominations thereof. All Notes of a particular Series
or, if such Series is comprised of one or more Classes, all Notes of a
particular Class thereof, in each case issued under this Indenture, shall be in
all respects equally and ratably entitled to the benefits hereof without
preference, priority, or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture.

Each Series of Notes shall be created by a Trustee's Issuance
Certificate or Series Supplement, as the case may be, authorized by a
Responsible Officer of the Note Issuer and establishing the terms and provisions
of such Series. The several Series and Classes thereof may differ as between
Series and Classes, in respect of any of the following matters:

(1) designation of the Series and, if applicable, the Classes
thereof;

(2) the principal amount;

(3) the Note Interest Rate;

(4) the Payment Dates;

(5) the Scheduled Maturity Date;

(6) the Final Maturity Date;

(7) the Series Issuance Date;

(8) the place or places for the payment of interest, principal and
premium, if any;

(9) the Minimum Denominations;

(10) the Expected Amortization Schedule;

(11) provisions with respect to the definitions set forth in Appendix
A hereto;

(12) whether or not the Notes of such Series are to be Book-Entry
Notes and the extent to which Section 2.11 should apply;

(13) any redemption provisions applicable to the Notes of such Series
and the price or prices at which and the terms and conditions upon which
Notes of such Series shall be redeemed or purchased;

5
<PAGE>

(14) to the extent applicable, the extent to which payments on the
Notes of the related Series are subordinate to or PARI PASSU in right of
payment of principal and interest to other Notes; and

(15) any other provisions expressing or referring to the terms and
conditions upon which the Notes of the applicable Series or Class are to be
issued under this Indenture that are not in conflict with the provisions of
this Indenture and as to which the Rating Agency Condition is satisfied.

SECTION 2.03. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes
shall be executed on behalf of the Note Issuer by any of its Responsible
Officers. The signature of any such Responsible Officer on the Notes may be
manual or facsimile.

Notes bearing the manual or facsimile signature of individuals who
were at any time Responsible Officers of the Note Issuer shall bind the Note
Issuer, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.

At any time and from time to time after the execution and delivery of
this Indenture, the Note Issuer may deliver Notes executed by the Note Issuer to
the Indenture Trustee pursuant to an Issuer Order for authentication; and the
Indenture Trustee shall authenticate and deliver such Notes as in this Indenture
provided and not otherwise.

No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for therein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.

SECTION 2.04. TEMPORARY NOTES. Pending the preparation of Definitive
Notes, the Note Issuer may execute, and upon receipt of an Issuer Order the
Indenture Trustee shall authenticate and deliver, Temporary Notes which are
printed, lithographed, typewritten, mimeographed or otherwise produced, of the
tenor of the Definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.

If Temporary Notes are issued, the Note Issuer will cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the Temporary Notes at the office or agency of the Note Issuer
to be maintained as provided in Section 3.02, without charge to the Holder.
Upon surrender for cancellation of any one or more Temporary Notes, the Note
Issuer shall execute and the Indenture Trustee shall authenticate and deliver in
exchange therefor

6
<PAGE>

a like principal amount of Definitive Notes of authorized denominations. Until
so delivered in exchange, the Temporary Notes shall in all respects be entitled
to the same benefits under this Indenture as Definitive Notes.

SECTION 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE OF
NOTES. The Note Issuer shall cause to be kept a register (the "Note Register")
in which, subject to such reasonable regulations as it may prescribe, the Note
Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Indenture Trustee shall be "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Note Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties of
Note Registrar.

If a Person other than the Indenture Trustee is appointed by the Note
Issuer as Note Registrar, the Note Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by a Responsible
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.

Upon surrender for registration of transfer of any Note at the office
or agency of the Note Issuer to be maintained as provided in Section 3.02, the
Note Issuer shall execute, and the Indenture Trustee shall authenticate and the
Holder shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any Minimum Denominations,
of the same Series (and, if applicable, Class) and aggregate principal amount.

At the option of the Holder, Notes may be exchanged for other Notes in
any Minimum Denominations, of the same Series (and, if applicable, Class) and
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, the Note
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Holder shall obtain from the Indenture Trustee, the Notes which the Holder
making the exchange is entitled to receive.

All Notes issued upon any registration of transfer or exchange of
other Notes shall be the valid obligations of the Note Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.

Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by (a) a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by an institution which is a

7
<PAGE>

member of one of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock
Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) such other guarantee program acceptable to the Indenture
Trustee, and (b) such other documents as the Indenture Trustee may require.

No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Note Issuer or Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.04 or 9.06 not
involving any transfer.

The preceding provisions of this Section notwithstanding, the Note
Issuer shall not be required to make, and the Note Registrar need not register
transfers or exchanges (i) of Notes that have been selected for redemption
pursuant to Article X, (ii) of any Note that has been submitted within 15 days
preceding the due date for any payment with respect to such Note or (iii) of
Unregistered Notes unless Section 2.17 has been complied with in connection with
such transfer or exchange.

SECTION 2.06. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Note Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Note Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a
protected purchaser, the Note Issuer shall execute and, upon its request, the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of like
Series (and, if applicable, Class), tenor and principal amount, bearing a number
not contemporaneously outstanding; PROVIDED, HOWEVER, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within seven days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Note Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Optional
Redemption Date without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a purchaser of the original Note in lieu of
which such replacement Note was issued presents for payment such original Note,
the Note Issuer and the Indenture Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Note Issuer or the
Indenture Trustee in connection therewith.

8
<PAGE>

Upon the issuance of any replacement Note under this Section, the Note
Issuer and/or the Indenture Trustee may require the payment by the Holder of
such Note of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other reasonable expenses (including
the fees and expenses of the Indenture Trustee) connected therewith.

Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Note Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be found at any time or enforced
by any Person, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.

SECTION 2.07. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Note Issuer, the Indenture Trustee and
any agent of the Note Issuer or the Indenture Trustee may treat the Person in
whose name any Note is registered (as of the day of determination) as the owner
of such Note for the purpose of receiving payments of principal of and premium,
if any, and interest on such Note and for all other purposes whatsoever, whether
or not such Note be overdue, and neither the Note Issuer, the Indenture Trustee
nor any agent of the Note Issuer or the Indenture Trustee shall be affected by
notice to the contrary.

SECTION 2.08. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST;
INTEREST ON OVERDUE PRINCIPAL; PRINCIPAL, PREMIUM, IF ANY, AND INTEREST RIGHTS
PRESERVED. (a) The Notes shall accrue interest as provided in the related
Trustee's Issuance Certificate or Series Supplement at the applicable Note
Interest Rate specified therein, and such interest shall be payable on each
Payment Date as specified therein. Any installment of interest, principal or
premium, if any, payable on any Note which is punctually paid or duly provided
for by the Note Issuer on the applicable Payment Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date for such Payment Date, by check mailed first-class, postage
prepaid to such Person's address as it appears on the Note Register on such
Record Date or in such other manner as may be provided in the related Trustee's
Issuance Certificate or Series Supplement, if any, except that with respect to
Book Entry Notes payments will be made by wire transfer in immediately available
funds to the account designated by the Holder of the applicable Global Note
unless and until such Global Note is exchanged for Definitive Notes (in which
event payments shall be made as provided above) and except for the final
installment of principal and premium, if any, payable with respect to such Note
on a Payment Date which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03 hereof.

9
<PAGE>

(b) The principal of each Note of each Series (and, if applicable,
Class) shall be paid, to the extent funds are available therefor in the
Collection Account, in installments on each Payment Date specified in the
related Trustee's Issuance Certificate or Series Supplement, if any.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
of a Series shall be due and payable, if not previously paid, on the date on
which an Event of Default shall have occurred and be continuing with respect to
such Series, if the Indenture Trustee or the Holders of the Notes representing
not less than a majority of the Outstanding Amount of the Notes of all Series
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.02. All payments of principal and premium, if any, on the Notes of
any Series shall be made pro rata to the Holders entitled thereto. The
Indenture Trustee shall notify the Person in whose name a Note is registered at
the close of business on the Record Date preceding the Payment Date on which the
Note Issuer expects that the final installment of principal of and premium, if
any, and interest on such Note will be paid. Such notice shall be mailed no
later than five days prior to such final Payment Date and shall specify that
such final installment will be payable only upon presentation and surrender of
such Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Holders as provided in Section 10.02.

(c) If interest on the Notes of any Series is not paid when due, such
defaulted interest shall be paid (plus interest on such defaulted interest at
the applicable Note Interest Rate to the extent lawful) to the Persons who are
Holders on a subsequent Special Record Date, which date shall be at least five
Business Days prior to the Special Payment Date. The Note Issuer shall fix or
cause to be fixed any such Special Record Date and Special Payment Date, and, at
least 20 days before any such Special Record Date, the Note Issuer shall mail to
each affected Holder a notice that states the Special Record Date, the Special
Payment Date and the amount of defaulted interest (plus interest on such
defaulted interest) to be paid.

SECTION 2.09. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Note Issuer may at
any time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Note Issuer may have acquired in
any manner whatsoever, and all Notes so delivered shall be promptly canceled by
the Indenture Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time.

SECTION 2.10. OUTSTANDING AMOUNT; AUTHENTICATION AND DELIVERY OF
NOTES. The aggregate Outstanding Amount of Notes that may be authenticated and
delivered under this Indenture shall be limited as provided in Section 3.08.

10
<PAGE>

Notes of each Series created and established by a Trustee's Issuance
Certificate or Series Supplement, if any, may from time to time be executed by
the Note Issuer and delivered to the Indenture Trustee for authentication and
thereupon the same shall be authenticated and delivered by the Indenture Trustee
upon Issuer Request and upon delivery by the Note Issuer to the Indenture
Trustee, and receipt by the Indenture Trustee, or the causing to occur by the
Note Issuer, of the following; PROVIDED, HOWEVER, that compliance with such
conditions and delivery of such documents shall only be required in connection
with the original issuance of a Note or Notes of such Series:

(1) NOTE ISSUER ACTION. An Issuer Order authorizing and directing
the execution, authentication and delivery of the Notes by the Indenture
Trustee and specifying the principal amount of Notes to be authenticated.

(2) AUTHORIZATIONS. The Funding Order related to such Series shall
be in full force and effect and be Final.

(3) OPINIONS. (a) An Opinion of Counsel that the applicable Funding
Order is in full force and effect and Final and that no other
authorization, approval or consent of any governmental body or bodies at
the time having jurisdiction in the premises is required for the valid
issuance, authentication and delivery of such Notes, except for such
registrations as are required under the Blue Sky and securities laws of any
State or such authorizations, approvals or consents of governmental bodies
that have been obtained and copies of which have been delivered with such
Opinion of Counsel.

(b) An Opinion of Counsel that no authorization, approval or consent
of any governmental body or bodies at the time having jurisdiction in the
premises is required for the valid execution and delivery by the Note
Issuer of each of the Basic Documents to which the Note Issuer is a party,
except for such authorizations, approvals or consents of governmental
bodies that have been obtained and copies of which have been delivered with
such Opinion of Counsel.

(4) AUTHORIZING CERTIFICATE. A certificate of a Responsible Officer
of the Note Issuer certifying that (i) the Note Issuer has duly authorized
the execution and delivery of this Indenture and the related Trustee's
Issuance Certificate or Series Supplement, as the case may be, and the
execution and delivery of the Notes of such Series and (ii) that the
Trustee's Issuance Certificate or Series Supplement, as the case may be,
for such Series of Notes shall be in the form attached thereto, which
Trustee's Issuance Certificate or Series Supplement, as the case may be,
shall comply with the requirements of Section 2.02 hereof.

(5) THE NOTE COLLATERAL. The Note Issuer shall have made or caused
to be made all filings with the ICC pursuant to the Funding Order and the
Funding Law and all

11
<PAGE>

other filings necessary to perfect the Grant of the Note Collateral to the
Indenture Trustee and the lien of this Indenture.

(6) CERTIFICATES OF THE NOTE ISSUER AND THE GRANTEE. (a) An Officer's
Certificate from the Note Issuer, dated as of the Series Issuance Date:

(i) to the effect that (A) the Note Issuer is not in Default
under this Indenture and that the issuance of the Notes applied for
will not result in any Default or in any breach of any of the terms,
conditions or provisions of or constitute a default under the Funding
Order or any indenture, mortgage, deed of trust or other agreement or
instrument to which the Note Issuer is a party or by which it or its
property is bound or any order of any court or administrative agency
entered in any Proceeding to which the Note Issuer is a party or by
which it or its property may be bound or to which it or its property
may be subject and (B) that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the Notes
applied for have been complied with;

(ii) to the effect that the Note Issuer has not assigned any
interest or participation in the Note Collateral except for the Grant
contained in this Indenture; the Note Issuer has the power and right
to Grant the Note Collateral to the Indenture Trustee as security
hereunder; and the Note Issuer, subject to the terms of this
Indenture, has Granted to the Indenture Trustee all of its right,
title and interest in and to such Note Collateral free and clear of
any lien, mortgage, pledge, charge, security interest, adverse claim
or other encumbrance arising as a result of actions of the Note Issuer
or through the Note Issuer, except the lien of this Indenture;

(iii) to the effect that the Note Issuer has appointed the firm
of Independent certified public accountants as contemplated in Section
8.06 hereof;

(iv) to the effect that attached thereto are duly executed,
true and complete copies of the Grant Agreement and the Sale Agreement
or Subsequent Grant Agreement and Subsequent Sale Agreement, as
applicable, and the Servicing Agreement; and

(v) stating that all filings with the ICC pursuant to the
Funding Law and the Funding Order and all UCC financing statements
with respect to the Note Collateral which are required to be filed by
the terms of the Funding Order, the Funding Law, the Grant Agreement
and the Sale Agreement or Subsequent Grant Agreement and Subsequent
Sale Agreement, as applicable, the Servicing Agreement and this
Indenture have been filed as required.

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(b) An Officer's Certificate from the Grantee, dated as of the Series
Issuance Date, to the effect that, in the case of the Intangible Transition
Property, immediately prior to the conveyance thereof to the Note Issuer
pursuant to the Sale Agreement or the Subsequent Sale Agreement, as
applicable:

(i) the Grantee was the owner of such Intangible Transition
Property, free and clear of any Lien; the Grantee had not assigned any
interest or participation in such Intangible Transition Property and
the proceeds thereof other than to the Note Issuer pursuant to the
Sale Agreement or Subsequent Sale Agreement, as applicable; the
Grantee has the power and right to convey such Intangible Transition
Property and the proceeds thereof to the Note Issuer; and the Grantee,
subject to the terms of the Sale Agreement or the Subsequent Sale
Agreement, as applicable, has validly conveyed to the Note Issuer all
of its right, title and interest in and to such Intangible Transition
Property and the proceeds thereof, free and clear of any lien,
mortgage, pledge, charge, security interest, adverse claim or other
encumbrance;

(ii) the attached copy of the Funding Order creating such
Intangible Transition Property is true and correct; and

(7) OPINION OF TAX COUNSEL. ComEd shall have delivered to the
Grantee, the Note Issuer, the Delaware Trustee and the Indenture Trustee an
opinion of independent tax counsel and/or a ruling from the Internal
Revenue Service (as selected by, and in form and substance reasonably
satisfactory to, ComEd) to the effect that, for federal income tax
purposes, (i) such issuance of the Notes, and transfer of the Note proceeds
to ComEd, will not result in gross income to the Grantee, the Note Issuer
or ComEd and (ii) such issuance will not materially adversely affect the
characterization of the then Outstanding Notes as obligations of ComEd.

(8) OPINION OF COUNSEL. Unless otherwise specified in a Trustee's
Issuance Certificate or Series Supplement, if any, an Opinion of Counsel,
portions of which may be delivered by counsel for the Note Issuer, portions
of which may be delivered by counsel for the Grantee and the Servicer, and
portions of which may be delivered by counsel for the Indenture Trustee,
dated the Series Issuance Date, in each case subject to the customary
exceptions, qualifications and assumptions contained therein, to the
collective effect that:

(a) the Indenture has been duly qualified under the Trust
Indenture Act and either the related Trustee's Issuance Certificate
or Series Supplement, if any, has been duly qualified under the Trust
Indenture Act or no such qualification of the Trustee's Issuance
Certificate or Series Supplement is necessary;

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(b) all instruments furnished to the Indenture Trustee
pursuant to this Indenture conform to the requirements set forth in
this Indenture and constitute all of the documents required to be
delivered hereunder for the Indenture Trustee to authenticate and
deliver the Notes applied for, and all conditions precedent provided
for in this Indenture relating to the authentication and delivery of
the Notes have been complied with;

(c) the Note Issuer has the power and authority to execute and
deliver the Trustee's Issuance Certificate, the Series Supplement, if
any, and this Indenture and to issue the Notes, and each of the
Trustee's Issuance Certificate, the Series Supplement, if any, and
this Indenture, and the Notes have been duly authorized and the Note
Issuer is duly formed and is validly existing in good standing under
the laws of the jurisdiction of its organization;

(d) the Trustee's Issuance Certificate, the Series Supplement,
if any, and the Indenture have been duly authorized, executed and
delivered by the Note Issuer;

(e) the Notes applied for have been duly authorized and
executed and, when authenticated in accordance with the provisions of
the Indenture and delivered against payment of the purchase price
therefor, will constitute valid and binding obligations of the Note
Issuer, entitled to the benefits of the Indenture and any related
Trustee's Issuance Certificate or Series Supplement;

(f) this Indenture, the Grant Agreement or the Subsequent
Grant Agreement as applicable, the Sale Agreement or the Subsequent
Sale Agreement as applicable, the Servicing Agreement and the related
Trustee's Issuance Certificate or Series Supplement, if any, are valid
and binding agreements of the Note Issuer, enforceable in accordance
with their respective terms, except as such enforceability may be
subject to bankruptcy, insolvency, reorganization and other similar
laws affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);

(g) in accordance with the Funding Law, the Funding Order (A)
creates Intangible Transition Property in an amount not less than the
amount, if any, specified in the Trustee's Issuance Certificate or
Series Supplement, if any, which was vested by the Funding Order in
the Grantee; (B) approves and authorizes the sale, transfer and
assignment by the Grantee of such Intangible Transition Property to
the Note Issuer; (C) approves the issuance and sale by the Note Issuer
of the Notes to be issued on such Series Issuance Date in an aggregate
principal amount which equals or exceeds the initial Outstanding
Amount of the Notes referred to in (1) above; and (D) declares and
establishes that such Notes are Transitional

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Funding Instruments within the meaning of Section 18-102 of the
Funding Law; and

(h) (A) at the time of the issuance of such Notes the lien of
this Indenture in favor of the Holders in the Intangible Transition
Property attaches automatically; (B) such lien has been perfected in
accordance with Section 18-107(c) of the Funding Law and in accordance
with the Funding Order; (C) such lien is valid and enforceable against
ComEd, the Servicer, the Grantee, the Note Issuer, and all third
parties, including judgment lien creditors; and (D) such lien ranks
prior to any other lien which subsequently attaches to the Intangible
Transition Property;

(i) with respect to the Note Collateral other than the
Intangible Transition Property, upon the giving of value by the
Indenture Trustee to the Note Issuer with respect to such Note
Collateral, (A) this Indenture, together with any related Trustee's
Issuance Certificate or Series Supplement, creates in favor of the
Indenture Trustee a security interest in the rights of the Note Issuer
in such Note Collateral, and such security interest is enforceable
against ComEd, the Servicer, the Grantee, the Note Issuer and all
third parties, (B) such security interest is perfected, and (C) such
perfected security interest is of first priority;

(j) either (A) the Registration Statement covering the Notes is
effective under the Securities Act and, to such counsel's knowledge,
no stop order suspending the effectiveness of such Registration
Statement has been issued under the Securities Act and no proceedings
for that purpose have been initiated or are pending or threatened by
the SEC or (B) the Notes are exempt from the registration requirements
under the Securities Act;

(k) the Note Issuer is not now and, assuming that the Note
Issuer uses the proceeds of the sale of the Notes for the purpose of
acquiring Intangible Transition Property in accordance with the terms
of the Sale Agreement or the Subsequent Sale Agreement, as applicable,
following the sale of the Notes to the underwriter, underwriters,
placement agent or agents or similar Person, neither the Note Issuer
nor the Grantee will be required to be registered under the Investment
Company Act of 1940, as amended;

(l) the Grant Agreement or Subsequent Grant Agreement, as
applicable, is a valid and binding agreement of ComEd enforceable
against ComEd in accordance with its terms and the Sale Agreement or
Subsequent Sale Agreement as applicable, is a valid and binding
agreement of the Grantee enforceable against the Grantee in
accordance with its terms, except in each case as such enforceability
may be subject to bankruptcy, insolvency, reorganization and other
similar laws affecting the rights of creditors generally and general
principles

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of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law);

(m) the Servicing Agreement is a valid and binding agreement
of the Servicer enforceable against the Servicer in accordance with
its terms except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting the rights
of creditors generally and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);

(n) pursuant to the Funding Order and upon the delivery of the
fully executed Sale Agreement or Subsequent Sale Agreement as
applicable to the Note Issuer and the payment of the purchase price of
the Intangible Transition Property by the Note Issuer to the Grantee
pursuant to the Sale Agreement or Subsequent Sale Agreement as
applicable, (i) the transfer of the Intangible Transition Property by
the Grantee to the Note Issuer conveys the Grantee's right, title and
interest in the Intangible Transition Property to the Note Issuer and
will be treated under Illinois state law as an absolute transfer of
all of the Grantee's right, title, and interest in the Intangible
Transition Property, other than for federal and state income and
franchise tax purposes, (ii) such transfer of the Intangible
Transition Property is perfected, (iii) such transfer has priority
over any other assignment of the Intangible Transition Property and
(iv) the Intangible Transition Property is free and clear of all liens
created prior to its transfer to the Note Issuer pursuant to the Sale
Agreement; and

(o) such other matters as the Indenture Trustee may reasonably
require.

[(8) ACCOUNTANT'S CERTIFICATE OR OPINION. Unless otherwise specified
in a Trustee's Issuance Certificate or a Series Supplement, if any, a
certificate or opinion, addressed to the Note Issuer and the Indenture
Trustee complying with the requirements of Section 11.01(a) hereof, of a
firm of Independent certified public accountants of recognized national
reputation to the effect that (a) such accountants are Independent with
respect to the Note Issuer within the meaning of this Indenture, and are
independent public accountants within the meaning of the standards of The
American Institute of Certified Public Accountants, and (b) with respect to
the Note Collateral, they have made such calculations as they deemed
necessary for the purpose and determined that, based on the assumptions
used in calculating the initial IFCs or, if applicable, the most recent
revised IFCs, as of the Series Issuance Date for such Series (after giving
effect to the issuance of such Series and the application of the proceeds
therefrom) such IFCs are sufficient to pay (a) Operating Expenses when
incurred, plus (b) the Overcollateralization Amount, plus (c) interest on
each Series of Notes at their respective Note Interest Rates when due, plus
(d) principal of each Series of Notes in accordance with the Expected
Amortization Schedule.]

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(9) RATING AGENCY CONDITION. The Indenture Trustee shall receive
evidence reasonably satisfactory to it that the Rating Agency Condition
will be satisfied with respect to the issuance of such new Series.

(10) REQUIREMENTS OF TRUSTEE'S ISSUANCE CERTIFICATE OR SERIES
SUPPLEMENT. Such other funds, accounts, documents certificates,
agreements, instruments or opinions as may be required by the terms of the
Trustee's Issuance Certificate or Series Supplement, if any, creating such
Series.

(11) OTHER REQUIREMENTS. Such other documents, certificates,
agreements, instruments or opinions as the Indenture Trustee may reasonably
require.

SECTION 2.11. BOOK-ENTRY NOTES. Unless the applicable Trustee's
Issuance Certificate or Series Supplement, if any, provides otherwise, all of
the related Series of Notes shall be issued in Book-Entry Form, and the Note
Issuer shall execute and the Indenture Trustee shall, in accordance with this
Section and the Issuer Order with respect to such Series, authenticate and
deliver one or more Global Notes, evidencing the Notes of such Series which (i)
shall be an aggregate original principal amount equal to the aggregate original
principal amount of such Notes to be issued pursuant to the applicable Issuer
Order, (ii) shall be registered in the name of the Clearing Agency therefor or
its nominee, which shall initially be Cede & Co., as nominee for The Depository
Trust Company, the initial Clearing Agency, (iii) shall be delivered by the
Indenture Trustee to such Clearing Agency's or such nominee's instructions, and
(iv) shall bear a legend substantially to the following effect: "Transfers of
this Global Note shall be limited to transfers in the Clearing Agency or to a
successor thereof or such successor's nominee and transfers of portions of this
Global Note shall be limited to transfers made in accordance with the
restrictions set forth in the Indenture."

Each Clearing Agency designated pursuant to this Section 2.11 must, at
the time of its designation and at all times while it serves as Clearing Agency
hereunder, be a "clearing agency" registered under the Exchange Act and any
other applicable statute or regulation.

No Holder of any such Series of Notes issued in Book-Entry Form shall
receive a Definitive Note representing such Holder's interest in any such Notes,
except as provided in Section 2.13 or in the applicable Trustee's Issuance
Certificate or Series Supplement, if any, relating to such Notes. Unless (and
until) certificated, fully registered Notes of any Series (the "Definitive
Notes") have been issued to the Holders of such Series pursuant to Section 2.13
or pursuant to any applicable Trustee's Issuance Certificate or Series
Supplement, if any, relating thereto:

(a) the provisions of this Section 2.11 shall be in full force
and effect;

(b) the Note Issuer, the Servicer, the Paying Agent, the Note
Registrar and the Indenture Trustee may deal with the Clearing Agency
for all purposes

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<PAGE>

(including the making of distributions on the Notes of such Series) as
the authorized representatives of the Holders of such Series;

(c) to the extent that the provisions of this Section 2.11
conflict with any other provisions of this Indenture, the provisions
of this Section 2.11 shall control; and

(d) the rights of Holders of such Series shall be exercised
only through the Clearing Agency and the Clearing Agency Participants
and shall be limited to those established by law and agreements
between such Holders and the Clearing Agency and/or the Clearing
Agency Participants. Unless and until Definitive Note are issued
pursuant to Section 2.13, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest on the
Book-Entry notes to such Clearing Agency Participants.

SECTION 2.12. NOTICES TO CLEARING AGENCY. Unless and until
Definitive Notes shall have been issued to Holders of such Series pursuant to
Section 2.13 or the applicable Trustee's Issuance Certificate or Series
Supplement, if any, relating to such Notes, whenever notice, payment, or other
communication to the holders of Book-Entry Notes of any Series is required under
this Indenture, the Indenture Trustee, the Servicer and the Paying Agent shall
give all such notices and communications specified herein to be given to Holders
of such Series to the Clearing Agency.

SECTION 2.13. DEFINITIVE NOTES. If (i)(A) the Administrator advises
the Indenture Trustee in writing that the Clearing Agency is no longer willing
or able to properly discharge its responsibilities under any Letter of
Representations and (B) the Administrator is unable to locate a qualified
successor Clearing Agency, (ii) the Administrator, at its option, advises the
Indenture Trustee in writing that, with respect to any Series, it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of a Servicer Default, Holders holding Notes aggregating not less
than 50% of the aggregate Outstanding Amount of any Series of Notes maintained
as Book-Entry Notes advise the Indenture Trustee, the Administrator, the Note
Issuer and the Clearing Agency (through the Clearing Agency Participants) in
writing that the continuation of a book-entry system through the Clearing Agency
is no longer in the best interests of the Holders of such Series, the
Administrator shall notify the Clearing Agency, the Indenture Trustee and all
such Holders of such Series of the occurrence of any such event and of the
availability of Definitive Notes of such Series to the Holders of such Series
requesting the same. Upon surrender to the Indenture Trustee of the Global
Notes of such Series by the Clearing Agency accompanied by registration
instructions from such Clearing Agency for registration, the Indenture Trustee
shall authenticate and deliver Definitive Notes of such Series. None of the
Note Issuer, the Note Registrar, or the Indenture Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Notes of any Series, all

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<PAGE>

references herein to obligations with respect to such Series imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Indenture Trustee, to the extent applicable with respect to
such Definitive Notes and the Indenture Trustee shall recognize the Holders of
the Definitive Notes as Holders hereunder.

SECTION 2.14. CUSIP NUMBER. The Note Issuer in issuing any Note or
Series of Notes may use a "CUSIP" number and, if so used, the Indenture Trustee
shall use the CUSIP number in any notices to the Holders thereof as a
convenience to such Holders; PROVIDED, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Note Issuer shall
promptly notify the Indenture Trustee of any change in the CUSIP number with
respect to any Note.

SECTION 2.15. LETTER OF REPRESENTATIONS. Notwithstanding anything to
the contrary in this Indenture or any Series Supplement or any Trustee's
Issuance Certificate, the parties hereto shall comply with the terms of each
Letter of Representations.

SECTION 2.16. RELEASE OF NOTE COLLATERAL. Subject to Section 11.01,
the Indenture Trustee shall release property from the lien of this Indenture
only as specified in Section 8.02(d) or upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(l) or an Opinion
of Counsel in lieu of such Independent Certificates to the effect that the TIA
does not require any such Independent Certificates.

SECTION 2.17 SPECIAL TERMS APPLICABLE TO SUBSEQUENT TRANSFERS OF
CERTAIN NOTES.

(a) Certain Series of Notes may not be registered under the
Securities Act, or the securities laws of any other jurisdiction. Consequently,
such Unregistered Notes shall not be transferable other than pursuant to an
exemption from the registration requirements of the Securities Act and
satisfaction of certain other provisions specified herein or in the related
Trustee s Issuance Certificate or Series Supplement, if any. Unless otherwise
provided in the related Trustee s Issuance Certificate or Series Supplement, if
any, no sale, pledge or other transfer of any Unregistered Note (or interest
therein) may be made by any Person unless either (i) such sale, pledge or other
transfer is made to a "qualified institutional buyer" (as defined under Rule
144A under the Securities Act) or to an "institutional accredited investor" (as
described in Rule 501(a)(l), (2), (3) or (7) under the Securities Act) and, if
so requested by the Grantee or the Indenture Trustee, such proposed transferee
executes and delivers a certificate, substantially in the form attached hereto
as EXHIBIT ___ or otherwise in form and substance satisfactory to the Indenture
Trustee and the Note Issuer, or (ii) such sale, pledge or other transfer is
otherwise made in a transaction exempt from the registration requirements of the
Securities Act, in which case (A) the Indenture Trustee shall require that both
the prospective transferor and the

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<PAGE>

prospective transferee certify to the Indenture Trustee and the Note Issuer in
writing the facts surrounding such transfer, which certification shall be in
form and substance satisfactory to the Indenture Trustee and the Note Issuer,
and (B) the Indenture Trustee shall require a written opinion of counsel (which
shall not be at the expense of the Note Issuer, the Servicer or the Indenture
Trustee) satisfactory to the Note Issuer and the Indenture Trustee to the effect
that such transfer will not violate the Securities Act. Neither the Grantee,
the Note Issuer, nor the Indenture Trustee shall be obligated to register any
Unregistered Notes under the Securities Act, qualify any Unregistered Notes
under the securities laws of any state or provide registration rights to any
purchaser or holder thereof.

(b) Unless otherwise provided in the related Trustee's Issuance
Certificate or Series Supplement, the Unregistered Notes may not be acquired by
or for the account of a Benefit Plan and, by accepting and holding an
Unregistered Note, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan and, if requested to do so by the Note
Issuer or the Indenture Trustee, the Holder of an Unregistered Note shall
execute and deliver to the Indenture Trustee a letter of undertaking in the form
set forth in EXHIBIT __.

(c) Unless otherwise provided in the related Trustee's Issuance
Certificate or Series Supplement, Unregistered Notes shall be issued in the form
of Definitive Notes, shall be in fully registered form and Sections 2.11 and
2.12 of this Indenture shall not apply thereto.

(d) Each Unregistered Note shall bear legends to the effect set forth
in subsections (a) and (b) (if subsection (b) is applicable) above.

SECTION 2.18. TAX TREATMENT. The Note Issuer and the Indenture
Trustee, by entering into this Indenture, and the Holders and any Persons
holding a beneficial interest in any Note, by acquiring any Note or interest
therein, (i) express their intention that the Notes qualify under applicable tax
law as indebtedness of ComEd secured by the Note Collateral and (ii) agree to
treat the Notes as indebtedness secured by the Note Collateral for the purpose
of federal income, state and local income and franchise taxes, and any other
taxes imposed upon, measured by or based upon gross or net income, unless
otherwise required by appropriate taxing authorities.

SECTION 2.19. STATE PLEDGE. At the Closing Date, under the laws of
the State of Illinois and the United States in effect on the Closing Date, the
State of Illinois has agreed with the Holders, pursuant to Section 18-105(b) of
the Funding Law, as follows:

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<PAGE>

instruments, the transitional funding instruments and interest, premium and
other fees, costs and charges related thereto, as the case may be, are
fully paid and discharged. Electric utilities, grantees and issuers are
authorized to include these pledges and agreements of the State in any
contract with the holders of transitional funding instruments or with any
assignees pursuant to this Article XVIII and any assignees are similarly
authorized to include these pledges and agreements of the State in any
contract with any issuer, holder or any other assignee. Nothing in this
Article XVIII shall preclude the State of Illinois from requiring
adjustments as may otherwise be allowed by law to the electric utility's
base rates, transition charges, delivery services charges, or other charges
for tariffed services, so long as any such adjustment does not directly
affect or impair any instrument funding charges previously authorized by a
transitional funding order issued by the [ICC]."

As a result of the foregoing pledge, the State of Illinois may not, except as
provided in the succeeding sentence, in any way limit, alter, impair or reduce
the value of the ITP or the IFCs in a manner substantially impairing this
Indenture or the rights and remedies of the Holders, until the Notes, together
with interest thereon, are fully paid and discharged. Notwithstanding the
immediately preceding sentence, the State of Illinois would be allowed to effect
a temporary impairment of the Holders' rights if it could be shown that such
impairment was necessary to advance a significant and legitimate public purpose.

ARTICLE III

COVENANTS

SECTION 3.01. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.
The principal of and premium, if any, and interest on the Notes will be duly and
punctually paid in accordance with the terms of the Notes and this Indenture.
Amounts properly withheld under the Code or other tax laws by any Person from a
payment to any Holder of interest or principal or premium, if any, shall be
considered as having been paid by the Note Issuer to such Holder for all
purposes of this Indenture.

SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Note Issuer will
maintain in the [Borough of Manhattan, the City of New York,] an office or
agency where Notes may be surrendered for registration of transfer or exchange.
The Note Issuer hereby initially appoints the Indenture Trustee to serve as its
agent for the foregoing purposes. The Note Issuer will give prompt written
notice to the Indenture Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Note Issuer shall
fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders may be made at the
Corporate Trust Office, and the Note Issuer hereby appoints the Indenture
Trustee as its agent to receive all such surrenders.

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<PAGE>

SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.02(a), all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 8.02(d) shall be made on behalf of the Note Issuer by the
Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from
the Collection Account for payments with respect to any Notes shall be paid over
to the Note Issuer except as provided in this Section and Section 8.02.

The Note Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:

(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;

(ii) give the Indenture Trustee notice of any default by the Note
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect to the
Notes;

(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;

(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it determines that it has ceased to meet the standards required
to be met by a Paying Agent at the time of such determination; and

(v) comply with all requirements of the Code and other tax laws with
respect to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.

The Note Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.

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<PAGE>

Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Note Issuer on an Issuer Request; and, subject to Section
11.18, the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Note Issuer for payment thereof (but only to the
extent of the amounts so paid to the Note Issuer), and all liability of the
Indenture Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; PROVIDED, HOWEVER, that the Indenture Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of
the Note Issuer, cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general
circulation in the City of Chicago, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Note Issuer. The Indenture Trustee may also adopt and
employ, at the expense of the Note Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).

SECTION 3.04. EXISTENCE. The Note Issuer will keep in full effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Note Issuer hereunder is
or becomes, organized under the laws of any other State or of the United States
of America, in which case the Note Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Note Collateral and each other
instrument or agreement included in the Note Collateral.

SECTION 3.05. PROTECTION OF NOTE COLLATERAL The Note Issuer will
from time to time execute and deliver all such supplements and amendments hereto
and all filings with the ICC pursuant to the Funding Order or to the Funding Law
and all financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:

(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;

(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;

(iii) enforce any of the Note Collateral;

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(iv) preserve and defend title to the Note Collateral and the rights
of the Indenture Trustee and the Holders in such Note Collateral against
the Claims of all Persons and parties, including the challenge by any party
to the validity or enforceability of any Funding Order, any Tariff, the
Intangible Transition Property or any proceeding relating thereto and
institute any action or proceeding necessary to compel performance by the
ICC or the State of Illinois of any of its obligations or duties under the
Funding Law, the State Pledge, or any Funding Order; or

(v) pay any and all taxes levied or assessed upon all or any part of
the Note Collateral.

The Note Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any filings with the ICC, financing statements,
continuation statements or other instrument required by the Indenture Trustee
pursuant to this Section, it being understood that the Indenture Trustee shall
have no such obligation.

SECTION 3.06. OPINIONS AS TO NOTE COLLATERAL. (a) On the Series
Issuance Date for each Series (including the Closing Date), the Note Issuer
shall furnish to the Indenture Trustee an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been taken with respect to
the recording and filing of this Indenture, any indentures supplemental hereto,
and any other requisite documents, and with respect to the execution and filing
of any filings with the ICC pursuant to the Funding Law and the applicable
Funding Order and any financing statements and continuation statements, as are
necessary to perfect and make effective the lien and security interest of this
Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.

(b) On or before [September 30] in each calendar year, while any
Series is outstanding, beginning on _________, 1999, the Note Issuer shall
furnish to the Indenture Trustee an Opinion of Counsel either stating that, in
the opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any filings with the ICC pursuant to the Funding Law
and the Funding Order and any financing statements and continuation statements
as is necessary to maintain the lien and security interest created by this
Indenture and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any filings
with the ICC, financing statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the lien and security interest
created by this Indenture until [September 30] in the following calendar year.

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(c) Prior to the effectiveness of any Subsequent Sale Agreement or
any amendment to any Sale Agreement, the Note Issuer shall furnish to the
Indenture Trustee an Opinion of Counsel either (A) stating that, in the opinion
of such counsel, all filings, including filings with the ICC pursuant to the
Funding Law, or the Funding Order, have been executed and filed that are
necessary fully to preserve and protect the interest of the Note Issuer and the
Indenture Trustee in the Intangible Transition Property and the proceeds
thereof, and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B) stating that, in the opinion
of such counsel, no such action shall be necessary to preserve and protect such
interest.

SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING; SEC FILINGS. (a)
The Note Issuer (i) will diligently pursue any and all actions to enforce its
rights under each instrument or agreement included in the Note Collateral and
(ii) will not take any action and will use its best efforts not to permit any
action to be taken by others that would release any Person from any of such
Person's covenants or obligations under any such instrument or agreement or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except, in each case, as expressly provided in this Indenture, any
Trustee's Issuance Certificate, any Series Supplement, the Sale Agreement, any
Subsequent Sale Agreement related to the applicable Note Collateral, the
Servicing Agreement, the Administration Agreement or such other instrument or
agreement.

(b) The Note Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee herein or in an Officer's
Certificate of the Note Issuer shall be deemed to be action taken by the Note
Issuer. Initially, the Note Issuer has contracted with the Servicer and the
Administrator to assist the Note Issuer in performing its duties under this
Indenture.

(c) The Note Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Note Collateral, including,
but not limited to, filing or causing to be filed all filings with the ICC
pursuant to the Funding Law or the Funding Order, all UCC financing statements
and continuation statements required to be filed by it by the terms of this
Indenture, any Sale Agreement and the Servicing Agreement in accordance with and
within the time periods provided for herein and therein.

(d) If the Note Issuer shall have knowledge of the occurrence of a
Servicer Default under the Servicing Agreement, the Note Issuer shall promptly
give written notice thereof to the Indenture Trustee and the Rating Agencies,
and shall specify in such notice the response or action, if any, the Note Issuer
has taken or is taking with respect of such default. If a Servicer Default
shall arise from the failure of the Servicer to perform any of its duties or
obligations under the Servicing Agreement with respect to the Intangible
Transition Property or the IFCs, the Note Issuer shall take all reasonable steps
available to it to remedy such failure.

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(e) As promptly as possible after the giving of notice of termination
to the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 7.01 of the Servicing Agreement, the Grantee shall appoint a
successor Servicer (the "Successor Servicer") with the Note Issuer's prior
written consent thereto (which consent shall not be unreasonably withheld), and
such Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Grantee, the Note Issuer and the Indenture Trustee. A
Person shall qualify as a Successor Servicer only if such Person satisfies the
requirements of the Servicing Agreement. If within 30 days after the delivery
of the notice referred to above, the Note Issuer shall not have obtained such a
new Servicer, the Indenture Trustee may petition the ICC or a court of competent
jurisdiction to appoint a Successor Servicer. In connection with any such
appointment, the Grantee may make such arrangements for the compensation of such
successor as it and such successor shall agree, subject to the limitations set
forth below and in the Servicing Agreement.

(f) Upon any termination of the Servicer's rights and powers pursuant
to the Servicing Agreement, the Indenture Trustee shall promptly notify the Note
Issuer, the Holders and the Rating Agencies. As soon as a Successor Servicer is
appointed, the Indenture Trustee shall notify the Grantee, the Note Issuer, the
Holders and the Rating Agencies of such appointment, specifying in such notice
the name and address of such Successor Servicer.

(g) Without derogating from the absolute nature of the assignment
Granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Note Issuer agrees that it will not, without
the prior written consent of the Indenture Trustee or the Holders of at least [a
majority] in Outstanding Amount of the Notes of all Series, amend, modify,
waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
Note Collateral or the Basic Documents, or waive timely performance or
observance by ComEd, the Grantee or the Servicer under the Grant Agreement, any
Subsequent Grant Agreement, the Sale Agreement any Subsequent Sale Agreement or
the Servicing Agreement, respectively; PROVIDED, that no such consent shall be
required if (i) the Indenture Trustee shall have received an Officer's
Certificate stating that such waiver, amendment, modification, supplement or
termination shall not adversely affect in any material respect the interests of
the Holders and (ii) the Rating Agency Condition shall have been satisfied with
respect thereto. If any such amendment, modification, supplement or waiver
shall be so consented to by the Indenture Trustee or such Holders, the Note
Issuer agrees to execute and deliver, in its own name and at its own expense,
such agreements, instruments, consents and other documents as shall be necessary
or appropriate in the circumstances. The Note Issuer agrees that no such
amendment, modification, supplement or waiver shall adversely affect the rights
of the Holders of the Notes outstanding at the time of any such amendment,
modification, supplement or waiver.

(h) The Note Issuer shall, or shall cause the Administrator to,
file with the SEC such periodic reports, if any, as are required from time to
time under Section 13 of the Exchange Act.

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(i) The Note Issuer shall make all filings required under the Funding
Law relating to the transfer of the ownership or security interest in the
Intangible Transition Property other than those required to be made by the
Grantee pursuant to the Basic Documents.

SECTION 3.08. CERTAIN NEGATIVE COVENANTS.

(a) The Note Issuer shall not issue Notes in an aggregate initial
Outstanding Amount (i) during the twelve-month period beginning on August 1,
1998 in excess of $3,400,000,000; and (ii) on any date from and after July 31,
1999, in excess of $6,800,000,000, less the aggregate initial Outstanding Amount
of any Notes issued on or prior to July 31, 1999.

(b) So long as any Notes are Outstanding, the Note Issuer shall
not:

(i) except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of any of the properties or assets
of the Note Issuer, including those included in the Note Collateral, unless
directed to do so by the Indenture Trustee in accordance with Article V;

(ii) claim any credit on, or make any deduction from the principal or
premium, if any, or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or other tax
laws) or assert any claim against any present or former Holder by reason of
the payment of the taxes levied or assessed upon any part of the Note
Collateral;

(iii) terminate its existence or dissolve or liquidate in whole or in
part; or

(iv) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture), to be created on
or extend to or otherwise arise upon or burden the Note Collateral or any
part thereof or any interest therein or the proceeds thereof (other than
tax liens arising by operation of law with respect to amounts not yet due)
or (C) permit the lien of this Indenture not to constitute a valid first
priority security interest in the Note Collateral; or

(v) elect to be classified as an association taxable as a
corporation for federal income tax purposes.

SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Note Issuer
will deliver to the Indenture Trustee and the Rating Agencies not later than
[September 30] of each

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year (commencing with _________), an Officer's Certificate stating, as to the
Responsible Officer signing such Officer's Certificate, that

(i) a review of the activities of the Note Issuer during the
preceding twelve months ended [June 30] and of performance under this
Indenture has been made under such Responsible Officer's supervision; and

(ii) to the best of such Responsible Officer's knowledge, based on
such review, the Note Issuer has in all material respects complied with all
conditions and covenants under this Indenture throughout such twelve month
period, or, if there has been a default in the compliance of any such
condition or covenant, specifying each such default known to such
Responsible Officer and the nature and status thereof.

SECTION 3.10. NOTE ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS. (a) The Note Issuer shall not consolidate or merge with or into any
other Person, unless

(i) the Person (if other than the Note Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under
the laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form and substance satisfactory to the Indenture
Trustee, the performance or observance of every agreement and covenant of
this Indenture on the part of the Note Issuer to be performed or observed,
including all obligations of the Note Issuer, hereunder or under the Notes,
with respect to the payment of principal of, and premium, if any, and
interest on all Notes, all as provided herein and in the applicable
Trustee's Issuance Certificates and Series Supplements, if any;

(ii) immediately after giving effect to such merger or consolidation,
no Default or Event of Default shall have occurred and be continuing;

(iii) the Rating Agency Condition shall have been satisfied with
respect to such merger or consolidation;

(iv) ComEd shall have delivered to the Grantee, the Note Issuer, the
Delaware Trustee and the Indenture Trustee an opinion of independent tax
counsel (as selected by, and in form and substance reasonably satisfactory
to, ComEd, and which may be based on a ruling from the Internal Revenue
Service) to the effect that such consolidation or merger will not result in
a material adverse federal income tax consequence to ComEd, the Grantee,
the Note Issuer, the Delaware Trustee, the Indenture Trustee or the then
existing Holders;

(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and

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(vi) the Note Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Section 3.10(a) and that all conditions precedent herein provided for in
this Section 3.10(a) with respect to such transaction have been complied
with (including any filing required by the Exchange Act).

(b) Except as specifically provided herein, the Note Issuer shall not
sell, convey, exchange, transfer or otherwise dispose of any of its properties
or assets included in the Note Collateral, to any Person, unless

(i) the Person that acquires the properties and assets of the Note
Issuer, the conveyance or transfer of which is hereby restricted shall (A)
be a United States citizen or a Person organized and existing under the
laws of the United States of America or any State, (B) expressly assumes,
by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form and substance satisfactory to the Indenture
Trustee, the performance or observance of every agreement and covenant of
this Indenture on the part of the Note Issuer to be performed or observed,
including all obligations of the Note Issuer, hereunder or under the Notes,
with respect to the payment of principal of, and premium, if any, and
interest on all Notes, all as provided herein and in the applicable
Trustee's Issuance Certificates or Series Supplements, if any, (C)
expressly agrees by means of such supplemental indenture that all right,
title and interest so sold, conveyed, exchanged, transferred or otherwise
disposed of shall be subject and subordinate to the rights of Holders of
the Notes, (D) unless otherwise provided in the supplemental indenture
referred to in clause (B) above, expressly agrees to indemnify, defend and
hold harmless the Note Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and (E)
expressly agrees by means of such supplemental indenture that such Person
(or if a group of Persons, then one specified Person) shall make all
filings with the SEC (and any other appropriate Person) required by the
Exchange Act in connection with the Notes;

(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;

(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;

(iv) ComEd shall have delivered to the Grantee, the Note Issuer, the
Delaware Trustee and the Indenture Trustee an opinion of independent tax
counsel (as selected by, and in form and substance reasonably satisfactory
to, ComEd, and which may be based on a ruling from the Internal Revenue
Service) to the effect that such transaction will not result in a material
adverse federal income tax consequence to ComEd, the Grantee, the Note
Issuer, the Delaware Trustee, the Indenture Trustee or the then existing
Holders;

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(v) any action as is necessary to maintain the lien and security
interest created by this Indenture pursuant to the Funding Order or the
Funding Law shall have been taken; and

(vi) the Note Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that such
sale, conveyance, exchange, transfer or other disposition and such
supplemental indenture comply with this Section 3.10(b) and that all
conditions precedent herein provided for in this Section 3.10(b) with
respect to such transaction have been complied with (including any filing
required by the Exchange Act).

SECTION 3.11. SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation or
merger of the Note Issuer in accordance with Section 3.10(a), the Person formed
by or surviving such consolidation or merger (if other than the Note Issuer)
shall succeed to, and be substituted for, and may exercise every right and power
of, the Note Issuer under this Indenture with the same effect as if such Person
had been named as the Note Issuer herein.

(b) Except as set forth in Section 6.07, upon a sale, conveyance,
exchange, transfer or other disposition of all the assets and properties of the
Note Issuer pursuant to Section 3.10(b), the Note Issuer and the Grantee will be
released from every covenant and agreement of this Indenture and the other Basic
Documents to be observed or performed on the part of the Note Issuer and the
Grantee with respect to the Notes and the Intangible Transition Property
immediately upon the delivery of written notice to the Indenture Trustee from
the Person acquiring such assets and properties stating that the Note Issuer and
the Grantee are to be so released.

SECTION 3.12. NO OTHER BUSINESS. The Note Issuer shall not engage in
any business other than financing, purchasing, owning and managing the
Intangible Transition Property and the other Note Collateral and the issuance of
the Notes in the manner contemplated by the Funding Order and this Indenture and
the Basic Documents and activities incidental thereto.

SECTION 3.13. NO BORROWING. The Note Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.

SECTION 3.14. SERVICER'S OBLIGATIONS. The Note Issuer shall enforce
the Servicer's compliance with all of the Servicer's material obligations under
the Servicing Agreement.

SECTION 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as otherwise contemplated by the Sale Agreement, any Subsequent Sale
Agreement, the Servicing Agreement or this Indenture, the Note Issuer shall not
make any loan or advance or credit to, or

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guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.

SECTION 3.16. CAPITAL EXPENDITURES. Other than the purchase of
Intangible Transition Property from the Grantee on each Series Issuance Date and
other than expenditures in an aggregate amount not to exceed [$25,000] in any
calendar year, the Note Issuer shall not make any expenditure (by long-term or
operating lease or otherwise)for capital assets (either realty or personalty).

SECTION 3.17. RESTRICTED PAYMENTS. The Note Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to any owner of a beneficial interest in the Note Issuer or
otherwise with respect to any ownership or equity interest or similar security
in or of the Note Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or similar security or (iii) set
aside or otherwise segregate any amounts for any such purpose; PROVIDED,
HOWEVER, that, if no Event of Default shall have occurred and be continuing, the
Note Issuer may make, or cause to be made, any such distributions to any owner
of a beneficial interest in the Note Issuer or otherwise with respect to any
ownership or equity interest or similar security in or of the Note Issuer using
funds distributed to the Note Issuer pursuant to Section 8.02(d) to the extent
that such distributions would not cause the book value of the remaining equity
in the Note Issuer to decline below 0.5 percent of the original principal amount
of all Series of Notes which remain outstanding. The Note Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Basic Documents.

SECTION 3.18. NOTICE OF EVENTS OF DEFAULT. The Note Issuer agrees to
give the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder and each default on the part of the Grantee or the
Servicer of its obligations under the Sale Agreement, any Subsequent Sale
Agreement or the Servicing Agreement, respectively.

SECTION 3.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Indenture Trustee, the Note Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.

SECTION 3.20. PURCHASE OF SUBSEQUENT INTANGIBLE TRANSITION PROPERTY.
(a) The Note Issuer may from time to time purchase Subsequent Transition
Property from the Grantee pursuant to a Subsequent Sale Agreement, subject to
the conditions specified in paragraph (b) below.

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(b) The Note Issuer shall be permitted to purchase from the Grantee
Subsequent Transition Property and the proceeds thereof only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Sale Date:

(i) the Grantee shall have provided the Note Issuer, the Indenture
Trustee and the Rating Agencies with written notice, which shall be given
not later than 10 days prior to the related Subsequent Sale Date,
specifying the Subsequent Sale Date for such Subsequent Intangible
Transition Property and the aggregate amount of the IFCs related to such
Subsequent Transition Property, and shall have provided any information
reasonably requested by any of the foregoing Persons with respect to the
Subsequent Intangible Transition Property then being conveyed to the Note
Issuer;

(ii) ComEd, the Grantee and the Note Issuer shall have delivered to
the Indenture Trustee a duly executed Subsequent Grant Agreement in
substantially the form of the Grant Agreement and a duly executed
Subsequent Sale Agreement in substantially the form of the Sale Agreement;

(iii) as of such Subsequent Sale Date, the Grantee was not insolvent
and will not have been made insolvent by such transfer and the Grantee is
not aware of any pending insolvency with respect to itself;

(iv) the Rating Agency Condition shall have been satisfied with
respect to such conveyance;

(v) ComEd shall have delivered to the Grantee, the Note Issuer, the
Delaware Trustee and the Indenture Trustee an opinion of independent tax
counsel and/or a ruling from the Internal Revenue Service (as selected by,
and in form and substance reasonably satisfactory to, ComEd) to the effect
that, for federal income tax purposes (i) the ICC's issuance of the
Subsequent Funding Order creating and establishing the Subsequent
Transition Property in the Grantee, and the assignment pursuant to such
Subsequent Sale Agreement of such Subsequent Transition Property, will not
result in gross income to the Grantee, the Note Issuer or ComEd, and the
future revenues relating to the Subsequent Transition Property and the
assessment of the IFCs authorized in such Subsequent Funding Order (except
for revenue related to certain lump-sum payments) will be included in
ComEd's gross income in the year in which the related electrical service is
provided to Customers, and (ii) the assignment pursuant to such Subsequent
Sale Agreement will not adversely affect the characterization of the then
Outstanding Notes as obligations of ComEd;

(vi) as of such Subsequent Sale Date, no breach by ComEd of its
representations, warranties or covenants in the related Subsequent Grant
Agreement and no breach by the Grantee of its representations, warranties
or covenants in the related Subsequent Sale Agreement and no Servicer
Default shall exist;

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(vii) as of such Subsequent Sale Date, the Note Issuer shall have
sufficient funds available to pay the purchase price for the Subsequent
Intangible Transition Property to be conveyed on such date and all
conditions to the issuance of one or more Series of Notes intended to
provide such funds set forth in Section 2.10 of this Indenture shall have
been satisfied;

(viii) the Note Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b);

(ix) (A) the Note Issuer shall have delivered to the Rating Agencies
any Opinions of Counsel requested by the Rating Agencies and (B) the Note
Issuer shall have delivered to the Indenture Trustee the Opinion of Counsel
required by Section 3.06(c) of this Indenture; and

(x) the Grantee and the Note Issuer shall have taken any action
required to maintain the first perfected ownership interest of the Note
Issuer in the Subsequent Intangible Transition Property and the proceeds
thereof, and the Note Issuer shall have taken any action required to
maintain the first perfected security interest of the Indenture Trustee in
the Subsequent Intangible Transition Property and the proceeds thereof.

ARTICLE IV

SATISFACTION AND DISCHARGE; DEFEASANCE

SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE.
(a) This Indenture shall cease to be of further effect with respect to the Notes
of any Series and the Indenture Trustee, on reasonable demand of and at the
expense of the Note Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes of such
Series, when

(A) either

(1) all Notes of such Series theretofore authenticated and
delivered (other than (i) Notes that have been destroyed, lost or
stolen and that have been replaced or paid as provided in Section 2.06
and (ii) Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Note Issuer and
thereafter repaid to the Note Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Indenture Trustee
for cancellation; or

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(2) either (x)the Scheduled Maturity Date has occurred with
respect to all Notes of such Series not theretofore delivered to the
Indenture Trustee for cancellation, (y) such Notes will be due and
payable on their respective Scheduled Maturity Dates within one year,
or (z) such Notes are to be called for redemption within one year in
accordance with the provisions of the applicable Trustee's Issuance
Certificate or Series Supplement, if any, and in any such case, the
Note Issuer has irrevocably deposited or caused to be irrevocably
deposited with the Indenture Trustee cash, in trust for such purpose,
in an amount sufficient to pay and discharge the entire indebtedness
on such Notes not theretofore delivered to the Indenture Trustee for
cancellation when due;

(B) the Note Issuer has paid or caused to be paid all other sums
payable hereunder by the Note Issuer with respect to such Series; and

(C) the Note Issuer has delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA or
the Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.01(a) and each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture with respect
to Notes of such Series have been complied with.

(b) Subject to Sections 4.01(c) and 4.02, the Note Issuer at any
time may terminate (i) all its obligations under this Indenture with respect to
the Notes of any Series ("Legal Defeasance Option") or (ii) its obligations
under Sections 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15,
3.16, 3.17 and 3.18 and the operation of Section 5.01(iv) ("Covenant Defeasance
Option") with respect to any Series of Notes. The Note Issuer may exercise the
Legal Defeasance Option with respect to any Series of Notes notwithstanding its
prior exercise of the Covenant Defeasance Option with respect to such Series.

If the Note Issuer exercises the Legal Defeasance Option with respect
to any Series, the maturity of the Notes of such Series may not be accelerated
because of an Event of Default. If the Note Issuer exercises the Covenant
Defeasance Option with respect to any Series, the maturity of the Notes of such
Series may not be accelerated because of an Event of Default specified in
Section 5.01(iv).

Upon satisfaction of the conditions set forth herein to the exercise
of the Legal Defeasance Option or the Covenant Defeasance Option with respect to
any Series of Notes, the Indenture Trustee, on reasonable demand of and at the
expense of the Note Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of the obligations that are terminated pursuant to
such exercise.

(c) Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen

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Notes, (iii) rights of Holders to receive payments of principal, premium, if
any, and interest, (iv) Sections 4.03 and 4.04, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.03) and (vi) the rights of Holders as beneficiaries
hereof with respect to the property deposited with the Indenture Trustee payable
to all or any of them, shall survive until the Notes of the Series as to which
this Indenture or certain obligations hereunder have be satisfied and discharged
pursuant to Section 4.01(a) or 4.01(b) have been paid in full. Thereafter the
obligations in Sections 6.07 and 4.04 with respect to such Series shall survive.

SECTION 4.02. CONDITIONS TO DEFEASANCE. The Note Issuer may exercise
the Legal Defeasance Option or the Covenant Defeasance Option with respect to
any Series of Notes only if:

(a) the Note Issuer irrevocably deposits or causes to be deposited in
trust with the Indenture Trustee cash or U.S. Government Obligations for
the payment of principal of and premium, if any, and interest on such Notes
to the Scheduled Maturity Dates or Optional Redemption Date therefor, as
applicable;

(b) the Note Issuer delivers to the Indenture Trustee a certificate
from a nationally recognized firm of Independent accountants expressing its
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited cash without investment will provide cash at such times and in
such amounts (but, in the case of the Legal Defeasance Option only, not
more than such amounts) as will be sufficient to pay in respect of the
Notes of such Series (i) subject to clause (ii), principal in accordance
with the Expected Amortization Schedule therefor, (ii) if such Series is to
be redeemed, the Optional Redemption Price therefor on the Optional
Redemption Date and (iii) interest when due;

(c) in the case of the Legal Defeasance Option, 91 days pass after
the deposit is made and during the 91-day period no Default specified in
Section 5.01(v) or (vi) occurs which is continuing at the end of the
period;

(d) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;

(e) in the case of an exercise of the Legal Defeasance Option, the
Note Issuer shall have delivered to the Indenture Trustee an Opinion of
Counsel stating that (i) the Note Issuer has received from, or there has
been published by, the Internal Revenue Service a ruling, or (ii) since the
date of execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the Notes of
such Series will not recognize income, gain or loss for Federal income tax
purposes as a result of such legal

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defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such legal defeasance had not occurred;

(f) in the case of an exercise of the Covenant Defeasance Option, the
Note Issuer shall have delivered to the Indenture Trustee an Opinion of
Counsel to the effect that the Holders of the Notes of such Series will not
recognize income, gain or loss for Federal income tax purposes as a result
of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred;

(g) the Note Issuer delivers to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the satisfaction and discharge of the Notes of such Series to
the extent contemplated by this Article IV have been complied with; and

(h) the Rating Agency Condition shall have been satisfied with
respect to the exercise of any Legal Defeasance Option or Covenant
Defeasance Option.

Before or after a deposit pursuant to this Section 4.02 with respect
to any Series of Notes, the Note Issuer may make arrangements satisfactory to
the Indenture Trustee for the redemption of such Notes at a future date in
accordance with Article X.

SECTION 4.03. APPLICATION OF TRUST MONEY. All moneys or U.S.
Government Obligations deposited with the Indenture Trustee pursuant to Section
4.01 or 4.02 hereof shall be held in trust and applied by it, in accordance with
the provisions of the Notes and this Indenture, to the payment, either directly
or through any Paying Agent, as the Indenture Trustee may determine, to the
Holders of the particular Notes for the payment or redemption of which such
moneys have been deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal, premium, if any, and interest; but such moneys
need not be segregated from other funds except to the extent required herein or
in the Servicing Agreement or required by law.

SECTION 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of this Indenture or the Covenant
Defeasance Option or Legal Defeasance Option with respect to the Notes of any
Series, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes shall,
upon demand of the Note Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.03 and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.

ARTICLE V

REMEDIES

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SECTION 5.01. EVENTS OF DEFAULT. "Event of Default" with respect to any
Series, wherever used herein, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(i) default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of
five days; or

(ii) default in the payment of the then unpaid principal of any Note
of any Series on the Final Maturity Date for such Series; or

(iii) default in the payment of the Optional Redemption Price for any
Note on the Optional Redemption Date therefor; or

(iv) default in the observance or performance in any material respect
of any covenant or agreement of the Note Issuer made in this Indenture
(other than defaults specified in clauses (i), (ii) or (iii) above), or any
representation or warranty of the Note Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the
time when the same shall have been made, and such default shall continue or
not be cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been
given, by registered or certified mail, to the Note Issuer by the Indenture
Trustee or to the Note Issuer and the Indenture Trustee by the Holders of
at least 25 percent of the Outstanding Amount of the Notes of such Series,
a written notice specifying such default or incorrect representation or
warranty and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or

(v) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Note Issuer or any
substantial part of the Note Collateral in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Note Issuer or
for any substantial part of the Note Collateral, or ordering the winding-up
or liquidation of the Note Issuer's affairs, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or

(vi) the commencement by the Note Issuer of a voluntary case under
any applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Note Issuer to the entry
of an order for relief in an involuntary case under any such law, or the
consent by the Note Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or

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similar official of the Note Issuer or for any substantial part of the Note
Collateral, or the making by the Note Issuer of any general assignment for
the benefit of creditors, or the failure by the Note Issuer generally to
pay its debts as such debts become due, or the taking of action by the Note
Issuer in furtherance of any of the foregoing; or

(vii) any failure to act or act by the State of Illinois or any of
its agencies (including the ICC), officers or employees which violates or
is not in accordance with the State Pledge; or

(viii) any other event designated as such in a Trustee's Issuance
Certificate or Series Supplement, if any.

The Note Issuer shall deliver to a Responsible Officer of the
Indenture Trustee and the Rating Agencies, within five days after a Responsible
Officer of the Note Issuer has knowledge of the occurrence thereof, written
notice in the form of an Officer's Certificate of any event (i) which is an
Event of Default under clause (vii) or (ii) which with the giving of notice and
the lapse of time would become an Event of Default under clause (iv), including,
in each case, the status of such Event of Default and what action the Note
Issuer is taking or proposes to take with respect thereto.

SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
an Event of Default (other than an Event of Default under clause (vii) of
Section 5.01) should occur and be continuing with respect to any Series, then
and in every such case the Indenture Trustee or the Holders of Notes
representing not less than a majority of the Outstanding Amount of the Notes of
all Series may declare all the Notes to be immediately due and payable, by a
notice in writing to the Note Issuer (and to the Indenture Trustee if given by
Holders), and upon any such declaration the unpaid principal amount of the Notes
of all Series, together with accrued and unpaid interest thereon through the
date of acceleration, shall become immediately due and payable.

At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes
of all Series, by written notice to the Note Issuer and the Indenture Trustee,
may rescind and annul such declaration and its consequences if:

(i) the Note Issuer has paid or deposited with the Indenture Trustee
a sum sufficient to pay:

(A) all payments of principal of and premium, if any, and
interest on all Notes of all Series and all other amounts that would
then be due hereunder or upon such Notes if the Event of Default
giving rise to such acceleration had not occurred; and

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(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel; and

(ii) all Events of Default with respect to all Series, other than
the nonpayment of the principal of the Notes of all Series that has become
due solely by such acceleration, have been cured or waived as provided in
Section 5.12.

No such rescission shall affect any subsequent default or impair any
right consequent thereto.

SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE. (a) If an Event of Default under Section 5.01(i), (ii) or
(iii) has occurred and is continuing, subject to Section 11.18, the Indenture
Trustee, in its own name and as trustee of an express trust, may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and, subject to the limitations on
recourse set forth herein, may enforce the same and collect in the manner
provided by law out of the Note Collateral and the proceeds thereof the moneys
adjudged or decreed to be payable Notes of such Series, the whole amount then
due and payable on such Notes for principal, premium, if any, and interest, with
interest upon the overdue principal and premium, if any, and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the respective rate borne by the Notes of such
Series or the applicable Class of such Series and in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel.

(b) If an Event of Default (other than Event of Default under clause
(vii) of Section 5.01) occurs and is continuing with respect to any Series, the
Indenture Trustee may, as more particularly provided in Section 5.04, in its
discretion, proceed to protect and enforce its rights and the rights of the
Holders of such Series, by such appropriate Proceedings as the Indenture Trustee
shall deem most effective to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.

(c) If an Event of Default under Section 5.01(v) or (vi) has occurred
and is continuing, the Indenture Trustee, irrespective of whether the principal
of any Notes of any Series shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in any Proceedings related to such Event
of Default or otherwise:

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(i) to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee (including
any claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee, except as a result of negligence or bad faith) and of
the Holders allowed in such Proceedings;

(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings; and

(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Holders and of the Indenture Trustee on their
behalf;

and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Holders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Holders, to pay to the
Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.

(d) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar Person.

(e) All rights of action and of asserting claims under this
Indenture, or under any of the Notes of any Series, may be enforced by the
Indenture Trustee without the possession of any of the Notes of such Series or
the production thereof in any trial or other Proceedings relative thereto, and
any such action or proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation
of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the Holders
of the Notes of such Series.

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(f) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Holder a party to any such Proceedings.

SECTION 5.04. REMEDIES; PRIORITIES. (a) If an Event of Default
(other than an Event of Default under clause (vii) of Section 5.01) shall have
occurred and be continuing with respect to a Series, the Indenture Trustee may
do one or more of the following (subject to Section 5.05):

(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes of such
Series or under this Indenture with respect thereto, whether by declaration
of acceleration or otherwise, and, subject to the limitations on recovery
set forth herein, enforce any judgment obtained, and collect moneys
adjudged due upon such Notes;

(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Note Collateral;

(iii) exercise any remedies of a secured party under the UCC or the
Funding Law and take any other appropriate action to protect and enforce
the rights and remedies of the Indenture Trustee and the Holders of the
Notes of such Series; and

(iv) sell the Note Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;

PROVIDED, HOWEVER, that the Indenture Trustee may not sell or otherwise
liquidate any portion of the Note Collateral following such an Event of Default,
other than an Event of Default described in Section 5.01(i), (ii) or (iii), with
respect to any Series unless (A) the Holders of 100 percent of the Outstanding
Amount of the Notes of all Series consent thereto, (B) the proceeds of such sale
or liquidation distributable to the Holders of all Series are sufficient to
discharge in full all amounts then due and unpaid upon such Notes for principal,
premium, if any, and interest after taking into account payment of all amounts
due prior thereto pursuant to the priorities set forth in Section 8.02(d) or (C)
the Indenture Trustee determines that the Note Collateral will not continue to
provide sufficient funds for all payments on the Notes of all Series as they
would have become due if the Notes had not been declared due and payable, and
the Indenture Trustee obtains the consent of Holders of 66-2/3 percent of the
Outstanding Amount of the Notes of all Series. In determining such sufficiency
or insufficiency with respect to clause (B) and (C), the Indenture Trustee may,
but need not, obtain and conclusively rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Note
Collateral for such purpose.

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(b) If an Event of Default under clause (vii) of Section 5.01 shall
have occurred and be continuing, the Indenture Trustee, for the benefit of the
Holders, shall be entitled and empowered to the extent permitted by applicable
law, to institute or participate in Proceedings reasonably necessary to compel
performance of or to enforce the State Pledge and to collect any monetary
damages incurred by the Holders or the Indenture Trustee as a result of any such
Event of Default, and may prosecute any such Proceeding to final judgment or
decree. The rights and remedies set forth in this Section 5.04(b) and the
obligations of the Servicer under Section 5.02(c) of the Servicing Agreement
shall be the sole and exclusive remedies for such an Event of Default.

(c) If the Indenture Trustee collects any money pursuant to this
Article V, it shall pay out such money in accordance with the priorities set
forth in Section 8.02(d).

SECTION 5.05. OPTIONAL PRESERVATION OF THE NOTE COLLATERAL. If the
Notes of all Series have been declared to be due and payable under Section 5.02
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Note Collateral. It is the desire of the parties
hereto and the Holders that there be at all times sufficient funds for the
payment of principal of and premium, if any, and interest on the Notes, and the
Indenture Trustee shall take such desire into account when determining whether
or not to maintain possession of the Note Collateral. In determining whether to
maintain possession of the Note Collateral, the Indenture Trustee may, but need
not, obtain and conclusively rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Note Collateral for such
purpose.

SECTION 5.06. LIMITATION OF SUITS. No Holder of any Note of any
Series shall have any right to institute any Proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless:

(i) such Holder previously has given written notice to the Indenture
Trustee of a continuing Event of Default with respect to such Series;

(ii) the Holders of not less than 25 percent of the Outstanding
Amount of the Notes of all Series have made written request to the
Indenture Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;

(iii) such Holder or Holders have offered to the Indenture Trustee
indemnity satisfactory to it against the costs, expenses and liabilities to
be incurred in complying with such request;

(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and

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(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority of the Outstanding Amount of the Notes of all Series;

it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.

In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes of
all Series, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.

SECTION 5.07. UNCONDITIONAL RIGHTS OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST. Notwithstanding any other provisions in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, (a) to receive payment of (i) the interest, if any, on such Note
on the due dates thereof expressed in such Note or in this Indenture, (ii) the
unpaid principal, if any, of such Notes on the Final Maturity Date therefor or
(iii) in the case of redemption, receive payment of the unpaid principal and
premium, if any, and interest, if any, on such Note on the Optional Redemption
Date therefor and (b) to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.

SECTION 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Holder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Holder, then and in every such case the Note Issuer, the
Indenture Trustee and the Holders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee and
the Holders shall continue as though no such Proceeding had been instituted.

SECTION 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

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SECTION 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission
of the Indenture Trustee or any Holder to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Indenture Trustee or by the Holders, as
the case may be.

SECTION 5.11. CONTROL BY HOLDERS. The Holders of a majority of the
Outstanding Amount of the Notes of all Series (or, if less than all Series or
Classes are affected, the affected Series or Class or Classes) shall have the
right to direct the time, method and place of conducting any Proceeding for any
remedy available to the Indenture Trustee with respect to the Notes of such
Series or Class or Classes or exercising any trust or power conferred on the
Indenture Trustee with respect to such Series or Class or Classes; PROVIDED that

(i) such direction shall not be in conflict with any rule of law or
with this Indenture;

(ii) subject to the express terms of Section 5.04, any direction to
the Indenture Trustee to sell or liquidate the Note Collateral shall be by
the Holders of Notes representing not less than 100 percent of the
Outstanding Amount of the Notes of all Series;

(iii) if the conditions set forth in Section 5.05 have been satisfied
and the Indenture Trustee elects to retain the Note Collateral pursuant to
such Section, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100 percent of the Outstanding Amount of the
Notes of all Series to sell or liquidate the Note Collateral shall be of no
force and effect; and

(iv) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;

PROVIDED, HOWEVER, that, the Indenture Trustee's duties shall be subject to
Section 6.01, and the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Holders not consenting to such action.

SECTION 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of
the acceleration of the maturity of the Notes of all Series as provided in
Section 5.02, the Holders of Notes of not less than a majority of the
Outstanding Amount of the Notes of all Series may waive any past Default or
Event of Default and its consequences except a Default (a) in payment of
principal of or premium, if any, or interest on any of the Notes or (b) in
respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note of all Series or Classes
affected. In the case of any such waiver, the Note Issuer, the Indenture
Trustee and the Holders of the Notes shall be restored to their former positions
and

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rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.

Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.

SECTION 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Holder, or group of Holders,
in each case holding in the aggregate more than 10 percent of the Outstanding
Amount of the Notes of a Series or (c) any suit instituted by any Holder for the
enforcement of the payment of (i) interest on any Note on or after the due dates
expressed in such Note and in this Indenture, (ii) the unpaid principal, if any,
of any Note on or after the Final Maturity Date therefor or (iii) in the case of
redemption, the unpaid principal of and premium, if any, and interest on any
Note on or after the Optional Redemption Date therefor.

SECTION 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Note Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Note Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Indenture Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

SECTION 5.15. ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Holders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Note Issuer or by
the levy of any execution under such judgment upon any portion of the Note
Collateral or any other assets of the Note Issuer.

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SECTION 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do so and at the
Note Issuer's expense, the Note Issuer agrees to take all such lawful action as
the Indenture Trustee may request to compel or secure the performance and
observance by ComEd, the Grantee and the Servicer, as applicable, of each of
their obligations to the Note Issuer under or in connection with the Grant
Agreement or any Subsequent Grant Agreement, the Sale Agreement, or any
Subsequent Sale Agreement and the Servicing Agreement, respectively, in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Note Issuer under or in
connection with any such agreements, respectively, to the extent and in the
manner directed by the Indenture Trustee, including the transmission of notices
of default on the part of ComEd, the Grantee or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by ComEd, the Grantee or the Servicer of each of their
respective obligations under the Grant Agreement, any Subsequent Grant
Agreement, the Sale Agreement, any Subsequent Sale Agreement and the Servicing
Agreement, respectively.

(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and, at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of 66-2/3 percent of the Outstanding Amount of the Notes of all Series
shall, subject to Article VI, exercise all rights, remedies, powers, privileges
and claims of the Note Issuer against the Grantee or the Servicer under or in
connection with the Sale Agreement, any Subsequent Sale Agreement and the
Servicing Agreement, respectively, including the right or power to take any
action to compel or secure performance or observance by the Grantee or the
Servicer of each of their obligations to the Note Issuer thereunder and to give
any consent, request, notice, direction, approval, extension or waiver under the
Sale Agreement, any Subsequent Sale Agreement or the Servicing Agreement,
respectively, and any right of the Note Issuer to take such action shall be
suspended.

ARTICLE VI

THE INDENTURE TRUSTEE

SECTION 6.01. DUTIES OF INDENTURE TRUSTEE. (a) If an Event of
Default has occurred and is continuing, the Indenture Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.

(b) Except during the continuance of an Event of Default:

(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and

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(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.

(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:

(i) this paragraph (c) does not limit the effect of paragraph (b) of
this Section 6.01;

(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and

(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.

(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.

(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Note Issuer.

(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture, the Sale Agreement, any Subsequent Sale Agreement and the
Servicing Agreement.

(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or indemnity satisfactory to it against such risk or
liability is not reasonably assured to it.

(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.

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(i) In the event that the Trustee is also acting as Paying Agent or
Note Registrar hereunder, the protections of this Article VI shall also be
afforded to such Paying Agent or Note Registrar.

SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE. (a) The Indenture Trustee
may conclusively rely and shall be fully protected in relying on any document
believed by it to be genuine and to have been signed or presented by the proper
person. The Indenture Trustee need not investigate any fact or matter stated in
the document.

(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel that such action
is required or permitted hereunder. The Indenture Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.

(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.

(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.

(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.

SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Note Issuer or its affiliates with the
same rights it would have if it were not Indenture Trustee. Any Paying Agent,
Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.

SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Note Issuer's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Note Issuer in the Indenture or in any

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document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.

SECTION 6.05. NOTICE OF DEFAULTS. If a Default occurs and is
continuing with respect to any Series and if it is actually known to a
Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail
to each Holder of Notes of all Series notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of and
premium, if any, or interest on any Note, the Indenture Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Holders.

SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS.

(a) So long as Notes are Outstanding and the Indenture Trustee is
the Note Registrar and Paying Agent, within the prescribed period of time for
tax reporting purposes after the end of each calendar year it shall deliver to
each relevant current or former Holder such information in its possession as may
be required to enable such Holder to prepare its Federal and state income tax
returns.

(b) With respect to each Series of Notes, on or prior to each
Payment Date therefor, the Indenture Trustee will deliver to each Holder of
Notes on such Payment Date a statement as provided and prepared by the Servicer
which will include (to the extent applicable) the following information (and any
other information so specified in the applicable Trustee's Issuance Certificate
or Series Supplement, if any,) as to the Notes of such Series with respect to
such Payment Date or the period since the previous Payment Date, as applicable:

(i) the amount of the payment to Holders allocable to principal, if
any;

(ii) the amount of the payment to Holders allocable to interest;

(iii) the aggregate Outstanding Amount of such Notes, after giving
effect to any payments allocated to principal reported under (i) above; and

(iv) the difference, if any, between the amount specified in
subsection (iii) above and the Outstanding Amount specified in the related
Expected Amortization Schedule.

(c) The Note Issuer shall send a copy of each of the Certificate of
Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement
and the Annual Accountant's Report delivered to it pursuant to Section 3.04 of
the Servicing Agreement to the Rating Agencies. A copy of such certificate and
report may be obtained by any Holder by a request in writing to the Indenture
Trustee.

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SECTION 6.07. COMPENSATION AND INDEMNITY. The Note Issuer shall pay
to the Indenture Trustee from time to time reasonable compensation for its
services. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Note Issuer shall
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Note Issuer shall indemnify the
Indenture Trustee and its officers, directors, employees and agents against any
and all loss, liability or expense (including attorneys' fees and expenses)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Note Issuer as soon as is reasonably practicable of any claim for which it may
seek indemnity. Failure by the Indenture Trustee to so notify the Note Issuer
shall not relieve the Note Issuer of its obligations hereunder. The Note Issuer
shall defend the claim and the Indenture Trustee may have separate counsel and
the Note Issuer shall pay the fees and expenses of such counsel. The Note
Issuer need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Indenture Trustee through the Indenture Trustee's own
wilful misconduct, negligence or bad faith.

The payment obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture or the earlier resignation
or removal of the Indenture Trustee. When the Indenture Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(v) or (vi) with
respect to the Note Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or state bankruptcy, insolvency or similar law.

SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE. The Indenture
Trustee may resign at any time by so notifying the Note Issuer, provided that no
such resignation shall be effective until either (a) the Note Collateral has
been completely liquidated and the proceeds of the liquidation distributed to
the Holders or (b) a successor trustee having the qualifications set forth in
Section 6.11 has been designated and has accepted such trusteeship. The Holders
of a majority in Outstanding Amount of the Notes of all Series may remove the
Indenture Trustee by so notifying the Indenture Trustee and may appoint a
successor Indenture Trustee. The Note Issuer shall remove the Indenture Trustee
if:

(i) the Indenture Trustee fails to comply with Section 6.11;

(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or

(iv) the Indenture Trustee otherwise becomes incapable of acting.

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If the Indenture Trustee gives notice of resignation or is removed or
if a vacancy exists in the office of Indenture Trustee for any reason (the
Indenture Trustee in such event being referred to herein as the retiring
Indenture Trustee), the Note Issuer shall promptly appoint a successor Indenture
Trustee.

A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Note Issuer.
Thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to Holders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.

If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Note Issuer or the Holders of a majority in Outstanding
Amount of the Notes of all Series may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.

If the Indenture Trustee fails to comply with Section 6.11, any Holder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.

Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Note Issuer's obligations under Section 6.07 shall continue
for the benefit of the retiring Indenture Trustee.

SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
PROVIDED, however, that if such successor Indenture Trustee is not eligible
under Section 6.11, then the successor Indenture Trustee shall be replaced in
accordance with Section 6.08.

In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.

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SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the trust created by this Indenture or the Note Collateral may at the time be
located, the Indenture Trustee shall have the power and may execute and deliver
all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
trust created by this Indenture or the Note Collateral, and to vest in such
Person or Persons, in such capacity and for the benefit of the Holders, such
title to the Note Collateral, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 6.11 and no notice to Holders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof.

(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Note Collateral or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;

(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and

(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.

(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording

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protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.

(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.

SECTION 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a) and Section
26(a)(i) of the Investment Company Act of 1940. The Indenture Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition and it shall have a long term
debt rating of A (or the equivalent thereof) or better by all of the Rating
Agencies from which a rating is available. The Indenture Trustee shall comply
with TIA Section 310(b), including the optional provision permitted by the
second sentence of TIA Section 310(b)(9); PROVIDED, HOWEVER, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Note Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.

SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST NOTE ISSUER,
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.

SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE.
The Indenture Trustee hereby represents and warrants that:

(a) the Indenture Trustee is a bank validly existing and in good standing
under the laws of the United States; and

(b) the Indenture Trustee has full power, authority and legal right to
execute, deliver and perform this Indenture and the Basic Documents to which the
Indenture Trustee is a party and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Indenture and such Basic
Documents.

ARTICLE VII

HOLDERS' LISTS AND REPORTS

SECTION 7.01. NOTE ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF HOLDERS. The Note Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not

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more than five days after the earlier of (i) each Record Date with respect to
each Series and (ii) three months after the last Record Date with respect to
each Series, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Holders of Notes of such Series as of
such Record Date, (b) at such other times as the Indenture Trustee may request
in writing, within 30 days after receipt by the Note Issuer of any such request,
a list of similar form and content as of a date not more than 10 days prior to
the time such list is furnished; PROVIDED, HOWEVER, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished.

SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
HOLDERS. (a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.

(b) Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or under the
Notes.

SECTION 7.03. REPORTS BY NOTE ISSUER. (a) The Note Issuer shall:

(i) so long as the Note Issuer is required to file such documents
with the SEC, provide to the Indenture Trustee, within 15 days after the
Note Issuer is required to file the same with the SEC, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may from time to time by
rules and regulations prescribe) which the Note Issuer may be required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act;

(ii) provide to the Indenture Trustee and file with the SEC in
accordance with rules and regulations prescribed from time to time by the
SEC such additional information, documents and reports with respect to
compliance by the Note Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and

(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Holders described in TIA Section 313(c))
such summaries of any information, documents and reports required to be
filed by the Note Issuer pursuant to clauses (I) and (ii) of this Section
7.03(a) as may be required by rules and regulations prescribed from time to
time by the SEC.

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(b) Unless the Note Issuer otherwise determines, the fiscal year of
the Note Issuer shall end on December 31 of each year.

SECTION 7.04. REPORTS BY INDENTURE TRUSTEE. If required by TIA
Section 313(a), within 60 days after [September 30] of each year, commencing
with the year after the issuance of the Notes of any Series, the Indenture
Trustee shall mail to each Holder of Notes of such Series as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b); PROVIDED, HOWEVER, that the initial report so issued shall be delivered
not more than 12 months after the initial issuance of each Series.

A copy of each report at the time of its mailing to Holders shall be
filed by the Indenture Trustee with the SEC and each stock exchange, if any, on
which the Notes are listed. The Note Issuer shall notify the Indenture Trustee
if and when the Notes are listed on any stock exchange.

ARTICLE VIII

ACCOUNTS, DISBURSEMENTS AND RELEASES

SECTION 8.01. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The
Indenture Trustee shall apply all such money received by it as provided in this
Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Note Collateral, the Indenture Trustee may
take such action as may be appropriate to enforce such payment or performance,
subject to Article VI, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.

SECTION 8.02. COLLECTION ACCOUNT. (a) Prior to the Series Issuance
Date for the first Series of Notes issued hereunder, the Note Issuer shall open,
at the Indenture Trustee's Corporate Trust Office, or at another Eligible
Institution, one or more segregated trust accounts in the Indenture Trustee's
name for the deposit of Estimated IFC Collections (collectively, the "Collection
Account"). The Collection Account will consist of four subaccounts: a general
subaccount (the "General Subaccount"), a reserve subaccount (the "Reserve
Subaccount"), a subaccount for the Overcollateralization Amount (the
"Overcollateralization Subaccount") and a capital subaccount (the "Capital
Subaccount"). All amounts in the Collection Account not allocated to any other
subaccount shall be allocated to the General Subaccount. Prior to the initial
Payment Date, all amounts in the Collection Account (other than funds deposited
into the

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Capital Subaccount, up to the Required Capital Level for any Series of Notes)
shall be allocated to the General Subaccount. All references to the Collection
Account shall be deemed to include reference to all subaccounts contained
therein. Withdrawals from and deposits to each of the foregoing subaccounts of
the Collection Account shall be made as set forth in Section 8.02(d) and (e).
The Collection Account shall at all times be maintained in an Eligible Deposit
Account and only the Indenture Trustee shall have access to the Collection
Account for the purpose of making deposits in and withdrawals from the
Collection Account in accordance with this Indenture. Funds in the Collection
Account shall not be commingled with any other moneys. All moneys deposited from
time to time in the Collection Account, all deposits therein pursuant to this
Indenture, and all investments made in Eligible Investments with such moneys,
including all income or other gain from such investments, shall be held by the
Indenture Trustee in the Collection Account as part of the Note Collateral as
herein provided.

(b) The Indenture Trustee shall have sole dominion and exclusive
control over all moneys in the Collection Account and shall apply such amounts
therein as provided in this Section 8.02. The Indenture Trustee shall also pay
from the Collection Account any amounts requested to be paid by the Servicer
pursuant to Section 6.11(d)(ii) of the Servicing Agreement.

(c) IFC Collections shall be deposited in the General Subaccount as
provided in Section 6.11 of the Servicing Agreement. All deposits to and
withdrawals from the Collection Account and all allocations to the subaccounts
of the Collection Account shall be made by the Indenture Trustee in accordance
with the written instructions provided by the Servicer in the Monthly Servicer's
Certificate and the Quarterly Servicer's Certificate, as applicable.

(d) On each Payment Date for any Series of Notes, the Indenture
Trustee shall apply all amounts on deposit in the Collection Account, including
all net earnings thereon, to pay the following amounts, in accordance with the
Quarterly Servicer's Certificate, in the following priority:

(i) all amounts owed by the Note Issuer to the Indenture Trustee
(including legal fees and expenses) shall be paid to the Indenture Trustee
(subject to Section 6.07) and all amounts owed to the Delaware Trustee
under the Trust Agreement shall be paid to the Delaware Trustee, as
appropriate;

(ii) the Servicing Fee for such Payment Date and all unpaid Servicing
Fees for prior Payment Dates shall be paid to the Servicer;

(iii) the Quarterly Administration Fee and all unpaid Quarterly
Administration Fees, if any, from prior Payment Dates shall be paid to the
Administrator;

(iv) so long as no Default or Event of Default shall have occurred
and be continuing or would result from such payment, all other Operating
Expenses shall be paid to the Persons entitled thereto or, if such have
been previously paid by the Note Issuer, to

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the Note Issuer in reimbursement thereof; PROVIDED that the amount paid on
each Payment Date pursuant to this clause (iv) shall not exceed [$100,000];

(v) any overdue Quarterly Interest (together with, to the extent
lawful, interest on such overdue Quarterly Interest at the applicable Note
Interest Rate) and then Quarterly Interest for such Payment Date with
respect to each Series of Notes shall be paid to the Holders of such Series
of Notes;

(vi) principal due and payable on the Notes of any Series as a result
of an Event of Default or on the Final Maturity Date of the Notes of such
Series, shall be paid to the Holders of such Series of Notes;

(vii) Quarterly Principal for such Payment Date with respect to each
Series of Notes shall be paid to the Holders of such Series of Notes;

(viii) unpaid Operating Expenses shall be paid to the Persons
entitled thereto or, if such have been previously paid by the Note Issuer,
to the Note Issuer or as it directs in reimbursement thereof;

(ix) the amount, if any, by which the Required Capital Level with
respect to all Outstanding Series of Notes exceeds the amount in the
Capital Subaccount as of such Payment Date shall be allocated to the
Capital Subaccount;

(x) the amount, if any, by which the Required Overcollateralization
Level with respect to all Outstanding Series of Notes exceeds the amount in
the Overcollateralization Subaccount as of such Payment Date shall be
allocated to the Overcollateralization Subaccount;

(xi) funds up to the amount of net earnings on amounts in the
Collection Account for the prior quarter without cumulation shall be paid
to the Note Issuer, free from the lien of this Indenture;

(xii) if no Series of Notes is Outstanding as of such Payment Date,
the amount by which the amount in the Overcollateralization Subaccount
exceeds the aggregate Required Overcollateralization Level shall be paid to
the Grantee or as it directs, free from the lien of this Indenture;

(xiii) if no Series of Notes is Outstanding as of such Payment Date,
the amount by which the amount in the Capital Subaccount exceeds the
aggregate Required Capital Level shall be paid to the Grantee or as it
directs, free from the lien of this Indenture;

(xiv) the balance, if any, shall be allocated to the Reserve
Subaccount for distribution on subsequent Payment Dates; and

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(xv) after principal of and premium, if any, and interest on all Notes
of all Series, and all of the other foregoing amounts, have been paid in
full, the balance, if any, shall be paid to the Note Issuer, free from the
lien of this Indenture.

All payments to the Holders of a Series pursuant to clauses (v), (vi) and (vii)
above or, in the case of clause (vi), if there is more than one Series of Notes
outstanding all payments to the Holders of all Series, shall be made to such
Holders pro rata based on the respective principal amounts of Notes of such
Series held by such Holders, unless, in the case of a Series comprised of two or
more Classes, the Trustee's Issuance Certificate or Series Supplement, if any,
for such Series provides otherwise. Payments in respect of principal of and
premium, if any, and interest on any Class of Notes will be made on a pro rata
basis among all the Holders of such Class,

(e) If on any Payment Date funds on deposit in the General Subaccount
are insufficient to make the payments contemplated by clauses (i) through (vii)
of Section 8.02(d) above, the Indenture Trustee shall (i) FIRST, draw from
amounts on deposit in the Reserve Subaccount, (ii) SECOND, draw from amounts on
deposit in the Overcollateralization Subaccount and (iii) THIRD, draw from
amounts on deposit in the Capital Subaccount, in each case, up to the amount of
such shortfall in order to make the payments contemplated by clauses (i) through
(vii) of Section 8.02(d). In addition, if on any Payment Date funds on deposit
in the General Subaccount are insufficient to make the allocations contemplated
by clauses (ix) and (x) above, the Indenture Trustee shall draw from amounts on
deposit in the Reserve Subaccount to make such allocations notwithstanding the
fact that on such Payment Date the allocation contemplated by clause (viii)
above may not have been fully satisfied.

SECTION 8.03. GENERAL PROVISIONS REGARDING THE COLLECTION ACCOUNT.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and reinvested by the Indenture Trustee upon
Issuer Order; PROVIDED, HOWEVER, that (i) such Eligible Investments shall not
mature later than the Business Day prior to the next Payment Date for the
related Series of Notes and (ii) such Eligible Investments shall not be sold,
liquidated or otherwise disposed of at a loss prior to the maturity thereof.
All income or other gain from investments of moneys deposited in the Collection
Account shall be deposited by the Indenture Trustee in the Collection Account,
and any loss resulting from such investments shall be charged to the Collection
Account. The Note Issuer will not direct the Indenture Trustee to make any
investment of any funds or to sell any investment held in the Collection Account
unless the security interest Granted and perfected in such account will continue
to be perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Indenture Trustee to make any such investment or sale, if requested by
the Indenture Trustee, the Note Issuer shall deliver to the Indenture Trustee an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect. In no
event shall the Indenture Trustee be liable for the selection of Eligible
Investments or for investment losses incurred thereon. The Indenture Trustee
shall have no liability in respect of losses incurred as a result of the
liquidation of any Eligible Investment prior to its stated maturity or the
failure of the Note Issuer to provide timely written

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investment direction. The Indenture Trustee shall have no obligation to invest
or reinvest any amounts held hereunder in the absence of written investment
direction pursuant to an Issuer Order.

(b) Subject to Section 6.01(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in the Collection Account
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as trustee, in accordance with their terms.

(c) If (i) the Note Issuer shall have failed to give written
investment directions for any funds on deposit in the Collection Account to the
Indenture Trustee by 11:00 a.m. Eastern Time (or such other time as may be
agreed by the Note Issuer and Indenture Trustee) on any Business Day; or (ii) a
Default or Event of Default shall have occurred and be continuing with respect
to the Notes of any Series but the Notes of such Series shall not have been
declared due and payable pursuant to Section 5.02; then the Indenture Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the
Collection Account in one or more investments which qualify as investments in
money market funds described under paragraph (d) of the definition of Eligible
Investments.

SECTION 8.04. RELEASE OF NOTE COLLATERAL. (a) The Indenture Trustee
may, and when required by the provisions of this Indenture shall, execute
instruments to release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee as provided in this
Article VIII shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any moneys.

(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding, release any remaining portion of the Note Collateral that secured
the Notes from the lien of this Indenture and release to the Note Issuer or any
other Person entitled thereto any funds then on deposit in the Collection
Account. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01.

SECTION 8.05. OPINION OF COUNSEL. The Indenture Trustee shall
receive at least seven days' notice when requested by the Note Issuer to take
any action pursuant to Section 8.04(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have

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been complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Holders in contravention of the
provisions of this Indenture; PROVIDED, HOWEVER, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Note
Collateral. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.

SECTION 8.06. REPORTS BY INDEPENDENT ACCOUNTANTS. As of the Closing
Date, the Note Issuer shall appoint a firm of Independent certified public
accountants of recognized national reputation for purposes of preparing and
delivering the reports or certificates of such accountants required by this
Indenture and the related Trustee's Issuance Certificates or Series Supplements,
if any. In the event such firm requires the Indenture Trustee to agree to the
procedures performed by such firm, the Note Issuer shall direct the Indenture
Trustee in writing to so agree; it being understood and agreed that the
Indenture Trustee will deliver such letter of agreement in conclusive reliance
upon the direction of the Note Issuer, and the Indenture Trustee makes no
independent inquiry or investigation to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures. Upon any resignation by such firm the Note Issuer shall provide
written notice thereof to the Indenture Trustee and shall promptly appoint a
successor thereto that shall also be a firm of Independent certified public
accountants of recognized national reputation. If the Note Issuer shall fail to
appoint a successor to a firm of Independent certified public accountants that
has resigned within 15 days after such resignation, the Indenture Trustee shall
promptly notify the Note Issuer of such failure in writing. If the Note Issuer
shall not have appointed a successor within 10 days thereafter the Indenture
Trustee shall promptly appoint a successor firm of Independent certified public
accountants of recognized national reputation; PROVIDED that the Indenture
Trustee shall have no liability with respect to such appointment if the
Indenture Trustee acted with due care with respect thereto. The fees of such
Independent certified public accountants and its successor shall be payable by
the Note Issuer.

ARTICLE IX

SUPPLEMENTAL INDENTURES

SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
(a) Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies, the Note Issuer and the Indenture Trustee, when authorized by
an Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:

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(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;

(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Note Issuer, and the assumption
by any such successor of the covenants of the Note Issuer herein and in the
Notes contained;

(iii) to add to the covenants of the Note Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Note Issuer;

(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;

(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; PROVIDED that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect the interests
of the Holders of the Notes;

(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI;

(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar Federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA; or

(viii) to set forth the terms of any Series that has not theretofore
been authorized by a Trustee's Issuance Certificate or Series Supplement,
if any, or to provide for the execution and delivery of any Swap Agreement.

The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.

(b) The Note Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the Notes,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any

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manner or eliminating any of the provisions of, this Indenture or of modifying
in any manner the rights of the Holders of the Notes under this Indenture;
PROVIDED, HOWEVER, that (i) such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of the Holders
and (ii) the Rating Agency Condition shall have been satisfied with respect
thereto.

SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. The
Note Issuer and the Indenture Trustee, when authorized by an Issuer Order, also
may, with prior notice to the Rating Agencies and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Notes of
each Series or Class to be affected, by Act of such Holders delivered to the
Note Issuer and the Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note of each Series or Class
affected thereby:

(i) change the date of payment of any installment of principal of or
premium, if any, or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or premium, if any, with respect
thereto, change any Optional Redemption Price, change the provisions of
this Indenture and the related applicable Trustee's Issuance Certificate or
Series Supplement, if any, relating to the application of collections on,
or the proceeds of the sale of, the Note Collateral to payment of principal
of or premium, if any, or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of the provisions of this Indenture requiring the application
of funds available therefor, as provided in Article V, to the payment of
any such amount due on the Notes on or after the respective due dates
thereof (or, in the case of optional redemption, on or after the Optional
Redemption Date);

(ii) reduce the percentage of the Outstanding Amount of the Notes or
of a Series or Class thereof, the consent of the Holders of which is
required for any such supplemental indenture, or the consent of the Holders
of which is required for any waiver of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences
provided for in this Indenture;

(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";

(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Note Issuer to sell
or liquidate the Note Collateral pursuant to Section 5.04;

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(v) modify any provision of this Section to decrease any minimum
percentage specified herein necessary to approve any amendments to any
provisions of this Indenture;

(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest,
principal or premium, if any, due on any Note on any Payment Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the benefit
of any provisions for the mandatory redemption of the Notes contained
herein;

(vii) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Note
Collateral or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Note of the security provided by the
lien of this Indenture; or

(viii) cause any material adverse federal income tax consequence to
ComEd, the Grantee, the Note Issuer, the Delaware Trustee, the Indenture
Trustee or the then existing Holders..

The Indenture Trustee may in its discretion determine whether or not
any Notes of a Series or Class would be affected by any supplemental indenture
and any such determination shall be conclusive upon the Holders of all Notes of
such Series or Class, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.

It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

Promptly after the execution by the Note Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Note Issuer
shall mail to the Rating Agencies and the Holders of the Notes to which such
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.

SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated

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to, enter into any such supplemental indenture that affects the Indenture
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise.

SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to each Series or Class of Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Indenture Trustee, the Note Issuer and the Holders
of the Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.

SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Note Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Note Issuer, to any such
supplemental indenture may be prepared and executed by the Note Issuer and
authenticated and delivered by the Indenture Trustee in exchange for Outstanding
Notes.

ARTICLE X

REDEMPTION OF NOTES

SECTION 10.01. OPTIONAL REDEMPTION BY NOTE ISSUER. The Note Issuer
may, at its option, redeem all, but not less than all, of the Notes of a Series
(a) on any Payment Date if, after giving effect to payments that would otherwise
be made on such Payment Date, the Outstanding Amount of any such Series of Notes
has been reduced to less than five percent of the initial principal balance
thereof, or (b) if and to the extent specified in the related Trustee's Issuance
Certificate or Series Supplement, if any, on any Payment Date on or prior to
December 31, 2004, from the proceeds of the issuance and sale of the Notes of
any other Series. In addition, a Series of Notes shall be subject to redemption
if and to the extent provided in the related Trustee's Issuance Certificate or
Series Supplement, if any. The purchase price in any such case shall be equal
to the outstanding principal amount of the Notes to be redeemed plus accrued and
unpaid interest thereon at the Note Interest Rate to the Optional Redemption
Date

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(such price being called the "Optional Redemption Price"). If the Note Issuer
shall elect to redeem the Notes of a Series pursuant to this Section 10.01, it
shall furnish written notice (which notice shall state all items listed in
Section 10.02) of such election to the Indenture Trustee and the Rating Agencies
not more than 50 and not later than 25 days prior to the Optional Redemption
Date and shall deposit with the Indenture Trustee not later than one Business
Day prior to the Optional Redemption Date the Optional Redemption Price of the
Notes to be redeemed whereupon all such Notes shall be due and payable on the
Optional Redemption Date upon the furnishing of a notice complying with Section
10.02 hereof to each Holder of the Notes of such Series pursuant to this Section
10.01.

SECTION 10.02. FORM OF OPTIONAL REDEMPTION NOTICE. Unless otherwise
specified in the Trustee's Issuance Certificate or Series Supplement, if any,
relating to a Series of Notes, notice of redemption under Section 10.01 hereof
shall be given by the Indenture Trustee by first-class mail, postage prepaid,
mailed not less than five days nor more than 25 days prior to the applicable
Optional Redemption Date to each Holder of Notes to be redeemed, as of the close
of business on the Record Date preceding the applicable Optional Redemption Date
at such Holder's address appearing in the Note Register.

All notices of redemption shall state:

(1) the Optional Redemption Date;

(2) the Optional Redemption Price;

(3) the place where such Notes are to be surrendered for payment of
the Optional Redemption Price (which shall be the office or agency of the
Note Issuer to be maintained as provided in Section 3.02 hereof);

(4) the CUSIP number, if applicable; and

(5) the principal amount of Notes to be redeemed.

Notice of redemption of the Notes to be redeemed shall be given by the
Indenture Trustee in the name and at the expense of the Note Issuer. Failure to
give notice of redemption, or any defect therein, to any Holder of any Note
selected for redemption shall not impair or affect the validity of the
redemption of any other Note.

SECTION 10.03. NOTES PAYABLE ON OPTIONAL REDEMPTION DATE. Notice of
redemption having been given as provided in Section 10.02 hereof, the Notes to
be redeemed shall on the Optional Redemption Date become due and payable at the
Optional Redemption Price and (unless the Note Issuer shall default in the
payment of the Optional Redemption Price) no interest shall accrue on the
Optional Redemption Price for any period after the date to which accrued
interest is calculated for purposes of calculating the Optional Redemption
Price.

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ARTICLE XI

MISCELLANEOUS

SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. (a) Upon
any application or request by the Note Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Note Issuer shall furnish
to the Indenture Trustee (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;

(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;

(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and

(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.

(b) (i) Prior to the deposit of any Note Collateral or other property
or securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Note Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Note
Issuer of the Note Collateral or other property or securities to be so
deposited.

(ii) Whenever the Note Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Note Issuer shall
also deliver to the Indenture Trustee an

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Independent Certificate as to the same matters, if the fair value to the Note
Issuer of the securities to be so deposited and of all other such securities
made the basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Note Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is ten percent or
more of the Outstanding Amount of the Notes of all Series, but such a
certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Note Issuer as set forth in the related
Officer's Certificate is less than the lesser of (A) $25,000 or (B) one percent
of the Outstanding Amount of the Notes of all Series.

(iii) Whenever any property or securities are to be released from the
lien of this Indenture other than pursuant to Section 8.02(d), the Note Issuer
shall also furnish to the Indenture Trustee an Officer's Certificate certifying
or stating the opinion of each person signing such certificate as to the fair
value (within 90 days of such release) of the property or securities proposed to
be released and stating that in the opinion of such person the proposed release
will not impair the security under this Indenture in contravention of the
provisions hereof.

(iv) Whenever the Note Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signatory thereof as to the matters described in clause (iii) above, the Note
Issuer shall also furnish to the Indenture Trustee an Independent Certificate as
to the same matters if the fair value of the property or securities and of all
other property with respect to such Series, or securities released from the lien
of this Indenture (other than pursuant to Section 8.02(d) hereof) since the
commencement of the then-current calendar year, as set forth in the certificates
required by clause (iii) above and this clause (iv), equals 10 percent or more
of the Outstanding Amount of the Notes of all Series, but such certificate need
not be furnished in the case of any release of property or securities if the
fair value thereof as set forth in the related Officer's Certificate is less
than the lesser of (A) $25,000 or (B) one percent of the then Outstanding Amount
of the Notes of all Series.

(v) Notwithstanding Section 2.16 or any other provision of this
Section 11.01, the Indenture Trustee may (A) collect, liquidate, sell or
otherwise dispose of the Intangible Transition Property and the other Note
Collateral as and to the extent permitted or required by the Basic Documents and
(B) make cash payments out of the Collection Account as and to the extent
permitted or required by the Basic Documents.

SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.

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Any certificate or opinion of a Responsible Officer of the Note Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of a Responsible Officer
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Servicer, the Grantee, the Note Issuer or the Administrator, stating that
the information with respect to such factual matters is in the possession of the
Servicer, the Grantee, the Note Issuer or the Administrator, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.

Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Note
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Note Issuer's compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the granting
of such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Note Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion contained
in any such document as provided in Article VI.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 11.03. ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee, and, where it is hereby
expressly required, to the Note Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Indenture Trustee and the Note Issuer, if made in the
manner provided in this Section.

(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.

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<PAGE>

(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Note Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.

SECTION 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE, NOTE ISSUER AND
RATING AGENCIES. (a) Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other documents provided or permitted by
this Indenture to be made upon, given or furnished to or filed with:

(i) the Indenture Trustee by any Holder or by the Note Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing by facsimile transmission, first-class mail or overnight
delivery service to or with the Indenture Trustee at its Corporate Trust
Office, or

(ii) the Note Issuer by the Indenture Trustee or by any Holder shall
be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to the Note Issuer addressed to: ComEd
Transitional Funding Trust, Attention: [ ] or at any other address
previously furnished in writing to the Indenture Trustee by the Note
Issuer. The Note Issuer shall promptly transmit any notice received by it
from the Holders to the Indenture Trustee.

(b) Notices required to be given to the Rating Agencies by the Note
Issuer or the Indenture Trustee shall be in writing, personally delivered or
mailed by certified mail, return receipt requested to (i) in the case of
Moody's, to: Moody's Investors Service, Inc., ABS Monitoring Department, 99
Church Street, New York, New York 10007, (ii) in the case of Standard & Poor's,
to: Standard & Poor's Corporation, 26 Broadway (10th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department, (iii) in the case of
Fitch, to Fitch Investors Service, L.P., One State Street Plaza, New York, New
York 10004, Attention of Commercial Asset-Backed Securities, and (iv) in the
case of Duff & Phelps, to Duff & Phelps Credit Rating Co., 17 State Street, 12th
Floor, New York, New York 10004, Attention: Asset-Backed Monitoring Group.

SECTION 11.05. NOTICES TO HOLDERS; WAIVER. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Holder affected by such event, at such
Holder's address as it appears on the Note Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with

69
<PAGE>

respect to other Holders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.

Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Indenture Trustee
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.

In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Holders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.

Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.

SECTION 11.06. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.

The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

SECTION 11.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

SECTION 11.08. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture and the Notes by the Note Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee
in this Indenture shall bind its successors.

SECTION 11.09. SEPARABILITY. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

SECTION 11.10. BENEFITS OF INDENTURE. Nothing in this Indenture or
in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their

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<PAGE>

successors hereunder, and the Holders, and any other party secured hereunder,
and any other Person with an ownership interest in any part of the Note
Collateral, any benefit or any legal or equitable right, remedy or claim under
this Indenture.

SECTION 11.11. LEGAL HOLIDAYS. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.

SECTION 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 11.13. COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

SECTION 11.14. RECORDING OF INDENTURE. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Note Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Holders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.

SECTION 11.15. TRUST OBLIGATION. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Note Issuer or the
Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Delaware Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Note Issuer (including the Grantee and
ComEd) or (iii) any partner, owner, beneficiary, agent, officer, or employee of
the Indenture Trustee or the Delaware Trustee in its individual capacity, any
holder of a beneficial interest in the Note Issuer or the Indenture Trustee or
of any successor or assign of any of them in their respective individual or
corporate capacities, except as any such Person may have expressly agreed (it
being understood that none of the Indenture Trustee, the Delaware Trustee, the
Grantee and ComEd have any such obligations in their respective individual or
corporate capacities).

SECTION 11.16. NO RECOURSE TO NOTE ISSUER. Notwithstanding any
provision of this Indenture or any Trustee's Issuance Certificate or any Series
Supplement to the contrary,

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<PAGE>

Holders shall have no recourse against the Note Issuer, but shall look only to
the Note Collateral with respect to any amounts due to the Holders hereunder and
under the Notes.

SECTION 11.17. INSPECTION. The Note Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee, during the Note Issuer's normal business hours, to examine all the
books of account, records, reports, and other papers of the Note Issuer, to make
copies and extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Note Issuer's affairs, finances
and accounts with the Note Issuer's officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the extent
disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder. Notwithstanding anything herein to the
contrary, the foregoing shall not be construed to prohibit (i) disclosure of any
and all information that is or becomes publicly known, or information obtained
by the Indenture Trustee from sources other than the Note Issuer, provided such
parties are rightfully in possession of such information, (ii) disclosure of any
and all information (A) if required to do so by any applicable statute, law,
rule or regulation, (B) pursuant to any subpoena, civil investigative demand or
similar demand or request of any court or regulatory authority exercising its
proper jurisdiction, (C) in any preliminary or final offering circular,
registration statement or contract or other document pertaining to the
transactions contemplated by this Indenture or the Basic Documents approved in
advance by the Note Issuer or (D) to any affiliate, independent or internal
auditor, agent, employee or attorney of the Indenture Trustee having a need to
know the same, provided that such parties agree to be bound by the
confidentiality provisions contained in this Section 11.17, or (iii) any other
disclosure authorized by the Note Issuer.

SECTION 11.18 NO PETITION. The Indenture Trustee, by entering into
this Indenture, and each Holder, by accepting a Note (or interest therein)
issued hereunder, hereby covenant and agree that they shall not, prior to the
date which is one year and one day after the termination of the Trust Agreement,
acquiesce, petition or otherwise invoke or cause the Grantee or the Note Issuer
to invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Grantee or the Note Issuer under any
insolvency law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Grantee or the Note
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Grantee or the Note Issuer.

IN WITNESS WHEREOF, the Note Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers,
thereunto duly authorized and duly attested, all as of the day and year first
above written.

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<PAGE>

COMED TRANSITIONAL FUNDING TRUST
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Delaware Trustee

By:
-------------------------------------
Name:
------------------------------
Title:
---------------------------

HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity but solely as Indenture
Trustee

By:
---------------------------------
Name:
--------------------------------
Title:
-----------------------------

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<PAGE>

STATE OF ILLINOIS, )
)ss:
COUNTY OF COOK )

On the day of [ ], 1998, before me, [ ], a Notary Public in and
for said county and state, personally appeared [ ], personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person and officer
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument __________________________________, a bank and the entity upon whose
behalf the person acted, executed this instrument.

WITNESS my hand and official seal.

-----------------
Notary Public
My commission expires:

<PAGE>

STATE OF ILLINOIS, )
)ss:
COUNTY OF COOK )

On the day of [ ], 1998, before me, [ ], a Notary Public in and
for said county and state, personally appeared [ ], personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person and officer
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument COMED TRANSITIONAL FUNDING TRUST, a Delaware business trust and the
entity upon whose behalf the person acted, executed this instrument.

WITNESS my hand and official seal.

-----------------
Notary Public
My commission expires:

<PAGE>

EXHIBIT B

REGISTERED $_____
No.____

SEE REVERSE FOR CERTAIN DEFINITIONS

CUSIP NO.___

THE PRINCIPAL OF THIS CLASS A - [ ] NOTE WILL BE PAID IN INSTALLMENTS
AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS
CLASS A - [ ] NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF. THE HOLDER OF THIS NOTE HAS NO RECOURSE TO THE ISSUER HEREOF AND AGREES
TO LOOK ONLY TO THE NOTE COLLATERAL, AS DESCRIBED IN THE INDENTURE AND ANY
RELATED TRUSTEE'S ISSUANCE CERTIFICATE OR SERIES SUPPLEMENT REFERRED TO ON THE
REVERSE HEREOF, FOR PAYMENT OF ANY AMOUNTS DUE HEREUNDER. ALL OBLIGATIONS OF
THE ISSUER OF THIS NOTE UNDER THE TERMS OF THE INDENTURE WILL BE RELEASED AND
DISCHARGED UPON PAYMENT HEREOF OR AS OTHERWISE PROVIDED IN SECTION 3.10(B) OR
ARTICLE IV OF THE INDENTURE. THE HOLDER OF THIS NOTE HEREBY COVENANTS AND
AGREES THAT PRIOR TO THE DATE WHICH IS ONE (1) YEAR AND ONE (1) DAY AFTER THE
PAYMENT IN FULL OF THE [CLASS A] NOTES, IT WILL NOT INSTITUTE AGAINST, OR JOIN
ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY BANKRUPTCY,
REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER
SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF THE
UNITED STATES. NOTHING IN THIS PARAGRAPH SHALL PRECLUDE, OR BE DEEMED TO ESTOP,
SUCH HOLDER (A) FROM TAKING OR OMITTING TO TAKE ANY ACTION PRIOR TO SUCH DATE IN
(I) ANY CASE OR PROCEEDING VOLUNTARILY FILED OR COMMENCED BY OR ON BEHALF OF THE
ISSUER UNDER OR PURSUANT TO ANY SUCH LAW OR (II) ANY INVOLUNTARY CASE OR
PROCEEDING PERTAINING TO THE ISSUER WHICH IS FILED OR COMMENCED BY OR ON BEHALF
OF A PERSON OTHER THAN SUCH HOLDER AND IS NOT JOINED IN BY SUCH HOLDER (OR ANY
PERSON TO WHICH SUCH HOLDER SHALL HAVE ASSIGNED, TRANSFERRED OR OTHERWISE
CONVEYED ANY PART OF THE OBLIGATIONS OF THE ISSUER HEREUNDER) UNDER OR PURSUANT
TO ANY SUCH LAW, OR (B) FROM COMMENCING OR PROSECUTING ANY LEGAL ACTION WHICH IS
NOT AN INVOLUNTARY CASE OR PROCEEDING UNDER OR PURSUANT TO ANY SUCH LAW AGAINST
THE ISSUER OR ANY OF ITS PROPERTIES.

<PAGE>

COMED TRANSITIONAL FUNDING TRUST
NOTES, SERIES 199 [ ] - [ ], Class A - [ ].

INTEREST ORIGINAL PRINCIPAL FINAL MATURITY
RATE AMOUNT DATE
---- ------ ----

ComEd Transitional Funding Trust, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Note Issuer"), for value received, hereby promises to pay to [ ], or
registered assigns, the Original Principal Amount shown above [in quarterly
installments] on the Payment Dates and in the amounts specified on the reverse
hereof or, if less, the amounts determined pursuant to Section 8.02 of the
Indenture, in each year, commencing on the date determined as provided on the
reverse hereof and ending on or before the Final Maturity Date shown above and
to pay interest, at the Interest Rate shown above, on each [March 15, June 15,
September 15 and December 15] or if any such day is not a Business Day, the next
succeeding Business Day, commencing on [ ]and continuing until the earlier of
the payment of the principal hereof and the Final Maturity Date (each a "Payment
Date"), on the principal amount of this Class A - [ ] Note. Interest on this
Class A - [ ]Note will accrue for each Payment Date from the most recent Payment
Date on which interest has been paid to but excluding such Payment Date or, if
no interest has yet been paid, from [ ]. Interest will be computed on the
basis of a [specify method of computation]. Such principal of and interest on
this Class A - [ ] Note shall be paid in the manner specified on the reverse
hereof.

The principal of and interest on this Class A - [ ] Note are payable
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. All payments
made by the Note Issuer with respect to this Class A - [ ] Note shall be applied
first to interest due and payable on this Class A - [ ] Note as provided above
and then to the unpaid principal of and premium, if any, on this Class A - [ ]
Note, all in the manner set forth in Section 8.02 of the Indenture.

Reference is made to the further provisions of this Class A - [ ] Note
set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A - [ ] Note.

Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class A
- - [ ] Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.

2
<PAGE>

IN WITNESS WHEREOF, the Note Issuer has caused this instrument to be
signed, manually or in facsimile, by its Responsible Officer.

Date:

COMED TRANSITIONAL FUNDING TRUST
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity
by solely as Delaware Trustee

By:
----------------------------------------
Name:
Title:

3
<PAGE>

INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

Dated:____, 199__

This is one of the Class A - [ ] Notes of the Series 199 [ ] -[ ]
Notes, designated above and referred to in the within-mentioned Indenture.

HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity but solely as Indenture
Trustee

By:
-------------------------
Name:
-----------------------
Title:
----------------------

4
<PAGE>

[REVERSE OF NOTE]

This Series 199[ ] - [ ], Class A - [ ] Note is one of a duly
authorized issue of Notes of the Note Issuer, designated as its Notes (herein
called the "Notes"), issued and to be issued in one or more Series, which Series
are issuable in one or more Classes, and this Series 199 [ ] - [ ]Note , in
which this Class A - [ ] Note represents an interest, consists of [ ] Classes,
including this Class A - [ ] Note (herein called the "Class A - [ ] Notes"), all
issued and to be issued under an Indenture dated as of [ ], 1998, (the
"Indenture"), each between the Note Issuer and [ ], as Indenture Trustee (the
"Indenture Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Note Issuer, the Indenture Trustee and the Holders of the
Notes. All terms used in this Class A - [ ] Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in the Indenture.

The Class A - [ ] Notes, the other Classes of Series 199[ ] - [ ]
Notes and any other Series of Notes issued by the Note Issuer are and will be
equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.

The principal of this Class A - [ ] Note shall be payable on each
Payment Date only to the extent that amounts in the Collection Account are
available therefor, and only until the outstanding principal balance thereof on
the preceding Payment Date (after giving effect to all payments of principal, if
any, made on the preceding Payment Date) has been reduced to the principal
balance specified in the Expected Amortization Schedule which is attached to the
related Trustee's Issuance Certificate or Series Supplement, if any, as Schedule
__, unless payable earlier either because (x) an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of Notes
representing not less than a majority of the Outstanding Amount of the Notes of
all Series have declared the Notes of all Series to be immediately due and
payable in accordance with Section 5.02 of the Indenture or (y) the Note Issuer,
at its option, shall have called for the redemption of the Series 199 [ ] - [ ]
Notes pursuant to Section 10.01 of the Indenture. However, actual principal
payments may be made in lesser than expected amounts and at later than expected
times as determined pursuant to Section 8.02 of the Indenture. The entire
unpaid principal amount of this Class A - [ ] Note shall be due and payable on
the earlier of the Final Maturity Date hereof and the Optional Redemption Date,
if any. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable, if not then previously paid, on the date on
which an Event of Default shall have occurred and be continuing and the
Indenture Trustee or the Holders of the Notes representing not less than a
majority of the Outstanding Amount of the Notes of all Series have declared the
Notes of all Series to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. All

- -----------------------------------

(1) The form of the reverse of a Note is substantially as follows, unless
otherwise specified in the related Trustee's Issuance Certificate or Series
Supplement.

5
<PAGE>

principal payments on the Class A - [ ] Notes shall be made pro rata to the
Class A - [ ] Holders entitled thereto based on the respective principal
amounts of the Class A - [ ]Notes held by them.

Payments of interest on this Class A - [ ] Note due and payable on
each Payment Date , together with the installment of principal or premium, if
any, shall be made by check mailed first-class, postage prepaid, to the Person
whose name appears as the Registered Holder of this Class A - [ ] Note (or one
or more Predecessor Notes) on the Note Register as of the close of business on
the Record Date or in such other manner as may be provided in the related
Trustee's Issuance Certificate or Series Supplement, except for the final
installment of principal and premium, if any, payable with respect to this Class
A - [ ] Note on a Payment Date which shall be payable as provided below. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Class A - [ ] Note be submitted for notation of
payment. Any reduction in the principal amount of this Class A - [ ] Note (or
any one or more Predecessor Notes) effected by any payments made on any Payment
Date shall be binding upon all future Holders of this Class A - [ ] Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A - [ ] Note on a Payment Date,
then the Indenture Trustee, in the name of and on behalf of the Note Issuer,
will notify the Person who was the Registered Holder hereof as of the Record
Date preceding such Payment Date by notice mailed no later than five days prior
to such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of this Class A - [ ] Note and
shall specify the place where this Class A - [ ] Note may be presented and
surrendered for payment of such installment.

The Note Issuer shall pay interest on overdue installments of interest
at the Note Interest Rate to the extent lawful.

As provided in the Indenture, the Class A - [ ] Notes may be redeemed,
in whole but not in part, at the option of the Note Issuer on any Payment Date
at the Optional Redemption Price if, after giving effect to payments that would
otherwise be made on such Payment Date, the Outstanding Amount of the Class A-[
] Notes has been reduced to less than five percent of the initial principal
balance thereof.

This Note is a transitional funding instrument as such term is defined
in the Funding Law. Principal and interest due and payable on this Note are
payable from and secured primarily by intangible transition property created and
established by a transitional funding order obtained from the Illinois Commerce
Commission pursuant to the Funding Law. Intangible transition property consists
of the right to impose and collect certain charges (defined in the Funding Law
as "instrument funding charges") to be included in regular electric utility
bills of existing and future electric service customers of Commonwealth Edison
Company, an Illinois electric utility.

6
<PAGE>

The Funding Law provides that: "The State [of Illinois] pledges to
and agrees with the holders of any transitional funding instruments who may
enter into contracts with an electric utility, grantee, assignee or issuer
pursuant to this Article XVIII [of the Public Utility Act] that the State [of
Illinois] will not in any way limit, alter, impair or reduce the value of
intangible transition property created by, or instrument funding charges
approved by, a transitional funding order so as to impair the terms of any
contract made by such electric utility, grantee, assignee or issuer with such
holders or in any way impair the rights and remedies of such holders until the
pertinent grantee instruments or, if the related transitional funding order does
not provide for the issuance of grantee instruments, the pertinent transitional
funding instruments and interest, premium and other fees, costs and charges
related thereto, as the case may be, are fully paid and discharged. Electric
utilities, grantees and issuers are authorized to include these pledges and
agreements of the State [of Illinois] in any contract with the holders of
transitional funding instruments or with any assignees pursuant to this Article
XVIII [of the Public Utility Act] and any assignees are similarly authorized to
include these pledges and agreements of the State [of Illinois] in any contract
with any issuer, holder or any other assignee. Nothing in this Article XVIII
[of the Public Utility Act] shall preclude the State of Illinois from requiring
adjustments as may otherwise be allowed by law to the electric utility's base
rates, transition charges, delivery services charges, or other charges for
tariffed services, so long as any such adjustment does not directly affect or
impair any instrument funding charges previously authorized by a transitional
funding order issued by the [Illinois Commerce Commission]."

As a result of the foregoing pledge, the State of Illinois may not,
except as provided in the succeeding sentence, in any way limit, alter, impair
or reduce the value of such intangible transition property or such instrument
funding changes in a manner substantially impairing the Note Indenture or the
rights and remedies of the Holders, until the Notes, together with interest
thereon, are fully paid and discharged. Notwithstanding the immediately
preceding sentence, the State of Illinois would be allowed to effect a temporary
impairment of the Holders' rights if it could be shown that such impairment was
necessary to advance a significant and legitimate public purpose.

As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A - [ ] Note may be registered on the
Note Register upon surrender of this Class A - [ ] Note for registration of
transfer at the office or agency designated by the Note Issuer pursuant to the
Indenture, duly endorsed by, or accompanied by (a) a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by the
Holder hereof or his attorney duly authorized in writing, with such signature
guaranteed by an institution which is a member of one of the following
recognized Signature Guaranty Programs: (i) The Securities Transfer Agent
Medallion Program (STAMP); (ii)The New York Stock Exchange Medallion Program
(MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other
guarantee program acceptable to the Indenture Trustee, and (b) such other
documents as the Indenture Trustee may require, and thereupon one or more new
Class A - [ ] Notes of Minimum Denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or

7
<PAGE>

exchange of this Class A - [ ] Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange, other than
exchanges pursuant to Section 2.04 or 9.06 of the Indenture not involving any
transfer.

Each Note holder, by acceptance of a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Note Issuer or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Note Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture
Trustee in its individual capacity, any holder of a beneficial interest in the
Note Issuer or the Indenture Trustee or of any successor or assign of the
Indenture Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Indenture Trustee has no such
obligations in its individual capacity).

Prior to the due presentment for registration of transfer of this
Class A - [ ] Note, the Note Issuer, the Indenture Trustee and any agent of the
Note Issuer or the Indenture Trustee may treat the Person in whose name this
Class A - [ ] Note is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium, if
any, and interest on this Class A - [ ] Note and for all other purposes
whatsoever, whether or not this Class A - [ ] Note be overdue, and neither the
Note Issuer, the Indenture Trustee nor any such agent shall be affected by
notice to the contrary.

The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Note Issuer and the rights of the Holders of the Notes under the Indenture at
any time by the Note Issuer with the consent of the Holders of Notes
representing a majority of the Outstanding Amount of all Notes at the time
outstanding of each Series or Class to be affected. The Indenture also contains
provisions permitting the Holders of Notes representing specified percentages of
the outstanding Amount of the Notes of all Series, on behalf of the Holders of
all the Notes, to waive compliance by the Note Issuer with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Class A - [ ]
Note (or any one of more Predecessor Notes) shall be conclusive and binding upon
such Holder and upon all future Holders of this Class A - [ ] Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Class A - [ ] Note. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.

The term "Note Issuer" as used in this Class A - [ ] Note includes any
successor to the Note Issuer under the Indenture.

8
<PAGE>

The Note Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Holders of Notes under the Indenture.

The Class A - [ ] Notes are issuable only in registered form in
denominations as provided in the Indenture and the related Trustee's Issuance
Certificate or Series Supplement, if any, subject to certain limitations therein
set forth.

This Class A - [ ] Note, the Indenture and the related Trustee's
Issuance Certificate or Series Supplement, if any, shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.

No reference herein to the Indenture and no provision of this Class A
- - [ ] Note or of the Indenture shall alter or impair the obligation of the Note
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Class A - [ ] Note at the times, place, and rate, and in the
coin or currency-herein prescribed.

The Holder of this Class A - [ ] Note by the acceptance hereof agrees
that, notwithstanding any provision of the Indenture or the related Trustee's
Issuance Certificate or Series Supplement, if any, to the contrary, the Holder
shall have no recourse against the Note Issuer, but shall look only to the Note
Collateral, with respect to any amounts due to the Holder under this Class A - [
] Note.

The Note Issuer and the Indenture Trustee, by entering into the
Indenture, and the Holders and any Persons holding a beneficial interest in any
Class-A [] Note, by acquiring any Class-A [] Note or interest therein, (i)
express their intention that the Class-A [] Notes qualify under applicable tax
law as indebtedness of ComEd secured by the Note Collateral and (ii) unless
otherwise required by appropriate taxing authorities, agree to treat the Class-A
[] Notes as indebtedness of ComEd secured by the Note Collateral for the purpose
of federal income, state and local income and franchise taxes, and any other
taxes imposed upon, measured by or based upon gross or net income.

9
<PAGE>

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

- --------

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
---------------------------------------------------------
(name and address of assignee)

the within Class A - [ ] Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________, attorney, to transfer said Class A -
[ ] Note on the books kept for registration thereof, with full power of
substitution in the premises.

Dated: ____ --------------
Signature Guaranteed:

- -------- --------------

- ---------------------------

(2) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Class A - [ ] Note in
every particular, without alteration, enlargement or any change whatsoever.

10
<PAGE>

EXHIBIT D

SERIES SUPPLEMENT dated as of ____, 199 ____ (this "Supplement"),
by and between COMED TRANSITIONAL FUNDING TRUST, business trust
created under the laws as the State of Delaware (the "Note
Issuer"), and, ___________, a bank organized under the laws of
the United States of America (the "Indenture Trustee"), as
Indenture Trustee under the Indenture dated as of [ ], 1998,
between the Note Issuer and the Indenture Trustee (the
"Indenture").

PRELIMINARY STATEMENT

Section 9.01 of the Indenture provides, among other things, that the
Note Issuer and the Indenture Trustee may at any time and from time to time
enter into one or more indentures supplemental to the Indenture for the purposes
of authorizing the issuance by the Note Issuer of a Series of Notes and
specifying the terms thereof. The Note Issuer has duly authorized the creation
of a Series of Notes with an initial aggregate principal amount of $ [ ] to be
known as the Note Issuer's Notes, Series 199 [ ]- [ ] (the "Series 199 [ ] -
[ ] Notes"), and the Note Issuer and the Indenture Trustee are executing and
delivering this Supplement in order to provide for the Series 199 [ ] - [ ]
Notes.

All terms used in this Supplement that are defined in the Indenture,
either directly or by reference therein, have the meanings assigned to them
therein, except to the extent such terms are defined or modified in this
Supplement or the context clearly requires otherwise. In the event that any
term or provision contained herein shall conflict with or be inconsistent with
any term or provision contained in the Indenture, the terms and provisions of
this Supplement shall govern.

SECTION 1. DESIGNATION. The Series 199 [ ] - [ ] Notes shall be
designated generally as the Note Issuer's Notes, Series 199 [ ] and further
denominated as Classes [ ] through [ ].

SECTION 2. INITIAL PRINCIPAL AMOUNT; NOTE INTEREST RATE; SCHEDULED
MATURITY DATE; FINAL MATURITY DATE. The Notes of each Class of the Series 199
[ ] - [ ] shall have the initial principal amount, bear interest at the
rates per annum and shall have Scheduled Maturity Dates and Final Maturity
Dates as set forth below:

<PAGE>

Initial Scheduled Final
Principal Interest Maturity Maturity
Class Amount Rate Date Date
- ----- ------ ---- ---- ----

The Note Interest Rate shall be computed on the basis of a 360-day year of
twelve 30-day months.

SECTION 3. AUTHENTICATION DATE; PAYMENT DATES; EXPECTED AMORTIZATION
SCHEDULE FOR PRINCIPAL; QUARTERLY INTEREST; REQUIRED OVERCOLLATERALIZATION
LEVEL; NO PREMIUM. (a) AUTHENTICATION DATE. The Series 199 [ ] - [ ] Notes
that are authenticated and delivered by the Indenture Trustee to or upon the
order of the Note Issuer on [ ], 199 [ ] (the "Series Issuance Date") shall
have as their date of authentication [ ], 199 [ ].

(b) PAYMENT DATES. The Payment Dates for the Series 199 [ ] -
[ ] Notes are [March 15, June 15, September 15 and December 15] of each year
or, if any such date is not a Business Day, the next succeeding Business Day,
commencing on [ ] and continuing until the earlier of repayment of the
Series 199 [ ] - [ ] Notes in full and the Final Maturity Date for the
Series 199 [ ] - [ ] Notes.

(c) EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL. Unless an Event of
Default shall have occurred and be continuing on each Payment Date, the
Indenture Trustee shall distribute to the Holders of record as of the related
Record Date amounts payable pursuant to Section 8.02(d)(vii) of the Indenture as
principal, in the following order and priority: [(1) to the holders of the Class
A-1 Notes, until the Outstanding Amount of such Class of Notes thereof has been
reduced to zero; (2) to the holders of the Class A-2 Notes, until the
Outstanding Amount of such Class of Notes thereof has been reduced to zero; (3)
to the holders of the Class A-3 Notes, until the Outstanding Amount of such
Class of Notes thereof has been reduced to zero; (4) to the holders of the Class
A-4 Notes, until the Outstanding Amount of such Class of Notes thereof has been
reduced to zero; (5) to the holders of the Class A-5 Notes until the Outstanding
Amount of such Class of Notes thereof has been reduced to zero; (6) to the
holders of the Class A-6 Notes, until the Outstanding Amount of such Class of
Notes thereof has been reduced to zero; (7) to the holders of the Class A-7
Notes until the Outstanding Amount of such Class of Notes thereof has been
reduced to zero; and (8) to the holders of the Class A-8 Notes, until the
Outstanding Amount of such Class of Notes thereof has been reduced to zero;]
PROVIDED, HOWEVER, that in no event shall a principal payment pursuant to this
Section 3(c) on any Class on a Payment Date be greater than the amount necessary
to reduce the Outstanding Amount of such Class of Notes below the amount
specified in the Expected Amortization Schedule which is attached as Schedule A
hereto for such Class and Payment Date.

(d) QUARTERLY INTEREST. [Quarterly] Interest will be payable on each
Class of the Series 199 [ ]- [ ]Notes on each Payment Date in an equal amount to
[one-fourth] of the product

2
<PAGE>

of (i) the applicable Note Interest Rate and (ii) the Outstanding Amount of the
related Class of Notes as of the close of business on the preceding Payment Date
after giving effect to all payments of principal made to the holders of the
related Class of Series 199 [ ] - [ ] Notes on such preceding Payment Date;
PROVIDED, HOWEVER, that with respect to the initial Payment Date, or, if no
payment has yet been made, interest on the outstanding principal balance will
accrue from and including the Series Issuance Date to, but excluding, the
following Payment Date.

(e) REQUIRED OVERCOLLATERALIZATION LEVEL. The Required
Overcollateralization Level for any Payment Date shall be as set forth in
Schedule B hereto.

(f) NO PREMIUM, No premium will be payable in connection with any
optional redemption of the Series 199 [ ] - [ ] Notes.

SECTION 4. MINIMUM DENOMINATIONS. The Series 199 [ ] - [ ] Notes
shall be issuable in the Minimum Denomination and integral multiples thereof.

SECTION 5. CERTAIN DEFINED TERMS. Article One of the Indenture
provides that the meanings of certain defined terms used in the Indenture shall,
when applied to the Notes of a particular Series, be as defined in Article One
but with such additional provisions as are specified in the related Supplement.
Additionally, Article Two of the Indenture provides that with respect to a
particular Series of Notes, certain terms will have the meanings specified in
the related Supplement. With respect to the Series 199 [ ] - [ ] Notes, the
following definitions shall apply:

"MINIMUM DENOMINATION" shall mean $1,000.

"NOTE INTEREST RATE" has the meaning set forth in Section 2 of this
supplement.

"PAYMENT DATE" has the meaning set forth in Section 3(b) of this
Supplement.

"QUARTERLY INTEREST" has the meaning set forth in Section 3(d) of this
Supplement.

"SERIES ISSUANCE DATE" has the meaning set forth in Section 3(a) of
this Supplement.

SECTION 6. DELIVERY AND PAYMENT FOR THE SERIES 199[ ] - [ ] NOTES;
FORM OF THE SERIES 199[ ] - [ ] NOTES. The Indenture Trustee shall deliver
the Series 199[ ] - [ ] Notes to the Note Issuer when authenticated in
accordance with Section 2.03 of the Indenture. The Series 199[ ] - [ ] Notes
of each Class shall be in the form of Exhibits [A-1 through A-8] hereto.

SECTION 7. RATIFICATION OF AGREEMENT. As supplemented by this
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture, as so supplemented by this Supplement, shall be read, taken, and
construed as one and the same instrument.

3
<PAGE>

SECTION 8. COUNTERPARTS. This Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.

SECTION 9. GOVERNING LAW. This Supplement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

SECTION 10. TRUST OBLIGATION. No recourse may be taken directly or
indirectly, with respect to the obligations of the Note Issuer or the Indenture
Trustee on the Notes or under this Supplement or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Indenture
Trustee or the Delaware Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Note Issuer (including the Grantee or ComEd) or (iii)
any partner, owner, beneficiary, agent, officer, director, employee or agent of
the Indenture Trustee or the Delaware Trustee in its individual capacity, any
holder of a beneficial interest in the Note Issuer or the Indenture Trustee or
of any successor or assign of any of them in their respective individual or
corporate capacities, except as any such Person may have expressly agreed (it
being understood that none of the Indenture Trustee, the Delaware Trustee, the
Grantee and ComEd have any such obligations in their respective individual or
corporate capacities).

4
<PAGE>

IN WITNESS WHEREOF, the Note Issuer and the Indenture Trustee have
caused this Supplement to be duly executed by their respective officers
thereunto duly authorized as of the first day of the month and year first above
written.

COMED TRANSITIONAL FUNDING TRUST, as
Note Issuer,
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity but
solely as Delaware Trustee
By:
---------------------------------
Name:
-----------------------------
Title:
--------------------------

HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity but solely as Indenture
Trustee
By:
---------------------------------
Name:
-----------------------------
Title:
--------------------------

5
<PAGE>

SCHEDULE A

EXPECTED AMORTIZATION SCHEDULE
OUTSTANDING PRINCIPAL BALANCE

<TABLE>
<CAPTION>
DATE CLASS CLASS CLASS CLASS CLASS
- ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Series Issuance $ $ $ $ $
Date
,199
,199
,199
,199
[Etc.]
</TABLE>

<PAGE>

SCHEDULE B

REQUIRED OVERCOLLATERALIZATION LEVEL SCHEDULE

<TABLE>
<CAPTION>
Required
Payment Date Overcollateralization Level
------------ ---------------------------
<S> <C>
,199 $

,199 $

[Etc.] $
</TABLE>

<PAGE>

EXHIBIT 4.3
FORM OF APPENDIX A TO INDENTURE

APPENDIX A

DEFINITIONS

This is APPENDIX A to the Indenture.

A. DEFINED TERMS. As used in the Grant Agreement, the Sale
Agreement, the Indenture, the Trust Agreement, the Servicing Agreement,
Trustee's Issuance Certificate, Series Supplement or any other Basic Document as
hereinafter defined, as the case may be (unless the context requires a different
meaning), the following terms have the following meanings:

"1998 FUNDING ORDER" means the Final Transitional Funding Order dated
July 21, 1998 issued by the ICC pursuant to the Funding Law, Docket No. 98-0319.

"1998 INITIAL TARIFF" means the initial Tariff filed with the ICC to
evidence the IFCs pursuant to the 1998 Funding Order.

"1998 TRANSITION PROPERTY" means all ITP created in favor of the
Grantee pursuant to the 1998 Funding Order.

"ACT" is defined in Section 11.03 of the Indenture.

"ACTUAL IFC COLLECTIONS" means, with respect to any Collection Period,
IFC Collections actually received by the Servicer with respect to such
Collection Period.

"ADJUSTMENTS" means a Reconciliation Adjustment or a True-Up
Adjustment, as the context may require.

"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as
of [ ], 1998, among ComEd, the Grantee and the Note Issuer, as the same may be
amended, supplemented or otherwise modified from time to time.

"ADMINISTRATOR" means ComEd and any successor in interest to the
extent permitted under the Administration Agreement.

"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

<PAGE>

"AGENCY OFFICE" means the office of the Note Issuer maintained
pursuant to Section 3.02 of the Indenture.

"AGGREGATE REMITTANCE AMOUNT" has the meaning set forth in ANNEX I to
the Servicing Agreement.

"ALLOCABLE IFC REVENUE AMOUNTS" means, (i) with respect to any
lump-sum payments of transition charges under Section 16-108(h) of the Public
Utilities Act or (ii) with respect to any revenues derived from condemnation
proceedings, or FERC stranded cost recoveries or any other amounts which reflect
compensation for lost revenues which would otherwise have been attributable to
Applicable Rates, the allocable amounts of such transition charges or other
revenues which are deemed to be proceeds of the IFCs in accordance with the
terms of the Funding Order and which are to be set aside for the benefit of the
Note Issuer, in each case as calculated pursuant to Section 6(f) of Annex I to
the Servicing Agreement.

"AMENDATORY ACT" means the Electric Service Customer Choice and Rate
Relief Law of 1997, 220 ILCS 5/16-101 ET SEQ., 220 ILCS 5/17-101 ET SEQ. and 220
ILCS 5/18-101 ET SEQ., as amended from time to time.

"AMENDATORY TARIFF" means a tariff or notice filing filed with the ICC
in respect of a Reconciliation Adjustment or a True-Up Adjustment, substantially
in the form of EXHIBIT C to the Servicing Agreement.

"ANNUAL ACCOUNTANT'S REPORT" is defined in Section 3.04 of the
Servicing Agreement.

"APPLICABLE ARES" means, with respect to each Customer taking service
from an ARES, the ARES, if any, providing consolidated billing to that Customer
which includes billing of IFCs.

"APPLICABLE RATES" means all of ComEd's tariffed charges including,
without limitation, charges for base rates and delivery services and transition
charges (including lump-sum payments of such charges); PROVIDED, however, that
Applicable Rates shall not include late charges or charges set forth in those
tariffs which are filed specifically and primarily to collect amounts related to
decommissioning expense, taxes, franchise fees or other franchise cost
additions, costs imposed by local governmental units which are allocated and
charged to customers within the boundaries of such governmental units'
jurisdiction, renewable energy resources and coal technology development
assistance charges, energy assistance charges for the Supplemental Low-Income
Energy Assistance Fund, reimbursement for the costs of optional or non-standard
facilities and reimbursement for the costs of optional or non-standard meters,
or monies that will be paid to third parties (after deduction of allowable
administrative, servicing or similar fees).

2
<PAGE>

"APPLICATION" means the Application for Transitional Funding Order and
Petition filed by ComEd with the ICC dated April 22, 1998 pursuant to Section
18-103 of the Funding Law.

"ARES" means an alternative retail electric supplier as defined in
Section 16-102 of the Amendatory Act.

"ARES SERVICE AGREEMENT" means an agreement between an ARES and ComEd
for the provision of consolidated billing by such ARES to customers in
accordance with ICC Regulations, the terms of any Tariffs and the terms of any
delivery service tariffs filed by ComEd under Section 16-118(b) of the Public
Utilities Act.

"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
Section 101 ET SEQ.), as amended from time to time.

"BASIC DOCUMENTS" means each Grant Agreement, each Sale Agreement, the
Indenture, the Trust Agreement, the Servicing Agreement, the Administration
Agreement, each Letter of Representations, the Note Depository Agreement, each
Underwriting Agreement and all other documents and certificates delivered in
connection therewith.

"BENEFIT PLAN" means, with respect to any Person, any defined benefit
plan (as defined in Section 3(35) of ERISA) that (a) is or was at any time
during the past six years maintained by such Person or any ERISA Affiliate of
such person, or to which contributions by any such Person are or were at any
time during the past six years required to be made or under which such Person
has or could have any liability or (b) is subject to the provisions of Title IV
of ERISA.

"BILLING PERIOD" means the period created by dividing the calendar
year into twelve consecutive periods of approximately twenty-one (21) Servicer
Business Days.

"BILLS" means each of the regular monthly bills, summary bills,
opening bills and closing bills issued to Customers or ARES by ComEd on its own
behalf and in its capacity as Servicer.

"BOOK-ENTRY FORM" means, with respect to any Note or Series of Notes,
that such Note or Series is not certificated and the ownership and transfers
thereof shall be made through the book entries by a Clearing Agency as described
in Section 2.11 of the Indenture and the applicable Trustee's Issuance
Certificate or Series Supplement, if any, pursuant to which such Note or Series
was issued.

"BOOK-ENTRY NOTES" means any Notes issued in Book-Entry Form;
PROVIDED, HOWEVER, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer permitted and Definitive Notes are to be
issued to the holder of such Notes, such Notes shall no longer be "Book-Entry
Notes".

3
<PAGE>

"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in Wilmington, Delaware,
Chicago, Illinois or New York, New York or the Depository Trust Company are
authorized or required by law, regulation or executive order to remain closed.

"BUSINESS TRUST ACT" means the Delaware Business Trust Act, 12 Del.
Code Section 3801 ET SEQ.

"CALCULATION PERIOD" means initially, the period commencing on the
Closing Date and ending on May 31, 1999 and, thereafter, each period of six
Collection Periods which ends one month prior to a Reconciliation Adjustment
Date; PROVIDED, that, if a True-Up Adjustment is required, then the Calculation
Period for such True-Up Adjustment shall mean the Collection Period of three
Collection Periods commencing with the period during which such True-Up
Adjustment is calculated and ending with the last day of the Collection Period
immediately preceding the next Payment Date.

"CAPITAL CONTRIBUTION" means the amount of cash contributed to the
Note Issuer by the Grantee as specified in the Trust Agreement.

"CAPITAL SUBACCOUNT" is defined in Section 8.02(a) of the Indenture.

"CERTIFICATE OF COMPLIANCE" means the certificate referred to in
Section 3.03 of the Servicing Agreement and substantially in the form of EXHIBIT
B attached to the Servicing Agreement.

"CERTIFICATE OF FORMATION" means the Certificate of Formation of the
Grantee filed as of July 21, 1998 pursuant to, and in accordance with, the
Delaware Limited Liability Company Act, 6 Del. Code Section 18-101 ET SEQ.

"CERTIFICATE OF TRUST" means the Certificate of Trust filed with the
Secretary of State pursuant to which the Trust was established, substantially in
the form of EXHIBIT A to the Trust Agreement.

"CLAIM" means a "claim" as defined in Section 101(5) of the Bankruptcy
Code.

"CLASS" means, with respect to any Series of Notes, any one of the
classes of Notes of that Series.

"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act, as amended.

"CLEARING AGENCY PARTICIPANT" means a securities broker, dealer, bank,
trust company, clearing corporation or other financial institution or other
Person for whom from time to time a Clearing Agency effects book entry transfers
and pledges of securities deposited with the Clearing Agency.

4
<PAGE>

"CLOSING DATE" means [ ], 1998.

"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.

"COLLECTION ACCOUNT" means the account established and maintained by
the Note Trustee in accordance with Section 8.02(a) of the Indenture and any
subaccounts contained therein.

"COLLECTION PERIOD" means any period commencing on the first Servicer
Business Day of any calendar month and ending on the last Servicer Business Day
of such month.

"COMED" means Commonwealth Edison Company, an Illinois corporation,
and any successor in interest to the extent permitted under the Grant
Agreement.

"CONSOLIDATED ARES BILLING" has the meaning set forth in ANNEX I to
the Servicing Agreement.

"CORPORATE TRUST OFFICE" means with respect to the Indenture Trustee
or the Delaware Trustee, the principal office at which at any particular time
the corporate trust business of the Indenture Trustee or the Delaware Trustee,
respectively, shall be administered, which offices at the Closing Date are
located, in the case of the Indenture Trustee, at [Chicago, Illinois], and in
the case of the Delaware Trustee, at [address], Wilmington, Delaware or at such
other address as the Indenture Trustee or Delaware Trustee may designate from
time to time by notice to the Holders and the Note Issuer, or the principal
corporate trust office of any successor Indenture Trustee or Delaware Trustee
(the addresses of which the successor Indenture Trustee or Delaware Trustee will
notify the Holders and the Note Issuer).

"COVENANT DEFEASANCE OPTION" is defined in Section 4.01(b) of the
Indenture.

"CUSTOMERS" means all existing and future retail customers or classes
of retail customers of ComEd or other Persons or group of Persons obligated from
time to time to pay ComEd or any successor "Applicable Rates," and all other
Persons obligated to pay IFCs pursuant to the 1998 Funding Order or any
Subsequent Funding Order, as applicable, and, including, without limitation, any
Persons who enter into contracts with ComEd to take non-tariffed electrical
services but would otherwise have been obligated to pay Applicable Rates.

"DEBT SERVICE BILLING REQUIREMENT" means, for any Calculation Period,
the aggregate amount of IFCs calculated by the Servicer as necessary to be
billed during such period in order to collect the Required Debt Service on or
before the end of the Collection Period immediately preceding the next Payment
Date.

"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default as defined in Section 5.01 of the
Indenture.

5
<PAGE>

"DEFINITIVE NOTES" means Notes issued in definitive form in accordance
with Section 2.13 of the Indenture.

"DELAWARE TRUSTEE" means the Person acting as Delaware Trustee under
the Trust Agreement.

"DTC" means the Depository Trust Company or any successor thereto.

"DUFF & PHELPS" means Duff & Phelps Credit Rating Co. or any successor
thereto.

"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution shall have a credit rating from
each Rating Agency in one of its generic rating categories which signifies
investment grade.

"ELIGIBLE INSTITUTION" means (a) the corporate trust department of the
Indenture Trustee; PROVIDED that an account with the Indenture Trustee will only
be an Eligible Deposit Account if it is a segregated trust account or (b) a
depository institution organized under the laws of the United States of America
or any State (or any domestic branch of a foreign bank), which (i) has either
(A) a long-term unsecured debt rating of AAA by Standard & Poor's and A2 by
Moody's or (B) a certificate of deposit rating of A-1+ by Standard & Poor's and
P-1 by Moody's, or any other long-term, short-term or certificate of deposit
rating acceptable to the Rating Agencies and (ii) whose deposits are insured by
the FDIC. If so qualified under clause (b) above, the Indenture Trustee may be
considered an Eligible Institution for the purposes of clause (a) of this
definition.

"ELIGIBLE INVESTMENTS" mean instruments or investment property which
evidence:

(a) direct obligations of, and obligations fully and
unconditionally guaranteed as to timely payment by, the United States
of America;

(b) demand deposits, time deposits, certificates of deposit or
bankers' acceptances of depository institutions meeting the
requirements of clause (b) of the definition of Eligible Institution;

(c) commercial paper (other than commercial paper of ComEd)
having, at the time of the investment or contractual commitment to
invest therein, a rating from each of the Rating Agencies from which a
rating is available in the highest investment category granted
thereby;

(d) investments in money market funds having a rating from each
of the Rating Agencies from which a rating is available in the highest
investment category

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granted thereby (including funds for which the Indenture Trustee or
any of its Affiliates is investment manager or advisor);

(e) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with depository institutions
meeting the requirements of clause (b) of the definition of Eligible
Institutions; and

(f) any other investment permitted by each of the Rating
Agencies;

in each case, other than as permitted by the Rating Agencies, maturing not later
than the Business Day immediately preceding the next Payment Date.
Notwithstanding the foregoing, (x) Eligible Investments in the Collection
Account may mature not later than the Business Day immediately preceding the
next Payment Date, and (y) subject to the conditions and limitations set forth
in Section 8.03 of the Indenture, funds in the Collection Account may be
invested in securities that will not mature prior to each Payment Date;
PROVIDED, HOWEVER, that any securities or investments which mature in 32 days or
more shall not be an "Eligible Investment" unless the issuer thereof has a
long-term unsecured debt rating of at least A1 from Moody's or A+ from S&P.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"ESTIMATED IFC COLLECTIONS" means the sum of the amounts remitted with
respect to a Billing Period during the six months following such Billing Period
based on the Collections Curves.

"EVENT OF DEFAULT" is defined in Section 5.01 of the Indenture.

"EXCESS REMITTANCE" means the amount, if any, calculated for a
particular Remittance Date, by which all Estimated IFC Collections remitted to
the Collection Account on and prior to such Remittance Date with respect to the
IFCs billed to Customers during the sixth preceding Billing Period exceed Actual
IFC Collections received by the Servicer attributable to such Billing Period.

"EXPECTED AMORTIZATION SCHEDULE" means SCHEDULE 4.01(a) to the
Servicing Agreement, as the same may be amended from time to time.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.

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<PAGE>

"FERC" means the Federal Energy Regulatory Commission or any successor
thereto.

"FINAL" means, with respect to any Funding Order, that such Funding
Order has become final and that the time for filing an appeal therefrom has
expired.

"FINAL MATURITY DATE" means, with respect to any Series or Class of
Notes, the Final Maturity Date therefor, as specified in the related Trustee's
Issuance Certificate or Series Supplement, if any.

"FITCH" means Fitch Investors Service, L.P. or any successor thereto.

"FLOATING RATE NOTES" means any Series or Class of Notes that accrue
interest at a variable rate based on the index described in the related
Trustee's Issuance Certificate or Series Supplement, if any.

"FUNDING LAW" means the Electric Utility Transitional Funding Law of
1997, 220 ILCS 5/18-101 ET SEQ.

"FUNDING ORDER" means, as the context may require, (i) the 1998
Funding Order and/or (ii) any Subsequent Funding Order.

"GENERAL SUBACCOUNT" is defined in Section 8.02(a) of the Indenture.

"GLOBAL NOTE" means a Note evidencing all or any part of a Series of
Notes to be issued to the Holders thereof in Book-Entry Form, which Global Note
shall be issued to the Clearing Agency, or its nominee, for such Series, in
accordance with Section 2.11 of the Indenture and the applicable Trustee's
Issuance Certificate or Series Supplement, if any, pursuant to which the Note is
issued.

"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative function of
government.

"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, grant, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Indenture. A Grant of the Note Collateral or of any other
agreement or instrument included therein shall include all rights, powers and
options (but none of the obligations) of the Granting party thereunder,
including the immediate and continuing right to claim for, collect, receive and
give receipt for payments in respect of the Note Collateral and all other moneys
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.

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<PAGE>

"GRANT AGREEMENT" means that certain Agreement Relating to Grant of
Intangible Transition Property dated as of [ ], 1998 between ComEd and the
Grantee, as the same may be amended, supplemented or otherwise modified from
time to time.

"GRANTEE" means ComEd Funding, LLC, a Delaware limited liability
company, and any successor in interest to the extent permitted under the Sale
Agreement and the other Basic Documents.

"HOLDER" means the Person in whose name a Note is registered on the
Note Register.

"ICC" means the Illinois Commerce Commission, or any successor
thereto.

"ICC REGULATIONS" means the regulations, including proposed or
temporary regulations, promulgated under the Public Utilities Act.

"IFC" means the instrument funding charge as defined in Section 18-102
of the Funding Law (expressed in cents per kilowatt-hour) and as authorized by a
Funding Order, including, without limitation, each "IFC" or equivalent amount
which Customers have agreed to pay pursuant to any contract under which ComEd
agrees to provide non-tariffed electrical service and which are deemed to be
proceeds of the Intangible Transition Property in accordance with the terms of
the applicable Funding Order.

"IFC COLLECTIONS" means IFCs received by the Servicer which are
remitted to the Collection Account.

"IFC PAYMENTS" means the payments made by Customers based on the IFCs.

"INDENTURE" means the Indenture dated as of [ ], 1998 between the Note
Issuer and the Indenture Trustee as originally executed and, as from time to
time supplemented or amended by one or more Trustee's Issuance Certificate or
indentures supplemental thereto entered into pursuant to the applicable
provisions of the Indenture, as so supplemented or amended, or both, and shall
include the forms and terms of the Notes established thereunder.

"INDENTURE TRUSTEE" means Harris Trust and Savings Bank, an Illinois
banking corporation, as Indenture Trustee under the Indenture, or any successor
Indenture Trustee under the Indenture.

"INDEPENDENT" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Note Issuer, any other obligor
on the Notes, the Grantee, the Servicer and any Affiliate of any of the
foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Note Issuer, any such other obligor,
the Grantee, the Servicer or any Affiliate of any of the foregoing Persons and
(c) is not connected with the Note Issuer, any such other obligor, the Grantee,
the Servicer or any Affiliate

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<PAGE>

of any of the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.

"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and consented to by the Indenture Trustee, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in the Indenture and that the signer is Independent within the meaning thereof.

"INDIRECT PARTICIPANT" means a securities broker, dealer, bank, trust
company or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant, either directly or indirectly.

"INSOLVENCY EVENT" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.

"INSOLVENCY LAW" means any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect.

"INTANGIBLE TRANSITION PROPERTY" or "ITP" means all intangible
transition property as defined in Section 18-102 of the Funding Law which has
been created in favor of the Grantee pursuant to a Funding Order and assigned to
the Note Issuer pursuant to a Sale Agreement, including the 1998 Transition
Property and any Subsequent Transition Property, and, including, without
limitation, all Allocable IFC Revenue Amounts.

"INVESTMENT EARNINGS" means investment earnings on funds deposited in
the Collection Account net of losses and investment expenses.

"ISSUER ORDER" and "ISSUER REQUEST" mean a written order or request
signed in the name of the Note Issuer by any one of its Responsible Officers and
delivered to the Indenture Trustee.

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<PAGE>

"LEGAL DEFEASANCE OPTION" is defined in Section 4.01(b) of the
Indenture.

"LETTER OF REPRESENTATIONS" means any applicable agreement among the
Note Issuer, the Indenture Trustee, the Administrator and the applicable
Clearing Agency, with respect to such Clearing Agency's rights and obligations
(in its capacity as a Clearing Agency) with respect to any Book-Entry Notes, as
the same may be amended, supplemented, restated or otherwise modified from time
to time.

"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach by operation of law.

"MINIMUM DENOMINATION" means, with respect to any Note, the minimum
denomination therefor specified in the applicable Trustee's Issuance Certificate
or Series Supplement, if any, which minimum denomination shall be not less than
[$1,000] and, except as otherwise provided in such Trustee's Issuance
Certificate or Series Supplement, if any, integral multiples thereof.

"MONTHLY SERVICER'S CERTIFICATE" means a certificate, substantially in
the form of EXHIBIT A to the Servicing Agreement, completed and executed by a
Responsible Officer of the Servicer pursuant to Section 3.01(b)(i) of the
Servicing Agreement.

"MOODY'S" means Moody's Investors Service Inc. or any successor
thereto.

"NOTE COLLATERAL" has the meaning specified in the Granting Clause of
the Indenture.

"NOTE DEPOSITORY" means the depositary from time to time selected by
the Indenture Trustee on behalf of the Note Issuer in whose name the Notes are
registered prior to the issuance of Definitive Notes. The initial Note
Depository shall be Cede & Co., the nominee of the initial Clearing Agency.

"NOTE DEPOSITORY AGREEMENT" means the agreement, dated as of the
Closing Date, among the Note Issuer, the Indenture Trustee and the DTC, as the
initial Clearing Agency relating to the Notes, as the same may be amended
supplemented or otherwise modified from time to time.

"NOTE INTEREST RATE" means, with respect to any Series or Class of
Notes, the rate at which interest accrues on the Notes of such Series or Class,
as specified in the related Trustee's Issuance Certificate or Series Supplement,
if any.

"NOTE ISSUER" means ComEd Transitional Funding Trust, a Delaware
business trust named as such in the Indenture until a successor replaces it and,
thereafter, means the successor and, for purposes of any provision contained
herein and required by the TIA, each other obligor on the Notes.

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<PAGE>

"NOTE OWNER" means with respect to a Book-Entry Note, the Person who
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
Indirect Participant, in each case in accordance with the rules of such Clearing
Agency).

"NOTE REGISTER" means the register maintained pursuant to Section 2.05
of the Indenture, providing for the registration of the Notes and transfers and
exchanges thereof.

"NOTE REGISTRAR" means the registrar at any time of the Note Register,
appointed pursuant to Section 2.05 of the Indenture.

"NOTES" means one or more Series of Notes authorized by the 1998
Funding Order and any Subsequent Funding Order and issued under the Indenture.

"OFFICER'S CERTIFICATE" means a certificate signed by a Responsible
Officer of the Note Issuer under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01 of the Indenture,
and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in the Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Responsible Officer of the party delivering such certificate.

"OPERATING AGREEMENT" means the Limited Liability Company Agreement of
the Grantee dated as of [ ], 1998 between the Grantee and ComEd.

"OPERATING EXPENSES" means all fees, costs and expenses of the Note
Issuer, including all amounts owed by the Note Issuer to the Indenture Trustee
and the Delaware Trustee, the Servicing Fee, the Quarterly Administration Fee,
any fees, costs and expenses payable or reimbursable by the Note Issuer to the
Administrator and legal and accounting fees, costs and expenses of the Note
Issuer and the Grantee.

"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in the Basic Documents, be employees
of or counsel to the party providing such opinion of counsel, which counsel
shall be acceptable to the party receiving such opinion of counsel, and shall be
in form and substance acceptable to such party.

"OPTIONAL REDEMPTION DATE" means, with respect to any Series of Notes,
the Payment Date specified for the redemption of the Notes of such Series
pursuant to Section 10.01 of the Indenture.

"OPTIONAL REDEMPTION PRICE" is defined in Section 10.01 of the
Indenture.

"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:

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<PAGE>

(a) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;

(b) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (PROVIDED,
HOWEVER, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor,
satisfactory to the Indenture Trustee, made); and

(c) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;

PROVIDED that in determining whether the Holders of the requisite Outstanding
Amount of the Notes or any Series or Class thereof have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or under
any Basic Document, Notes owned by the Note Issuer, any other obligor upon the
Notes, the Grantee or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Indenture Trustee actually knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Note Issuer, any other obligor upon the Notes, the
Grantee or any Affiliate of any of the foregoing Persons.

"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
or, if the context requires, all Notes of a Series or Class, Outstanding at the
date of determination.

"OVERCOLLATERALIZATION SUBACCOUNT" is defined in Section 8.02(a) of
the Indenture.

"PAYING AGENT" means with respect to the Indenture, the Indenture
Trustee or any other Person that meets the eligibility standards for the
Indenture Trustee specified in Section 6.11 of the Indenture and is authorized
by the Note Issuer to direct the Servicer to make the payments to and
distributions from the Collection Account, including payment of principal of or
interest on the Notes on behalf of the Note Issuer.

"PAYMENT DATE" means, with respect to any Series or Class of Notes,
March 15, June 15, September 15 and December 15 of each year, PROVIDED that if
any such date is not a Business Day, the Payment Date shall be the Business Day
immediately succeeding such date, commencing [ ].

"PERSON" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary

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<PAGE>

thereof), unincorporated organization or government or any agency or political
subdivision thereof.

"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note, and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.06 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.

"PRINCIPAL BALANCE" means, as of any Payment Date, the sum of the
outstanding principal amount of each Series of Notes.

"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.

"PROJECTED PRINCIPAL BALANCE" means, as of any Payment Date, the sum
of the projected outstanding principal amount of each Series of Notes for such
Payment Date set forth in the Expected Amortization Schedule.

"PUBLIC UTILITIES ACT" means the Illinois Public Utilities Act, 220
ILCS 5/1-101 ET SEQ., as the same may be amended from time to time.

"QUARTERLY ADMINISTRATION FEE" means $25,000 per calendar quarter.

"QUARTERLY INTEREST" means, with respect to any Payment Date and any
Series of Notes, the quarterly interest for such Payment Date and Series as
specified in the related Trustee's Issuance Certificate or Series Supplement,
if any.

"QUARTERLY PRINCIPAL" means, with respect to any Payment Date and any
Series of Notes, the excess, if any, of the Outstanding Amount of such Series of
Notes over the outstanding principal balance specified for such Payment Date on
the applicable Expected Amortization Schedule.

"QUARTERLY SERVICER'S CERTIFICATE" means a certificate, substantially
in the form of EXHIBIT D to the Servicing Agreement, completed and executed by a
Responsible Officer of the Servicer pursuant to Section 4.01(c)(ii) of the
Servicing Agreement.

"RATING AGENCY" means Moody's, Standard & Poor's, Duff & Phelps and
Fitch. If no such organization or successor is any longer in existence, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Note Issuer, notice of which
designation shall be given to the Indenture Trustee and the Servicer.

"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten days prior notice thereof and that each
of the Rating Agencies shall have notified the Servicer, the Note Issuer and the
Indenture Trustee in writing that such

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<PAGE>

action will not result in a reduction or withdrawal of the then current rating
by such Rating Agency of either any Series or Class of Notes.

"RECONCILIATION ADJUSTMENT" means each adjustment to the IFCs made
pursuant to the terms of any Funding Order in accordance with Section 4.01(b)(i)
of the Servicing Agreement.

"RECONCILIATION ADJUSTMENT DATE" shall mean June 30 and December 31 of
each year, commencing on June 30, 1999.

"RECORD DATE" means, with respect to a Payment Date or Redemption
Date, in the case of Definitive Notes, the close of business on the last day of
the calendar month preceding the calendar month in which such Payment Date or
Redemption Date occurs, and in the case of Book Entry Notes, one Business Day
prior to the applicable Payment Date or Redemption Date.

"REDEMPTION DATE" means, with respect to any Series or Class of Notes,
the Payment Date specified by the Note Issuer for the redemption of the Notes of
such Series or Class pursuant to Section 10.01 of the Indenture.

"REDEMPTION PAYMENT" means with respect to any Series or Class of
Notes, any payment of principal of and interest on the Notes of such Series or
Class due from the Note Issuer upon the early redemption of such Series or Class
of Notes, other than any such payment due by reason of the occurrence of an
Event of Default with respect to such Series or Class of Notes.

"REDEMPTION PRICE" means with respect to any Series or Class of Notes,
the unpaid principal amount of the Notes of such Series or Class redeemed, plus
accrued and unpaid interest thereon at the interest rate applicable to such
Series or Class to but excluding the Redemption Date.

"REGISTERED HOLDER" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.

"REGISTRATION STATEMENT" means the registration statement, Form S-3
file number [ ], filed with the SEC for registration under the Securities Act
relating to the offering and sale of the Notes, and including all supplements
thereto.

"RELATED ASSETS" means all of Grantee's and/or the Note Issuer's
right, title and interest in and to the Grant Agreement, the Sale Agreement, the
Servicing Agreement and all present and future claims, demands, causes and
choses in action in respect of all of the foregoing and all payments on or under
and all proceeds of every kind and nature whatsoever in respect of any or all of
the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind, and other forms of obligations and receivables, instruments and
other property which in any time constitute all or part of or are included in
the proceeds of any of the foregoing.

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"REMITTANCE DATE" means the tenth day of each calendar month or, if
such day is not a Business Day, the next succeeding Business Day.

"REMITTANCE SHORTFALL" means the amount, if any, calculated for a
particular Remittance Date, by which Actual IFC Collections received by the
Servicer attributable to IFCs billed to Customers during the sixth preceding
billing Period exceed all Estimated IFC Collections remitted to the Collection
Account on and prior to such Remittance Date with respect to such Billing
Period.

"REQUIRED CAPITAL LEVEL" means, with respect to each Series of Notes,
an amount equal to 0.50% of the initial principal amount of such Series,
deposited into the Capital Subaccount by the Grantee prior to or upon the
issuance of such Series.

"REQUIRED DEBT SERVICE" for any Calculation Period means the total
dollar amount of IFC Collections reasonably calculated by the Servicer in
accordance with SECTION 4.01 of the Servicing Agreement as necessary to be
received during such period (after giving effect to the allocation and
distribution of amounts on deposit in the Reserve Subaccount at the time of
calculation and which are available for payments on the Notes and including any
shortfalls in Required Debt Service for any prior Calculation Period) in order
to ensure that, as of the last Payment Date occurring in such Calculation
Period, (1) all accrued and unpaid interest on the Notes then due shall have
been paid in full, (2) the Principal Balance of the Notes is equal to the
Projected Principal Balance, (3) the balance on deposit in the
Overcollateralization Subaccount equals the aggregate Required
Overcollateralization Level, (4) the balance on deposit in the Capital
Subaccount equals the aggregate Required Capital Level and (5) all other fees
and expenses due and owing and required or allowed to be paid under SECTION 8.02
of the Note Indenture as of such date shall have been paid in full; PROVIDED,
that, with respect to any Reconciliation Adjustment or True-Up Adjustment
occurring after the last Scheduled Maturity Date for any Notes, the Required
Debt Service shall be calculated to ensure that sufficient IFCs will be
collected to retire such Notes in full as of the earlier of (x) the Payment Date
preceding the next Reconciliation Adjustment Date and (y) the Final Maturity
Date for such Notes.

"REQUIRED DEPOSIT RATING" means a rating on short-term unsecured debt
obligations of P-1 by Moody's, A-1+ by S&P and, if rated by Fitch, F-1 by Fitch
and if rated by Duff & Phelps, Duff-1+ by Duff & Phelps. Any requirement that
short-term unsecured debt obligations have the "Required Deposit Rating" shall
mean that such short-term unsecured debt obligations have the foregoing required
ratings from each of such rating agencies.

"REQUIRED OVERCOLLATERALIZATION LEVEL" means, as of any Payment Date
with respect to any Series, the amount required to be on deposit in the
Overcollateralization Subaccount as specified in the applicable Trustee's
Issuance Certificate or Series Supplement, if any, but not less than, as of the
Scheduled Maturity Date for such Series, 0.5% of the initial Outstanding amount
thereof.

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<PAGE>

"REQUIREMENT OF LAW" means any foreign, federal, state or local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any Governmental Authority or common law.

"RESERVE SUBACCOUNT" is defined in Section 8.02(a) of the Indenture.

"RESPONSIBLE OFFICER" means with respect to (a) the Note Issuer, any
officer within the Corporate Trust Office of the Delaware Trustee; (b) with
respect to the Indenture Trustee, the Delaware Trustee or other trustee, any
officer within the Corporate Trust office of such trustee (including, in the
case of (a) and (b) above, the President, any Vice President, Assistant Vice
President, Secretary or Assistant Treasurer or any other officer or assistant
officer of such Person customarily performing functions similar to those
performed by any of the chosen designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred to because
of such officer's knowledge and familiarity with the particular subject); (c)
any corporation, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer or any other duly authorized officer of such Person
who has been authorized to act in the circumstances;(d) the Grantee, any Manager
or duly authorized officer who has been authorized to act in the circumstances;
(e) partnership, any general partner thereof; and (f) any other Person (other
than an individual), any duly authorized officer or member of such Person, as
the context may require, who is authorized to act in matters relating to such
Person.

"SALE AGREEMENT" means as the context may require, either (i) the
Intangible Transition Property Sale Agreement dated as of [ ], 1998 between the
Grantee and the Note Issuer, as the same may be amended, supplemented or
otherwise modified from time to time or (ii) any Subsequent Sale Agreement.

"SCHEDULED FINAL PAYMENT DATE" means, with respect to any Series or
Class of Notes, the Scheduled Maturity Date thereof.

"SCHEDULED MATURITY DATE" means, with respect to any Series or Class
of Notes, the Scheduled Maturity Date therefor, as specified in the related
Trustee's Issuance Certificate or Series Supplement, if any.

"SCHEDULED PAYMENT DATE" is defined in the applicable Trustee's
Issuance Certificate or Series Supplement, if any, with respect to each Series
or Class of Notes.

"SEC" means the Securities and Exchange Commission.

"SECRETARY OF STATE" means the Secretary of State of the State of
Delaware or the Secretary of State of the State of Illinois, as the case may be,
or any Governmental Authority succeeding to the duties of such offices.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

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"SERIES" means each series of Notes issued and authenticated pursuant
to the Indenture and a related Trustee's Issuance Certificate or Series
Supplement, if any.

"SERIES ISSUANCE DATE" means, with respect to any Series, the date on
which the Notes of such Series are to be originally issued in accordance with
Section 2.10 of the Indenture and the related Trustee's Issuance Certificate or
Series Supplement, if any.

"SERIES SUPPLEMENT" means an indenture supplemental to the Indenture
that authorizes the issuance of a particular Series of Notes.

"SERVICER" means ComEd, as Servicer under the Servicing Agreement, or
any successor Servicer to the extent permitted under the Servicing Agreement.

"SERVICER BUSINESS DAY" means any day other than a Saturday, Sunday or
holiday on which the Servicer maintains normal office hours and conducts
business.

"SERVICER DEFAULT" is defined in Section 7.01 of the Servicing
Agreement.

"SERVICER'S CERTIFICATE" means an Officer's Certificate of the
Servicer.

"SERVICING AGREEMENT" means the Intangible Transition Property
Servicing Agreement dated as of [ ], 1998, between the Grantee and ComEd
assigned to the Note Issuer, as the same may be amended, supplemented or
otherwise modified from time to time.

"SERVICING FEE" means the fee payable to the Servicer on each Payment
Date for services rendered during the period from, but not including, the
preceding Payment Date to and including the current Payment Date, determined
pursuant to Section 6.06 of the Servicing Agreement.

"SOLE MEMBER" means ComEd as sole member of the Grantee defined in the
Operating Agreement.

"SPECIAL PAYMENT" means with respect to any Series or Class of Notes,
any payment of principal of or interest on (including any interest accruing upon
default), or any other amount in respect of, the Notes of such Series or Class
(including, with respect to Floating Rate Notes only, a payment under any Swap)
that is not actually paid within five days of the Payment Date applicable
thereto.

"SPECIAL PAYMENT DATE" means the date on which a Special Payment is to
be made by the Indenture Trustee to the Holders.

"SPECIAL RECORD DATE" means with respect to any Special Payment Date,
the close of business on the 15th day (whether or not a Business Day) preceding
such Special Payment Date.

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<PAGE>

"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. or any successor thereto.

"STATE" means any one of the 50 states of the United States of America
or the District of Columbia.

"STATE PLEDGE" means the pledge of the State of Illinois as set forth
in Section 18-105(b) of the Funding Law.

"SUBSEQUENT CLOSING DATE" means any date (other than the Closing Date)
specified in a Trustee's Issuance Certificate or Series Supplement, if any,
under which Notes of any Series or Class are issued.

"SUBSEQUENT CREATION DATE" means any date on which Subsequent
Intangible Transition Property is created in favor of the Grantee pursuant to a
Subsequent Funding Order.

"SUBSEQUENT FUNDING ORDER" means a transitional funding order (other
than the 1998 Funding Order) issued hereafter by the ICC in favor of the Grantee
at the request of ComEd.

"SUBSEQUENT GRANT AGREEMENT" means an agreement substantially similar
to the Grant Agreement, relating to Subsequent Transition Property, as the same
may be amended, supplemented or otherwise modified from time to time.

"SUBSEQUENT RELATED ASSETS" means all of the Grantee's and/or the Note
Issuer's right, title and interest in and to any Subsequent Grant Agreement and
all present and future claims, demands, causes and choses in action in respect
of any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind, and
other forms of obligations and receivables, instruments and other property which
in any time constitute all or part of or are included in the proceeds of any of
the foregoing.

"SUBSEQUENT SALE AGREEMENT" means an agreement substantially similar
to the initial Sale Agreement, relating to Subsequent Intangible Transition
Property, as the same may be amended, supplemented or otherwise modified from
time to time.

"SUBSEQUENT SALE DATE" means any date on which Subsequent Intangible
Transition Property is to be sold to the Note Issuer pursuant to a Subsequent
Sale Agreement.

"SUBSEQUENT TARIFF" means a tariff filed with the ICC in connection
with a Subsequent Funding Order.

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<PAGE>

"SUBSEQUENT TRANSITION PROPERTY" or "SUBSEQUENT ITP" means the
intangible transition property contemplated by, and specifically described in, a
Subsequent Funding Order.

"SUCCESSOR SERVICER" is defined in Section 3.07(e) of the Indenture.

"SWAP" means an interest rate swap, cap, floor, collar or other
hedging transaction that may be entered into by the Note Issuer for the purpose
of managing interest rate risk with respect to a specified Series or Class of
Floating Rate Notes that are being issued concurrently with the execution of the
Swap.

"SWAP AGREEMENT" means an Interest Rate and Currency Exchange
Agreement (including the Schedule and Confirmation thereto) entered into between
the Note Issuer and a swap provider.

"SWAP COUNTERPARTY" means the entity that is a party to a Swap with
the Note Issuer.

"SWAP PAYMENT" means the payments made by the Note Issuer to the Swap
Counterparty pursuant to any Swap, subject to any netting of payments provided
in the applicable Swap.

"SWAP REVENUES" means the payments paid by a Swap Counterparty to the
Note Issuer pursuant to any Swap, subject to any netting of payments provided in
the applicable Swap.

"TARIFF" means any rate tariff filed with the ICC pursuant to the
Funding Law to evidence any IFCs.

"TEMPORARY NOTES" means Notes executed, and upon the receipt of an
Issuer Order, authenticated and delivered by the Indenture Trustee pending the
preparation of Definitive Notes pursuant to Section 2.04 of the Indenture.

"TREASURY REGULATIONS" means the regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.

"TRUE-UP ADJUSTMENT" means each adjustment to the IFCs made pursuant
to the terms of the 1998 Transitional Funding Order and in accordance with
Section 4.01(b)(ii) of the Servicing Agreement.

"TRUST AGREEMENT" means the Declaration of Trust by First Union Trust
Company, National Association as "Delaware Trustee", dated as of _________, 1998
acknowledged and agreed to by the Grantee, as the same may be amended,
supplemented or otherwise modified from time to time.

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<PAGE>

"TRUST ESTATE" means all right, title and interest of the Note Issuer
in, to and under the property and rights assigned to the Note Issuer pursuant to
the Sale Agreement, all funds on deposit from time to time in the Collection
Account and all other property of or interests of the Note Issuer from time to
time, including all rights, interests and claims of the Delaware Trustee and the
Note Issuer under or in connection with any Basic Documents.

"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, as in force on the Closing
Date, unless otherwise specifically provided.

"TRUSTEE'S ISSUANCE CERTIFICATE" means a certificate executed by a
Authorized Officer of the Delaware Trustee in accordance with the terms of the
Sale Agreement or any Subsequent Sale Agreement and delivered to the Indenture
Trustee under Section 2.01 of the Indenture substantially in the form attached
as EXHIBIT C to the Indenture.

"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.

"UNDERWRITERS" means the underwriters who purchase Notes of any Series
or Class from the Note Issuer and sell such Notes in a public offering.

"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated as of
[ ], 1998 between [ ], on its own behalf and as representative of the several
underwriters named therein, and the Note Issuer.

"UNREGISTERED NOTES" means any Notes not registered under the
Securities Act or the securities laws of any other jurisdiction.

"U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the Note Issuer's option.

B. OTHER TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with United States generally accepted
accounting principles. To the extent that the definitions of accounting terms
in any Basic Document are inconsistent with the meanings of such terms under
generally accepted accounting principles or regulatory accounting principles,
the definitions contained in such Basic Document shall control. All terms used
in Article 9 of the UCC in the State of Illinois and not specifically defined
herein, are used herein as defined in such Article 9. As used in the Basic
Documents, the term "INCLUDING" means "including without limitation," and other
forms of the verb "to include" have correlative meanings. All references to any
Person shall include such Person's permitted successors.

C. COMPUTATION OF TIME PERIODS. Unless otherwise stated in any of
the Basic Documents, as the case may be, in the computation of a period of time
from a specified date to a

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<PAGE>

later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".

D. REFERENCE; CAPTIONS. The words "hereof", "herein" and "hereunder"
and words of similar import when used in any Transaction Document shall refer to
such Transaction Document as a whole and not to any particular provision of such
Transaction Document; and references to "SECTION", "SUBSECTION", "SCHEDULE" and
"EXHIBIT" in any Basic Document are references to Sections, subsections,
Schedules and Exhibits in or to such Transaction Document unless otherwise
specified in such Basic Document. The various captions (including the tables of
contents) in each Basic Document are provided solely for convenience of
reference and shall not affect the meaning or interpretation of any Basic
Document.

E. The definitions contained in this Appendix A are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter forms of such terms.

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

EXHIBIT 10.1
FORM OF SALE AGREEMENT

INTANGIBLE TRANSITION PROPERTY SALE AGREEMENT

between

COMED FUNDING, LLC

Grantee

and

COMED TRANSITIONAL FUNDING TRUST

Note Issuer

Dated as of [_____________], 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. . . . . . . . . . . . . . . 2

ARTICLE II
CONVEYANCE OF 1998 TRANSITION PROPERTY AND RELATED ASSETS . . . . . . . . 3
SECTION 2.01. CONVEYANCE OF 1998 TRANSITION PROPERTY AND
RELATED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GRANTEE . . . . . . . . . . . . . . . . 4
SECTION 3.01. ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . 4
SECTION 3.02. DUE QUALIFICATION. . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.03. POWER AND AUTHORITY. . . . . . . . . . . . . . . . . . . . 4
SECTION 3.04. BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.05. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.06. NO PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.07. APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.08. THE 1998 TRANSITION PROPERTY AND RELATED ASSETS. . . . . . 6

ARTICLE IV
COVENANTS OF THE GRANTEE. . . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 4.01. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . .10
SECTION 4.02. NO LIENS . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.03. DELIVERY OF COLLECTIONS. . . . . . . . . . . . . . . . . .11
SECTION 4.04. NOTICE OF LIENS. . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.05. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . .11
SECTION 4.06. COVENANTS RELATED TO 1998 TRANSITION PROPERTY
AND RELATED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . .12
SECTION 4.07. PROTECTION OF TITLE. . . . . . . . . . . . . . . . . . . .12
SECTION 4.08. NONPETITION COVENANTS. . . . . . . . . . . . . . . . . . .13
SECTION 4.09. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 4.10. PERFORMANCE OF OBLIGATIONS; SERVICING. . . . . . . . . . .14
SECTION 4.11. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .15
SECTION 4.12. NO OTHER BUSINESS. . . . . . . . . . . . . . . . . . . . .16
SECTION 4.13. NO BORROWING . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 4.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. . . . .16
SECTION 4.15. CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . .17
SECTION 4.16. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . .17
SECTION 4.17. SEPARATE EXISTENCE.. . . . . . . . . . . . . . . . . . . .17
SECTION 4.18. FURTHER INSTRUMENTS AND ACTS . . . . . . . . . . . . . . .19
SECTION 4.19. SUBSEQUENT TRANSITION PROPERTY . . . . . . . . . . . . . .19
</TABLE>

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<PAGE>

ARTICLE V
THE GRANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
SECTION 5.01. LIABILITY OF GRANTEE; INDEMNITIES. . . . . . . . . . . . .21
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE OBLIGATIONS OF, GRANTEE. . . . . . . . . . . . . . . . . . . . .24
SECTION 5.03. LIMITATION ON LIABILITY OF GRANTEE AND OTHERS. . . . . . .25

ARTICLE VI
MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 6.01. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 6.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 6.03. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. . . . . . . . . . . . . .28
SECTION 6.05. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 6.06. SEPARATE COUNTERPARTS. . . . . . . . . . . . . . . . . . .28
SECTION 6.07. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 6.08. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .28
SECTION 6.09. ASSIGNMENT TO INDENTURE TRUSTEE. . . . . . . . . . . . . .28
SECTION 6.10. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . .29

SCHEDULE 3.06. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
</TABLE>

ii
<PAGE>

INTANGIBLE TRANSITION PROPERTY SALE AGREEMENT dated as of [ ], 1998
between COMED FUNDING, LLC, a Delaware limited liability company (the
"Grantee"), and COMED TRANSITIONAL FUNDING TRUST, a Delaware business trust (the
"Note Issuer").

WHEREAS the Note Issuer desires to purchase the 1998 Transition Property
created pursuant to the Public Utilities Act and the 1998 Funding Order,
together with the Related Assets; and

WHEREAS the Grantee is willing to sell such 1998 Transition Property and
Related Assets to the Note Issuer.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in that certain
Indenture (including Appendix A thereto) dated as of the date hereof, between
the Note Issuer and Harris Trust and Savings Bank, as the Indenture Trustee, as
the same may be amended, supplemented or otherwise modified from time to time.

SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.

(a) "AGREEMENT" means this Intangible Transition Property Sale Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.

(b) Non-capitalized terms used herein which are defined in the Public
Utilities Act shall, as the context requires, have the meanings assigned to such
terms in the Public Utilities Act, but without giving effect to amendments to
the Public Utilities Act after the date hereof which have a material adverse
effect on the Note Issuer or the Holders.

<PAGE>

(c) All terms defined in this Agreement shall have the defined meaning when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

(d) The words "hereof," "herein," "hereunder" and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation".

(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter forms of such terms.

ARTICLE II

CONVEYANCE OF 1998 TRANSITION PROPERTY AND RELATED ASSETS

SECTION 2.01. CONVEYANCE OF 1998 TRANSITION PROPERTY AND RELATED ASSETS.
In consideration of the Note Issuer's delivery of $[_________________] to or
upon the order of the Grantee, the Grantee irrevocably sells, transfers,
assigns, sets over and otherwise conveys to the Note Issuer, without recourse
(subject to the obligations herein), all of its right, title and interest in and
to:

(a) the 1998 Transition Property (such sale, transfer, assignment, set
over and conveyance of the 1998 Transition Property includes, to the
fullest extent permitted by the Funding Law, the assignment of all
revenues, collections, claims, rights, payments, money or proceeds of or
arising from the IFCs pursuant to the 1998 Funding Order and the 1998
Initial Tariff), including, without limitation, any Allocable IFC Revenue
Amounts; and

2
<PAGE>

(b) the Related Assets.

Such sale, transfer, assignment, set over and conveyance is expressly stated to
be a sale and absolute transfer, and pursuant to Section 18-108 of the Funding
Law, shall be treated as an absolute transfer (as in a true sale), and not as a
pledge or other financing, of the 1998 Transition Property. The previous
sentence is the express statement referred to in Section 18-108 of the Funding
Law. To the extent that, notwithstanding the Funding Law, the Application and
the 1998 Funding Order, the foregoing sale, transfer, assignment, set over and
conveyance is held not to be an absolute transfer (as in a true sale) as
contemplated under Section 18-108 of the Funding Law, then such sale, transfer,
assignment, set over and conveyance shall be treated as a pledge of the 1998
Transition Property and the Grantee shall be deemed to have granted a security
interest to the Note Issuer in the 1998 Transition Property. The Grantee takes
the position that it has no rights in the 1998 Transition Property to which such
a security interest could attach because it has sold, transferred, assigned, set
over or otherwise conveyed all rights in, to and under the 1998 Transition
Property to the Note Issuer pursuant to Section 18-108 of the Funding Law.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF GRANTEE

The Grantee makes the following representations and warranties, as of the
Closing Date, on which the Note Issuer has relied in acquiring the 1998
Transition Property and Related Assets. These representations and warranties
shall survive the sale, transfer, assignment, set over and conveyance of the
1998 Transition Property and Related Assets to the Note Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.

SECTION 3.01. ORGANIZATION AND GOOD STANDING. The Grantee is duly
organized and validly existing as a limited liability company in good standing
under the laws of the State of

3
<PAGE>

Delaware, with the power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, the requisite power,
authority and legal right to own the 1998 Transition Property and Related
Assets.

SECTION 3.02. DUE QUALIFICATION. The Grantee is duly qualified to do
business as a foreign limited liability company in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions, including
Illinois, in which the ownership or lease of property or the conduct of its
business shall require such qualifications, licenses or approvals (except where
the failure to so qualify would not be reasonably likely to have a material
adverse effect on the Grantee's business, operations, assets, revenues or
properties).

SECTION 3.03. POWER AND AUTHORITY. The Grantee has the requisite power
and authority to execute and deliver this Agreement and to carry out its terms;
the Grantee has full power and authority to sell and assign the 1998 Transition
Property and Related Assets to be sold and assigned to the Note Issuer and the
Grantee has duly authorized such sale and assignment to the Note Issuer by all
necessary company action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Grantee by all necessary company
action.

SECTION 3.04. BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of the Grantee enforceable against the Grantee in
accordance with its terms, subject to applicable insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws relating to or affecting
creditors' rights generally from time to time in effect and to general
principles of equity (including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing), regardless of whether considered
in a proceeding in equity or at law.

SECTION 3.05. NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
(i) conflict with, result in any breach

4
<PAGE>

of any of the terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the Operating Agreement or Certificate of
Formation of the Grantee, or any indenture, agreement or other instrument to
which the Grantee is a party or by which it shall be bound; (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument; or (iii) violate any
law or any order, rule or regulation applicable to the Grantee of any court or
of any Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Grantee or its
properties.

SECTION 3.06. NO PROCEEDINGS. [Except as set forth on Schedule 3.06],
there are no proceedings or investigations pending or, to the Grantee's
knowledge, threatened, before any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Grantee or its properties involving or relating to the Grantee or the
Note Issuer or, to the Grantee's knowledge, any other Person: (i) asserting the
invalidity of the Funding Law, this Agreement, any of the other Basic Documents
or the Notes, (ii) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or any of
the other Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect the Grantee's
performance of its obligations under, or the validity or enforceability of, this
Agreement, any of the other Basic Documents or the Notes, or (iv) which could
reasonably be expected to adversely affect the Federal or state income tax
attributes of the Notes.

5
<PAGE>

Grantee's fulfillment of the terms hereof, except (i) those that have been
obtained or made and (ii) filings to be made by ComEd with the ICC pursuant to
the 1998 Funding Order and the Funding Law relating to ComEd's use of proceeds
from the transactions contemplated hereby and the final terms of each Series of
Notes issued pursuant to the Indenture.

SECTION 3.08. THE 1998 TRANSITION PROPERTY AND RELATED ASSETS.

(a) INFORMATION. At the Closing Date, all information provided by the
Grantee to the Note Issuer with respect to the 1998 Transition Property
(including the 1998 Funding Order and the 1998 Initial Tariff) and the Related
Assets is correct in all material respects.

(b) TITLE. It is the intention of the parties hereto that the transfer and
assignment herein contemplated constitute a sale and absolute transfer of the
1998 Transition Property and Related Assets from the Grantee to the Note Issuer
and that no beneficial interest in or title to the 1998 Transition Property and
Related Assets shall be part of the Grantee's estate in the event of the filing
of a bankruptcy petition by or against the Grantee under any bankruptcy law. No
portion of the 1998 Transition Property and Related Assets has been sold,
transferred, assigned, pledged or otherwise conveyed by the Grantee to any
Person other than the Note Issuer. At the Closing Date, immediately prior to
the sale hereunder, the Grantee owns the 1998 Transition Property and Related
Assets, free and clear of all Liens and rights of any other Person, and no
offsets, defenses or counterclaims exist or have been asserted with respect
thereto.

(c) TRANSFER FILINGS. At the Closing Date, the 1998 Transition Property
and Related Assets have been validly transferred and sold to the Note Issuer,
the Note Issuer owns all the 1998 Transition Property and Related Assets, free
and clear of all Liens and rights of any other Person (other than Liens created
pursuant to the Indenture), and all filings to be made by the Grantee (including
filings with the ICC under the Funding Law) necessary in any jurisdiction to
give the Note Issuer a first priority perfected ownership interest in the 1998
Transition Property

6
<PAGE>

and Related Assets have been made. No further action is required under Illinois
law to maintain such first priority perfected ownership interest in the 1998
Transition Property. No further action, other than any filings or other steps
required to be taken with respect to proceeds or on account of events occurring
after the date hereof by Sections 9-103, 9-304, 9-306, 9-402(7) or 9-403(2)-(3)
of the UCC, is required to maintain such first priority perfected ownership
interest in the Related Assets.

(d) STATE PLEDGE. At the Closing Date, under the laws of the State of
Illinois and the United States in effect on the Closing Date, the State of
Illinois has agreed with the Holders, pursuant to Section 18-105(b) of the
Funding Law, as follows:

"(b) The State pledges to and agrees with the holders of any
transitional funding instruments who may enter into contracts with an
electric utility, grantee, assignee or issuer pursuant to this Article
XVIII that the State will not in any way limit, alter, impair or reduce the
value of intangible transition property created by, or instrument funding
charges approved by, a transitional funding order so as to impair the terms
of any contract made by such electric utility, grantee, assignee or issuer
with such holders or in any way impair the rights and remedies of such
holders until the pertinent grantee instruments or, if the related
transitional funding order does not provide for the issuance of grantee
instruments, the pertinent transitional funding instruments and interest,
premium and other s, costs and charges related thereto, as the case may be,
are fully paid and discharged. Electric utilities, grantees and issuers
are authorized to include these pledges and agreements of the State in any
contract with the holders of transitional funding instruments or with any
assignees pursuant to this Article XVIII and any assignees are similarly
authorized to include these pledges and agreements of the State in any
contract with any issuer, holder or any other assignee. Nothing in this
Article XVIII shall preclude the State of Illinois from requiring
adjustments as may otherwise be allowed by law to the electric utility's
base rates, transition charges, delivery services charges, or other charges
for tariffed services, so long as any such adjustment does not directly
affect or impair any instrument funding charges previously authorized by a
transitional funding order issued by the [ICC]."

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<PAGE>

of the Holders, until the Notes, together with interest thereon, are fully paid
and discharged. Notwithstanding the immediately preceding sentence, the State
would be allowed to effect a temporary impairment of the Holders' rights if it
could be shown that such impairment was necessary to advance a significant and
legitimate public purpose.

(e) 1998 FUNDING ORDER AND TARIFFS; OTHER APPROVALS. At the Closing Date,
under the laws of the State of Illinois and the United States in effect on the
Closing Date, (i) the 1998 Funding Order pursuant to which the 1998 Transition
Property has been created has been duly entered by the ICC, is in full force and
effect; (ii) the 1998 Initial Tariff is in full force and effect and is not
subject to modification by the ICC except as provided under the Funding Law;
(iii) as of the issuance of the Notes, the Notes are entitled to the protections
provided in Section 18-104(c) of the Funding Law and, accordingly, the 1998
Funding Order is not revocable by the ICC; (iv) neither the State of Illinois
nor the ICC may reduce, postpone, impair or terminate the 1998 Transition
Property or the 1998 Funding Order; (v) the process by which the 1998 Funding
Order was adopted and approved and the 1998 Initial Tariff was filed, and the
1998 Funding Order and the 1998 Initial Tariff themselves, comply with all
applicable laws, rules and regulations; and (vi) no other approval,
authorization, consent, order or other action of, or filing with, any court,
Federal or state regulatory body, administrative agency or other governmental
instrumentality is required in connection with the grant of the 1998 Transition
Property, except those that have been obtained or made and those filings
described in Section 3.07.

(f) ASSUMPTIONS. At the Closing Date, the assumptions used in calculating
the IFCs are reasonable and made in good faith.

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interest in and to the IFCs authorized under the 1998 Funding Order, as adjusted
from time to time, (B) the right, title and interest in and to all revenues,
collections, claims, payments, money or proceeds of or arising from the IFCs set
forth in the 1998 Initial Tariff, and (C) all rights to obtain adjustments to
the IFCs pursuant to the 1998 Funding Order; and (iii) the Grantee is entitled
to impose and collect the IFCs described in the 1998 Funding Order and the 1998
Initial Tariff in an aggregate amount equal to the principal amount of the
Notes, all interest thereon, all amounts required to be deposited in the Reserve
Subaccount, the Overcollateralization Subaccount and (to the extent payable from
the proceeds of the IFCs) the Capital Subaccount, and all related fees, costs
and expenses in respect of the Notes until they have been paid in full, subject
only to the $6.323 billion limitation set forth in the 1998 Funding Order as the
maximum dollar amount of 1998 Transition Property created thereunder.

(h) PROPERTY OF GRANTEE. To the fullest extent permitted by the Funding
Law and all other applicable law, the 1998 Transition Property and the right to
impose and collect IFCs contemplated thereunder constitute property rights of
the Grantee and its assigns, including the Note Issuer and its assigns
(including the Indenture Trustee on behalf of the Holders), which property has
been placed beyond the reach of ComEd and its creditors, as in a true sale, and
which property rights may not be limited, altered, impaired, reduced or
otherwise terminated by any subsequent actions of ComEd or any third party and
which shall, to the full extent permitted by law, be enforceable against ComEd,
its successors and assigns, and all other third parties (including judicial lien
creditors) claiming an interest therein by or through ComEd or its successors
and assigns.

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ARTICLE IV

COVENANTS OF THE GRANTEE

SECTION 4.01. CORPORATE EXISTENCE. So long as any of the Notes are
outstanding, the Grantee (a) will keep in full force and effect its existence,
rights and franchises as a limited liability company under the laws of the State
of Delaware (unless it becomes, or any successor Grantee hereunder is or
becomes, organized under the laws of any other State or of the United States of
America, in which case the Grantee will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction), (b) will
obtain and preserve its qualification to do business, in each case to the extent
that in each such jurisdiction such existence or qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Basic Documents to which the Grantee is a party and each other instrument or
agreement necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated hereby and (c) at all times
hereafter, the Grantee will not elect nor cause nor permit the Note Issuer to
elect to be classified as an association taxable as a corporation for federal
income tax purposes.

SECTION 4.02. NO LIENS. Except for the conveyances hereunder, the Grantee
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on, any of the 1998 Transition
Property or Related Assets, or any interest therein, and the Grantee shall
defend the right, title and interest of the Note Issuer and the Indenture
Trustee in, to and under the 1998 Transition Property and Related Assets,
against all claims of third parties claiming through or under the Grantee.

SECTION 4.03. DELIVERY OF COLLECTIONS. If the Grantee receives
collections in respect of the IFCs or the proceeds thereof, or in replacement
therefor, including, without limitation, any Allocable IFC Revenue Amounts, the
Grantee agrees to hold such payments in trust for the

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<PAGE>

Servicer and to pay the Servicer all payments received by the Grantee in respect
thereof as soon as practicable after receipt thereof by the Grantee, but in no
event later than [ ] Business Days after such receipt.

SECTION 4.04. NOTICE OF LIENS. The Grantee shall notify the Note Issuer
and the Indenture Trustee promptly after becoming aware of any Lien on any of
the 1998 Transition Property or Related Assets other than the conveyances
hereunder and under the Indenture.

SECTION 4.05. COMPLIANCE WITH LAW. The Grantee shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality applicable to it, except
to the extent that failure to so comply would not materially adversely affect
the Note Issuer's or the Indenture Trustee's interests in the 1998 Transition
Property or Related Assets or under any of the Basic Documents or the Grantee's
performance of its obligations hereunder or under any of the other Basic
Documents to which it is party.

SECTION 4.06. COVENANTS RELATED TO THE 1998 TRANSITION PROPERTY, RELATED
ASSETS AND THE NOTES.

(a) So long as any of the Notes are outstanding, the Grantee shall indicate
in its financial statements that the Note Issuer and not the Grantee owns the
1998 Transition Property and the Related Assets.

(b) So long as any of the Notes are outstanding, the Grantee shall not own
or purchase any Notes.

(c) The Grantee agrees that upon its sale of the 1998 Transition Property
and Related Assets to the Note Issuer pursuant to this Agreement, (i) to the
fullest extent permitted by law, including applicable ICC Regulations, the Note
Issuer shall have all of the rights of the owner of the 1998 Transition Property
(including all of the rights originally held by the Grantee with

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<PAGE>

respect to the 1998 Transition Property and Related Assets), including the right
(subject to the terms of the Servicing Agreement) to exercise any and all rights
and remedies to collect any amounts payable by any Customer or third party
collection agent, including any ARES, in respect of the 1998 Transition
Property, notwithstanding any objection or direction to the contrary by the
Grantee and (ii) any payment by any Customer or third party collection agent,
including any ARES, to the Note Issuer (or to the Servicer for the benefit of
the Note Issuer) shall discharge such Customer's or third party's obligations in
respect of the 1998 Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by the Grantee.

(d) So long as any of the Notes are outstanding, (i) except with respect to
federal and other appropriate taxes, the Grantee shall not make any statement or
reference in respect of the 1998 Transition Property or the Related Assets that
is inconsistent with the ownership interest of the Note Issuer therein, and (ii)
the Grantee shall not take any action in respect of the 1998 Transition Property
or the Related Assets except as otherwise contemplated by the Basic Documents.

SECTION 4.07. PROTECTION OF TITLE. The Grantee shall execute and file
such filings, including filings with the ICC pursuant to the Funding Law, and
cause to be executed and filed such filings, all in such manner and in such
places as may be required by law fully to preserve, maintain, and protect the
interests of the Note Issuer in the 1998 Transition Property and Related Assets,
including all filings required under the Funding Law relating to the transfer of
the ownership or security interest in the 1998 Transition Property by the
Grantee to the Note Issuer. The Grantee shall deliver (or cause to be
delivered) to the Note Issuer file-stamped copies of, or filing receipts for,
any document filed as provided above, promptly following such filing. The
Grantee shall institute any action or proceeding necessary to compel performance
by the ICC or

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<PAGE>

the State of Illinois of any of their obligations or duties under the Funding
Law, the 1998 Funding Order, the 1998 Initial Tariff or any amendatory tariff
filed pursuant to Section 18-104(k) of the Funding Law, and the Grantee agrees
to take such legal or administrative actions, including defending against or
instituting and pursuing legal actions and appearing or testifying at hearings
or similar proceedings, as may be reasonably necessary to protect the Note
Issuer and the Holders from claims, state actions or other actions or
proceedings of third parties which, if successfully pursued, would result in a
breach of any representation set forth in Article III. The costs of any such
actions or proceedings will be payable by the Grantee. The Grantee designates
the Note Issuer as its agent and attorney-in-fact to execute any filings with
the ICC, financing statements, continuation statements or other instruments
required by the Note Issuer pursuant to this Section, it being understood that
the Note Issuer shall have no obligation to execute any such instruments.

SECTION 4.08. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the ICC's right
to order the sequestration and payment of revenues arising with respect to the
1998 Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to ComEd, the Grantee, the Note Issuer or
any other grantee or assignee of the 1998 Transition Property pursuant to
Section 18-107(c)(4) of the Funding Law, the Grantee shall not, prior to the
date which is one year and one day after the termination of the Indenture,
acquiesce, petition or otherwise invoke or cause or join with any other Person
to invoke the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the Note Issuer under any Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of or for the Note Issuer or any substantial part of

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<PAGE>

the property of the Note Issuer, or ordering the winding up or liquidation of
the affairs of the Note Issuer.

SECTION 4.09. TAXES. So long as any of the Notes are outstanding, the
Grantee shall, and shall cause each of its subsidiaries to, pay all material
taxes, assessments and governmental charges imposed upon it or any of its
properties or assets or with respect to any of its franchises, business, income
or property before any penalty accrues thereon if the failure to pay any such
taxes, assessments and governmental charges would, after any applicable grace
periods, notices or other similar requirements, result in a lien on the 1998
Transition Property or Related Assets; provided that no such tax need be paid if
the Grantee or one of its subsidiaries is contesting the same in good faith by
appropriate proceedings promptly instituted and diligently conducted and if the
Grantee or such subsidiary has established appropriate reserves as shall be
required in conformity with generally accepted accounting principles.

SECTION 4.10. PERFORMANCE OF OBLIGATIONS; SERVICING. (a) The Grantee may
contract with other Persons to assist it in performing its duties under this
Agreement, and any performance of such duties by a Person identified to the Note
Issuer in an Officer's Certificate of the Grantee shall be deemed to be action
taken by the Grantee.

(b) Except as otherwise expressly permitted therein, the Grantee shall not
waive, amend, modify, supplement or terminate any Basic Document or any
provision thereof without the written consent of the Note Issuer (which consent
shall not be withheld if the Indenture Trustee shall have consented thereto).

(c) Upon any termination of the Servicer's rights and powers pursuant to
the Servicing Agreement, the Note Issuer shall promptly notify the Grantee. As
soon as a Successor Servicer is appointed, the Note Issuer shall notify the
Grantee of such appointment, specifying in such notice the name and address of
such Successor Servicer.

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<PAGE>

(d) Without derogating from the absolute nature of the assignment granted
to the Note Issuer under this Agreement or the rights of the Note Issuer
hereunder, the Grantee will not, without the prior written consent of the Note
Issuer, amend, modify, waive, supplement, terminate or surrender, or agree to
any amendment, modification, supplement, termination, waiver or surrender of,
the terms of any Note Collateral or the Basic Documents, or waive timely
performance or observance by ComEd or the Servicer under the Grant Agreement or
the Servicing Agreement, respectively. If any such amendment, modification,
supplement or waiver shall be so consented to by the Note Issuer and the Note
Issuer shall so request, the Grantee shall execute and deliver, in its own name
and at its own expense, such agreements, instruments, consents and other
documents as shall be necessary or appropriate in the circumstances.

(e) The Grantee shall make all filings required under the Funding Law
relating to the transfer of the ownership or security interest in the 1998
Transition Property other than those required to be made by ComEd pursuant to
the Basic Documents.

SECTION 4.11. ADDITIONAL NEGATIVE COVENANTS. So long as any Notes are
Outstanding, the Grantee shall not:

(i) except as permitted by Section 5.02, sell, transfer, exchange or
otherwise dispose of any of its properties or assets;

(ii) assert any claim against the Note Issuer by reason of the
payment of the taxes levied or assessed upon any part of the 1998
Transition Property or the Related Assets;

(iii) except as permitted by Section 5.02, terminate its existence or
dissolve or liquidate in whole or in part; or

(iv) take any action that would be inconsistent with the Note Issuer's
absolute and first priority ownership interest in the 1998 Transition
Property and the Related Assets.

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<PAGE>

SECTION 4.12. NO OTHER BUSINESS. The Grantee shall not engage in any
business other than acquiring, owning, financing, transferring, assigning and
otherwise managing the 1998 Transition Property and Related Assets, and any
Subsequent Intangible Transition Property and Subsequent Related Assets, in the
manner contemplated by this Agreement and the Basic Documents (or in a similar
manner, in the case of Subsequent Transition Property and Subsequent Related
Assets) and activities incidental thereto.

SECTION 4.13. NO BORROWING. The Grantee shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness.

SECTION 4.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except
as otherwise contemplated by the Grant Agreement, the Administration Agreement,
the Servicing Agreement or this Agreement, the Grantee shall not make any loan
or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.

SECTION 4.15. CAPITAL EXPENDITURES. Other than expenditures in an
aggregate amount not to exceed $25,000 in any calendar year, the Grantee shall
not make any expenditure (by long-term or operating lease or otherwise) for
capital assets (either realty or personalty).

SECTION 4.16. NOTICE OF DEFAULTS. The Grantee shall promptly notify the
Note Issuer, in writing, of each default hereunder and each default on the part
of ComEd or the Servicer of their respective obligations under the Grant
Agreement or the Servicing Agreement.

SECTION 4.17. SEPARATE EXISTENCE. The Grantee shall:

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<PAGE>

(i) Maintain with commercial banking institutions its own deposit
account or accounts separate from those of any Affiliate of the Grantee.
The Grantee's funds will not be diverted to any other Person or for other
than the Grantee's use, and, except as may be expressly permitted by this
Agreement or the Servicing Agreement, the funds of the Grantee shall not be
commingled with those of any Affiliate of the Grantee.

(ii) Ensure that, to the extent that it shares the same officers or
other employees as any of its members or Affiliates, the salaries of and
the expenses related to providing benefits to such officers and other
employees shall be fairly allocated among such entities, and each such
entity shall bear its fair share of the salary and benefit costs associated
with all such common officers and employees.

(iii) Ensure that, to the extent that it jointly contracts with any
of its members or Affiliates to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so doing
shall be allocated fairly among such entities, and each such entity shall
bear its fair share of such costs. To the extent that the Grantee
contracts or does business with vendors or service providers where the
goods and services provided are partially for the benefit of any other
Person, the costs incurred in so doing shall be fairly allocated to or
among such entities for whose benefit the goods and services are provided,
and each such entity shall bear its fair share of such costs. All material
transactions between the Grantee and any of its Affiliates shall be only on
an arm's-length basis.

(iv) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its members
and Affiliates. To the extent that the Grantee and any of its members or
Affiliates have offices in contiguous space,

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<PAGE>

there shall be fair and appropriate allocation of overhead costs among
them, and each such entity shall bear its fair share of such expenses.

(v) Conduct its affairs strictly in accordance with its Operating
Agreement and Certificate of Formation and observe all necessary,
appropriate and customary formalities, including, but not limited to,
holding all regular and special members' meetings, and meetings of the
Grantee's management committee, appropriate to authorize all action on
behalf of the Grantee, keeping all resolutions or consents necessary to
authorize actions taken or to be taken, and maintaining accurate and
separate books, records and accounts, including, but not limited to,
payroll and intercompany transaction accounts. [The Grantee shall hold
members' and management committee meetings at least annually.]

(vi) Ensure that its management committee (a) shall not include any
Person who is also a member of the Board of Directors of any of the
Grantee's Affiliates and (b) shall at all times include at least one
Independent Manager (as such term is defined in the Grantee's Certificate
of Formation).

(vii) Act solely in its own name and through its own authorized
managers and agents, and no Affiliate of the Grantee shall be appointed to
act as agent of the Grantee, except as expressly contemplated by this
Agreement or the Servicing Agreement.

(viii) Ensure that no Affiliate of the Grantee shall advance funds to
the Grantee, or otherwise guaranty debts of, the Grantee, except as
provided in the Grantee's Operating Agreement or Certificate of Formation;
PROVIDED, HOWEVER, that an Affiliate of the Grantee may provide funds to
the Grantee in connection with capitalization of the Grantee.

(ix) Not enter into any guaranty, or otherwise become liable, with
respect to any obligation of any Affiliate of the Grantee.

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<PAGE>

SECTION 4.18. FURTHER INSTRUMENTS AND ACTS. Upon request of the Note
Issuer, the Grantee will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Agreement.

SECTION 4.19. SUBSEQUENT TRANSITION PROPERTY. (a) Notwithstanding any
provision hereof to the contrary, the Grantee may from time to time accept
newly-created Subsequent Transition Property pursuant to a related Subsequent
Funding Order and a Subsequent Tariff, subject to the conditions specified in
paragraph (b) below.

(b) The Grantee shall be permitted to accept Subsequent Transition Property
only upon the satisfaction of each of the following conditions on or prior to
the related Subsequent Creation Date:

(i) ComEd shall have provided the Grantee, the Subsequent Note
Issuer, the Indenture Trustee and the Rating Agencies with written notice,
which shall be given not later than 10 days prior to the related Subsequent
Creation Date, specifying the Subsequent Creation Date for such Subsequent
Transition Property and the aggregate amount of the IFCs related to such
Subsequent Transition Property, and shall have provided any information
reasonably requested by any of the foregoing Persons with respect to the
Subsequent Transition Property to be created in favor of the Grantee.

(ii) ComEd and the Grantee shall have delivered to the Note Issuer a
duly executed Subsequent Grant Agreement, and the Grantee shall have
delivered to the Note Issuer a duly executed Subsequent Sale Agreement;

(iii) as of such Subsequent Creation Date, ComEd will not be
insolvent and will not have been made insolvent by such transfer and ComEd
will not be aware of any pending insolvency with respect to itself;

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<PAGE>

(iv) the Rating Agency Condition shall have been satisfied with
respect to such creation;

(v) ComEd shall have delivered to the Grantee, the Trust, the
Indenture Trustee and the Delaware Trustee an opinion of independent tax
counsel and/or a ruling from the IRS (as selected by, and in form and
substance reasonably satisfactory to, ComEd) to the effect that, for
federal income tax purposes (i) the ICC's issuance of the Funding Order
creating and establishing the Subsequent Transition Property in the
Grantee, and the assignment of such Subsequent Transition Property, will
not result in gross income to the Grantee, the Note Issuer or ComEd, and
the future revenues relating to the Subsequent Transition Property and the
assessment of the IFCs (except for revenue related to certain lump-sum
payments) will be included in ComEd's gross income in the year in which the
related electrical service is provided to consumers and (ii) such
conveyance will not adversely affect the characterization of the then
outstanding Notes as obligations of ComEd;

(vi) as of such Subsequent Creation Date, no breach by ComEd of its
representations, warranties or covenants in the Grant Agreement and no
Servicer Default shall exist;

(vii) as of such Subsequent Creation Date, the Grantee shall have
sufficient funds available to pay ComEd the consideration set forth in the
Subsequent Grant Agreement, and all conditions shall have been satisfied
for the issuance of one or more instruments under the Indenture in order to
provide such funds;

(viii) the Grantee shall have delivered to the Rating Agencies any
Opinions of Counsel requested by the Rating Agencies;

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<PAGE>

(ix) the Grantee and the Note Issuer shall have taken all actions
required to perfect the ownership interest or security interest (as the
case may be) of the Note Issuer in the Subsequent Transition Property and
Subsequent Related Assets and the proceeds thereof, free and clear of any
Liens; and

(x) the Grantee shall have delivered to the Note Issuer an Officer's
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b).

ARTICLE V

THE GRANTEE

SECTION 5.01. LIABILITY OF GRANTEE; INDEMNITIES.

(a) The Grantee shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Grantee under this Agreement.

(b) The Grantee shall indemnify the Note Issuer, the Indenture Trustee and
the Delaware Trustee, and each of their respective officers, directors,
employees and agents for, and defend and hold harmless each such Person from and
against, any and all taxes (i) that may at any time be imposed on or asserted
against any such Person as a result of the grant of the 1998 Transition Property
to the Grantee, or (ii) that may be imposed on or asserted against any such
Person under existing law as of the Closing Date as a result of the Grantee's
ownership and assignment of the 1998 Transition Property, the Note Issuer's
issuance and sale of the Notes, or the other transactions contemplated herein,
including, in each case, any sales, gross receipt, general corporation, tangible
personal property, privilege or license taxes, but excluding any taxes imposed
as a result of a failure of such Person to withhold or remit taxes imposed with
respect to payments on any Notes.

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<PAGE>

(c) The Grantee shall indemnify the Note Issuer, the Indenture Trustee, the
Delaware Trustee and the Holders and each of their respective officers,
directors, employees and agents for, and defend and hold harmless each such
Person from and against, any and all liabilities, obligations, losses, claims,
actions, suits, damages, payments, and reasonable costs or expenses, of any kind
whatsoever (collectively, "Losses") that may be imposed on, incurred by or
asserted against any such Person as a result of (i) the Grantee's willful
misconduct, bad faith or gross negligence in the performance of its duties or
observance of its covenants under this Agreement, or the Grantee's reckless
disregard of its obligation and duties under this Agreement, or (ii) the
Grantee's breach of any of its representations or warranties contained in this
Agreement.

(d) The Grantee shall pay any and all taxes levied or assessed upon all or
any part of the Note Issuer's property or assets based on existing law as of the
Closing Date.

(e) Indemnification under Sections 5.01(b) through 5.01(e) shall survive
the resignation or removal of the Indenture Trustee or the Delaware Trustee and
the termination of this Agreement and shall include reasonable fees and expenses
of investigation and litigation (including reasonable attorneys' fees and
expenses).

SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, GRANTEE. Any Person (a) into which the Grantee may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Grantee shall be a party or (c) which may succeed to the properties and assets
of the Grantee substantially as a whole, which Person in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the
Grantee hereunder, shall be the successor to the Grantee under this Agreement
without further act on the part of any of the parties to this Agreement;
PROVIDED, HOWEVER, that (i) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Article III shall have been
breached, (ii) the Grantee shall have delivered to the Note Issuer and the
Indenture

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<PAGE>

Trustee an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, (iii) the
Grantee shall have delivered to the Note Issuer and the Indenture Trustee an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
filings to be made by the Grantee, including filings with the ICC pursuant to
the Funding Law, have been executed and filed that are necessary to fully
preserve and protect the interest of the Note Issuer in the 1998 Transition
Property and Related Assets and reciting the details of such filings, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interests (iv) the Rating Agencies shall have
received prior written notice of such transaction and (v) ComEd shall have
delivered to the Grantee, the Note Issuer, the Delaware Trustee and the
Indenture Trustee an opinion of independent tax counsel (as selected by, and in
form and substance reasonably satisfactory to, ComEd, and which may be based on
a ruling form the Internal Revenue Service) to the effect that such
consolidation or merger will not result in a material adverse federal income tax
consequence to ComEd, the Grantee, the Note Issuer, the Delaware Trustee, the
Indenture Trustee or the then existing Holders. Notwithstanding anything herein
to the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii), (iii) and (iv) above shall be conditions to
the consummation of any transaction referred to in clauses (a), (b) or (c)
above. When any Person acquires the properties and assets of ComEd Funding, LLC
substantially as a whole and becomes the successor to ComEd Funding, LLC in
accordance with the terms of this Section 5.02, then upon the satisfaction of
all of the other conditions of this Section 5.02, ComEd Funding, LLC shall
automatically and without further notice be released from its obligations
hereunder.

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<PAGE>

SECTION 5.03. LIMITATION ON LIABILITY OF GRANTEE AND OTHERS. The Grantee
and any director or officer or employee or agent of the Grantee may rely in good
faith on the advice of counsel or on any document of any kind, PRIMA FACIE
properly executed and submitted by any Person, respecting any matters arising
hereunder. Subject to Section 4.07, the Grantee shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 6.01. AMENDMENT. The Agreement may be amended by the Grantee and
the Note Issuer, with prior written notice given to the Rating Agencies and the
prior written consent of the Indenture Trustee, but without the consent of any
of the Holders, to cure any ambiguity, to correct or supplement any provisions
in this Agreement or for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions in this Agreement or of
modifying in any manner the rights of the Holders; PROVIDED, HOWEVER, that such
action shall not, as evidenced by an Officer's Certificate delivered to the Note
Issuer and the Indenture Trustee, adversely affect in any material respect the
interests of any Holder.

This Agreement may also be amended from time to time by the Grantee and the
Note Issuer, with prior written notice given to the Rating Agencies and the
prior written consent of the Indenture Trustee and Holders holding not less than
a majority of the Outstanding Amount of the Notes of all Series affected
thereby, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders; PROVIDED, HOWEVER, that no such amendment
shall (a) increase or reduce

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<PAGE>

in any manner the amount of, or accelerate or delay the timing of, IFC
Collections or (b) reduce the aforesaid percentage of the Outstanding Amount of
the Notes, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all the outstanding Notes.

Promptly after the execution of any such amendment or consent, the Note
Issuer shall furnish a copy of such amendment or consent to the Indenture
Trustee and each of the Rating Agencies.

It shall not be necessary for the consent of Holders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.

Prior to the execution of any amendment to this Agreement, the Indenture
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Indenture Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Indenture Trustee's own rights, duties or
immunities under this Agreement or otherwise.

SECTION 6.02. NOTICES. All demands, notices and communications upon or to
the Grantee, the Note Issuer, the Indenture Trustee or the Rating Agencies under
this Agreement shall be in writing, personally delivered, mailed or sent by
telecopy or other similar form of rapid transmission, and shall be deemed to
have been duly given upon receipt (a) in the case of the Grantee, to ComEd
Funding, LLC, c/o Commonwealth Edison Company, 10 South Dearborn Street, 37th
Floor, Chicago, Illinois 60603, (b) in the case of the Note Issuer, to [ ], (c)
in the case of the Indenture Trustee, at the Corporate Trust Office, (d) in the
case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007, (e) in the case of Standard &
Poor's, to Standard & Poor's Corporation, 26

25
<PAGE>

Broadway (10th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department, (f) in the case of Fitch, to Fitch Investors Service,
L.P., One State Street Plaza, New York, New York 10004, Attention of Commercial
Asset-Backed Securities, or (g) in the case of Duff & Phelps, to Duff & Phelps
Rating Co., 17 State Street, 12th Floor, New York, New York 10004, Attention of
Asset Backed Monitoring Group, or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.

SECTION 6.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02, this Agreement may not be
assigned by the Grantee.

SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the 1998 Transition
Property or Related Assets or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.

SECTION 6.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

SECTION 6.06. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

26
<PAGE>

SECTION 6.07. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

SECTION 6.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

SECTION 6.09. ASSIGNMENT TO INDENTURE TRUSTEE. The Grantee acknowledges
and consents to any transfer, pledge, assignment and grant of a security
interest by the Note Issuer to the Indenture Trustee pursuant to the Indenture
for the benefit of the Holders of all right, title and interest of the Note
Issuer in, to and under the 1998 Transition Property and Related Assets and the
proceeds thereof and the assignment of any or all of the Note Issuer's rights
and obligations hereunder to the Indenture Trustee.

SECTION 6.10. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by First Union Trust Company, National Association ("FIRST UNION") not
individually or personally but solely as Delaware Trustee on behalf of the Note
Issuer, in the exercise of the powers and authority conferred and vested in it,
(b) the representations, undertakings and agreements herein made by the Delaware
Trustee on behalf of the Note Issuer are made and intended not as personal
representations, undertakings and agreements by First Union are made and
intended for the purpose of binding only the Note Issuer, (c) nothing herein
contained shall be construed as creating any liability on First Union
individually or personally, to perform any covenant either expressed or implied
contained herein, except in its capacity as Delaware Trustee, all such
liability, if any, being expressly waived by the parties who are signatories to
this Agreement and by any Person claiming by, through or under such parties

27
<PAGE>

and (d) under no circumstances shall First Union be personally liable for the
payment of any indebtedness or expense of the Note Issuer or be personally
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Note Issuer under this Agreement; PROVIDED,
HOWEVER, that this provision shall not protect First Union against any liability
that would otherwise be imposed by reason of willful misconduct, bad faith or
gross negligence in the performance of its obligations and duties under this
Agreement.

28
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.

COMED FUNDING LLC, Grantee

By:
---------------------------
Name:
Title:

COMED TRANSITIONAL FUNDING
TRUST, Note Issuer

By First Union Trust Company,
National Association, not in its
individual capacity but solely as
Delaware Trustee

By:
---------------------------
Name:
Title:

Acknowledged and accepted:

Harris Trust and Savings Bank, not in
its individual capacity but
solely as Indenture Trustee,

By:
--------------------
Name:
Title:

29
<PAGE>

SCHEDULE 3.06

PROCEEDINGS

None, except:

[insert any applicable proceedings]

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

EXHIBIT 10.2
FORM OF GRANT AGREEMENT

AGREEMENT RELATING TO GRANT OF
INTANGIBLE TRANSITION PROPERTY

between

COMMONWEALTH EDISON COMPANY

and

COMED FUNDING, LLC

Dated as of [_____________], 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. . . . . . . . . . . . . . . 3

ARTICLE II
GRANT OF TRANSITION PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.01. GRANT OF TRANSITION PROPERTY . . . . . . . . . . . . . . . 3

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMED . . . . . . . . . . . . . . . . . 4
SECTION 3.01. ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . 4
SECTION 3.02. DUE QUALIFICATION. . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.03. POWER AND AUTHORITY. . . . . . . . . . . . . . . . . . . . 5
SECTION 3.04. BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.05. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.06. NO PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.07. APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.08. THE 1998 TRANSITION PROPERTY . . . . . . . . . . . . . . . 7

ARTICLE IV
COVENANTS OF COMED. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.01. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . .11
SECTION 4.02. NO LIENS . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.03. DELIVERY OF COLLECTIONS. . . . . . . . . . . . . . . . . .12
SECTION 4.04. NOTICE OF LIENS. . . . . . . . . . . . . . . . . . . . . .12
SECTION 4.05. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . .12
SECTION 4.06. COVENANTS RELATED TO TRANSITION PROPERTY . . . . . . . . .12
SECTION 4.07. PROTECTION OF TITLE. . . . . . . . . . . . . . . . . . . .13
SECTION 4.08. NONPETITION COVENANTS. . . . . . . . . . . . . . . . . . .14
SECTION 4.09. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 4.10. CONTRACTS FOR NON-TARIFFED SERVICES. . . . . . . . . . . .15

ARTICLE V
COMED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 5.01. LIABILITY OF COMED; INDEMNITIES. . . . . . . . . . . . . .16
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, COMED. . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 5.03. LIMITATION ON LIABILITY OF COMED AND OTHERS. . . . . . . .19

ARTICLE VI
MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 6.01. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . .20
</TABLE>

i
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
SECTION 6.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .21
SECTION 6.03. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . .21
SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. . . . . . . . . . . . . .22
SECTION 6.05. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6.06. SEPARATE COUNTERPARTS. . . . . . . . . . . . . . . . . . .22
SECTION 6.07. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6.08. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6.09. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE . . . . .22

SCHEDULE 3.06. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
</TABLE>

ii
<PAGE>

AGREEMENT RELATING TO GRANT OF INTANGIBLE TRANSITION PROPERTY (as the same
may be hereafter amended, supplemented or otherwise modified from time to time,
this "Agreement") dated as of __________ 1998, between COMMONWEALTH EDISON
COMPANY, an Illinois corporation ("ComEd"), and COMED FUNDING, LLC, a Delaware
limited liability company (the "Grantee").

WHEREAS, ComEd filed the Application with the ICC pursuant to Section
18-103 of the Funding Law requesting the issuance of a transitional funding
order;

WHEREAS, ComEd requested in the Application that the transitional funding
order (i) establish, create and grant rights, in favor of the Grantee, in and to
"intangible transition property" (as defined in Section 18-102 of the Funding
Law) in the aggregate amount of $6,323,000,000; and (ii) establish and create
"instrument funding charges" as defined in Section 18-102 of the Funding Law,
granting the right to impose and receive certain non-bypassable charges
expressed in cents per kilowatt hour from and after the effective date of the
associated tariff;

WHEREAS, the ICC issued the 1998 Funding Order on July 21, 1998, which
created and established the intangible transition property requested by ComEd in
the Application;

WHEREAS, the 1998 Funding Order granted to and vested in the Grantee, as
current and original property rights, and not by assignment from ComEd, all
right, title and interest to impose and receive the IFCs authorized by and under
the 1998 Funding Order and all related revenues, collections, claims, payments,
money or proceeds thereof, including all right, title and interest of the
Grantee in, to and under the 1998 Funding Order; and

WHEREAS, the Grantee has agreed to (i) transfer the 1998 Transition
Property to the Note Issuer pursuant to the Sale Agreement, and (ii) pay ComEd
the net proceeds received by the Grantee from the Note Issuer in connection with
such transfer;

<PAGE>

NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in that certain
Indenture (including Appendix A thereto) dated as of the date hereof, between
ComEd Transitional Funding Trust, as the Note Issuer, and Harris Trust and
Savings Bank, as the Indenture Trustee, as the same may be amended, supplemented
or otherwise modified from time to time.

SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.

(a) "AGREEMENT" shall have the meaning set forth in the preamble hereto.

(c) All terms defined in this Agreement shall have the defined meaning when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

2
<PAGE>

ARTICLE II

GRANT OF TRANSITION PROPERTY

SECTION 2.01. GRANT OF TRANSITION PROPERTY. In consideration of ComEd's
actions in requesting that the 1998 Transition Property be created and vested in
the Grantee, the Grantee agrees to remit to ComEd the net proceeds remitted to
it by the Note Issuer from the sale of the Notes. To the extent that,
notwithstanding the Funding Law, the Application and the 1998 Funding Order,
applicable law provides that ComEd has any interest in the 1998 Transition
Property or any part thereof, ComEd sells, transfers, assigns, sets over and
otherwise conveys to the Grantee without recourse (subject to the obligations
herein) all of ComEd's right, title and interest, if any, in, to and under the
1998 Transition Property (such grant of the 1998 Transition Property, and such
sale, transfer, assignment, set over and conveyance, include, to the fullest
extent permitted by the Funding Law, the assignment of all revenues,
collections, claims, rights, payments, money or proceeds of or arising from the
IFCs pursuant to the 1998 Funding Order and the 1998 Initial Tariff, including,
without limitation, any Allocable IFC Revenue Amounts. Such sale, transfer,
assignment, set over and conveyance by ComEd is expressly stated to be an
absolute transfer, and pursuant to Section 18-108 of the Funding Law, shall be
treated as an absolute transfer (as in a true sale), and not as a pledge or
other financing, of the 1998 Transition Property. The previous sentence is the
express statement referred to in Section 18-108 of the Funding Law. To the
extent that, notwithstanding the Funding Law, the Application and the 1998
Funding Order, ComEd is deemed to have any interest in the 1998 Transition
Property or

3
<PAGE>

any part thereof under applicable law, and if the foregoing sale, transfer,
assignment, set over and conveyance is held not to be an absolute transfer (as
in a true sale) as contemplated under Section 18-108 of the Funding Law, then
such sale, transfer, assignment, set over and conveyance shall be treated as a
pledge of the 1998 Transition Property and ComEd shall be deemed to have granted
a security interest to the Grantee in the 1998 Transition Property. ComEd takes
the position that it has no rights in the 1998 Transition Property to which such
a security interest could attach.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF COMED

ComEd makes the following representations and warranties, as of the Closing
Date, on which the Grantee has relied in assigning the 1998 Transition Property
to the Note Issuer. These representations and warranties shall survive (i) the
grant of the 1998 Transition Property to the Grantee pursuant to the 1998
Funding Order and the 1998 Initial Tariff, (ii) to the extent that ComEd has any
interest in the 1998 Transition Property or any part thereof, the sale,
transfer, assignment, set over and conveyance by ComEd contemplated hereby,
(iii) the sale, transfer, assignment, set over and conveyance of the 1998
Transition Property and Related Assets to the Note Issuer and (iv) the pledge
thereof to the Indenture Trustee pursuant to the Indenture.

SECTION 3.01. ORGANIZATION AND GOOD STANDING. ComEd is duly organized and
validly existing as a corporation in good standing under the laws of the State
of Illinois, with the power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has the requisite power,
authority and legal right to request that the ICC issue the 1998 Funding Order.
ComEd is engaged in the generation, transmission, distribution and sale of
electricity to the public in Illinois, is a public utility within the meaning of
Section 3-105 of the Public Utilities Act and is

4
<PAGE>

an electric utility within the meaning of the Funding Law and Article XVI of the
Public Utilities Act.

SECTION 3.02. DUE QUALIFICATION. ComEd is duly qualified to do business
as a corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business shall require such qualifications, licenses or
approvals (except where the failure to so qualify would not be reasonably likely
to have a material adverse effect on ComEd's business, operations, assets,
revenues or properties).

SECTION 3.03. POWER AND AUTHORITY. ComEd has the requisite power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by ComEd by all necessary corporate action.

SECTION 3.04. BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of ComEd enforceable against ComEd in accordance
with its terms, subject to applicable insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws relating to or affecting creditors'
rights generally from time to time in effect and to general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.

SECTION 3.05. NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
(i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
Articles of Incorporation or by-laws of ComEd, or any indenture, agreement or
other instrument to which ComEd is a party or by which it shall be bound; (ii)
result in the

5
<PAGE>

creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument; or (iii) violate any
law or any order, rule or regulation applicable to ComEd of any court or of any
Federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over ComEd or its properties.

SECTION 3.06. NO PROCEEDINGS. [Except as set forth on Schedule 3.06],
there are no proceedings or investigations pending or, to ComEd's knowledge,
threatened, before any court, Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over ComEd or
its properties involving or relating to ComEd or the Grantee or to ComEd's
knowledge, any other Person: (i) asserting the invalidity of the Funding Law,
this Agreement, any of the other Basic Documents or the Notes, (ii) seeking to
prevent the grant of the 1998 Transition Property to the Grantee or the
consummation of any of the transactions contemplated by this Agreement or any of
the other Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect ComEd's performance of
its obligations under, or the validity or enforceability of, this Agreement, any
of the other Basic Documents or the Notes, or (iv) which could reasonably be
expected to adversely affect the Federal or state income tax attributes of the
Notes.

SECTION 3.07. APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with ComEd's execution and delivery of this Agreement, ComEd's
performance of the transactions contemplated hereby or ComEd's fulfillment of
the terms hereof, except (i) those that have been obtained or made and (ii)
filings to be made by ComEd with the ICC pursuant to the 1998 Funding Order and
the Funding Law relating to ComEd's use of proceeds from the transactions
contemplated hereby and the final terms of each Series of Notes issued pursuant
to the Indenture.

6
<PAGE>

SECTION 3.08. THE 1998 TRANSITION PROPERTY.

(a) INFORMATION. All information provided by ComEd to the Grantee with
respect to the 1998 Transition Property (including the 1998 Funding Order and
the 1998 Initial Tariff) is correct in all material respects.

(b) TITLE. It is the intention of the parties hereto that the vesting of
the 1998 Transition Property in the Grantee as contemplated by the 1998 Funding
Order shall be irrevocable and enforceable against ComEd and its successors and
that no interest in or title to the 1998 Transition Property shall be part of
ComEd's estate in the event of the filing of a bankruptcy petition by or against
ComEd under any bankruptcy law. Accordingly, ComEd reaffirms that it has no
right, title or interest in and to the 1998 Transition Property and any sale,
transfer, assignment, set over and conveyance which may nonetheless be
contemplated by Section 2.01 hereof shall constitute an absolute transfer to the
Grantee, within the meaning of Section 18-108 of the Funding Law, of any right,
title and interest ComEd may otherwise have had in the 1998 Transition Property
(or any part thereof) created by, under and pursuant to the 1998 Funding Order,
such transfer is irrevocable and enforceable against ComEd and its successors,
and no interest in or title to the 1998 Transition Property shall be part of
ComEd's estate in the event of the filing of a bankruptcy petition by or against
ComEd under any bankruptcy law. No portion of the 1998 Transition Property has
been sold, transferred, assigned, pledged or otherwise conveyed by ComEd to any
Person other than the Grantee. Immediately prior to the sale, transfer,
assignment, set over and conveyance contemplated hereunder, ComEd's right, title
and interest in and to the 1998 Transition Property, if any, is free and clear
of all Liens and rights of any other Person, and no offsets, defenses or
counterclaims exist or have been asserted with respect thereto. ComEd, in its
capacity as Servicer or otherwise, will not at any time assert any Lien against
or with respect to any of the 1998 Transition Property.

7
<PAGE>

(c) TRANSFER FILINGS. The 1998 Transition Property has been validly granted
and transferred to the Grantee pursuant to the 1998 Funding Order and, to the
extent applicable, this Agreement, the Grantee owns all right, title and
interest to the 1998 Transition Property, free and clear of all Liens and rights
of any other Person (other than Liens created pursuant to the Sale Agreement and
the Indenture), and all filings to be made by ComEd (including filings with the
ICC under the Funding Law) necessary in any jurisdiction to give the Grantee a
perfected ownership interest in the 1998 Transition Property, free and clear of
all Liens, have been made. No further action is required under Illinois law to
maintain such ownership interest in the 1998 Transition Property. No further
action, other than any filings or other steps required to be taken with respect
to proceeds or on account of events occurring after the date hereof by Sections
9-103, 9-304, 9-306, 9-402(7) or 9-403(2)-(3) of the UCC, is required to
maintain such first priority perfected ownership interest in the Related Assets.

(d) STATE PLEDGE. Under the laws of the State of Illinois and the United
States in effect on the Closing Date, the State of Illinois has agreed with the
Holders, pursuant to Section 18-105(b) of the Funding Law, as follows:

"(b) The State pledges to and agrees with the holders of any
transitional funding instruments who may enter into contracts with an
electric utility, grantee, assignee or issuer pursuant to this Article
XVIII that the State will not in any way limit, alter, impair or reduce the
value of intangible transition property created by, or instrument funding
charges approved by, a transitional funding order so as to impair the terms
of any contract made by such electric utility, grantee, assignee or issuer
with such holders or in any way impair the rights and remedies of such
holders until the pertinent grantee instruments or, if the related
transitional funding order does not provide for the issuance of grantee
instruments, the pertinent transitional funding instruments and interest,
premium and other fees, costs and charges related thereto, as the case may
be, are fully paid and discharged. Electric utilities, grantees and
issuers are authorized to include these pledges and agreements of the State
in any contract with the holders of transitional funding instruments or
with any assignees pursuant to this Article XVIII and any assignees are
similarly authorized to include these pledges and agreements of the State
in any contract with any issuer, holder or any other assignee. Nothing in
this Article XVIII shall preclude the State of Illinois from requiring
adjustments as may

8
<PAGE>

otherwise be allowed by law to the electric utility's base rates,
transition charges, delivery services charges, or other charges for
tariffed services, so long as any such adjustment does not directly affect
or impair any instrument funding charges previously authorized by a
transitional funding order issued by the [ICC]."

As a result of the foregoing pledge, the State of Illinois may not, except as
provided in the succeeding sentence, in any way limit, alter, impair or reduce
the value of the 1998 Transition Property or the IFCs in a manner substantially
impairing the Indenture or the rights and remedies of the Holders, until the
Notes, together with interest thereon, are fully paid and discharged.
Notwithstanding the immediately preceding sentence, the State would be allowed
to effect a temporary impairment of the Holders' rights if it could be shown
that such impairment was necessary to advance a significant and legitimate
public purpose.

(e) 1998 FUNDING ORDER AND TARIFFS; OTHER APPROVALS. Under the laws of the
State of Illinois and the United States in effect on and at all relevant times
before the Closing Date, (i) ComEd was authorized to file the Application, (ii)
ComEd filed the Application with the ICC on April 22, 1998, in proper form,
requesting the issuance of a transitional funding order; (iii) the 1998 Funding
Order and 1998 Initial Tariff established, created and granted rights in and to
intangible transition property in an aggregate amount of $6.323 billion, and the
1998 Transition Property and the right to impose and collect IFCs constitute
current and original property rights vested in the Grantee; (iv) the 1998
Funding Order has been duly entered by the ICC, is in full force and effect; (v)
the 1998 Initial Tariff is in full force and effect and is not subject to
modification by the ICC except as provided under the Funding Law; (vi) as of the
issuance of the Notes, the Notes are entitled to the protections provided in
Section 18-104(c) of the Funding Law and, accordingly, the 1998 Funding Order is
not revocable by the ICC; (vii) neither the State of Illinois nor the ICC may
reduce, postpone, impair or terminate the 1998 Transition Property or the 1998
Funding Order; (viii) the process by which the 1998 Funding Order was adopted
and approved

9
<PAGE>

and the 1998 Initial Tariff was filed, and the 1998 Funding Order and the 1998
Initial Tariff themselves, comply with all applicable laws, rules and
regulations; and (ix) no other approval, authorization, consent, order or other
action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the creation and grant of the 1998 Transition Property, except
those that have been obtained or made and those filings described in Section
3.07.

(f) ASSUMPTIONS. The assumptions used in calculating the IFCs are
reasonable and made in good faith.

(g) CREATION OF 1998 TRANSITION PROPERTY. Upon the effectiveness of the
1998 Initial Tariff: (i) all of the 1998 Transition Property constitutes a
current property right vested in the Grantee; (ii) the 1998 Transition Property
includes, without limitation, (A) the right, title and interest in and to the
IFCs authorized under the 1998 Funding Order, as adjusted from time to time, (B)
the right, title and interest in and to all revenues, collections, claims,
payments, money or proceeds of or arising from the IFCs set forth in the 1998
Initial Tariff, and (C) all rights to obtain adjustments to the IFCs pursuant to
the 1998 Funding Order; and (iii) the Grantee is entitled to impose and collect
the IFCs described in the 1998 Funding Order and the 1998 Initial Tariff in an
aggregate amount equal to the principal amount of the Notes, all interest
thereon, all amounts required to be deposited in the Reserve Subaccount, the
Overcollateralization Subaccount and (to the extent payable from the proceeds of
the IFCs) the Capital Subaccount, and all related fees, costs and expenses in
respect of the Notes until they have been paid in full, subject only to the
$6.323 billion limitation set forth in the 1998 Funding Order as to the maximum
dollar amount of 1998 Transition Property created thereunder.

(h) PROPERTY OF GRANTEE. To the fullest extent permitted by the Funding
Law and all other applicable law, the 1998 Transition Property and the right to
impose and collect IFCs contem-

10
<PAGE>

plated thereunder constitute current property rights of the Grantee and its
assigns, including the Note Issuer and its assigns (including the Indenture
Trustee on behalf of the Holders), which property has been placed beyond the
reach of ComEd and its creditors, as in a true sale, and which property rights
may not be limited, altered, impaired, reduced or otherwise terminated by any
subsequent actions of ComEd or any third party and which shall, to the full
extent permitted by law, be enforceable against ComEd, its successors and
assigns, and all other third parties (including judicial lien creditors)
claiming an interest therein by or through ComEd or its successors and assigns.

ARTICLE IV

COVENANTS OF COMED

SECTION 4.01. CORPORATE EXISTENCE. So long as any of the Notes are
outstanding, ComEd (a) will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the State of Illinois (unless
it becomes, or any successor to ComEd hereunder is or becomes, organized under
the laws of any other State or of the United States of America, in which case
ComEd will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction), (b) will obtain and preserve its qualification
to do business, in each case to the extent that in each such jurisdiction such
existence or qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and any of the other Basic Documents to which
ComEd is a party and each other instrument or agreement necessary or appropriate
to the proper administration of this Agreement and the transactions contemplated
hereby and (c) at all times hereafter, neither ComEd nor any successor will
cause or permit the Grantee or the Note Issuer to elect to be classified as an
association taxable as a corporation for federal income tax purposes.

11
<PAGE>

SECTION 4.02. NO LIENS. Except for the conveyances hereunder, ComEd (i)
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on, any of the 1998 Transition
Property or any interest therein, (ii) will not at any time assert any Lien
against or with respect to any of the 1998 Transition Property in its capacity
as Servicer or otherwise, (iii) will not seek to limit, alter, impair, reduce or
otherwise terminate the property rights of the Grantee or any assignee of the
Grantee, and (iv) shall defend the right, title and interest of the Grantee in,
to and under the 1998 Transition Property against all claims of third parties
claiming through or under ComEd.

SECTION 4.03. DELIVERY OF COLLECTIONS. If ComEd receives collections in
respect of the IFCs or the proceeds thereof, or in replacement therefor,
including, without limitation, any Allocable IFC Revenue Amounts, ComEd agrees
to hold such payments in trust for the Servicer and to pay the Servicer all
payments received by ComEd in respect thereof as soon as practicable after
receipt thereof by ComEd, but in no event later than [ ] Business Days after
such receipt.

SECTION 4.04. NOTICE OF LIENS. ComEd shall notify the Grantee, the Note
Issuer and the Indenture Trustee promptly after becoming aware of any Lien on
any of the 1998 Transition Property other than the conveyances hereunder, under
the Sale Agreement and under the Indenture.

SECTION 4.05. COMPLIANCE WITH LAW. ComEd shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality applicable to it, except
to the extent that failure to so comply would not materially adversely affect
the Grantee's, the Note Issuer's or the Indenture Trustee's interests in the
1998 Transition Property or under any of the Basic Documents, or ComEd's
performance of its obligations hereunder or under any of the other Basic
Documents to which it is party.

12
<PAGE>

SECTION 4.06. COVENANTS RELATED TO THE 1998 TRANSITION PROPERTY AND THE
NOTES.

(a) So long as any of the Notes are outstanding, ComEd shall indicate in
its financial statements that it is not the owner of the 1998 Transition
Property.

(b) So long as any of the Notes are outstanding, ComEd shall not own or
purchase any Notes.

(c) ComEd agrees that upon the creation and grant of the 1998 Transition
Property to the Grantee pursuant to the 1998 Funding Order and, to the extent
applicable, this Agreement, (i) to the fullest extent permitted by law,
including applicable ICC Regulations, the Grantee shall have all of the rights
of the owner of the 1998 Transition Property (including all of the rights
originally held by ComEd, if any, with respect to the 1998 Transition Property),
including the right (subject to the terms of the Servicing Agreement) to
exercise any and all rights and remedies to collect any amounts payable by any
Customer or third party collection agent, including any ARES, in respect of the
1998 Transition Property, notwithstanding any objection or direction to the
contrary by ComEd and (ii) any payment by any Customer or third party collection
agent, including any ARES, to the Grantee (or to the Servicer for the benefit of
the Grantee) shall discharge such Customer's or third party's obligations in
respect of the 1998 Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by ComEd.

(d) So long as any of the Notes are outstanding, (i) except with respect to
federal and other applicable taxes, ComEd shall not make any statement or
reference in respect of the 1998 Transition Property that is inconsistent with
the ownership interest of the Grantee, and (ii) ComEd shall not take any action
in respect of the 1998 Transition Property except solely in its capacity as the
Servicer under the Servicing Agreement or as otherwise contemplated by the Basic
Documents.

13
<PAGE>

(e) So long as any of the Notes are outstanding, ComEd shall not initiate
any material changes with respect to its policies and procedures pertaining to
credit (including requirements for deposits from Customers), billing,
collections (including procedures for disconnection of service for non-payment)
and restoration of service after disconnection, and shall not initiate any
changes in any ICC tariffs relating to the foregoing matters which are likely to
adversely affect ComEd's ability to make timely recovery of amounts billed to
Customers, except for any such changes required by applicable law.

(f) If ComEd determines that aggregate dollar amount of IFC Charges to be
imposed and collected is reasonably likely to exceed the maximum dollar amount
of Intangible Transition Property authorized by the 1998 Funding Order and any
Subsequent Funding Orders and any Notes remain outstanding, ComEd shall make a
good faith effort to take any and all subsequent regulatory action with the ICC
to obtain an order permitting the creation of additional Intangible Transition
Property in an amount sufficient to pay such Notes in full.

SECTION 4.07. PROTECTION OF TITLE. ComEd shall execute and file such
filings, including filings with the ICC pursuant to the Funding Law, and cause
to be executed and filed such filings, all in such manner and in such places as
may be required by law fully to preserve, maintain, and protect the interests of
the Grantee in the 1998 Transition Property, including all filings required
under the Funding Law relating to the grant of the 1998 Transition Property to
the Grantee. ComEd shall deliver (or cause to be delivered) to the Grantee
file-stamped copies of, or filing receipts for, any document filed as provided
above, promptly following such filing. ComEd shall institute any action or
proceeding necessary to compel performance by the ICC or the State of Illinois
of any of their obligations or duties under the Funding Law, the 1998 Funding
Order, the 1998 Initial Tariff or any amendatory tariff filed pursuant to
Section 18-104(k) of the Funding Law, and ComEd agrees to take such legal or
administrative actions, including defending against

14
<PAGE>

or instituting and pursuing legal actions and appearing or testifying at
hearings or similar proceedings, as may be reasonably necessary to protect the
Grantee from claims, state actions or other actions or proceedings of third
parties which, if successfully pursued, would result in a breach of any
representation set forth in Article III hereof. The costs of any such actions
or proceedings will be payable by ComEd. ComEd designates the Grantee as its
agent and attorney-in-fact to execute any filings with the ICC or other
instruments required by the Grantee pursuant to this Section, it being
understood that the Grantee shall have no obligation to execute any such
instruments.

SECTION 4.08. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the ICC's right
to order the sequestration and payment of revenues arising with respect to the
1998 Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to ComEd, the Grantee or any other grantee
or assignee of the 1998 Transition Property pursuant to Section 18-107(c)(4) of
the Funding Law, ComEd shall not, prior to the date which is one year and one
day after the termination of the Indenture, acquiesce, petition or otherwise
invoke or cause or join with any other Person to invoke the process of any court
or governmental authority for the purpose of commencing or sustaining a case
against the Grantee or the Note Issuer under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of or for the Grantee
or the Note Issuer or any substantial part of the property of the Grantee or the
Note Issuer, or ordering the winding up or liquidation of the affairs of the
Grantee or the Note Issuer.

SECTION 4.09. TAXES. So long as any of the Notes are outstanding, ComEd
shall, and shall cause each of its subsidiaries to, pay all material taxes,
assessments and governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises,

15
<PAGE>

business, income or property before any penalty accrues thereon if the failure
to pay any such taxes, assessments and governmental charges would, after any
applicable grace periods, notices or other similar requirements, result in a
lien on the 1998 Transition Property; PROVIDED that no such tax need be paid if
ComEd or one of its subsidiaries is contesting the same in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
ComEd or such subsidiary has established appropriate reserves as shall be
required in conformity with generally accepted accounting principles.

SECTION 4.10. CONTRACTS FOR NON-TARIFFED SERVICES. Neither ComEd nor any
successor thereto shall enter into any contract with any Customer obligated (or
who would, but for such contract, be obligated) to pay IFCs if, as a result
thereof, such Customer would not receive tariffed services, unless the contract
provides that the Customer will pay an amount to the Grantee or its assigns, as
applicable, equal to the amount such Customer would pay in IFCs if the services
provided under such contract were tariffed services. Any revenues received by
ComEd or such successor from any such contract services shall, to the extent of
the authorized amount of the IFCs included therein (or deemed included therein
pursuant to the 1998 Funding Order and this Section), be deemed to be proceeds
of, and included in, the 1998 Transition Property.

ARTICLE V

COMED

SECTION 5.01. LIABILITY OF COMED; INDEMNITIES.

(a) ComEd shall indemnify the Grantee, the Note Issuer, the Indenture
Trustee, the Delaware Trustee and the Holders, and each of their respective
officers, directors, employees and agents for, and defend and hold harmless each
such Person from and against, any and all taxes (other than any taxes imposed on
the Holders) (i) that may at any time be imposed on or asserted

16
<PAGE>

against any such Person as a result of the grant of the 1998 Transition Property
to the Grantee, or (ii) that may be imposed on or asserted against any such
Person under existing law as of the Closing Date as a result of the Grantee's
ownership and assignment of the 1998 Transition Property, the Note Issuer's
issuance and sale of the Notes, or the other transactions contemplated herein,
including, in each case, any sales, gross receipt, general corporation, tangible
personal property, privilege or license taxes.

(b) ComEd shall indemnify the Grantee, the Note Issuer, the Indenture
Trustee, the Delaware Trustee and the Holders and each of their respective
officers, directors, employees and agents for, and defend and hold harmless each
such Person from and against, any and all liabilities, obligations, losses,
claims, actions, suits, damages, payments, and reasonable costs or expenses, of
any kind whatsoever (collectively, "Losses") that may be imposed on, incurred by
or asserted against any such Person as a result of (i) ComEd's willful
misconduct, bad faith or gross negligence in the performance of its duties or
observance of its covenants under this Agreement, or ComEd's reckless disregard
of its obligations and duties under this Agreement and (ii) ComEd's breach of
any of its representations or warranties contained in this Agreement (including
without limitation the representations and warranties specified in Sections
3.01, 3.03, 3.04, 3.05, 3.08(b), 3.08(c), 3.08(d), 3.08(e) or 3.08(g).

(c) ComEd shall pay any and all taxes levied or assessed upon all or any
part of the Grantee's property or assets based on existing law as of the Closing
Date.

(d) Indemnification under Sections 5.01(b) through 5.01(d) shall survive
the termination of this Agreement and shall include reasonable fees and expenses
of investigation and litigation (including reasonable attorneys' fees and
expenses).

SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, COMED. Any Person (a) into which ComEd may be merged or consolidated, (b)
which may result

17
<PAGE>

from any merger or consolidation to which ComEd shall be a party or (c) which
may succeed to the properties and assets of ComEd substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of ComEd hereunder, shall be the successor to ComEd
under this Agreement without further act on the part of any of the parties to
this Agreement; PROVIDED, HOWEVER, that (i) immediately after giving effect to
such transaction, no representation or warranty made pursuant to Article III
shall have been breached and (if ComEd is the Servicer) no Servicer Default, and
no event which, after notice or lapse of time, or both, would become a Servicer
Default shall have occurred and be continuing, (ii) ComEd shall have delivered
to the Grantee, the Note Issuer and the Indenture Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, (iii) ComEd shall have
delivered to the Grantee, the Note Issuer and the Indenture Trustee an Opinion
of Counsel either (x) stating that, in the opinion of such counsel, all filings
to be made by ComEd, including filings with the ICC pursuant to the Funding Law,
have been executed and filed that are necessary to fully preserve and protect
the interest of the Grantee in the 1998 Transition Property and reciting the
details of such filings, or (y) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interests, (iv) the
Rating Agencies shall have received prior written notice of such transaction and
(v) ComEd shall have delivered to the Grantee, the Note Issuer, the Delaware
Trustee and the Indenture Trustee an opinion of independent tax counsel and/or a
ruling from the Internal Revenue Service (as selected by, and in form and
substance reasonably satisfactory to, ComEd) to the effect that such
consolidation or merger will not result in a material adverse federal income tax
consequence to ComEd, the Grantee, the Note Issuer, the Delaware Trustee, the
Indenture Trustee or the then

18
<PAGE>

existing Holders. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(i), (ii), (iii) and (iv) above shall be conditions to the consummation of any
transaction referred to in clauses (a), (b) or (c) above. When any Person
acquires the properties and assets of ComEd substantially as a whole and becomes
the successor to ComEd in accordance with the terms of this Section 5.02, then
upon the satisfaction of all of the other conditions of this Section 5.02, ComEd
shall automatically and without further notice be released from its obligations
hereunder.

SECTION 5.03. LIMITATION ON LIABILITY OF COMED AND OTHERS. ComEd and any
director or officer or employee or agent of ComEd may rely in good faith on the
advice of counsel or on any document of any kind, PRIMA FACIE properly executed
and submitted by any Person, respecting any matters arising hereunder. Subject
to Section 4.07, ComEd shall not be under any obligation to appear in, prosecute
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 6.01. AMENDMENT. The Agreement may be amended by ComEd and the
Grantee, with prior written notice given to the Rating Agencies and the prior
written consent of the Note Issuer, but without the consent of any of the
Holders, to cure any ambiguity, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement or of modifying in
any manner the rights of the Holders; PROVIDED, HOWEVER, that such action shall
not, as evidenced by a ComEd Officer's Certificate delivered to the Note Issuer,
adversely affect in any material respect the interests of any Holder.

19
<PAGE>

This Agreement may also be amended from time to time by ComEd and the
Grantee, with prior written notice given to the Rating Agencies and the prior
written consent of the Note Issuer, the Indenture Trustee and Holders holding
not less than a majority of the Outstanding Amount of the Notes of all Series
affected thereby, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders; PROVIDED, HOWEVER, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, IFC Collections or (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes, the Holders of which are required to consent to
any such amendment, without the consent of the Holders of all the outstanding
Notes.

Promptly after the execution of any such amendment or consent, the Grantee
shall furnish a copy of such amendment or consent to the Note Issuer, the
Indenture Trustee and each of the Rating Agencies.

SECTION 6.02. NOTICES. All demands, notices and communications upon or to
ComEd, the Grantee, the Note Issuer, the Indenture Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, mailed
or sent by telecopy or other similar form of rapid transmission, and shall be
deemed to have been duly given upon receipt (a) in the case of ComEd, to
Commonwealth Edison Company, 10 South Dearborn Street, 37th Floor, Chicago,
Illinois 60603, (b) in the case of the Grantee, to ComEd Funding, LLC, c/o
Commonwealth Edison Company, 10 South Dearborn Street, 37th Floor, Chicago,
Illinois 60603, (c) in the case of the Note Issuer, to Transitional Funding
Trust, c/o First Union Trust Company, National Association,

20
<PAGE>

One Rodney Square, 920 King Street 1st Floor, Wilmington, Delaware 19801, Attn:
Corporate Trust Administration, (d) in the case of the Indenture Trustee, at the
Corporate Trust Office, (e) in the case of Moody's, to Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007, (f) in the case of Standard & Poor's, to Standard & Poor's Corporation,
26 Broadway (10th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department, (g) in the case of Fitch, to Fitch Investors Service,
L.P., One State Street Plaza, New York, New York 10004, Attention of Commercial
Asset-Backed Securities, or (h) in the case of Duff & Phelps, to Duff & Phelps
Credit Rating Co., 17 State Street, 12th Floor, New York, New York 10004,
Attention of Asset Based Monitoring Group, or as to each of the foregoing, at
such other address as shall be designated by written notice to the other
parties.

SECTION 6.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02, this Agreement may not be
assigned by ComEd.

SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of ComEd, the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the 1998 Transition
Property or under or in respect of this Agreement or any covenants, conditions
or provisions contained herein.

21
<PAGE>

SECTION 6.07. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

SECTION 6.09. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE. ComEd
acknowledges and consents to any transfer, pledge, assignment or grant of a
security interest by the Grantee to the Note Issuer pursuant to the Sale
Agreement, and by the Note Issuer to the Indenture Trustee for the benefit of
the Holders pursuant to the Indenture, of all right, title and interest of the
Grantee in, to and under the 1998 Transition Property and the proceeds thereof,
and the assignment of any or all of the Grantee's rights and obligations
hereunder to the Note Issuer and the Indenture Trustee. ComEd agrees that the
Note Issuer and the Indenture Trustee, as assignees, shall, subject to the terms
of the Basic Documents, have the right to enforce this Agreement and to exercise
directly all of the Grantee's rights and remedies under this Agreement
(including without limitation, the right to give or withhold any consents or
approvals of the Grantee to be given or withheld hereunder), and acknowledges
that with respect to the sale, transfer, assignment, set over and conveyance of
the 1998 Transition Property and Related Assets to the Note Issuer and the
pledge thereof to the Indenture Trustee pursuant to the Indenture, the

22
<PAGE>

Note Issuer and the Indenture Trustee have relied on the representations and
warranties made by ComEd herein.

23
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.

COMMONWEALTH EDISON
COMPANY

By:
----------------------------
Name:
Title:

COMED FUNDING, LLC, Grantee

By:
----------------------------
Name:
Title:

24
<PAGE>

SCHEDULE 3.06

PROCEEDINGS

None, except:

[insert any applicable proceedings]

<PAGE>

EXHIBIT 10.3
FORM OF SERVICING AGREEMENT

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT

between

COMED FUNDING, LLC

Grantee

and

COMMONWEALTH EDISON COMPANY,

Servicer

Dated as of [ ], 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE I

Definitions
<S> <C>
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions. . . . . . . . . . . . . . . 3

ARTICLE II

Appointment and Authorization

SECTION 2.01. Appointment of Servicer; Acceptance of Appointment . . . . 4
SECTION 2.02. Authorization. . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03. Dominion and Control Over the Intangible Transition
Property . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III

Billing Services

SECTION 3.01. Duties of Servicer.. . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02. Servicing and Maintenance Standards. . . . . . . . . . . . 7
SECTION 3.03. Certificate of Compliance. . . . . . . . . . . . . . . . . 8
SECTION 3.04. Annual Report by Independent Public Accountants. . . . . . 9

ARTICLE IV

Services Related to Reconciliation Adjustments and True-Up Adjustments

SECTION 4.01. Reconciliation Adjustments and True-Up Adjustments . . . .10
SECTION 4.02. Limitation of Liability. . . . . . . . . . . . . . . . . .14

ARTICLE V

The Intangible Transition Property

SECTION 5.01. Custody of Intangible Transition Property Records. . . . .16
SECTION 5.02. Duties of Servicer as Custodian . . . . . . . . . . . . . 16
SECTION 5.03. Instructions; Authority to Act . . . . . . . . . . . . . .18
SECTION 5.04. Custodian's Indemnification. . . . . . . . . . . . . . . .18
SECTION 5.05. Effective Period and Termination . . . . . . . . . . . . .19
SECTION 5.06. General Indemnification of Indenture Trustee and
Delaware Trustee . . . . . . . . . . . . . . . . . . . . .19

<PAGE>

ARTICLE VI

The Servicer

SECTION 6.01. Representations and Warranties of Servicer . . . . . . . .20
SECTION 6.02. Indemnities of Servicer; Release of Claims . . . . . . . .23
SECTION 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . . . .25
SECTION 6.04. Limitation on Liability of Servicer and Others . . . . . .26
SECTION 6.05. ComEd Not to Resign as Servicer. . . . . . . . . . . . . .26
SECTION 6.06. Servicing Compensation . . . . . . . . . . . . . . . . . .27
SECTION 6.07. Compliance with Applicable Law . . . . . . . . . . . . . .28
SECTION 6.08. Access to Certain Records and Information Regarding
Intangible Transition Property . . . . . . . . . . . . . .28
SECTION 6.09. Appointments . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 6.10. No Servicer Advances . . . . . . . . . . . . . . . . . . .29
SECTION 6.11. Remittances. . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 6.12 Compliance with Servicing Standard; Changes in
ICC Tariffs. . . . . . . . . . . . . . . . . . . . . . . .31

ARTICLE VII

Default

SECTION 7.01. Servicer Default . . . . . . . . . . . . . . . . . . . . .32
SECTION 7.02. Appointment of Successor . . . . . . . . . . . . . . . . .34
SECTION 7.03. Waiver of Past Defaults. . . . . . . . . . . . . . . . . .35
SECTION 7.04. Notice of Servicer Default . . . . . . . . . . . . . . . .35

ARTICLE VIII

Miscellaneous Provisions

SECTION 8.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 8.02. Maintenance of Records . . . . . . . . . . . . . . . . . .37
SECTION 8.03. Notices. . . . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 8.04. Assignment . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 8.05. Limitations on Rights of Others. . . . . . . . . . . . . .38
SECTION 8.06. Severability . . . . . . . . . . . . . . . . . . . . . . .39
SECTION 8.07. Separate Counterparts. . . . . . . . . . . . . . . . . . .39
SECTION 8.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . .39
SECTION 8.09. Governing Law. . . . . . . . . . . . . . . . . . . . . . .39
SECTION 8.10. Assignments to Note Issuer and Indenture Trustee . . . . .39
SECTION 8.11. Nonpetition Covenants. . . . . . . . . . . . . . . . . . .40
SECTION 8.12. Limitation of Liability. . . . . . . . . . . . . . . . . .40
</TABLE>

ii
<PAGE>

EXHIBITS AND SCHEDULES

Exhibit A Form of Monthly Servicer's Certificate
Exhibit B Form of Certificate of Compliance
Exhibit C Form of Amendatory Tariff
Exhibit D Form of Quarterly Servicer's Certificate

Schedule 4.01(a) Expected Amortization Schedule
Schedule 6.01(f) No Proceedings

ANNEXES

Annex I Servicing Procedures
Schedule 6 to
Annex I Calculation of Aggregate Remittance Amount
Annex II Routine Quarterly True-Up Mechanism

iii
<PAGE>

INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT dated as of [ ], 1998,
between COMED FUNDING LLC, a Delaware limited liability company (the "Grantee"),
and COMMONWEALTH EDISON COMPANY, an Illinois corporation, as Servicer (the
"Servicer").

RECITALS

A. Pursuant to the Funding Law and the 1998 Transitional Funding Order,
the Grantee and the Note Issuer are concurrently entering into the Sale
Agreement, pursuant to which the Grantee is selling the 1998 Intangible
Transition Property to the Note Issuer, and the Grantee may sell Subsequent
Intangible Transition Property to the Note Issuer pursuant to Subsequent Sale
Agreements.

B. In connection with its ownership of the Intangible Transition Property
and in order to collect the IFCs, the Grantee desires to engage the Servicer to
carry out the functions described herein. The Servicer currently performs
similar functions for itself with respect to its own charges to its customers
and may in the future perform such functions for others. In addition, the
Grantee desires to engage the Servicer to act on its behalf in making
Reconciliation Adjustments and True-Up Adjustments. The Servicer desires to
perform all of these activities on behalf of the Grantee.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. DEFINITIONS. (a) Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in that certain
Indenture (including Appendix A thereto) dated as of the date hereof between the
Note Issuer and Harris Trust and Savings Bank,

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as the Indenture Trustee, as the same may be amended, supplemented or otherwise
modified from time to time (the "INDENTURE").

(b) Whenever used in this Agreement, the following words and phrases shall
have the following meanings:

"AGREEMENT" means this Intangible Transition Property Servicing Agreement,
together with all Exhibits, Schedules, Annexes and Attachments hereto, as the
same may be amended, supplemented and otherwise modified from time to time.

"ANNUAL ACCOUNTANT'S REPORT" has the meaning set forth in Section 3.04.

"CERTIFICATE OF COMPLIANCE" has the meaning set forth in Section 3.03.

"COLLECTIONS CURVES" means the Monthly Collections Curves.

"DAILY REMITTANCE" has the meaning set forth in Section 6.11(b).

"INTANGIBLE TRANSITION PROPERTY RECORDS" has the meaning assigned to that
term in Section 5.01.

"LOSSES" has the meaning assigned to that term in Section 5.04.

"MONTHLY COLLECTIONS CURVES" has the meaning set forth on SCHEDULE 6 to
Annex I hereto.

"OFFICER'S CERTIFICATE" means a certificate signed by a Responsible
Officer.

"QUARTER" means each calendar quarter, specifically:

January 1 to and including March 31;

April 1 to and including June 30;

July 1 to and including September 30; and

October 1 to and including December 31.

"RETIREMENT OF THE NOTES" means the day on which the final distribution is
made to the Indenture Trustee in respect of the last Outstanding Notes.

"SERVICER DEFAULT" means an event specified in Section 7.01.

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"SERVICING STANDARD" means the obligation of the Servicer to calculate,
collect, apply, remit and reconcile proceeds of the Intangible Transition
Property, including IFC Payments, and all other Note Collateral for the benefit
of the Note Issuer and the Noteholders (i) with the same degree of care and
diligence as the Servicer applies with respect to payments owed to it for its
own account, (ii) in accordance with procedures and requirements established by
the ICC for collection of electric utility tariffs and (iii) in accordance with
the other terms of this Agreement.

"TERMINATION NOTICE" has the meaning assigned to that term in Section 7.01.

SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.

(a) Non-capitalized terms used herein which are defined in the Public
Utilities Act shall, as the context requires, have the meanings assigned to such
terms in the Public Utilities Act, but without giving effect to amendments to
the Public Utilities Act after the date hereof which have a material adverse
effect on the Note Issuer or the Holders.

(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

(c) The words "hereof," "herein," "hereunder" and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule, Exhibit, Annex
and Attachment references contained in this Agreement are references to
Sections, Schedules, Exhibits, Annexes and Attachments in or to this Agreement
unless otherwise specified; and the term "including" shall mean "including
without limitation."

(d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter forms of such terms.

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ARTICLE II

APPOINTMENT AND AUTHORIZATION

SECTION 2.01. APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT. Subject
to Section 6.05 and Article 7, the Grantee appoints the Servicer, and the
Servicer accepts such appointment, to perform the Servicer's obligations
pursuant to this Agreement on behalf of and for the benefit of the Grantee or
any assignee thereof in accordance with the terms of this Agreement and
applicable law. This appointment and the Servicer's acceptance thereof may not
be revoked except in accordance with the express terms of this Agreement.

SECTION 2.02. AUTHORIZATION. With respect to all or any portion of the
Intangible Transition Property, the Servicer shall be and is authorized and
empowered by the Grantee to (a) execute and deliver, on behalf of itself and/or
the Grantee, as the case may be, any and all instruments, documents or notices,
and (b) on behalf of itself and/or the Grantee, as the case may be, make any
filing and participate in proceedings of any kind with any governmental
authorities, including with the ICC. The Grantee shall furnish the Servicer
with such documents as have been prepared by the Servicer for execution by the
Grantee, and with such other documents as may be in the Grantee's possession, as
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Upon the Servicer's written request, the
Grantee shall furnish the Servicer with any powers of attorney or other
documents necessary or appropriate to enable the Servicer to carry out its
duties hereunder.

SECTION 2.03. DOMINION AND CONTROL OVER THE INTANGIBLE TRANSITION
PROPERTY. Notwithstanding any other provision herein, the Grantee shall have
dominion and control over the Intangible Transition Property, and the Servicer,
in accordance with the terms hereof, is acting solely as the servicing agent and
custodian for the Grantee with respect to the Intangible Transition Property and
the Intangible Transition Property Records. The Servicer shall not take

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any action that is not authorized by this Agreement, that is not consistent with
its customary procedures and practices, or that shall impair the rights of the
Grantee in the Intangible Transition Property, in each case unless such action
is required by law or court or regulatory order.

ARTICLE III

BILLING SERVICES

SECTION 3.01. DUTIES OF SERVICER. The Servicer, as agent for the Grantee,
shall have the following duties:

(a) DUTIES OF SERVICER GENERALLY. The Servicer's duties in general
shall include management, servicing and administration of the Intangible
Transition Property (including maintaining records of the cumulative total
of IFC Collections and verifying that such amount has not exceeded any cap
established by the ICC pursuant to a Funding Order)(1); obtaining meter
reads, calculating usage, billing, collections and posting of all payments
in respect of the Intangible Transition Property; responding to inquiries
by Customers, the ICC or any federal, local or other state governmental
authorities with respect to the Intangible Transition Property; delivering
Bills to Customers and ARES, investigating and handling delinquencies,
processing and depositing collections and making periodic remittances;
furnishing periodic reports to the Grantee, the Note Issuer, the Indenture
Trustee and the Rating Agencies; and taking all necessary action in
connection with Reconciliation Adjustments and True-Up Adjustments as set
forth herein. Certain of the duties set forth above may be performed by
ARES pursuant to ARES Service Agreements. Anything to the contrary
notwithstanding, the duties of the Servicer set forth

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(1) Need to confirm adequacy of procedures to monitor this number and whether
procedures need further description in this document.

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in this Agreement shall be qualified in their entirety by any ICC
Regulations as in effect at the time such duties are to be performed.
Without limiting the generality of this Section 3.01(a), in furtherance of
the foregoing, the Servicer shall also have, and shall comply with, the
duties and responsibilities relating to data acquisition, usage and bill
calculation, billing, customer service functions, collections, payment
processing and remittance set forth in Annex I hereto, including without
limitation payment of all Allocable IFC Revenue Amounts described therein.

(b) REPORTING FUNCTIONS.

(i) MONTHLY SERVICER'S CERTIFICATE. On or before each
Remittance Date, the Servicer shall prepare and deliver to the
Grantee, the Note Issuer, the Indenture Trustee and the Rating
Agencies a written report substantially in the form of EXHIBIT A
hereto (a "Monthly Servicer's Certificate") setting forth certain
information relating to IFC Payments received by the Servicer during
the Collection Period immediately preceding such Remittance Date.

(ii) NOTIFICATION OF LAWS AND REGULATIONS. The Servicer shall
immediately notify the Grantee, the Note Issuer, the Indenture Trustee
and the Rating Agencies in writing of any laws or ICC Regulations
hereafter promulgated that have a material adverse effect on the
Servicer's ability to perform its duties under this Agreement.

(iii) OTHER INFORMATION. Upon the reasonable request of the
Grantee, the Note Issuer, the Indenture Trustee or any Rating Agency,
the Servicer shall provide to the Grantee, the Note Issuer, Indenture
Trustee or the Rating Agencies, as the case may be, any public
financial information in respect of the Servicer, or any material
information regarding the Intangible Transition Property to the extent

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it is reasonably available to the Servicer, as may be reasonably
necessary and permitted by law, to enable the Grantee, the Note
Issuer, the Indenture Trustee or the Rating Agencies to monitor the
Servicer's performance hereunder. In addition, so long as any of the
Notes of any Series are outstanding, the Servicer shall provide the
Grantee, the Note Issuer and the Indenture Trustee, within a
reasonable time after written request therefor, any information
available to the Servicer or reasonably obtainable by it that is
necessary to calculate the IFCs applicable to each class of Customer.

(iv) PREPARATION OF REPORTS TO BE FILED WITH THE SEC. The Servicer
shall prepare any reports required to be filed by the Grantee or the
Note Issuer under the securities laws, including a copy of each
Quarterly Servicer's Certificate described in Section 4.01(c)(ii), the
annual Certificate of Compliance described in Section 3.03, and the
Annual Accountant's Report described in Section 3.04.

SECTION 3.02. SERVICING AND MAINTENANCE STANDARDS. On behalf of the
Grantee, the Servicer shall (a) manage, service, administer and make collections
in respect of the Intangible Transition Property with reasonable care and in
accordance with the Servicing Standard and applicable law, including all
applicable ICC Regulations and guidelines, using the same degree of care and
diligence that the Servicer exercises with respect to similar assets for its own
account and, if applicable, for others; (b) follow customary standards, policies
and procedures for the industry in performing its duties as Servicer; (c) use
all reasonable efforts, consistent with its customary servicing procedures, to
enforce, and maintain rights in respect of, the Intangible Transition Property;
(d) comply with all laws and regulations applicable to and binding on it
relating to the Intangible Transition Property, and (e) make all required
submissions and provide all required notifications to the ICC with respect to
any Adjustments. The Servicer shall be

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responsible for the imposition, collection and remittance of IFCs in accordance
with Annex I hereto, the inclusion of IFCs in all Bills, and the deduction of
IFCs from tariffed charges and all other charges from which the IFCs are to be
deducted and stated separately, including, without limitation, all charges under
any contracts with Customers who would, but for such contract, be paying
Applicable Rates. The Servicer shall follow such customary and usual practices
and procedures as it shall deem necessary or advisable in its servicing of all
or any portion of the Intangible Transition Property, which, in the Servicer's
judgment, may include the taking of legal action. Without limiting the
foregoing, if the Servicer determines at any time that the aggregate dollar
amount of IFC Charges to be imposed is reasonably likely to exceed the maximum
dollar amount of Intangible Transition Property authorized by the 1998
Transitional Funding Order and any Subsequent Funding Orders to be imposed and
collected and any Notes remain outstanding, the Servicer shall make a good faith
effort to take any and all subsequent regulatory action with the ICC to obtain
an order permitting the creation of additional Intangible Transition Property in
an amount sufficient to pay such Notes in full.

SECTION 3.03. CERTIFICATE OF COMPLIANCE. The Servicer shall deliver to
the Grantee, the Note Issuer, the Indenture Trustee and the Rating Agencies on
or before [INSERT APPROPRIATE MONTH AND DAY] of each year, commencing [INSERT
DATE FIRST REPORT IS DUE] to and including the [INSERT APPROPRIATE MONTH AND
DAY] succeeding the Retirement of the Notes, an Officer's Certificate
substantially in the form of EXHIBIT B hereto (a "Certificate of Compliance"),
stating that: (i) a review of the activities of the Servicer during the twelve
months ended the preceding [INSERT DATE AS OF WHICH REPORT WILL BE PREPARED]
(or, in the case of the first Certificate of Compliance to be delivered on or
before _____________, 199_, the period of time from the date of this Agreement
until [FIRST DATE AS OF WHICH REPORT WILL BE PREPARED]) and of its performance
under this Agreement has been made under such officer's supervision, and (ii) to
such officer's

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knowledge, based on such review, the Servicer has fulfilled all of its
obligations in all material respects under this Agreement throughout such twelve
months (or, in the case of the Certificate of Compliance to be delivered on or
before [DATE OF FIRST CERTIFICATE] the period of time from the date of this
Agreement until [FIRST DATE AS OF WHICH REPORT WILL BE PREPARED]), or, if there
has been a default in the fulfillment of any such material obligation,
specifying each such material default known to such officer and the nature and
status thereof.

SECTION 3.04. ANNUAL REPORT BY INDEPENDENT PUBLIC ACCOUNTANTS. (a) The
Servicer, at its own expense in consideration of the Servicing Fee paid to it,
shall cause a firm of independent certified public accountants (which may
provide other services to the Servicer or ComEd) to prepare, and the Servicer
shall deliver to the Grantee, the Note Issuer, the Indenture Trustee and the
Rating Agencies a report addressed to the Servicer (the "Annual Accountant's
Report"), which may be included as part of the Servicer's customary auditing
activities, for the information and use of the Grantee, the Note Issuer, the
Indenture Trustee and the Rating Agencies, on or before [_______________] of
each year, beginning [_____________, 199_] to and including the [_____________]
succeeding the Retirement of the Notes, to the effect that such firm has
performed certain procedures in connection with the Servicer's compliance with
its obligations under this Agreement during the preceding twelve months ended
[________] (or, in the case of the first Annual Accountant's Report to be
delivered on or before [_____________, 199_], the period of time from the date
of this Agreement until _________, 199_), identifying the results of such
procedures and including any exceptions noted. If such accounting firm requires
the Indenture Trustee to agree or consent to the procedures performed by such
firm, the Grantee shall direct the Note Issuer to direct the Indenture Trustee
in writing to so agree; it being understood and agreed that the Indenture
Trustee will deliver such letter of agreement or consent in conclusive reliance
upon the direction of the Note Issuer, and the Indenture Trustee will not make

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any independent inquiry or investigation as to, and shall have no obligation or
liability in respect of the sufficiency, validity or correctness of such
procedures.

(b) The Annual Accountant's Report shall also indicate that the accounting
firm providing such report is independent of the Servicer within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants.

ARTICLE IV

SERVICES RELATED TO RECONCILIATION ADJUSTMENTS AND TRUE-UP ADJUSTMENTS

SECTION 4.01. RECONCILIATION ADJUSTMENTS AND TRUE-UP ADJUSTMENTS. From
time to time, until the Retirement of the Notes, the Servicer shall identify the
need for Reconciliation Adjustments and True-Up Adjustments and shall take all
reasonable action to obtain and implement such Reconciliation Adjustments and
True-Up Adjustments, all in accordance with the following:

(a) EXPECTED AMORTIZATION SCHEDULE. The initial Expected Amortization
Schedule is attached hereto as SCHEDULE 4.01(a). In connection with the
Note Issuer's issuance of any additional Series of Notes after the Closing
Date, the Servicer, on or prior to the Series Issuance Date therefor, shall
revise the Expected Amortization Schedule to add the requisite information
for each new Series of Notes and set forth, as of each Payment Date through
the scheduled Retirement of the Notes, the aggregate principal amounts of
the Notes of all Series, including such additional Series, expected to be
outstanding on such Payment Date. The Servicer shall also revise the
Expected Amortization Schedule to reflect any required prepayments on
account of the receipt of Allocable IFC Revenue Amounts or any other
required or permitted prepayments affecting such schedule. If the Expected
Amortization Schedule is revised as set forth above, the Servicer shall
send a

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copy of such revised Expected Amortization Schedule to the Grantee, the
Note Issuer, the Indenture Trustee and the Rating Agencies promptly
thereafter.

(b) RECONCILIATION AND TRUE-UP ADJUSTMENTS(2)

(i) RECONCILIATION ADJUSTMENTS AND FILINGS. Each year within
the two-week period preceding each Reconciliation Adjustment Date,
the Servicer shall: (A) update the data and assumptions underlying the
calculation of the IFCs, including revenue from Applicable Rates for
each class of Customers, projected electricity usage during the next
Calculation Period for each such class and including interest and
estimated expenses and fees of the Grantee and the Note Issuer to be
paid during such period, the rate of delinquencies and write-offs, and
the Collections Curves; (B) determine the Required Debt Service and
Debt Service Billing Requirement for the next Calculation Period based
on such updated data and assumptions; (C) determine the IFCs to be
allocated to each class of Customers during the next Calculation
Period based on such Debt Service Billing Requirement and the terms of
the applicable Funding Orders and the Tariffs filed pursuant thereto;
(D) make all required notice and other filings with the ICC to reflect
the revised IFCs, including any Amendatory Tariffs required under
Section 18-104(k) of the Funding Law if the resulting IFCs for any
class of Customer will exceed an amount per kilowatt-hour greater than
the amount per kilowatt-hour authorized for such class of Customer in
the applicable Funding Order, and (E) take all reasonable actions and
make all reasonable efforts to effect such

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(2) These provisions will need to be revised after the amortization of the
Notes (quarterly vs. semi-annually) has been determined. We have assumed
that reconciliations will be performed semi-annually, in June and December
(commencing June 1999), and true-up determinations will be performed
semi-annually, in March and September (commencing September 1999).

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Reconciliation Adjustment and to enforce the provisions of the Funding
Law which limit the ICC's authority to review any such Amendatory
Tariff.

(ii) TRUE-UP ADJUSTMENTS AND FILINGS. Each year immediately
before each March 31 and September 30, commencing September 30, 1999,
the Servicer shall compare the Principal Balance, as of the most
recent Payment Date and after giving effect to payments made on such
Payment Date, to the Projected Principal Balance as of such Payment
Date. If the Servicer determines that such Principal Balance equals
or exceeds 105% of such Projected Principal Balance, then the Servicer
shall: (A) update the data and assumptions underlying the calculation
of the IFCs, including revenue from Applicable Rates for each class of
Customers, projected electricity usage during the next Calculation
Period for each such class and including interest and estimated
expenses and fees of the Grantee and the Note Issuer to be paid during
such period, the rate of delinquencies and write-offs, and the
Collections Curves; (B) determine the Debt Service Requirement and
Debt Service Billing Requirement for the next Calculation Period based
on such updated data and assumptions; (C) determine the IFCs to be
allocated to each class of Customers during such Calculation Period
based on such Debt Service Billing Requirement and the terms of the
applicable Funding Orders and the Tariffs filed pursuant thereto; (D)
make all required notice and other filings with the ICC to reflect the
revised IFCs, including any Amendatory Tariffs required under Section
18-104(k) of the Funding Law if the resulting IFCs for any class of
Customer will exceed an amount per kilowatt-hour greater than the
amount per kilowatt-hour authorized for such class of Customer in the
applicable Funding Order, and (E) take all reasonable actions and make
all reasonable efforts to effect such True-Up

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Adjustment and to enforce the provisions of the Funding Law which
limit the ICC's authority to review any such Amendatory Tariff.

(iii) In the case of any Reconciliation Adjustment or True-Up
Adjustment, the Servicer shall implement the revised IFCs, if any, as
of the first day of the following calendar month (e.g., January 1 for
a Reconciliation Adjustment determined in December, July 1 for a
Reconciliation Adjustment determined in June, April 1 for a True-Up
Adjustment determined in March and October 1 for a True-Up Adjustment
determined in September).

(i) NOTIFICATION OF TARIFF FILINGS AND RECONCILIATION AND TRUE-UP
ADJUSTMENTS. Whenever the Servicer files a Tariff with the ICC or
implements revised IFCs with notice to the ICC but without filing a
Tariff as contemplated by any applicable Funding Order, the Servicer
shall send a copy of such filing or notice (together with a copy of
all notices and documents which, in the Servicer's reasonable
judgment, are material to the adjustments effected by such Tariff or
notice) to the Grantee, the Note Issuer, the Indenture Trustee and the
Rating Agencies concurrently therewith.

(ii) QUARTERLY SERVICER'S CERTIFICATE. Not later than the
Remittance Date immediately prior to each Payment Date, the Servicer
shall deliver a written report substantially in the form of EXHIBIT D
hereto (the "Quarterly Servicer's Certificate") to the Grantee, the
Note Issuer, the Indenture Trustee and the Rating Agencies.

(iii) REPORTS TO CUSTOMERS. (A) After each revised IFC has gone
into effect pursuant to a Reconciliation Adjustment or a True-Up
Adjustment, the Servicer shall, to the extent and in the manner and
time frame required by

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applicable ICC Regulations, if any, cause to be prepared and delivered
to Customers any required notices announcing such revised IFCs.

(B) In addition, at least once each year, the Servicer shall
cause to be prepared and delivered to Customers a notice stating, in
effect, that the IFCs are owned by the Grantee or any assignee thereof
and not ComEd. Such notice shall be included either as an insert to
or in the text of the Bills delivered to such Customers or shall be
delivered to Customers by electronic means or such other means as the
Servicer or the Applicable ARES may from time to time use to
communicate with their respective customers.

(C) Except to the extent that applicable ICC Regulations make
the Applicable ARES responsible for such costs, the Servicer shall pay
from its own funds all costs of preparation and delivery incurred in
connection with clauses (A) and (B) above, including but not limited
to printing and postage costs as the same may increase or decrease
from time to time.

(iv) ARES REPORTS. The Servicer shall provide to the Rating
Agencies, upon request, any publicly available reports filed by the
Servicer with the ICC (or otherwise made publicly available by the
Servicer) relating to ARES and any other non-confidential and
non-proprietary information relating to ARES reasonably requested by
the Rating Agencies.

SECTION 4.02. LIMITATION OF LIABILITY. (a) The Grantee and the
Servicer expressly agree and acknowledge that:

(i) In connection with any Reconciliation Adjustment or True-Up
Adjustment, the Servicer is acting solely in its capacity as the servicing
agent hereunder.

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(ii) Neither the Servicer nor the Grantee shall be responsible in
any manner for, and shall have no liability whatsoever as a result of, any
action, decision, ruling or other determination made or not made, or any
delay (other than any delay resulting from the Servicer's failure to file
the Amendatory Tariffs required by Section 4.01 in a timely and correct
manner or other breach by the Servicer of its duties under this Agreement),
by the ICC in any way related to the Intangible Transition Property or in
connection with any Reconciliation Adjustment or True-Up Adjustment, the
subject of any filings under Section 4.01, any proposed Reconciliation
Adjustment or True-Up Adjustment, or the approval of any revised IFCs.

(iii) The Servicer shall have no liability whatsoever relating to the
calculation of any revised IFCs, including as a result of any inaccuracy of
any of the assumptions made in such calculation regarding expected energy
usage volume and the rate of delinquencies and write-offs, so long as the
Servicer has acted in good faith and has not acted in a grossly negligent
manner in connection therewith, nor shall the Servicer have any liability
whatsoever as a result of any Person, including the Holders, not receiving
any payment, amount or return anticipated or expected or in respect of any
Note generally, except only to the extent that the same is caused by the
Servicer's gross negligence, willful misconduct, bad faith, or reckless
disregard of its obligations and duties under this Agreement.

(b) Notwithstanding the foregoing, this Section 4.02 shall not relieve the
Servicer of liability for any misrepresentation by the Servicer under Section
6.01 or for any breach by the Servicer of its other obligations under this
Agreement.

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ARTICLE V

THE INTANGIBLE TRANSITION PROPERTY

SECTION 5.01. CUSTODY OF INTANGIBLE TRANSITION PROPERTY RECORDS. To
assure uniform quality in servicing the Intangible Transition Property and to
reduce administrative costs, the Grantee revocably appoints the Servicer, and
the Servicer accepts such appointment, to act as the agent of the Grantee, the
Note Issuer and the Indenture Trustee as custodian of any and all documents and
records that the Grantee shall keep on file, in accordance with its customary
procedures, relating to the Intangible Transition Property, including copies of
each Funding Order and all Tariffs relating thereto, and all documents filed
with the ICC in connection with any Reconciliation Adjustment or True-Up
Adjustment (collectively, the "Intangible Transition Property Records"), which
are hereby constructively delivered to the Note Issuer, as transferee of the
Grantee (or, in the case of the Subsequent Intangible Transition Property, will
as of the applicable Subsequent Sale Date be constructively delivered to the
Note Issuer, as transferee of the Grantee) with respect to all Intangible
Transition Property.

SECTION 5.02. DUTIES OF SERVICER AS CUSTODIAN. (a) SAFEKEEPING. The
Servicer shall hold the Intangible Transition Property Records on behalf of the
Grantee, the Note Issuer and the Indenture Trustee, and maintain such accurate
and complete accounts, records and computer systems pertaining to the Intangible
Transition Property Records as shall enable the Grantee to comply with this
Agreement and the Sale Agreement, and as shall enable the Note Issuer to comply
with the Sale Agreement and the Indenture. In performing its duties as
custodian the Servicer shall act with reasonable care, using that degree of care
and diligence that the Servicer exercises with respect to comparable assets that
the Servicer services for itself or, if applicable, for others. The Servicer
shall promptly report to the Grantee, the Note Issuer and the Indenture

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Trustee any failure on its part to hold the Intangible Transition Property
Records and maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Grantee, the Note Issuer or the Indenture Trustee of the
Intangible Transition Property Records. The Servicer's duties to hold the
Intangible Transition Property Records on behalf of the Grantee, the Note Issuer
and the Indenture Trustee set forth in this Section 5.02, to the extent such
Intangible Transition Property Records have not been previously transferred to a
successor Servicer pursuant to Article VII, shall terminate three years after
the earlier of the date on which (i) the Servicer is succeeded by a successor
Servicer in accordance with Article VII hereof and (ii) no Notes of any Series
are Outstanding.

(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain the
Intangible Transition Property Records at 10 South Dearborn Street, Chicago,
Illinois, 37th Floor or at such other office as shall be specified to the
Grantee, the Note Issuer and the Indenture Trustee by written notice at least 30
days prior to any change in location. The Servicer shall permit the Grantee,
the Note Issuer and the Indenture Trustee or their respective duly authorized
representatives, attorneys or auditors to inspect, audit and make copies of and
abstracts from the Servicer's records regarding the Intangible Transition
Property and the IFCs (including all the Intangible Transition Property
Records), at such times during normal business hours as the Grantee, the Note
Issuer or the Indenture Trustee shall reasonably request and which do not
unreasonably interfere with the Servicer's normal operations. Nothing in this
Section 5.02(b) shall affect the obligation of the Servicer to observe any
applicable law (including any ICC Regulations) prohibiting disclosure of
information regarding the Customers, and the failure of the Servicer to provide
access to such information as a result of such obligation shall not constitute a
breach of this Section 5.02(b).

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(c) DEFENDING INTANGIBLE TRANSITION PROPERTY AGAINST CLAIMS. The Servicer
shall institute any action or proceeding necessary to compel performance by the
ICC or the State of Illinois of any of their obligations or duties under the
Funding Law, any Funding Order or any Tariff, and the Servicer agrees to take
such legal or administrative actions, including defending against or instituting
and pursuing legal actions and appearing or testifying at hearings or similar
proceedings, as may be reasonably necessary to block or overturn any attempts to
cause a repeal of, modification of or supplement to the Funding Law or any
Funding Order or the rights of holders of Intangible Transition Property that
would be adverse to the Grantee, the Note Issuer or any Holders. Unless
expressly prohibited by law or by any court or regulatory order in effect at
such time, the Servicer shall continue to impose, collect and remit IFCs in
accordance with this Agreement during the pendency of any such action and
continuing for so long as the Notes remain Outstanding. The Servicer shall
advance its own funds in order to institute any actions or proceedings described
above, PROVIDED, however, that the costs of any such action or proceeding shall
be payable from IFC Collections as an Operating Expense in accordance with the
priorities set forth in Section 8.02(d) of the Indenture. The Servicer's
obligations pursuant to this Section 5.02 shall survive and continue
notwithstanding the fact that the payment of Operating Expenses pursuant to
Section 8.02(d) of the Indenture may be delayed (it being understood that the
Servicer may be required to advance its own funds to satisfy its obligations
hereunder).

SECTION 5.03. INSTRUCTIONS; AUTHORITY TO ACT. For so long as any Notes
remain Outstanding, the Servicer shall be deemed to have received proper
instructions with respect to the Intangible Transition Property Records upon its
receipt of written instructions signed by a Trust Officer of the Indenture
Trustee.

SECTION 5.04. CUSTODIAN'S INDEMNIFICATION. The Servicer as custodian
shall indemnify the Grantee, the Note Issuer, the Delaware Trustee, the
Indenture Trustee and the Holders and

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each of their respective officers, directors, employees and agents for, and
defend and hold harmless each such Person from and against, any and all
liabilities, obligations, losses, damages, payments and claims, and reasonable
costs or expenses, of any kind whatsoever (collectively, "Losses") that may be
imposed on, incurred by or asserted against any such Person as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Servicer, as custodian, of the Intangible Transition Property Records;
PROVIDED, HOWEVER, that the Servicer shall not be liable for any portion of any
such amount resulting from the willful misconduct, bad faith or gross negligence
of the Grantee, the Note Issuer, the Delaware Trustee, the Indenture Trustee or
any Holders.

Indemnification under this Section shall survive resignation or removal of
the Indenture Trustee or the Delaware Trustee and shall include reasonable
out-of-pocket fees and expenses of investigation and litigation.

SECTION 5.05. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect until terminated pursuant to this Section. If
any Servicer shall resign as Servicer in accordance with the provisions of this
Agreement or if all of the rights and obligations of any Servicer shall have
been terminated under Section 7.01, the appointment of such Servicer as
custodian shall be terminated by the Indenture Trustee or by the Holders of
Notes evidencing not less than twenty-five percent (25%) of the Outstanding
Amount of the Notes of all Series in the same manner as the Indenture Trustee or
such Holders may terminate the rights and obligations of the Servicer under
Section 7.01.

SECTION 5.06. GENERAL INDEMNIFICATION OF INDENTURE TRUSTEE AND DELAWARE
TRUSTEE. The Servicer agrees to indemnify and hold harmless the Indenture
Trustee and the Delaware Trustee and their respective directors, officers,
employees and agents from and against any and all

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Losses incurred by or asserted against any such Person as a result of or in
connection with the transactions contemplated by this Agreement or any other
Basic Document, other than any Loss incurred by reason or result of the gross
negligence or willful misconduct of the Indenture Trustee or the Delaware
Trustee; PROVIDED, HOWEVER, that the foregoing indemnity is extended to the
Indenture Trustee and the Delaware Trustee solely in their respective capacities
as trustees and not for the benefit of the Holders or any other Person. The
obligations of the Servicer set forth herein shall survive the termination of
this Agreement or the earlier resignation or removal of the Indenture Trustee
under the Indenture or the Delaware Trustee under the Trust Agreement.

ARTICLE VI

THE SERVICER

SECTION 6.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The Servicer
makes the following representations and warranties, as of the Closing Date, as
of each Subsequent Sale Date relating to the sale of Subsequent Intangible
Transition Property pursuant to a Subsequent Sale Agreement, and as of such
other dates as expressly provided in this Section 6.01, on which the Grantee is
deemed to have relied in entering into this Agreement. The representations and
warranties shall survive the execution and delivery of this Agreement, the
transfer of this Agreement to the Note Issuer pursuant to the Sale Agreement and
the pledge thereof to the Indenture Trustee pursuant to the Indenture.

(a) ORGANIZATION AND GOOD STANDING. The Servicer is duly organized
and validly existing as a corporation in good standing under the laws of
the state of its incorporation, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, the requisite power, authority and legal right to

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service the Intangible Transition Property and to hold the Intangible
Transition Property Records as custodian.

(b) DUE QUALIFICATION. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in, all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing
of the Intangible Transition Property as required by this Agreement) shall
require such qualifications, licenses or approvals (except where the
failure to so qualify would not be reasonably likely to have a material
adverse effect on the Servicer's business, operations, assets, revenues or
properties or adversely affect the servicing of the Intangible Transition
Property).

(c) POWER AND AUTHORITY. The Servicer has the requisite power and
authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been
duly authorized by the Servicer by all necessary corporate action.

(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable in accordance with its
terms, subject to applicable insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws relating to or affecting
creditors' rights generally from time to time in effect and to general
principles of equity (including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing), regardless of
whether considered in a proceeding in equity or at law.

(e) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof do not (i)
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse

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of time) a default under, the articles of incorporation or bylaws of the
Servicer, or any indenture, agreement or other instrument to which the
Servicer is a party or by which it shall be bound; (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument; or (iii)
violate any law or any order, rule or regulation applicable to the Servicer
of any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties.

(f) NO PROCEEDINGS. [Except as set forth on Schedule 6.01(f),] there
are no proceedings or investigations pending or, to the Servicer's
knowledge, threatened before any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties involving or relating to
the Servicer or the Grantee or, to the Servicer's knowledge, any other
Person: (i) asserting the invalidity of this Agreement, or any of the other
Basic Documents or the Notes, (ii) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to materially and
adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement, any of the other
Basic Documents or the Notes, or (iv) relating to the Servicer and which
could reasonably be expected to adversely affect the Federal or state
income tax attributes of the Notes.

(g) APPROVALS. No approval, authorization, consent, order or other
action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the Servicer's execution and delivery of this Agreement,
the Servicer's performance of the transactions contemplated

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hereby or the Servicer's fulfillment of the terms hereof, except those that
have been obtained or made and those that the Servicer is required to make
in the future pursuant to Article IV hereof.

(h) COLLECTIONS CURVES. Each Collections Curve used in connection
with SCHEDULE 6 to Annex I hereto is accurate in all material respects, and
the future delivery of each revised Collections Curve shall constitute a
representation and warranty that each such revised Collections Curve is
accurate in all material respects.

(i) ASSUMPTIONS. The assumptions set forth in SCHEDULE 6 to Annex I
hereto are reasonable and made in good faith, and will be reasonable and
made in good faith as they change from time to time.

(j) REPORTS AND CERTIFICATES. Each report and certificate delivered
in connection with a Tariff will constitute a representation and warranty
by the Servicer that each such report or certificate, as the case may be,
is true and correct; PROVIDED, HOWEVER, that to the extent any such report
or certificate is based in part upon or contains assumptions, forecasts or
other predictions of future events, the representation and warranty of the
Servicer with respect thereto will be limited to the representation and
warranty that such assumptions, forecasts or other predictions of future
events are reasonable based upon historical performance.

SECTION 6.02. INDEMNITIES OF SERVICER; RELEASE OF CLAIMS. (a) The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement.

(b) The Servicer shall indemnify the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders and each of their
respective officers, directors, employees and agents for, and defend and hold
harmless each such Person from and against, any and all

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<PAGE>

Losses that may be imposed on, incurred by or asserted against any such Person
as a result of (i) the Servicer's willful misconduct, bad faith or gross
negligence in the performance of its duties or observance of its covenants under
this Agreement or its reckless disregard of its obligations and duties under
this Agreement, or (ii) the Servicer's breach of any of its representations or
warranties in this Agreement.

(c) For purposes of Section 6.02(b), in the event of the termination of
the rights and obligations of ComEd (or any successor thereto pursuant to
Section 6.03) as Servicer pursuant to Section 7.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 7.02.

(d) Indemnification under Sections 6.02(b) and 6.02(c) shall survive the
resignation or removal of the Indenture Trustee or the Delaware Trustee or the
termination of this Agreement and shall include reasonable out-of-pocket fees
and expenses of investigation and litigation (including reasonable attorneys'
fees and expenses).

(e) Except to the extent expressly provided in this Agreement or the other
Basic Documents (including, without limitation, the Servicer's claims with
respect to the Servicing Fee, reimbursement for any Excess Remittance,
reimbursement for costs incurred pursuant to Section 5.12(d) and the payment of
the consideration for any grant of Intangible Transition Property to the
Grantee), the Servicer releases and discharges the Grantee, the Note Issuer and
the Indenture Trustee and each of their respective officers, directors and
agents (collectively, the "Released Parties") from any and all actions, claims
and demands whatsoever, whenever arising, which the Servicer, in its capacity as
Servicer or otherwise, shall or may have against any such Person relating to the
Intangible Transition Property or the Servicer's activities with respect thereto
other than any actions, claims and demands arising out of the willful
misconduct, bad faith or gross negligence of the Released Parties.

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SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, SERVICER. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party or (c) which may succeed to the properties and assets
of the Servicer substantially as a whole, or, with respect to its obligations as
Servicer, which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Servicer hereunder, shall be the
successor to the Servicer under this Agreement without further act on the part
of any of the parties to this Agreement; PROVIDED, HOWEVER, that (i) immediately
after giving effect to such transaction, no Servicer Default and no event which,
after notice or lapse of time, or both, would become a Servicer Default shall
have occurred and be continuing, (ii) the Servicer shall have delivered to the
Grantee, the Note Issuer, the Indenture Trustee and the Rating Agencies an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption complies
with this Section and that all conditions precedent provided for in this
Agreement relating to such transaction have been complied with and (iii) the
Servicer shall have delivered to the Grantee, the Note Issuer, the Indenture
Trustee and the Rating Agencies an Opinion of Counsel either (A) stating that,
in the opinion of such counsel, all filings to be made by the Servicer,
including filings with the ICC pursuant to the Funding Law, have been executed
and filed that are necessary to preserve and protect fully the interests of the
Grantee in the Intangible Transition Property and reciting the details of such
filings or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interests. Notwithstanding
anything herein to the contrary, the execution of the foregoing agreement of
assumption and compliance with clauses (i), (ii) and (iii) above shall be
conditions to the consummation of the transactions referred to in clauses (a),
(b) or (c) above.

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SECTION 6.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither the
Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be liable to the Grantee, the Note Issuer, the Indenture Trustee,
the Delaware Trustee, the Holders or any other Person, except as provided under
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; PROVIDED, HOWEVER,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misconduct,
bad faith or gross negligence in the performance of the Servicer's duties or by
reason of reckless disregard of the Servicer's obligations and duties. The
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on the advice of counsel reasonably acceptable to the
Indenture Trustee or on any document of any kind, PRIMA FACIE properly executed
and submitted by any Person, respecting any matters arising under this
Agreement.

Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
related to or incidental to its duties to service the Intangible Transition
Property in accordance with this Agreement, and that in its opinion may involve
it in any expense or liability.

SECTION 6.05. COMED NOT TO RESIGN AS SERVICER. Subject to the provisions
of Sections 6.03, ComEd shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement unless either (a) the Servicer
determines that the performance of its duties under this Agreement shall no
longer be permissible under applicable law (disregarding any breach of the State
Pledge that is being contested or subsequent invalidation of the Funding Law,
any Funding Order and/or any tariff or tariffs filed in connection therewith),
or (b) the Rating Agency Condition shall have been satisfied and, to the extent
required under any Funding Order, and, in either case, the ICC shall have
approved such resignation. Notice of any such determination

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<PAGE>

permitting ComEd's resignation shall be given to the Grantee, the Note Issuer,
the Indenture Trustee and the Rating Agencies at the earliest practicable time
(and, if such communication is not in writing, shall be confirmed in writing at
the earliest practicable time) and any such determination shall be evidenced by
an Opinion of Counsel to such effect delivered to the Grantee, the Note Issuer
and the Indenture Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until a successor Servicer shall have
assumed ComEd's responsibilities and obligations in accordance with
Section 7.02.

SECTION 6.06. SERVICING COMPENSATION. (a) In consideration for its
services hereunder, until the Retirement of the Notes, the Servicer shall
receive a fee (the "Servicing Fee") quarterly on each Payment Date in an amount
equal to one-fourth of (i) $__________ for so long as IFCs are billed
concurrently with charges or otherwise billed to Customers or (ii) $__________
if IFCs are not billed concurrently with charges or otherwise billed to
Customers but, instead, are billed separately to Customers. The Servicer shall
also be entitled to retain as additional compensation (i) any interest earnings
on IFC Payments received by the Servicer and invested by the Servicer pursuant
to Section 6(d) of Annex I hereto during each Collection Period prior to
remittance to the Collection Account and (ii) all late payment charges, if any,
collected from Customers or ARES. So long as the Servicer is billing Customers
for charges for electric service or any Applicable Rates, the Servicer will bill
IFCs to such Customers concurrently with such other charges and such Applicable
Rates.

(b) The Indenture Trustee shall pay the Servicer the Servicing Fee set
forth in Section 6.06(a) above on each Payment Date in accordance with the
priorities set forth in Section 8.02(d) of the Indenture, by wire transfer of
immediately-available funds from the Collection Account to an account designated
by the Servicer. Any portion of the Servicing Fee not paid on such date shall
be added to the Servicing Fee payable on the subsequent Payment Date.

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(c) Except as provided in Section 5.02(c), the Servicer shall be required
to pay from its own account all expenses incurred by it in connection with its
activities hereunder (including any fees to and disbursements by accountants,
counsel, or any other Person, any taxes imposed on the Servicer and any expenses
incurred in connection with reports to Holders) out of the compensation retained
by or paid to it pursuant to this Section 6.06, and shall not be entitled to any
extra payment or reimbursement therefor.

SECTION 6.07. COMPLIANCE WITH APPLICABLE LAW. The Servicer covenants and
agrees, in servicing the Intangible Transition Property, to comply with all laws
applicable to, and binding upon, the Servicer and relating to such Intangible
Transition Property the noncompliance with which would have a material adverse
effect on the value of the Intangible Transition Property; PROVIDED, HOWEVER,
that the foregoing is not intended to, and shall not, impose any liability on
the Servicer for noncompliance with any law that the Servicer is contesting in
good faith in accordance with its customary standards and procedures.

SECTION 6.08. ACCESS TO CERTAIN RECORDS AND INFORMATION REGARDING
INTANGIBLE TRANSITION PROPERTY. The Servicer shall provide to the Grantee, the
Note Issuer, the Indenture Trustee and the Holders access to the Intangible
Transition Property Records in such cases where the Grantee, the Note Issuer,
the Indenture Trustee and the Holders shall be required by applicable law to be
provided access to such records. Access shall be afforded without charge, but
only upon reasonable request and during normal business hours at the offices of
the Servicer. Nothing in this Section shall affect the Servicer's obligation to
observe any applicable law (including any ICC Regulation) prohibiting disclosure
of information regarding the Customers, and the failure of the Servicer to
provide access to such information as a result of such obligation shall not
constitute a breach of this Section.

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<PAGE>

SECTION 6.09. APPOINTMENTS. The Servicer may at any time appoint any
Person to perform all or any portion of its obligations as Servicer hereunder;
PROVIDED, HOWEVER, that, unless such person is Unicom Corporation or a
wholly-owned subsidiary thereof, the Rating Agency Condition shall have been
satisfied in connection therewith; PROVIDED FURTHER that the Servicer shall
remain obligated and be liable to the Grantee, the Note Issuer, the Indenture
Trustee and the Holders for the servicing and administering of the Intangible
Transition Property in accordance with the provisions hereof without diminution
of such obligation and liability by virtue of the appointment of such Person and
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing and administering the Intangible Transition Property; and
PROVIDED FURTHER, HOWEVER, that nothing herein (including, without limitation,
the Rating Agency Condition) shall preclude the execution by the Servicer of an
ARES Service Agreement with any ARES pursuant to applicable ICC Regulations.
The fees and expenses of such Person shall be as agreed between the Servicer and
such Person from time to time and none of the Grantee, the Note Issuer, the
Indenture Trustee, the Holders or any other Person shall have any responsibility
therefor or right or claim thereto. No such appointment shall constitute a
Servicer resignation under Section 6.05.

SECTION 6.10. NO SERVICER ADVANCES. The Servicer shall not make any
advances of interest or principal on the Notes.

SECTION 6.11. REMITTANCES. (a) Subject to clause (b) below, on each
Remittance Date, the Servicer shall cause to be made a wire transfer of
immediately-available funds equal to the Aggregate Remittance Amount for the
applicable Collection Period to the General Subaccount of the Collection
Account. Prior to each remittance to the General Subaccount of the Collection
Account pursuant to this Section, the Servicer shall provide written notice to
the Indenture Trustee of each such remittance (including the exact dollar amount
to be remitted).

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(b) Notwithstanding the foregoing clause (a), during any period in which a
Servicer Default has occurred and is continuing, the failure to satisfy the
Rating Agency Condition or the failure of the Servicer to maintain a short-term
rating of [___] or better by Standard & Poor's and [___] or better by Moody's,
the Servicer shall remit to the General Subaccount of the Collection Account the
total IFC Payments estimated to have been received by the Servicer from or on
behalf of Customers on a given Servicer Business Day in respect of all
previously Billed IFCs within [two] Servicer Business Days of receipt thereof by
the Servicer (the "Daily Remittance"). On or before each Remittance Date during
any period described in this clause (b), the Servicer shall calculate the amount
of any Remittance Shortfall or Excess Remittance attributable to the prior
Collection Period and (A) if a Remittance Shortfall exists, the Servicer shall
make a supplemental remittance to the General Subaccount of the Collection
Account on such Remittance Date in the amount of such Remittance Shortfall, or
(B) if an Excess Remittance exists, the Servicer shall reduce the amount of each
Daily Remittance (beginning with the Daily Remittance occurring on the
Remittance Date) by the outstanding amount of such Excess Remittance until the
balance of the Excess Remittance has been reduced to zero.

(c) The Servicer agrees and acknowledges that it holds all IFC Payments
collected by it for the benefit of the Grantee and that all such amounts shall
be remitted by the Servicer in accordance with this Section without any
surcharge, fee, offset, charge or other deduction except (i) as set forth in
clause (b) above or clause (d) below and (ii) for late fees permitted by Section
6.06. The Servicer shall not make any claim to reduce its obligation to remit
all IFC Payments collected by it in accordance with this Agreement except (i) as
set forth in clause (b) above or clause (d) below and (ii) for late fees
permitted by Section 6.06.

(d) If there is an Excess Remittance, the Servicer shall be entitled
either (i) to reduce the amount which the Servicer remits to the General
Subaccount of the Collection Account on

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such Remittance Date by the amount of such Excess Remittance, the amount of such
reduction becoming the property of the Servicer or (ii) to be paid immediately
from the General Subaccount or the Reserve Subaccount the amount of such Excess
Remittance, such payment becoming the property of the Servicer. If there is a
Remittance Shortfall, the amount which the Servicer remits to the General
Subaccount of the Collection Account on such Remittance Date shall be increased
by the amount of such Remittance Shortfall, such increase coming from the
Servicer's own funds.

SECTION 6.12 COMPLIANCE WITH SERVICING STANDARD; CHANGES IN ICC TARIFFS.
The Servicer shall, with respect to its duties hereunder, comply at all times
with the Servicing Standard, and, so long as any of the Notes are outstanding,
shall not initiate any material changes with respect to its policies and
procedures pertaining to credit (including requirements for deposits from
Customers), billing, collections (including procedures for disconnection of
service for non-payment) and restoration of service after disconnection, and
shall not, except as required by applicable law, initiate any changes in any
ICC tariffs relating to the foregoing matters which are reasonably likely to
adversely affect the Servicer's, ability to make timely recovery of amounts
billed to Customers. Notwithstanding the foregoing, the Servicer may, in its
own discretion, waive any late payment charge or any other fee or charge
relating to delinquent payments, if any, and may waive, vary or modify any terms
of payment of any amounts payable by a Customer, in each case, if such waiver or
action (a) would be in accordance with the Servicer's customary practices or
those of any successor Servicer with respect to comparable assets that it
services for itself, (b) would not materially adversely affect the Noteholders
and (c) would comply with applicable law. In addition, the Servicer may write
off any amounts that it deems uncollectible in accordance with its customary
practices.

ARTICLE VII

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DEFAULT

SECTION 7.01. SERVICER DEFAULT. If any one of the following events (a
"Servicer Default") shall occur and be continuing:

(a) any failure by the Servicer to deposit in the Collection Account
on behalf of the Grantee any required remittance that shall continue
unremedied for a period of three Business Days after written notice of such
failure is received by the Servicer from the Grantee, the Note Issuer or
the Indenture Trustee or after discovery of such failure by a Responsible
Officer of the Servicer; or

(b) any failure on the part of the Servicer or ComEd, as the case may
be, duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer or ComEd (as the case may be) set
forth in this Agreement (including Section 4.01) or any other Basic
Document to which it is a party, which failure shall (i) materially and
adversely affect the rights of the Holders and (ii) continue unremedied for
a period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given (A) to the
Servicer or ComEd (as the case may be) by the Grantee or the Note Issuer or
(B) to the Servicer or ComEd (as the case may be) by the Indenture Trustee
or by the Holders of Notes evidencing not less than twenty-five percent
(25%) of the Outstanding Amount of the Notes of all Series; or

(c) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect when made, which has a
material adverse effect on the Grantee, the Note Issuer or the Holders and
which material adverse effect continues unremedied for a period of 60 days
after the date on which written notice thereof, requiring the same to be
remedied, shall have been delivered to the Servicer by the Grantee, the
Note Issuer or the Indenture Trustee; or

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<PAGE>

(d) an Insolvency Event occurs with respect to the Servicer or ComEd;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee, or the Holders of Notes
evidencing not less than twenty-five percent (25%) of the Outstanding
Amount of the Notes of all Series, by notice (a "Termination Notice") then
given in writing to the Servicer (and to the Indenture Trustee if given by
the Holders) may terminate all the rights and obligations (other than the
obligations set forth in Section 6.02 hereof) of the Servicer under this
Agreement. In addition, upon a Servicer Default described in Section
7.01(a), each of the following shall be entitled to apply to the ICC for
sequestration and payment of revenues arising with respect to the
Intangible Transition Property: (1) the Holders and the Indenture Trustee
as beneficiaries of the lien provided under Section 18-107(c) of the
Funding Law; (2) the Grantee or its assignees; (3) the Note Issuer; or (4)
pledgees or transferees of the Intangible Transition Property. On or after
the receipt by the Servicer of a Termination Notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Notes, the Intangible Transition Property, the IFCs or otherwise, shall,
without further action, pass to and be vested in such successor Servicer as
may be appointed under Section 7.02; and, without limitation, the Indenture
Trustee is authorized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such Termination
Notice, whether to complete the transfer of the Intangible Transition
Property Records and related documents, or otherwise. The predecessor
Servicer shall cooperate with the successor Servicer, the Grantee, the Note
Issuer and the Indenture Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer

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under this Agreement, including the transfer to the successor Servicer for
administration by it of (i) all cash amounts that shall at the time be held
by the predecessor Servicer for remittance, or shall thereafter be received
by it with respect to the Intangible Transition Property or the IFCs, and
(ii) any and all Intangible Transition Property Records. All reasonable
out-of-pocket costs and expenses (including attorneys' fees and expenses)
incurred in connection with transferring the Intangible Transition Property
Records to the successor Servicer and amending this Agreement to reflect
such succession as Servicer pursuant to this Section shall be paid by the
predecessor Servicer upon presentation of reasonable documentation of such
costs and expenses.

SECTION 7.02. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt
of a Termination Notice pursuant to Section 7.01 or the Servicer's resignation
or removal in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, and shall be entitled to receive the requisite Servicing Fee, until a
successor Servicer shall have assumed in writing the obligations of the Servicer
hereunder as described below. In the event of the Servicer's termination
hereunder, the Grantee shall appoint a successor Servicer with the Note Issuer's
prior written consent thereto (which consent shall not be unreasonably
withheld), and the successor Servicer shall accept its appointment by a written
assumption in form acceptable to the Grantee and the Note Issuer. If within 30
days after the delivery of the Termination Notice, the Grantee shall not have
obtained such a new Servicer, the Indenture Trustee may petition the ICC or a
court of competent jurisdiction to appoint a successor Servicer under this
Agreement. A Person shall qualify as a successor Servicer only if (i) such
Person is permitted under ICC Regulations to perform the duties of the Servicer,
(ii) the Rating Agency Condition shall have been satisfied and (iii) such

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Person enters into a servicing agreement with the Grantee having substantially
the same provisions as this Agreement.

(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.

SECTION 7.03. WAIVER OF PAST DEFAULTS. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes of all Series
may, on behalf of all Holders, waive in writing any default by the Servicer in
the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to the Collection Account in accordance
with this Agreement, which waiver shall require the consent of all Holders.
Upon any such waiver of a past default, such default shall cease to exist, and
any Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.

SECTION 7.04. NOTICE OF SERVICER DEFAULT. The Servicer shall deliver to
the Grantee, the Note Issuer, the Indenture Trustee and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an Officer's Certificate of any
event which with the giving of notice or lapse of time, or both, would become a
Servicer Default under Section 7.01(a) or (b).

ARTICLE VIII

MISCELLANEOUS PROVISIONS

35
<PAGE>

SECTION 8.01. AMENDMENT. (a) This Agreement may be amended in writing by
the Servicer and the Grantee with five Business Days' prior written notice given
to the Rating Agencies and the prior written consent of the Indenture Trustee,
but without the consent of any of the Holders or Holders, to cure any ambiguity,
to correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Holders; PROVIDED, HOWEVER, that such action shall not, as evidenced by an
Officer's Certificate delivered to the Grantee, the Note Issuer, the Delaware
Trustee and the Indenture Trustee, adversely affect in any material respect the
interests of any Holder.

This Agreement may also be amended in writing from time to time by the
Servicer and the Grantee with prior written notice given to the Rating Agencies
and the prior written consent of the Indenture Trustee and the prior written
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes of all Series, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
PROVIDED, HOWEVER, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, IFC Collections or
(b) reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes.

Promptly after the execution of any such amendment and the requisite
consents, the Grantee shall furnish written notification of the substance of
such amendment to the Note Issuer, the Indenture Trustee and each of the Rating
Agencies.

36
<PAGE>

Prior to its consent to any amendment to this Agreement, the Indenture
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Agreement. The Indenture Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Indenture Trustee's own rights, duties or
immunities under this Agreement or otherwise.

(b) Notwithstanding Section 8.01(a) or anything to the contrary in this
Agreement, the Servicer and the Grantee may amend Annex I to this Agreement in
writing with prior written notice given to the Indenture Trustee and the Rating
Agencies, but without the consent of the Indenture Trustee, any Rating Agency or
any Holder, solely to address changes to the Servicer's method of calculating
IFC Payments received as a result of changes to the Servicer's current
computerized customer information system, as contemplated by Section [___] of
Annex I hereto; PROVIDED that any such amendment shall not have a material
adverse effect on the Holders.

SECTION 8.02. MAINTENANCE OF RECORDS. The Servicer shall maintain
accounts and records as to the Intangible Transition Property accurately and in
accordance with its standard accounting procedures and in sufficient detail to
permit reconciliation between IFC Payments received by the Servicer and IFC
Collections from time to time deposited in the Collection Account.

SECTION 8.03. NOTICES. All demands, notices and communications upon or to
the Servicer, the Grantee, the Note Issuer, the Indenture Trustee or the Rating
Agencies under this Agreement shall be in writing and personally delivered, sent
by overnight mail or sent by telecopy or other similar form of rapid
transmission, and shall be deemed to have been duly given upon

37
<PAGE>

receipt (a) in the case of the Servicer, to Commonwealth Edison Company, 10
South Dearborn Street, 37th Floor, Chicago, Illinois 60603; (b) in the case of
the Grantee, to ComEd Funding, LLC, c/o Commonwealth Edison Company, 10 South
Dearborn Street, 37th Floor, Chicago, Illinois 60603, (c) in the case of the
Note Issuer, to ComEd Transitional Funding Trust, c/o First Union Trust Company,
National Association, as Delaware Trustee, 37 Rodney Square, 920 King Street,
1st Floor, Wilmington, Delaware 19801, Attn: Corporate Trust Administration,
(d) in the case of the Indenture Trustee, at the Corporate Trust office, (e) in
the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007, (f) in the case of
Standard & Poor's, to Standard & Poor's Corporation, 26 Broadway (10th Floor),
New York, New York 10004, Attention of Asset Backed Surveillance Department, (g)
in the case of Fitch, to Fitch Investors Service, L.P., One State Street Plaza,
New York, NY 10004, Attention of Commercial Asset-Backed Securities, or (h) in
the case of Duff & Phelps, to Duff & Phelps Credit Rating Co., 17 State Street,
12th Floor, New York, NY 10004, Attention: Asset-Backed Monitoring Group, or as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.

SECTION 8.04. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.03 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Servicer.

SECTION 8.05. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Servicer and the Grantee and, to the
extent provided herein or in the Basic Documents, the Note Issuer, the Indenture
Trustee and the Holders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Intangible Transition Property or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.

38
<PAGE>

SECTION 8.06. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

SECTION 8.07. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

SECTION 8.08. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

SECTION 8.09. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

SECTION 8.10. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE. The
Servicer acknowledges and consents to the assignment of any or all of the
Grantee's rights and obligations hereunder to the Note Issuer pursuant to the
Sale Agreement, and the collateral assignment of any or all of the Note Issuer's
rights and obligations hereunder to the Indenture Trustee pursuant to the
Indenture. After the Grantee transfers its rights and obligations hereunder to
the Note Issuer pursuant to the Sale Agreement, any duty the Servicer owes to
the Grantee and the Note Issuer hereunder shall be fully performed if such duty
is performed for the benefit of the Note Issuer alone.

39
<PAGE>

SECTION 8.11. NONPETITION COVENANTS. Notwithstanding any prior termination
of this Agreement or the Indenture, but subject to the ICC's right to order the
sequestration and payment of revenues arising with respect to the Intangible
Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to the debtor, pledgor or transferor of the
Intangible Transition Property pursuant to any applicable Funding Order or other
applicable law, the Servicer shall not, prior to the date which is one year and
one day after the termination of the Indenture, acquiesce, petition or otherwise
invoke or cause the Grantee or the Note Issuer to invoke or join with them in
provoking the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the Grantee or the Note Issuer under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Grantee or the Note Issuer or any substantial part of the property of the
Grantee or the Note Issuer, or ordering the winding up or liquidation of the
affairs of the Grantee or the Note Issuer.

SECTION 8.12. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is acknowledged and
accepted by First Union Trust Company, National Association ("First Union"), not
individually or personally but solely as Delaware Trustee on behalf of the Note
Issuer, and by Harris Trust and Savings Bank ("Harris"), not individually or
personally but solely as Indenture Trustee on behalf of the Holders, in each
case in the exercise of the powers and authority conferred and vested in it, (b)
the representations, undertakings and agreements herein made by the Delaware
Trustee on behalf of the Note Issuer, and by the Indenture Trustee on behalf of
the Holders, are made and intended not as personal representations, undertakings
and agreements by First Union and Harris, respectively, but are made and
intended for the purpose of binding only the Note Issuer and the Holders,
respectively, (c) nothing herein contained shall be construed as creating any
liability on First Union or Harris,

40
<PAGE>

individually or personally, to perform any covenant either expressed or implied
contained herein, except in their respective capacities as Delaware Trustee and
Indenture Trustee, all such liability, if any, being expressly waived by the
parties who are signatories to this Agreement and by any Person claiming by,
through or under such parties and (d) under no circumstances shall First Union
or Harris, be personally liable for the payment of any indebtedness or expenses
of the Note Issuer or the Holders, respectively, or be personally liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Delaware Trustee or the Indenture Trustee, respectively,
under this Agreement; PROVIDED, HOWEVER, that this provision shall not protect
First Union or Harris against any liability that would otherwise be imposed by
reason of willful misconduct, bad faith or gross negligence in the performance
of their respective duties under this Agreement.

41
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.

COMED FUNDING, LLC

By:
------------------------
Name:
Title:

COMMONWEALTH EDISON COMPANY

By:
------------------------
Name:
Title:

Acknowledged and Accepted:

FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in
its individual capacity but solely as
Delaware Trustee on behalf of
ComEd Transitional Funding Trust

By:
----------------------
Name:
Title:

HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity but solely as
Indenture Trustee

By:
----------------------
Name:
Title:

<PAGE>

EXHIBIT 10.4
FORM OF
ADMINISTRATION
AGREEMENT

ADMINISTRATION AGREEMENT

THIS ADMINISTRATION AGREEMENT (this "Agreement"), dated as of
__________, 1998, is entered into among Commonwealth Edison Company, an Illinois
corporation, ("ComEd" or the "Administrator"), ComEd Funding, LLC, a Delaware
limited liability company ("CE Funding") and ComEd Transitional Funding Trust, a
Delaware business trust (the "Note Issuer").

WHEREAS, pursuant to Article XVIII of the Illinois Public Utilities
Act (the "Act"), the Administrator has formed CE Funding as a Delaware limited
liability company of which the Administrator is the sole member in order for CE
Funding to become a "grantee" of "intangible transition property" in accordance
with the Act; and

WHEREAS, the Note Issuer has been created in order to accept the
assignment of all of CE Funding's right, title and interest in and to the
intangible transition property and certain other property so that the Note
Issuer shall be an "assignee" as defined in Article XVIII of the Act and will
issue "transitional funding instruments" (the "Notes"), the net proceeds of
which will be paid by the Note Issuer to CE Funding and by CE Funding to ComEd;
and

WHEREAS, CE Funding and the Note Issuer each require certain
facilities, including, without limitation, office space, office furniture and
equipment, computer equipment and communications equipment, to carry on their
respective business activities; and

WHEREAS, CE Funding and the Note Issuer each require certain services,
including, without limitation, administrative, personnel, purchasing and
operational services, in order to carry on their respective business
activities; and

WHEREAS, each of CE Funding and the Note Issuer desire to engage ComEd
as Administrator hereunder in order to provide such facilities and services to
CE Funding and the Note Issuer and to administer the day to day operations of CE
Funding and the Note Issuer; and

WHEREAS, ComEd is willing to provide such facilities and services and
to act as Administrator hereunder; and

WHEREAS, the parties hereto believe that the Administrator's provision
of such facilities and services will be efficient and cost-effective for all
parties involved; and

WHEREAS, the parties hereto wish to incorporate certain terms and
provisions of that certain Affiliated Interests Agreement (the "AIA") dated as
of December 4, 1995 among

<PAGE>

Unicom Corporation ("Unicom"), ComEd and certain other entities, as amended, a
copy of which agreement is attached hereto as EXHIBIT A;

NOW, THEREFORE, in consideration of the mutual promises set forth
below, the parties hereby agree as follows:

1. DEFINITIONS. Capitalized terms used in this Agreement without
definition shall have the meaning set forth in the AIA. Non-capitalized terms
used herein which are defined in Article XVIII of the Act shall have the
meanings as so defined therein.

2. PROVISIONS OF FACILITIES AND SERVICES. During the term of this
Agreement, ComEd hereby agrees to act as Administrator hereunder on behalf of CE
Funding and on behalf of the Note Issuer. The Administrator shall make
available or provide to CE Funding and the Note Issuer upon their request, such
facilities (collectively, "FACILITIES") as are described in Section 2.1 of the
AIA and such services (collectively, "SERVICES") as are described in Section 2.2
of the AIA; PROVIDED that (i) the Administrator shall have no obligation to
provide any such Facilities or Services to the extent that ComEd, as a Provider
under the AIA, would not be obligated to provide such Facilities or Services
thereunder and (ii) such Services shall be administrative and ministerial in
nature and are not intended to provide the Administrator with the right to
manage and control CE Funding or the Note Issuer, it being understood that the
management and control of CE Funding and the Note Issuer shall be governed by
separate agreements relating to such matters, including without limitation CE
Funding's certificate of formation and limited liability company agreement and
the declaration of trust of the Note Issuer. The parties hereto further
acknowledge that CE Funding and the Note Issuer have been formed as special
purpose entities whose business activities will be limited to the perfection and
maintenance of rights in the intangible transition property created under an
order from the Illinois Commerce Commission and under the assignment
transactions contemplated thereby, the issuance of the Notes, the entry into
such documents as may be required to evidence and consummate the foregoing
transactions and any other matters relating or incidental thereto. Accordingly,
the Administrator shall have no obligation hereunder to provide or perform
Facilities or Services to CE Funding or the Note Issuer if such Services or
Facilities are not reasonably related to the business activities recited above.
Notwithstanding the foregoing, the Administrator shall provide all Facilities
and Services which CE Funding or the Note Issuer, as applicable, have reasonably
demonstrated are necessary for one or both of them to comply with the terms of,
and perform their obligations under, all documents, agreements or instruments
entered into in connection with the issuance of the Notes, including, without
limitation, all obligations of the Note Issuer under the indenture (the "Note
Indenture") governing the issuance of such Notes. All Facilities and Services
shall, except as otherwise specifically set forth in this Agreement, be provided
without warranty of any kind as provided in Section 6.1 of the AIA.

3. INSTRUCTIONS TO EMPLOYEES. The Administrator shall advise all of
its employees and all of any other Provider's employees requested to perform
Services that each of CE Funding and the Note Issuer is a separate legal entity
from ComEd, ComEd's subsidiaries and affiliates other than CE Funding, and shall
instruct such employees not to represent ComEd or

-2-
<PAGE>

its affiliates as having agreed to pay or as being liable for the debts of CE
Funding or the Note Issuer and not to represent CE Funding or the Note Issuer as
having agreed to pay or as being liable for the debts of ComEd or ComEd's
affiliates. The Administrator further agrees to advise all employees performing
Services on behalf of CE Funding or the Note Issuer that, in performing such
Services, such employees must follow any directions given them by the officers
of CE Funding or the designated representatives of the Note Issuer, as
applicable, and to act in the best interests of CE Funding and/or the Note
Issuer, as applicable.

4. EMPLOYEES. The Administrator shall at all times during the term
of this Agreement provide the following services to all of its personnel who
provide Services to CE Funding or the Note Issuer from time to time (such
personnel, the "Employees"), whether or not such Employees are also officers of
CE Funding or are authorized as officers of CE Funding to act on behalf of the
Note Issuer: (i) any and all compensation and benefits (including, but not
limited to, vacation, holiday and sick pay, life and health insurance, and
pension benefits) comparable to those maintained for the Administrator's
employees not engaged in rendering Services or as required by any applicable
employment practices, policies and contracts, and (ii) the payment of all
required federal, state, and local taxes, social security contributions and
federal and state unemployment compensation insurance taxes. The Administrator
shall also maintain workmen's compensation and liability insurance covering
Employees in compliance with applicable law on a basis comparable to such
insurance maintained for the Administrator's employees not engaged in rendering
Services.

5. CHARGES AND INVOICING. Charges for the use of Facilities and
Services shall be determined in accordance with Section 5.1(b) and other
applicable cost allocation provisions of the AIA and all invoicing and payment
for such Facilities and Services shall be in accordance with Section 4.3 of the
AIA; PROVIDED, however, that the Administrator acknowledges that payments owed
under this Agreement, to the extent paid out of collections of instrument
funding charges or other intangible transition property, shall be subject to the
priority of payment set forth in the Note Indenture. All charges owed hereunder
shall, unless otherwise expressly agreed by the parties, be deemed to be
operating expenses, and not fees, for purposes of the Note Indenture.

6. SERVICING AGREEMENT. Notwithstanding anything to the contrary in
this Agreement, so long as the Administrator is also acting as "Servicer" under
that certain Intangible Transition Property Servicing Agreement entered into as
of even date with the Note Indenture, the Administrator hereby acknowledges and
agrees that all out-of-pocket expenses and all other costs and expenses incurred
by the Administrator in performing its role as Servicer are being separately
compensated through payment of the "Servicing Fee" payable thereunder and shall
not constitute costs and expenses payable to the Administrator under this
Agreement.

7. TERM. The term of this Agreement shall begin as of the date of
issuance of the Notes, and, unless terminated earlier in accordance with the
provisions hereof, shall end on June 30, 2009; PROVIDED, that, if the Notes
issued by the Note Issuer have not been paid in full by such time, then the Note
Issuer shall have the option, by providing thirty days' prior written

-3-
<PAGE>

notice, to renew this Agreement for successive one-year terms. Notwithstanding
the foregoing, any party hereunder may terminate this Agreement upon written
notice to the other parties hereto; PROVIDED that the Administrator shall not
cease to perform its obligations hereunder unless a successor administrator
reasonably acceptable to CE Funding and the Note Issuer shall have been
appointed.

8. INDEPENDENT CONTRACTOR. The relationship of the Administrator to
the other parties under this Agreement shall be solely that of an independent
contractor entering into a services agreement. No representations or assertions
shall be made or actions taken by either party which could imply or establish
any agency, joint venture, partnership, employment or trust relationship between
the parties with respect to the subject matter of this Agreement. The
Administrator shall have no authority or power whatsoever to enter into any
agreement, contract or commitment on behalf of the other parties hereto or
create any liability or obligation whatsoever on behalf of such other parties to
any person or entity. Conversely, neither CE Funding nor the Note Issuer shall
have any authority or power whatsoever to enter into any agreement, contract or
commitment on behalf of the Administrator or create any liability or obligation
whatsoever on behalf of the Administrator to any person or entity.

9. CONFIDENTIALITY. The parties hereto agree to abide by the
confidentiality provisions set forth in Article VIII of the AIA.

10. TAX MATTERS. Each of CE Funding and the Note Issuer has been
established so as not to be an association taxable as a corporation for federal
income tax purposes; accordingly, the parties hereto agree that the provisions
of the Tax Sharing Agreement do not apply to the parties hereto.

11. RECORDS. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Note Issuer at any
time during normal business hours.

12. ADDITIONAL INFORMATION TO BE FURNISHED TO THE NOTE ISSUER. The
Administrator shall furnish to the Note Issuer from time to time such additional
information regarding the collateral for the Notes as the Note Issuer shall
reasonably request.

13. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein shall prevent
the Administrator or its affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Note Issuer.

14. NOT APPLICABLE TO COMED IN OTHER CAPACITIES. Nothing in this
Agreement shall affect any obligation ComEd may have in any other capacity.

15. NO PETITION. Administrator hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
Notes, it will not institute

-4-
<PAGE>

against, or join any other person in instituting against, CE Funding or the Note
Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.

16. MISCELLANEOUS.

(a) All provisions of this Agreement shall be binding upon the
parties hereto, their respective successors, legal representatives and assigns.
Neither party shall have the right to assign all or any portion of its
obligations under or interest in this Agreement, except monies which may be due
pursuant hereto, without the prior written consent of the other party; PROVIDED,
HOWEVER, that Administrator may subcontract or assign all or any portion of its
obligations under or interest in this Agreement to any affiliate of
Administrator upon written notice to CE Funding and the Note Issuer so long as
any subcontracting will not relieve the Administrator from liability for its
duties hereunder.

(b) No waiver by any party hereto of any of its rights under this
Agreement shall be effective unless in writing and signed by an officer of the
party waiving such right. No waiver of any breach of this Agreement shall
constitute a waiver of any subsequent breach, whether or not of the same nature.
This Agreement may not be modified except by a writing signed by officers or
other duly authorized representatives of each of the parties hereto.

(c) This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof, and cancels and supersedes any
and all prior written or oral contracts or negotiations between the parties
hereto with respect to the subject matter hereof. All exhibits referenced
herein are hereby incorporated into this Agreement and made an integral part
hereof.

(d) This Agreement and the rights and obligations of the parties
under this Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Illinois.

(e) The descriptive headings of the several sections hereof are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

(f) Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

(g) In the event of any conflict between the terms of this Agreement
and the terms of the AIA, the terms of the AIA shall control.

-5-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their respective names by their duly authorized representatives
as of the day and year first above written.

COMMONWEALTH EDISON COMPANY

By:
-------------------------
Title:
----------------------

COMED FUNDING, LLC

By:
-------------------------
Title:
----------------------

COMED TRANSITIONAL FUNDING TRUST
By: First Union Trust Company, National
Association, as Delaware Trustee and not in
its individual or corporate capacity

By:
-------------------------
Title:
----------------------

-6-

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee

Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) ______

HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)

Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)

111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)

Rory Nowakowski, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-5180 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)

COMED TRANSITIONAL FUNDING TRUST
(Note Issuer)
Delaware To be applied for
(State of Incorporation) (I.R.S. Employer Identification No.)

C/O First Union Trust Company, National Association
1 Rodney Square
920 King Street, 1st floor
Wilmington, DE 19801
(Address of principal executive offices)

Transitional Funding Trust Notes
(Title of indenture securities)

<PAGE>

1. GENERAL INFORMATION. Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising authority to which
it is subject.

Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System,Washington, D.C.

(b) Whether it is authorized to exercise corporate trust powers.

Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.

2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.

The Obligor is not an affiliate of the Trustee.

3. thru 15.

NO RESPONSE NECESSARY

16. LIST OF EXHIBITS.

1. A copy of the articles of association of the Trustee as now in effect
which includes the authority of the trustee to commence business and
to exercise corporate trust powers.

A copy of the Certificate of Merger dated April 1, 1972 between
Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc.
which constitutes the articles of association of the Trustee as now
in effect and includes the authority of the Trustee to commence
business and to exercise corporate trust powers was filed in
connection with the Registration Statement of Louisville Gas and
Electric Company, File No. 2-44295, and is incorporated herein by
reference.

2. A copy of the existing by-laws of the Trustee.

A copy of the existing by-laws of the Trustee was filed in
connection with the Registration Statement of Commercial Federal
Corporation, File No. 333-20711, and is incorporated herein by
reference.

3. The consents of the Trustee required by Section 321(b) of the Act.

(included as Exhibit A on page 2 of this statement)

4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.

(included as Exhibit B on page 3 of this statement)

<PAGE>

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 7th day of August, 1998.

HARRIS TRUST AND SAVINGS BANK

By: /s/ Rory Nowakowski
-------------------------
Trust Officer

EXHIBIT A

The consents of the trustee required by Section 321(b) of the Act.

Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.

HARRIS TRUST AND SAVINGS BANK

By: /s/ Rory Nowakowski
--------------------------
Trust Officer

<PAGE>

EXHIBIT B

Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of March 31, 1998, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.

[LOGO] HARRIS BANK

Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603

of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on March 31, 1998, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve System.
Published in accordance with a call made by the Commissioner of Banks and Trust
Companies of the State of Illinois and by the Federal Reserve Bank of this
District.

Bank's Transit Number 71000288

<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
------ -------------------------
<S> <C> <C>
CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS:
NON-INTEREST BEARING BALANCES AND CURRENCY AND COIN................. $1,039,854
INTEREST BEARING BALANCES........................................... $290,921
SECURITIES:..............................................................
A. HELD-TO-MATURITY SECURITIES $0
B. AVAILABLE-FOR-SALE SECURITIES $4,266,201
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL $82,000
LOANS AND LEASE FINANCING RECEIVABLES:
LOANS AND LEASES, NET OF UNEARNED INCOME............................ $8,726,578
LESS: ALLOWANCE FOR LOAN AND LEASE LOSSES.......................... $101,318
----------
LOANS AND LEASES, NET OF UNEARNED INCOME, ALLOWANCE, AND RESERVE
(ITEM 4.A MINUS 4.B)............................................... $8,625,260
ASSETS HELD IN TRADING ACCOUNTS.......................................... $120,674
PREMISES AND FIXED ASSETS (INCLUDING CAPITALIZED LEASES)................. $219,475
OTHER REAL ESTATE OWNED.................................................. $699
INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES...... $120
CUSTOMER'S LIABILITY TO THIS BANK ON ACCEPTANCES OUTSTANDING............. $46,688
INTANGIBLE ASSETS........................................................ $266,411
OTHER ASSETS............................................................. $773,386
-----------
TOTAL ASSETS $15,731,689
-----------
-----------
3

<PAGE>

LIABILITIES
DEPOSITS:
IN DOMESTIC OFFICES................................................. $8,270,648
NON-INTEREST BEARING........................................... $2,684,862
INTEREST BEARING............................................... $5,585,786
IN FOREIGN OFFICES, EDGE AND AGREEMENT SUBSIDIARIES, AND IBF'S...... $1,307,928
NON-INTEREST BEARING........................................... $23,432
INTEREST BEARING............................................... $1,284,496
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO
REPURCHASE IN DOMESTIC OFFICES OF THE BANK AND OF ITS EDGE AND
AGREEMENT SUBSIDIARIES, AND IN IBF'S:
FEDERAL FUNDS PURCHASED & SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE.. $3,599,510
TRADING LIABILITIES 74,487
OTHER BORROWED MONEY:.....................................................
A. WITH REMAINING MATURITY OF ONE YEAR OR LESS $471,692
B. WITH REMAINING MATURITY OF MORE THAN ONE YEAR $0
BANK'S LIABILITY ON ACCEPTANCES EXECUTED AND OUTSTANDING $46,688
SUBORDINATED NOTES AND DEBENTURES......................................... $325,000
OTHER LIABILITIES......................................................... $386,442
-----------
TOTAL LIABILITIES $14,482,395
-----------
-----------
EQUITY CAPITAL
COMMON STOCK.............................................................. $100,000
SURPLUS................................................................... $601,026
A. UNDIVIDED PROFITS AND CAPITAL RESERVES................................ $545,185
B. NET UNREALIZED HOLDING GAINS (LOSSES) ON AVAILABLE-FOR-SALE SECURITIES $2,802
-----------
TOTAL EQUITY CAPITAL $1,249,294
-----------
-----------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND EQUITY CAPITAL....... $15,731,689
-----------
-----------
</TABLE>

I, Pamela Piarowski, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.

PAMELA PIAROWSKI
1/30/98

We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.

EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD E. TERRY

Directors.

<PAGE>
EXHIBIT 99.1
APPLICATION FOR TRANSITIONAL FUNDING ORDER

STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION

COMMONWEALTH EDISON COMPANY, )
)
Application for transitional funding order ) No. 98-___________
pursuant to Section 18-103 of the Illinois Public )
Utilities Act, request for approval of transactions )
with affiliates pursuant to Sections 7-101, 7-102 )
and 7-204A, and approval of an instrument )
funding charge tariff. )

APPLICATION FOR TRANSITIONAL FUNDING ORDER AND PETITION

To the Illinois Commerce Commission:

Commonwealth Edison Company ("ComEd"), pursuant to Section 18-103 (220
ILCS 5/18-103) of the Public Utilities Act (the "Act"), respectfully requests
that the Illinois Commerce Commission (the "Commission") issue a transitional
funding order pursuant to Article XVIII of the Act (i) creating, establishing
and granting rights of ComEd Funding, LLC ("CE Funding") in and to "intangible
transition property" as defined in Section 18-102 of the Act (220 ILCS
5/18-102); (ii) approving and authorizing the sale, pledge, assignment or other
transfer of the intangible transition property by CE Funding to the Note Issuer
(as defined herein); (iii) approving and authorizing the issuance of notes to be
classified as "transitional funding instruments" (the "Notes") as defined in
Section 18-102 of the Act (220 ILCS 5/18-102) in an aggregate principal amount
of up to $3,400,000,000; and (iv) approving and authorizing the imposition,
collection and periodic adjustment of non-bypassable charges expressed in cents
per

<PAGE>

kilowatt-hour ("kWh") and constituting "instrument funding charges" ("IFCs") as
defined in Section 18-102 of the Act (220 ILCS 5/18-102). ComEd also requests
(1) pursuant to Sections 7-101, 7-102 and 7-204A of the Act, approval of an
administrative agreement among ComEd, CE Funding and the Note Issuer, (2)
pursuant to Section 7-101 of the Act approval of certain transactions with
affiliates, and (3) approval of an instrument funding charge tariff. In support
of its requests, ComEd states as follows:

1. ComEd is a corporation engaged in the generation, transmission,
distribution and sale of electricity to the public in Illinois, is a public
utility within the meaning of Section 3-105 of the Act (220 ILCS 5/3-105) and
is an electric utility within the meaning of Articles XVI and XVIII of the Act
(220 ILCS 5/16-102; 5/18-102).

2. ComEd seeks a transitional funding order pursuant to the
provisions of Article XVIII of the Act in order to establish non-bypassable
charges expressed in cents per kWh which will, from and after the effective date
of the associated tariff, constitute IFCs which will be applied and billed to
all customers and other persons or entities obligated to pay ComEd (or any
successor thereto) any "Applicable Rates" (as defined in Section 29, INFRA).
The IFCs will be deducted from and stated separately from the Applicable Rates
charged on each customer's or other person's or entity's bill. Therefore, the
IFCs will neither increase nor decrease the total amount of the bill. The right
to receive the IFCs will constitute a current property right granted to CE
Funding, a limited liability company whose sole member will be ComEd. CE
Funding will, in turn, assign the right to receive the IFCs and certain other
property to ComEd Transitional

2
<PAGE>

Funding Trust, a special-purpose Delaware business trust established to issue
the Notes (the "Note Issuer") and, as a result, the right to receive the IFCs
will thereafter be vested in the Note Issuer. CE Funding will be a "grantee,"
and the Note Issuer will be an "assignee," as such terms are defined in Section
18-102 of the Act (220 ILCS 5/18-102).

I. BACKGROUND OF TRANSACTION AND SECURITIZATION GENERALLY

3. As contemplated by Article XVIII of the Act, the Notes will be
"asset-backed securities." A key feature of any such securities is that the
asset or group of assets underlying the asset-backed securities be
"bankruptcy-remote" from the entity originating such asset or group of assets,
which in this case is ComEd. More specifically, an asset-backed security must
be secured by, and payable solely from, a cash flow stream associated with an
identifiable asset, the collections from which are sufficient to pay debt
service and related costs, and the ownership of that asset must be vested in a
limited purpose entity, such as a special-purpose corporation, trust or limited
liability company, which is insulated from the bankruptcy and credit risks of
the originating entity. As a result, the securities issued by such entity and
secured by, and payable solely out of, that cash flow stream should have less
credit risk than debt securities issued by the originating entity, and investors
should therefore be willing to accept a lower rate of return for the
asset-backed security than for such other debt securities. If such criteria are
satisfied in the proposed transaction, the Notes should receive a credit rating
from the applicable rating agencies that is higher than ComEd's credit rating
and result in a lower funding cost to ComEd, as contemplated by Section
18-103(d) of the Act (220 ILCS 5/18-103(d)).

3
<PAGE>

4. In order to satisfy the requirement of bankruptcy remoteness, the
proposed transaction must be structured to ensure that, if ComEd were to become
the subject of a bankruptcy proceeding, the intangible transition property would
not be part of ComEd's bankruptcy estate and therefore would not be subject to
the claims of ComEd's creditors. This goal is explicitly set forth in Section
18-108 of the Act, which provides that a sale, assignment or other transfer of
intangible transition property in a transaction approved by a transitional
funding order "shall be treated as an absolute transfer of all of the
transferor's right, title and interest in, to and under such intangible
transition property...which places such transferred property beyond the reach of
the transferor or its creditors" (220 ILCS 5/18-108). The subject transaction
would isolate the property right from ComEd and its creditors by, among other
things, causing the intangible transition property to be granted directly to CE
Funding (rather than being vested in ComEd and transferred to CE Funding). The
intangible transition property will then be assigned by CE Funding to the Note
Issuer so as to vest such property rights in the Note Issuer.

5. A second element of the bankruptcy analysis focuses on the
separate legal status of ComEd, CE Funding and the Note Issuer. Although ComEd
will be the sole member of CE Funding, the transaction will be structured so
that, in the event of a bankruptcy of ComEd, CE Funding's separate corporate
existence would be respected and the assets and liabilities of CE Funding and
the Note Issuer, as CE Funding's assignee, would remain separate from the estate
of ComEd.(1) The structural elements supporting such separate existence include,
but are not limited

- ---------------------

(1) Without such structural protections, a bankruptcy court might invoke the
doctrine of "substantive consolidation" and disregard CE Funding's separate
existence. Substantive
(continued...)

4
<PAGE>

to, requirements that CE Funding be adequately capitalized, that ComEd be
adequately compensated on an arms'-length basis for the servicing functions it
performs in billing, collecting and remitting the IFCs on behalf of the Note
Issuer and that each of ComEd and CE Funding take certain steps to ensure that
creditors are not misled as to their separate existence.

6. Another important component in obtaining the desired credit
rating for the Notes is that the revenue stream associated with the IFCs must
itself be secure. The IFCs will be collected from all customers and other
persons and entities obligated to pay ComEd (or any successor thereto) any
Applicable Rates (as defined below), and the credit rating for the Notes will
depend on the predictability and stability of that revenue stream even under
financial stress or changes in circumstances. Consistent with this goal,
Article XVIII of the Act specifies that the grant of intangible transition
property, once approved, is non-rescindable by the State and that the IFCs
become non-bypassable so long as a customer or other person or entity is
obligated to pay ComEd (or any successor thereto) any base rates, transition
charges or other rates for tariffed services from which such IFC has been
deducted and stated separately (220 ILCS 5/18-102). For example, customers who
choose an alternative retail electric supplier ("ARES") must continue to pay
(and, in the event the ARES is providing billing services, the ARES must remit
on behalf of such customers) applicable IFCs, and ComEd (or any successor) must
continue to impose and

- ----------------------

(1) (continued...)
consolidation is an equitable doctrine in bankruptcy cases which allows courts
to disregard the separate existence of two or more affiliated entities to ensure
the equitable treatment of all creditors and to maximize creditor recoveries.
When entities are "substantively consolidated" in a bankruptcy proceeding, their
assets and liabilities are pooled, thereby eliminating intercompany claims, and
claims of third party creditors against any of those entities are generally
treated as claims against the common pool of assets created by consolidation.

5
<PAGE>

collect such IFCs and deduct and state separately such charges from its delivery
and transition charges and other Applicable Rates (as defined below).
Similarly, to ensure that the stream of revenues is derived from a broad group
of customers, and therefore more secure, ComEd will not enter into any contract
with a customer who is, or who otherwise would be, obligated to pay IFCs unless
the customer agrees to pay CE Funding or its assigns, as applicable, an amount
equal to the amount that would be paid in IFCs if the customer took tariffed
services. ComEd, CE Funding and the Note Issuer will also agree that any
revenues received by ComEd or its successor from any such contract services
shall, to the extent IFCs would be assessed if such services were tariffed, be
deemed to be proceeds of, and included in, the intangible transition property.
In addition, if customers cease to take delivery services and become obligated
to pay to ComEd (or any successor thereto) fixed payments of transition charges
under Section 16-108(h) of the Act (220 ILCS 5/16-108(h)) or if ComEd (or any
successor thereto) becomes entitled to receive any similar payments, then the
portion of such payments allocable to the IFCs must be promptly remitted by
ComEd (or any successor) to the Note Trustee. Further, Article XVIII of the Act
expressly recognizes that additional credit enhancement mechanisms, such as
periodic true-up and reconciliation adjustments, overcollateralization amounts
and reserve funds, may be required. The aim of all of these mechanisms is to
give rating agencies and investors comfort that the IFCs and associated
collections will be sufficient in almost all circumstances to pay the interest
and principal on the Notes on a timely basis, again so as to justify a higher
credit rating and lower rate of interest than would otherwise be the case.

6
<PAGE>

7. As mentioned above, one important credit enhancement mechanism is
the use of true-up and reconciliation adjustments. Section 18-104(d) of the Act
(220 ILCS 5/18-104(d)) expressly provides that the Commission shall include in
its order a procedure for periodic adjustments, referred to herein as
"reconciliation" and "true-up" adjustments, to reconcile from time to time the
IFCs received with the amortization schedule for the Notes and to ensure
adequate funds for paying interest and related fees and expenses and for funding
and maintaining required reserves. Through the reconciliation and true-up
adjustments, investors' exposure to losses due to shortfalls in projected sales
of electricity, longer than estimated delays in bill collections and higher than
estimated bill uncollectibles is significantly mitigated.

8. To further ensure security of the revenue stream attributable to
the intangible transition property, ComEd has included in its proposed IFC
tariff procedures that would apply whenever a third party, which would include
an ARES that is required to collect IFCs on behalf of the Note Issuer, bills or
collects IFCs on behalf of the applicable customer. Such procedures include
requirements that would (A) require any such third-party to remit IFC
collections to the Servicer (as defined below) within two business days of
receipt, (B) allow the Servicer, within seven days after a default by any such
third-party in remitting IFC Collections, to assume or transfer to another third
party that defaulting entity's billing and collection responsibilities, (C)
grant the Servicer access to information not otherwise available to the Servicer
on kWh usage by the applicable retail customers to the extent reasonably
required for the Servicer to calculate and, if applicable, bill the related IFCs
owed by such customers, and (D) impose such other terms with respect to credit
and collection policies as may be reasonably

7
<PAGE>

necessary to prevent the then current rating of the Notes from being withdrawn
or downgraded. Such procedures shall be designed to minimize the risk that
defaults by third-party collection agents will trigger the need for higher IFCs
through the true-up adjustments. To the extent that ARES act as such
third-party collection agents, ComEd will include a detailed description of such
procedures in any tariffs filed by it under 16-118(b) of the Act (220 ILCS
5/16/118(b)).

9. Another important mechanism of credit enhancement is
overcollateralization, which is commonly required in asset-backed securities
transactions. Section 18-104(a) of the Act (220 ILCS 5/18-104(a)) expressly
provides that the amount of the intangible transition property may be in excess
of the principal and interest on the transitional funding instruments in order
to provide for, among other things, the funding and maintenance of debt service
and other reserves as security to the holders of such instruments. In the
subject transaction, it is anticipated that CE Funding will be required to
transfer capital to the Note Issuer in an amount at least equal to 0.50% of the
initial aggregate principal amount of the Notes. Such funds may be contributed
out of the net proceeds from the Notes and will be used to pay debt service and
related fees and expenses in the event of a shortfall in IFC collections. In
addition, in order to enhance the likelihood that payments on the Notes will be
made in accordance with the schedule of expected amortization of principal of
such Notes (the "Expected Amortization Schedule"), which will be finalized at
pricing, the order requested hereby would set the IFCs at levels that are
expected to produce IFC collections which exceed the amounts required to pay
principal and interest on the Notes, and to pay all related fees and expenses.
This additional amount (the "Overcollateralization Amount") will be collected
approximately ratably over the

8
<PAGE>

expected life of the Notes (I.E., over the period from the issue date of the
Notes through the latest scheduled maturity date for any of the Notes as set
forth in the Expected Amortization Schedule). The Overcollateralization Amount
will be held in a designated subaccount for the benefit of the holders of the
Notes. The actual Overcollateralization Amount and the timing of the collection
thereof will be finalized prior to the issuance of the Notes and will depend on
rating agency requirements, investor requirements, tax considerations and other
legal and financial concerns at the time of issuance.

10. Another important feature of the proposed transaction is that
IFCs will be deducted and stated separately from amounts which ComEd or any
successor thereto would otherwise be entitled to bill. The offsetting nature of
the IFCs is an important customer protection because it allows ComEd to receive
the many benefits associated with asset-backed securities while protecting
customers from paying more for services provided by ComEd than they would pay
absent the transaction described in this Application.

11. An additional feature of the transaction is the state pledge.
Pursuant to Section 18-105(b) of the Act (220 ILCS 5/18-105(b)), the State of
Illinois has pledged and agreed that the State will not limit, alter, impair or
reduce the value of the intangible transition property or the IFCs. As provided
in Section 18-105(b) of the Act (220 ILCS 5/18-105(b)), ComEd, CE Funding and
the Note Issuer will include this pledge from the State of Illinois in any
contract with holders of the Notes, the Note Issuer or with any assignees and
other appropriate transaction documents. It is contemplated that holders will
rely on this commitment in purchasing

9
<PAGE>

the Notes and that the rating agencies will rely on this commitment in assigning
a credit rating to the transaction.

12. A final key component of the transaction is that the Notes be
treated for federal income tax purposes as debt of ComEd and not as a sale of
assets. The economic benefits of the transaction could be effectively
eliminated if issuance of the Notes resulted in current income to ComEd upon
receipt of the proceeds of the Notes, or if ComEd were unable to deduct the
interest payments on the Notes from taxable income. Accordingly, ComEd has
requested a private letter ruling from the Internal Revenue Service ("IRS") to
the effect that, among other things, the issuance of the Notes and transfer of
the proceeds to ComEd will not result in gross income to ComEd, CE Funding or
the Note Issuer and that the Notes will constitute obligations of ComEd for
federal income tax purposes. Should the IRS not provide such a ruling, or rule
adversely, ComEd will reassess the transaction and, if possible, modify the
transaction as needed to eliminate the risk of current taxation. If any such
modifications would cause the structure to be outside the bounds described in
this Application, as approved by the Commission, ComEd would take appropriate
steps to seek any required Commission approval as a result of such changes.

II. DESCRIPTION OF PROPOSED TRANSACTION

13. CE Funding will be created as a Delaware special-purpose limited
liability company, the sole member of which will be ComEd. The Note Issuer
will be created as a special-purpose Delaware business trust whose purpose and
business activities will be limited to such matters as are necessary or
reasonably related to the issuance of the Notes. The holders of

10
<PAGE>

the Notes will, as is customary for debt holders, not be entitled to exercise
managerial control over the Note Issuer. The declaration of trust establishing
the Note Issuer will be further structured, however, so as to preclude ComEd or
CE Funding (or any elected officer or director of ComEd or of any other
"affiliated interest" within the meaning of Section 7-101 of the Act (220 ILCS
5/7-101)) from exercising control over the Note Issuer's operations or policies
so long as the Notes remain outstanding.

14. CE Funding will assign to the Note Issuer the intangible
transition property and all of its rights under any related servicing agreements
with ComEd. The Note Issuer will issue and sell the Notes to investors (the
"Holders") in an offering to be detailed in an offering document for each
issuance and sale of one or more series (each a "Series") of such Notes. Each
Series of Notes may be subdivided into one or more classes ("Classes"). The
Notes will be secured pursuant to the terms of an indenture (the "Note
Indenture") with an independent trustee (the "Note Trustee"). The Notes will
constitute "transitional funding instruments" under the Act.

15. The Notes will have an initial aggregate principal amount of not
greater than $3,400,000,000, which amount does not exceed twenty-five percent of
ComEd's total capitalization (including both debt and equity) of
$13,623,912,000, as of December 31, 1996, ("1996 Total Capitalization"),
calculated as required by Section 18-103(d)(6)(A) of the Act (220 ILCS
5/18-103(d)(6)(A)). Attached as Attachment 1.2 to the testimony of Ruth Ann M.
Gillis, attached hereto as Exhibit 1.0 and incorporated herein by reference, is
a calculation supporting this capitalization figure, including calculation of
the ratio of ComEd's revenues from Illinois

11
<PAGE>

electric utility retail customers in the 1996 calendar year to ComEd's total
electric retail revenues for such year (I.E., 100%). ComEd may present
subsequent applications for transitional funding orders, provided that the
aggregate amount of all authorized grantee instruments or, absent grantee
instruments, transitional funding instruments (including the Notes) shall not
exceed fifty percent of ComEd's 1996 Total Capitalization, or approximately
$6,800,000,000, as required by Section 18-103(d)(6)(B) of the Act (220 ILCS
5/18-103(d)(6)(B)) and as adjusted pursuant to Section 18-103(d)(6)(A) of the
Act as set forth in Attachment 1.2 to Ms. Gillis' testimony (Exhibit 1.0).(2)

16. The Notes, except to the extent specifically requested in a
subsequent application and authorized in a subsequent order relating to a Series
other than the initial Series, will have an expected maturity date of no later
than December 31, 2008.(3) It is expected that the

- ----------------------

(2) If the Notes have call or prepayment options and interest rates decline,
the Note Issuer could seek to refinance the Notes in order to take advantage of
lower interest rates. Through the true-up mechanism, any reduction in debt
service costs would reduce the level of IFCs thereafter charged. If the
proceeds of any such refinancing were used solely to repay outstanding Notes and
did not result in any increased debt service, no additional intangible
transition property would be created by such a refinancing and the replacement
Notes would not be a new issuance to be counted towards the aggregate limits
described above. ComEd would be required, however, to notify the Commission of
any changes in terms and seek approval for any changes in terms or conditions of
the refinancing which do not conform to the requirements of the original
transitional funding order.

(3) Both the latest expected maturity date of the Notes and the final date
on which IFCs are authorized to be imposed will be on or before December 31,
2008. Section 18-104(l) of the Act, however, states that IFCs may continue to
be imposed beyond such date, if necessary, until the corresponding Notes have
been paid in full. The debt service schedule and Expected Amortization
Schedules for the Notes have been and will be calculated to support full
repayment of the Notes by the expected maturity date. In addition to the
expected maturity date, the rating agencies may require that the Notes have a
"legal final" date later than the expected maturity date
(continued...)

12
<PAGE>

principal amount of the Notes will be paid in approximately equal payments each
year over the life of the Notes. ComEd's current projection for the Expected
Amortization Schedule is contained in Attachment 1.4, Table One, to Ms. Gillis'
testimony (Exhibit 1.0).

17. It will be a condition of the offering that, at the time of
issuance, the Notes receive ratings from one or more nationally recognized
statistical rating agencies which would cause each Class of Notes to be rated in
one of the four highest categories assigned to debt instruments by such agency
or agencies.

18. The Notes will be non-recourse except as to, and will be secured
only by and payable solely out of the proceeds of, the following property: (A)
the intangible transition property, (B) all rights of the Note Issuer under the
servicing agreements with ComEd (or any successor Servicer of the intangible
transition property) and under any other agreements entered into by the Note
Issuer in connection with the transaction, (C) any bank collection accounts,
investment accounts or similar reserve accounts established in connection with
the issuance of the Notes and all cash or investment property or other amounts
on deposit therein from time to time, (D) solely with respect to Notes, if any,
which bear a floating rate of interest, any interest rate hedging agreement
executed solely to permit the issuance of such Notes, (E) all rights to obtain
adjustments to the IFCs in accordance with Section 18-104(d) of the Act (220
ILCS 5/18-

- -----------------------

(3)(continued...)
which will be the first date on which investors may exercise certain
extraordinary remedies. The use of such a "legal final" date in the documents
will not extend the date beyond which IFCs may be charged except as permitted
under Section 18-104(l) of the Act.

13
<PAGE>

104(d)), (F) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing, and (G) all payments on or under and
all proceeds in respect of any or all of the foregoing (collectively, the "Note
Collateral").

19. Notwithstanding the non-recourse nature of the transaction, ComEd
(individually, as Servicer or otherwise) will be required under the transaction
documents (A) to make certain representations and warranties with respect to,
among other things, the validity of CE Funding's and its assignees' title to the
intangible transition property and (B) to observe certain covenants for the
benefit of CE Funding and its assignees. ComEd will also be required to
indemnify CE Funding and its assignees against any breaches of such
representations, warranties and covenants and to protect such parties against
certain other losses which result from actions or inactions of ComEd. Such
indemnification is typically required in securitization transactions and will
not in any event cover credit losses due to the failure of customers to pay
their bills on a timely basis or losses in IFC collections due to shortfalls in
projected electricity usage. Also, as noted earlier, ComEd may be required
under the documents to remit to the Note Trustee, for the benefit of the
Holders, a portion of payments which it receives on account of lost tariffed
revenues from which future IFCs would otherwise have been deducted, which
portion it has agreed constitutes proceeds of such IFCs. Section 18-104(a) of
the Act (220 ILCS 5/18-104(a)) requires that, except as otherwise described in
the Order, the transitional funding instruments will be "non-recourse to the
credit or to any assets of the electric utility other than assets comprising
intangible transition property or grantee instruments, as applicable." ComEd
believes that the limited indemnification and other provisions described above
do not conflict with the general

14
<PAGE>

requirement that the Notes be non-recourse to the credit or assets of ComEd.
Nonetheless, in order to avoid any misunderstanding, ComEd hereby requests that
the Commission acknowledge the foregoing provisions in its order.

20. ComEd currently anticipates that the Notes will be fixed-rate
instruments. Depending on market conditions at the time of the offering,
however, it may result in lower debt service costs for the Note Issuer to issue
floating rate Notes and then to enter into interest rate swaps or other hedging
arrangements with respect thereto. Accordingly, each Series of Notes may
include one or more Classes of floating rate Notes which accrue interest at a
variable rate based on the index described in the applicable offering document.
If floating rate Notes are issued, the Note Issuer will be required to enter
into interest rate swaps or other hedging arrangements to protect the Note
Issuer against the risk that interest rate fluctuations would cause such
floating rates to exceed the fixed rates used to calculate the IFCs. In such
event, ComEd would use the fixed rate hedging cost and not the variable interest
rate on the Notes to set the level of IFCs.

21. ComEd will act as servicer (in such capacity, together with
any successor-in-interest, the "Servicer") for CE Funding under the
transaction documents, pursuant to a servicing agreement (the "Servicing
Agreement") authorized under Section 18-104(f) of the Act (220 ILCS
5/18-104(f)). CE Funding's rights under the Servicing Agreement will be
assigned to the Note Issuer. The documents will contain provisions allowing
the Servicer to be replaced under limited circumstances, as contemplated by
Section 18-104(f) of the Act (220 ILCS 5/18-

15
<PAGE>

104(f)). The Servicer will be paid a servicing fee in consideration for
billing and collecting the IFCs on behalf of the Note Issuer, calculating the
true-up and reconciliation adjustments described herein, and performing
related services. It is important for the bankruptcy analysis described
above that this servicing fee be set on an arms'-length basis. Although the
final determination of such amount will depend on the outcome of the rating
agencies' review of the proposed transaction and further analysis by ComEd of
its servicing costs, it is expected that the annual servicing fee will not
exceed .25% of the initial aggregate principal amount of the Notes (I.E.,
$8.5 million). In the event that IFCs are not billed concurrently with other
charges for services, the servicing fee will be higher to reflect additional
costs related thereto. It is not expected that the annual servicing fee in
such circumstances would in any event exceed 1.25% of the initial aggregate
principal amount of the Notes (I.E., $42.5 million).

22. Pursuant to the terms of the Note Indenture, a collection account
(the "Collection Account") will be established and held by the Note Trustee for
the benefit of the Holders. The Collection Account will consist of four
subaccounts: a general subaccount, a reserve subaccount, a capital subaccount,
and, as discussed above, a subaccount for the Overcollateralization Amount.
Because of difficulties inherent in tracking IFC collections on a daily basis,
the transaction documents will contain procedures for determining the estimated
amounts of aggregate collections which are allocable to the IFCs, which
allocations will be subject to periodic reconciliations but will otherwise be
deemed conclusive. The collections on the IFCs will be periodically remitted to
the general subaccount and used to pay interest due and principal owed on the
Notes, trustee fees, servicing fees and certain other operating expenses
associated

16
<PAGE>

with the transaction and to replenish the capital subaccount to the extent funds
are withdrawn therefrom. Collections on the IFCs which exceed such required
payments will be transferred to the overcollateralization subaccount until the
amounts on deposit therein equal the Overcollateralization Amount (which may
increase over time). Thereafter, a limited amount of funds up to the current
net earnings on the funds in the Collection Account may be released to the Note
Issuer or as it directs. Otherwise, however, excess collections will be set
aside in the reserve subaccount for distribution to Holders in the event of
future IFC collection shortfalls. If, on any scheduled payment date for
principal or interest on the Notes or any related fees or expenses owed by the
Note Issuer, the amounts on deposit in the general subaccount of the Collection
Account are insufficient for the Note Issuer to make such payments, funds on
deposit in the other collection subaccounts will, to the extent required under
the transaction documents, be withdrawn in order to satisfy such shortfalls.
Reconciliation calculations for future periods will reflect any balances in the
Collection Account which exceed the required reserve levels and will also
reflect any amount by which such balances are less than the required reserve
levels. True-up calculations will similarly reflect amounts by which such
balances are less than the required reserve levels.

23. Certain details regarding the issuance of the Notes -- such as
the average interest rate, expected principal amortization and the level of
required reserves and the timing of funding thereof -- will not be able to be
determined until the time such Notes are issued. ComEd will file a statement of
the final terms of any Series of Notes with the Commission within 90 days of the
receipt of proceeds therefrom as required under Section 18-104(h) of the Act
(220 ILCS 5/18-104(h)).

17
<PAGE>

III. DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY AND INSTRUMENT FUNDING
CHARGES.

24. The intangible transition property to be created pursuant to the
order will primarily represent the total IFCs expected to be billed over time.
The IFCs will in turn be calculated to generate sufficient revenues to pay the
principal of the Notes in accordance with the Expected Amortization Schedule,
pay interest on the Notes, together with servicing fees and other fees, costs
and charges related thereto, and to fund and/or maintain any required reserves
in the collection subaccounts described above after giving effect to delays in
bill collections and uncollectibles. The aggregate dollar amount of IFCs
scheduled to be received over time will be a function of the average interest
rate at closing, the other costs of the transaction (E.G., ongoing fees and
expenses), the timing and amounts of overcollateralization or other forms of
credit enhancement required by the rating agencies and acceptable to the IRS,
and other factors which may not definitively be known until the issuance of the
Notes. Moreover, the actual aggregate dollar amount of IFCs will vary based
upon, among other things, the actual amount and timing of IFC collections, the
actual fees and expenses incurred and the actual earnings on amounts deposited
into the Collection Account. It is expected that the rating agencies will
require, as a condition of assigning a high credit rating to the Notes, that the
authorized dollar amount of intangible transition property be sufficiently large
to support repayment of the Notes notwithstanding any delays in collections
resulting from shortfalls in projected sales of electricity, from adverse
changes in customer payment patterns, from increases in fees and expenses
payable under the transaction or from other circumstances which may adversely
affect payments due on the Notes. Accordingly, ComEd requests the Commission to
authorize the creation and

18
<PAGE>

establishment of intangible transition property in an aggregate amount of $6.323
billion. Such amount is less than the rate base established in ComEd's most
recent rate case prior to January 1, 1998, Docket No. 94-0065 ($12,735,160,000),
and is therefore within the amount of intangible transition property authorized
under Section 18-104(a) of the Act (220 ILCS 5/18-104(a)).

25. The aggregate amount of the IFCs to be imposed at any time and
from time-to-time will be a function of, among other things, the principal
amount and expected maturity of, and scheduled amortization and interest rates
on, the Notes when issued, the levels of reserves maintained and required to be
maintained, and the levels of fees and expenses related to the transaction, the
projections of electricity usage for the periods during which the Notes will be
issued and outstanding, the projected average timing of receipt of collections
from customers, the projections of uncollectibles, and the actual amount and
timing of IFC collections previously received. Based on the foregoing factors,
an amount (the "Debt Service Billing Requirement" or "DSBR") will be calculated
for each period as the amount of IFCs which must be billed in order to ensure
that IFC collections for such period will be sufficient to make all required
payments (including funding or replenishing any required reserves). The method
for calculating the DSBR is described in Ms. Gillis' testimony (Exhibit 1.0).

26. As required by Section 18-103(d)(4) of the Act (220 ILCS
5/18-103(d)(4)), the DSBR used to determine the aggregate level of IFCs billed
will be allocated among customer classes of retail customers in accordance with
percentage ratios determined by dividing the base rate revenue from each such
class by ComEd's total base rate revenue for the

19
<PAGE>

1996 calendar year. The method for making such allocation is more precisely
described in the Testimony of Lawrence S. Alongi, which is attached hereto as
Exhibit 2.0 and incorporated herein by reference. Based on the assumptions as
to (A) pricing, amortization, fees and expenses, issuance date, collection
history, reserves and the timing of payments with respect to the Notes used to
calculate the DSBR as set forth in Ms. Gillis' testimony (Exhibit 1.0), (B) the
timing of true-up and reconciliation adjustments as set forth in Mr. Alongi's
testimony (Exhibit 2.0), (C) the allocations among customer classes as described
above, and (D) electricity usage set forth on Attachment 2.1 to Mr. Alongi's
testimony (Exhibit 2.0), the initial cents per kWh levels of the IFCs which
ComEd believes most likely would need to be collected from each customer class
in order to amortize an expected $3,400,000,000 aggregate principal amount of
the Notes in accordance with its current projection of the Expected Amortization
Schedule, and to make all other related payments described above, would be as
follows:

20
<PAGE>

<TABLE>
<CAPTION>
IFC
CUSTOMER CLASS DESCRIPTION (CENTS/KWH)
-------------- ----------- -----------
<S> <C> <C>
Residential - residential accounts
No Space Heat without space heating 1.181

Residential - residential accounts
Space Heat with space heating 0.760

Standby Service Rate 18 - Standby
Service accounts 0.467

Interruptible Rider 26 -
Service Interruptible Service
accounts 0.371

Street Lighting Rate 23 - Municipal
- Fixture Based Street Lighting
Rates accounts and
separately billed
Rate 26 - Private
Outdoor Lighting
accounts 1.583

Street Lighting accounts billed under
- Dusk to Dawn Rate 25 - Street,
and Traffic Highway, and Traffic
Signal Signal Lighting, as
well as contractual
agreements for
similar services 0.493

Railroads electric railroad
customers using
electricity for
traction power 0.698

Water-Supply accounts billed under
and Sewage Rate 24 - Water-
Pumping Service Supply and Sewage
Pumping Service 0.642

In Lieu of non-residential in
Demand lieu of demand
accounts 1.119

21
<PAGE>

0 to and non-residential
including 100 accounts with highest
kW Demand billing demand during
previous billing
year from 0 to and
including 100 kW 0.879

Over 100 to and non-residential
including 1,000 accounts with highest
kW Demand billing demand during
previous billing year
over 100 to and
including 1,000 kW 0.695

Over 1,000 to non-residential
and including accounts with highest
10,000 kW billing demand during
Demand previous billing year
over 1,000 to and
including 10,000 kW 0.644

Over 10,000 kW non-residential
Demand accounts with highest
billing demand during
previous billing year
over 10,000 kW 0.498
</TABLE>

27. Although ComEd believes the IFCs set forth in the preceding
paragraph are reasonably representative of the initial IFCs, the actual IFCs
necessary initially and thereafter will be affected by numerous factors,
including, but not limited to, the actual interest rate(s) for the Notes, the
actual maturity date(s) and terms of the Notes, changes in projections of
electricity usage, lags between billing and collection, and uncollectibles. In
order to account for such factors, ComEd requests that the Commission authorize
per kWh IFCs for each class as follows:

22
<PAGE>

<TABLE>
<CAPTION>
CUSTOMER CLASS IFC CHARGE (CENTS/KWH)
-------------- ----------------------
<S> <C>
Residential - No Space 1.476
Heat

Residential - Space 0.950
Heat

Standby Service 0.701

Interruptible Service 0.464

Street Lighting -
Fixture Based Rates 2.375

Street Lighting - Dusk
to Dawn and Traffic
Signal 0.740

Railroads 1.047

Water-Supply and
Sewage Pumping Service 0.963

In Lieu of Demand 1.399

0 to and including 100 1.099
kW Demand

Over 100 to and 0.869
including 1,000 kW
Demand

Over 1,000 to and 0.805
including 10,000 kW
Demand

Over 10,000 kW Demand 0.623
</TABLE>

28. In connection with and as a precondition to the issuance of the
Notes and the imposition of the IFCs and in accordance with Section 18-104(j) of
the Act (220 ILCS 5/18-104(j)), ComEd will file a tariff with the Commission in
the form attached hereto as Exhibit 4.0

23
<PAGE>

and incorporated herein by reference, except the filed tariff will reflect
actual IFCs for the initial period which shall not exceed the IFCs approved in
the order. The actual IFCs included in the filed tariff will be calculated
using the following formula:

IFC = DSBR X (BR96 /BR96)
c c
-------------------
Q
c

Where:

IFC = Per kWh Instrument Funding Charge for customers in a
c customer class during the Initial Applicable Period.
The amount in cents per kWh, rounded to the nearest
0.001CENTS, to be billed for each kWh sold or delivered
to customers in the customer class in any monthly
billing period during the Initial Applicable Period.

DSBR = The total amount of Debt Service Billing Requirement to
be billed through the IFCs for energy sales and
deliveries to customers during the Initial Applicable
Period.

BR96 = Total Base Revenue for the customer class in 1996
c

BR96 = Total Base Revenue for ComEd in 1996

Q = Projected kWh sales and deliveries to the customers in
c the customer class for the Initial Applicable Period.

The Initial Applicable Period is the period from the expected start
date of September 1, 1998 through June 30, 1999.

29. The rates and charges from which IFCs will be deducted and stated
separately (the "Applicable Rates") will include all tariffed charges including,
without limitation, charges for base rates and delivery services and transition
charges (including fixed payments of such charges); provided, however, that
Applicable Rates shall not include late charges or charges set forth in those
tariffs which are filed specifically and primarily to collect amounts related to
decommissioning expense, taxes, franchise fees or other franchise cost
additions, costs imposed

24
<PAGE>

by local governmental units which are allocated and charged to customers within
the boundaries of such governmental units' jurisdiction, renewable energy
resources and coal technology development assistance charges, energy assistance
charges for the Supplemental Low-Income Energy Assistance Fund, reimbursement
for the costs of optional or non-standard facilities and reimbursement for the
costs of optional or non-standard meters, or monies that will be paid to third
parties (after deduction of allowable administrative, servicing or similar
fees); and provided further that, to the extent any Applicable Rate reflects
compensation owed by ComEd for power or energy generated by a person or entity
other than ComEd, the IFC will be deducted and stated separately from such
Applicable Rates without giving effect to such compensation. The tariff will
direct that the cents per kWh charges included in the IFC be imposed, collected,
deducted and stated separately from the amounts otherwise billed by ComEd (or
any successor thereto) for Applicable Rates.

30. As required by Section 18-103(d)(5) of the Act (220 ILCS
5/18-103(d)(5)), the issuance of the Notes will not cause the rates for tariffed
services to increase over the rates then in existence as adjusted for the rate
decreases provided in subsection (b) of Section 16-111 of the Act (220 ILCS
5/16-111(b)).

31. ComEd also requests the Commission in its transitional funding
order to approve, in accordance with and as required by Section 18-104(d) of the
Act (220 ILCS 5/18-104(d)), procedures for periodic adjustments to the IFCs to
reconcile and true-up the revenues periodically received from such IFCs with the
amounts needed to amortize the Notes in

25
<PAGE>

accordance with the Expected Amortization Schedule, together with the amount
needed to pay interest on the Notes, related fees and expenses, and to fund and
maintain the required reserves. Such adjustments, referred to herein as
"reconciliation adjustments" and "true-up adjustments," will be based on the
methodology described by Mr. Alongi (Exhibit 2.0) and will occur not less
frequently than annually. In addition, if on any scheduled date for payment of
principal on the Notes, the Servicer determines that the outstanding principal
of the Notes exceeds the scheduled principal balance by five percent or such
greater amount as the rating agencies may permit consistent with their rating of
the Notes, then the Servicer shall, within not more than 30 days, implement
true-up adjustments to adjust for such shortfall. All reconciliation and
true-up adjustments shall be implemented automatically pursuant to the tariff
filed in compliance with the Commission's order. In addition, as required by
Section 18-104(d) of the Act (220 ILCS 5/18-104(d)), if, as a result of any
such adjustment, the amount of any IFC as adjusted will exceed an amount per kWh
greater than the amount per kWh of the IFC initially authorized by the
Commission in its transitional funding order, then ComEd (or any successor
thereto) shall be obligated to file amendatory tariffs under Section 18-104(k)
of the Act (220 ILCS 5/18-104(k)).

IV. DESCRIPTION OF USE OF PROCEEDS

32. The Note Issuer will remit the net proceeds from the sale of the
Notes to CE Funding, which in turn will remit such proceeds to ComEd in
consideration of ComEd's request that CE Funding be granted the intangible
transition property. Such proceeds will be net of any commercially reasonable
transaction costs to be paid by the Note Issuer and CE Funding and amounts
deposited into any subaccounts of the Collection Account.

26
<PAGE>

33. ComEd will use at least 80% of the proceeds to refinance debt
and/or equity in a manner which is reasonably expected to result in ComEd's cost
of capital, taking into account the costs of financing, in accordance with
Section 18-103(d)(1)(A) of the Act (220 ILCS 5/18-103(d)(1)(A)), being lower
than it would be absent the transaction that is the subject of this Application.
ComEd expects that the actual portion of the proceeds used for such purposes
will be approximately 96%. The basis for ComEd's expectation that there will be
a reduction in ComEd's cost of capital is discussed by Ms. Gillis (Exhibit 1.0)
and in the testimony of Daniel E. Thone, which is attached hereto as Exhibit 3.0
and incorporated herein by reference. The portion of the proceeds not used for
such purposes (I.E., 20% or less of the proceeds) will be used (A) to fund debt
service and other reserves, (B) to pay for costs and fees necessary or desirable
in connection with the marketing of the Notes, if any; (C) to pay for other
costs associated with the issuance and collateralization of the Notes, if any;
and (D) to pay for the costs associated with the use of proceeds from the Notes,
including the costs incurred since December 16, 1997 (the effective date of the
Electric Service Customer Choice and Rate Relief Law of 1997 (the "1997 Act")),
or to be incurred, in connection with recapitalization, refinancing and/or
retirement of stock and/or debt, any associated taxes, including federal and
state tax liabilities, and the costs incurred or to be incurred to obtain,
collateralize, issue, service and/or administer the Notes, if any, including
interest or yield thereon and other related fees, costs and charges. ComEd
expects that the actual portion of the proceeds used for the purposes described
in the immediately preceding sentence will be approximately 4%. A more precise
description of the use of proceeds, including the conclusion that the fees and
costs described in clauses (B), (C) and (D) are within commercially reasonable
ranges, is set forth in Ms. Gillis' testimony (Exhibit 1.0).

27
<PAGE>

34. All proceeds transferred to ComEd's parent company, Unicom
Corporation, through a common stock repurchase transaction shall be used by
Unicom Corporation to repurchase and retire its publicly traded common stock
(including stock repurchased and retired in anticipation of such transaction) or
to pay transaction costs associated with such repurchase or retirement in an
amount not to exceed 0.20% of the repurchase price for such common stock, which
amount is commercially reasonable.

35. As required by Section 18-103(d)(1) of the Act (220 ILCS
5/18-103(d)(1)), none of the proceeds will be used to repay or retire
obligations incurred by an affiliate of ComEd other than as set forth in the
prior paragraph.

36. As required by Section 18-103(d)(1) of the Act (220 ILCS
5/18-103(d)(1)), ComEd's use of proceeds will not, as of the date of application
of the proceeds, result in the common equity component of its capital structure,
exclusive of the portion of its capital structure that consists of obligations
representing the Notes, being reduced below the lesser of (1) 40% and (2) its
common equity percentage as of December 31, 1996 adjusted to reflect any
write-off of assets or common equity implemented or required to be implemented
as a result of the 1997 Act. As shown on Attachment 1.6 to Ms. Gillis'
testimony (Exhibit 1.0), as of December 31, 1996, ComEd's common equity as a
percentage of total capitalization was 44%. On December 31, 1997, however,
ComEd wrote down $1,437,000,000 in assets due to the implementation of the
provisions of the 1997 Act. This results in an adjusted equity percentage of
37.8%, which is lower than 40%. As demonstrated in Ms. Gillis' testimony
(Exhibit 1.0), after

28
<PAGE>

giving effect to the proposed use of proceeds that the common equity component
of ComEd's capital structure remain at or above 37.8% after giving effect to the
proposed transaction.

37. As required by Section 18-111(4) of the Act (220 ILCS
5/18-111(4)), ComEd will file periodic reports with the Commission setting forth
the use of proceeds from each issuance of Notes. Such reports will be filed
within 90 days of the receipt of proceeds from each issuance of Notes at
twelve-month intervals thereafter until such proceeds have been fully accounted
for. The reports will include the relevant accounting entries made by ComEd.

V. TRANSACTIONS WITH AFFILIATES

A. ADMINISTRATION AGREEMENT.

38. Because CE Funding and the Note Issuer will be special-purpose,
bankruptcy-remote entities with limited business activities, it is anticipated
that neither CE Funding nor the Note Issuer will have any employees.
Accordingly, both CE Funding and the Note Issuer need to enter into an
administrative agreement (the "Administration Agreement") with ComEd pursuant to
which ComEd shall perform ministerial services and provide facilities for CE
Funding and the Note Issuer to ensure that they are able to perform such
day-to-day operations as are necessary to maintain their existence and perform
their obligations under the transaction documents. The Administration Agreement
incorporates provisions of the Affiliated Interests Agreement, as amended,
approved by the Commission's Order in Ill. C.C. Dkt. 95-0615 (Mar. 12, 1997)
(the "AIA"), to ensure that ComEd will be reimbursed in amounts commensurate
with its costs in performing such services and providing such facilities. A
copy of the proposed

29
<PAGE>

Administration Agreement is attached hereto as Exhibit 5.0 and is incorporated
herein by reference.

39. The Administration Agreement provides that ComEd may perform
those services and provide those facilities which are (A) allowed under the
Commission-approved AIA, and (B) reasonably necessary for CE Funding and/or the
Note Issuer to maintain their existence and perform their obligations under the
transaction documents.

40. Under the Administration Agreement, ComEd will be compensated on
the basis provided for in the AIA. Use of the compensation provisions included
in the AIA will serve to meet the requirements that ComEd and CE Funding
transact business at arms'-length because the AIA has been found by the
Commission, in its Order in Ill. C.C. Dkt. 95-0615 at 9, to "prevent[]
cross-subsidization to the maximum extent practicable under Illinois law."
Therefore, adoption of the AIA provisions should support a conclusion that
transactions between ComEd and CE Funding are arms'-length.

41. The public will not be harmed by, and will instead benefit by,
ComEd's entry into the Administration Agreement because such an arrangement will
allow for the most efficient and economical administration of CE Funding and the
Note Issuer. Accordingly, ComEd's entry into the Administration Agreement will
reduce the costs of the transaction. For these reasons, ComEd's entry into the
Administration Agreement is in the public interest and the public will be
convenienced thereby.

30
<PAGE>

B. OTHER TRANSACTIONS.

42. One or more of the entities involved in the transactions
described herein and transactions related thereto (E.G., transactions related to
the repurchase of common stock) may be an "affiliated interest" of ComEd within
the meaning of Section 7-101 of the Act or an affiliate of one of ComEd's
affiliated interests. Such entity or entities may act as a participating
underwriter, the Note Trustee or other trustee, provider of any interest rate
swaps or other hedging arrangements, transfer agent or registrar, broker, tender
agent, financial advisor or a similar party.

43. ComEd's affiliated interests that presently perform such
functions or, to the best of ComEd's knowledge, have affiliates which perform
such functions, and thus might become involved in the transaction described
herein or transactions related thereto currently include The First National Bank
of Chicago, Morgan Stanley, Dean Witter & Co., Bank of Boston Corporation and
William Blair & Company, L.L.C. Each of these entities is related to ComEd
solely by virtue of the fact that each has an officer or director who is also an
officer or director of ComEd.

44. ComEd represents that no such affiliation will have any effect on
its actions relating to the transactions described herein or any transactions
related thereto.

45. ComEd will not engage any such affiliated interest or affiliate
of an affiliated interest unless such engagement is commercially reasonable and
economical, nor will

31
<PAGE>

ComEd pay, or agree to pay, such affiliated interest or affiliate of such
affiliated interest any fee or other compensation that is not commercially
reasonable and consistent with industry practices.

46. ComEd will file any such contract described in this SECTION V(B),
with the Commission within three business days of entry into the contract.

47. If ComEd is not able to engage an affiliated interest or
affiliate of an affiliated interest to perform the banking, underwriting and
investment banking services described above, ComEd's ability to obtain such
services at the most competitive prices and from able, experienced entities will
be limited. On the other hand, if ComEd can engage in such transactions with
affiliated interests and their affiliates, ComEd will be better able to assure
that the transaction described herein and transactions related thereto are
consummated efficiently and economically and with the assistance of experienced
persons and entities. ComEd will file any such contract described in this
SECTION V(B) with the Commission within three business days of entry into the
contract. Accordingly, the ability to engage in such transactions with
affiliated interests or affiliates of affiliated interests is in the public
interest.

VI. REQUEST FOR ORDER AND FINDINGS

48. ComEd requests that the Commission issue a transitional funding
order which would, among other things:

32
<PAGE>

(A)

(i) establish, create and grant rights in and to intangible
transition property in the amount of $6.323 billion, which intangible
transition property will be vested in CE Funding as an original right and
not by assignment from ComEd, and authorize the proposed assignment of such
intangible transition property to the Note Issuer, which intangible
transition property will include all right, title and interest of CE
Funding and the Note Issuer, as its assignee, to impose and receive the
non-bypassable IFCs authorized in the order and all related revenues,
collections, claims, payments, money or proceeds thereof, including all
right, title and interest of CE Funding and the Note Issuer in, to, under
and pursuant to the transitional funding order; and

(ii) authorize ComEd, or any affiliate of ComEd, pursuant to
Section 18-104(f) of the Act (220 ILCS 5/18/104(f)), to contract with CE
Funding, and/or the Note Issuer, to bill and collect the applicable IFCs
for the benefit and account of CE Funding and/or the Note Issuerand their
assigns, pursuant to which contract ComEd or such affiliate (or any
successor thereto) will account for and remit the applicable IFCs, without
the obligation to remit any investment earnings thereon, to or for the
account of CE Funding and/or the Note Issuer, and the obligation of ComEd
or such affiliate to bill, collect and remit the applicable IFCs shall
continue irrespective of whether ComEd (or any successor thereto) is
providing electric power and/or other services to the retail customers and
other persons obligated to pay such IFCs.

33
<PAGE>

(B) AUTHORIZE AND APPROVE:

(i) the proposed issuance and sale of transitional funding
instruments in an aggregate principal amount of up to $3,400,000,000 by the
Note Issuer to Holders in the form of the Notes and the proposed pledge and
assignment to the Note Trustee, for the benefit of such Holders, of all of
the Note Issuer's right, title and interest in and to the intangible
transition property and other Note Collateral as security for such Notes;

(ii) the proposed imposition and collection, through December 31,
2008 (as such date may be extended pursuant to Section 18-104(1) of the Act
(220 ILCS 5/18-104(1)), from all retail customers and other persons and
entities obligated to pay charges pursuant to Applicable Rates, of IFCs in
the amounts set forth in Paragraph 27, SUPRA, which amounts shall be
non-bypassable charges expressed in cents per kWh and calculated using the
methodology described in Section III, SUPRA, and which IFCs will not be
subject to any defense, counterclaim or right of set off arising as a
result of failure by ComEd (or any successor) to perform or provide past,
present or future services, as set forth in Section 18-104(a) of the Act
(220 ILCS 5/18-104(a));

(iii) the proposed allocation of such IFCs among ComEd's customer
classes according to the methodology described in Section III, SUPRA;

(iv) the proposed true-up and reconciliation adjustment mechanisms
described in Section III, SUPRA;

34
<PAGE>

(v) ComEd's entry into the Administration Agreement pursuant to
Sections 7-101, 7-102 and 7-204A of the Act (220 ILCS 5/7-101, 7-102,
7-204A) because such agreement is in the public interest and the public
would be convenienced thereby;

(vi) ComEd's entry into the transactions described in Section V.B,
SUPRA, pursuant to Section 7-101 of the Act (220 ILCS 5/7-101), provided
that ComEd file a copy of any relevant contract with the Commission within
three business days of entry into such contract, because the ability to
enter into such transactions is in the public interest; and

(vii) the filing of the instrument funding charge tariff attached
hereto as Exhibit 4.0, subject to adjustment to reflect (A) the actual IFCs
pursuant to the formula set forth in Section III, SUPRA, and (B) the actual
true-up and reconciliation adjustment processes.

49. ComEd further requests that the transitional funding order
include the following findings:

(i) that ComEd is a corporation engaged in the generation,
transmission, distribution and sale of electricity to the public in
Illinois, is a public utility within the meaning of Section 3-105 of the
Act (220 ILCS 5/3-105) and is an electric utility within the meaning of
Article XVI and Article XVIII of the Act (220 ILCS 5/16-102; 5/18-102),
and is authorized to file, and has filed, in proper form, an Application
with the

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Commission pursuant to Section 18-103 of the Act (220 ILCS 5/18-103) for
issuance of a transitional funding order;

(ii) that the Commission has jurisdiction over ComEd and of the
subject matter of the Application and Petition and of this proceeding;

(iii) that CE Funding will be a "grantee" as such term is defined in
Section 18-102 of the Act (220 ILCS 5/18-102) and will be the initial owner
of the intangible transition property to be created by the Commission's
order; the Note Issuer will be an "issuer" and an "assignee" as such terms
are defined in Section 18-102 of the Act (220 ILCS 5/18-102); the Holders,
along with the Note Trustee, will be "holders" as such term is defined in
Section 18-102 of the Act (220 ILCS 5/18-102); and the Notes will be
"transitional funding instruments" as such term is defined in Section
18-102 of the Act (220 ILCS 5/18-102);

(iv) that the uses of proceeds described by ComEd in this
application constitute permissible uses of proceeds under Section
18-103(d)(1) of the Act (220 ILCS 5/18-103(d)(1)) and that the costs
described herein are commercially reasonable;

(v) that, as contemplated by Section 18-103(d)(2) of the Act, (220
ILCS 5/18-103(d)(2)), the expected maturity date for the Notes and the
final date on which the IFCs are authorized to be collected shall each
occur no later than December 31, 2008; provided

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<PAGE>

that, as set forth in Section 18-104(l) of the Act (220 ILCS 5/18-104(1)),
if the Notes have not been paid in full at such time, the right of the Note
Issuer to impose and collect IFCs (and the obligation of ComEd or its
successor to continue to deduct such IFCs from Applicable Rates) shall
continue beyond such date until such time as the Notes have been paid in
full;

(vi) that ComEd's proposal for deducting the proposed IFCs and
stating such charges separately from ComEd's or its successors' Applicable
Rates is consistent with the provisions of Section 18-103(d)(3) of the Act
(220 ILCS 5/18-103(d)(3));

(vii) that the proposed allocation of IFCs among ComEd's classes of
retail customers is consistent with the requirements of Section
18-103(d)(4) of the Act (220 ILCS 5/18-103(d)(4));

(viii) that the Servicer, on behalf of CE Funding, as a grantee, and
on behalf of the Note Issuer, as an assignee under the Act, is authorized
and directed to impose and collect IFCs from all customers of ComEd (or any
successor thereto) or any other persons or entities who are obligated to
pay ComEd (or any successor thereto) any Applicable Rates;

(ix) that in accordance with Sections 18-103(d)(5) and 18-111(3) of
the Act (220 ILCS 5/18-103(d)(5), 18-111(3)), imposition of IFCs in
accordance with the order will not cause the base rates, transition charges
or other rates for tariffed services paid by any

37
<PAGE>

retail customer of ComEd, class of retail customers of ComEd or other
person or group of persons obligated to pay any such rates (A) to exceed
the levels then in effect, as adjusted for the rate decreases required by
Section 16-111(b) of the Act (220 ILCS 5/16-111(b)), or (B) to increase
above the levels which ComEd would have been allowed to charge had it not
been authorized to impose and collect IFCs;

(x) that Table One of Attachment 1.4 to Ms. Gillis' testimony
(Exhibit 1.0), is a reasonable projection of the Expected Amortization
Schedule (it being understood that such schedule will be finalized only
when the Notes are priced);

(xi) that the amount of intangible transition property, which ComEd
has requested to be created in the amount of $6.323 billion does not exceed
the amount of intangible transition property which may be created and
established in accordance with Section 18-104(a) of the Act (220 ILCS
5/18-104(a));

(xii) that the maximum aggregate principal amount of Notes requested
to be issued hereunder does not exceed the amount permitted under Section
18-103(d)(6) of the Act (220 ILCS 5/18-103(d)(6));

(xiii) that, as contemplated by Section 18-104(j) of the Act
(220 ILCS 5/18-104(j)), the deduction of the IFCs from ComEd's (or its
successor's) Applicable Rates for tariffed services shall not be
construed as a change in or

38
<PAGE>

otherwise require a recalculation of the authorized amounts of such rates
and charges under Section 16-102, 16-107, 16-108 or 16-110 of the Act (220
ILCS 5/16-102, 16-107, 16-108, 16-110) or otherwise;

(xiv) that ComEd or any successor Servicer must allocate any
shortfall in payments received from any customer or any other person or
entity obligated to pay Applicable Rates first ratably to the Note Issuer
and ComEd based on the amount owed for IFCs and the amount of other fees
and charges, other than late charges, owed to ComEd or any successor (or to
an ARES to the extent the Servicer is providing billing services therefor),
and second, all late charges shall be allocated to ComEd or any successor;

(xv) that, consistent with the pledge of the State of Illinois
provided in Section 18-105(b) of the Act (220 ILCS 5/18-105(b)),
notwithstanding any other provision of law, none of the transitional
funding order, the intangible transition property created and established
pursuant thereto nor the IFCs authorized to be imposed and collected
thereunder shall be subject to reduction, postponement, impairment or
termination by any subsequent action of the Commission, all as provided in
Section 18-104(c) of the Act (220 ILCS 5/18-104(c)), and that the
Commission will not revoke, amend or otherwise change the tariffs
evidencing the Note Issuer's right to receive IFCs in any manner which
would defeat the legitimate expectations of the Holders to receive such
IFCs on a timely basis;

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<PAGE>

(xvi) that, consistent with and in furtherance of the provisions and
objectives of Sections 18-105(b), 18-107 and 18-108 of the Act (220 ILCS
5/18-105(b), 18-107, 18-108), to the full extent permitted by the Act and
by all other applicable law, the intangible transition property created and
established by the order and the right to impose and collect IFCs
contemplated thereunder will constitute property rights of CE Funding and
its assigns, including the Note Issuer and its assigns (including the Note
Trustee on behalf of Holders) which property has been placed beyond the
reach of ComEd and its creditors, as in a true sale, and which property
rights may not be limited, altered, impaired, reduced or otherwise
terminated by any subsequent actions of ComEd or any third-party and which
shall, to the full extent permitted by law, be enforceable as against
ComEd, its successors and assigns, and all other third-parties (including
judicial lien creditors) claiming an interest therein by or through ComEd
or its successors and assigns;

(xvii) that, as provided under Section 18-107(c) of the Act (220 ILCS
5/18-107(c)), the lien of the Note Trustee on the intangible transition
property shall: (A) attach automatically to such intangible transition
property from the time of issuance of the Notes; (B) be continuously
perfected through a filing with the Chief Clerk of the Commission; (C) be
enforceable against ComEd, CE Funding, the Note Issuer, and all third
parties, including judicial lien creditors; (D) from and after the filing
described in clause (B) above, constitute a continuously perfected security
interest in and lien on all then existing or thereafter arising revenues
and proceeds arising with respect to the associated intangible transition
property, whether or not the electric power and energy included in the

40
<PAGE>

calculation of such revenues and proceeds have been provided; (E) rank
prior to any other lien, including any judicial lien, which subsequently
attaches to the intangible transition property or to any other rights
created by the order or any revenues or proceeds of the foregoing; and (F)
not be defeated or adversely affected by changes to the order or to the
IFCs payable by any retail customer, class of retail customers or other
person or group of persons obligated to pay such IFCs nor by commingling of
revenues arising with respect to intangible transition property with any
funds of ComEd any successor, CE Funding or the Note Issuer;

(xviii) that, in order to ensure that the allocations of IFCs be
maintained across the broadest possible range of customers and in
accordance with Section 18-103(d)(4) of the Act (220 ILCS 5/18-103(d)(4))
and in order to ensure that the IFCs be non-bypassable as provided in the
Act, (A) the order shall, as a condition thereof require that neither ComEd
nor any successor thereto shall, enter into any contracts with any customer
obligated (or who would but for such contract be obligated) to pay IFCs if,
as a result thereof, such customer would not receive tariffed services,
unless the contract provides that the customer will pay an amount to CE
Funding or its assigns, as applicable, equal to the amount that would be
paid in IFCs if the services provided under such contract were tariffed
services, and (B) the Commission acknowledges and accepts the parties'
intent that, any revenues received by ComEd or such successor from any such
contract services, shall, to the extent of the authorized amount of the
IFCs included therein, be deemed to be proceeds of, and included in, the
intangible transition property created by the order;

41
<PAGE>

(xix) that, in the event of default by ComEd or any successor
Servicer in payment to or for the benefit of the Note Issuer of the IFCs,
the Commission, upon application by (A) the Note Trustee or the Holders as
beneficiaries of the lien provided for under Section 18-107(c) of the Act
(220 ILCS 5/18-107(c)), (B) the Note Issuer or its assignees, or (C)
pledgees or transferees of the intangible transition property, shall,
without limiting any other remedies of such persons, order the
sequestration and payment to or for the benefit of such persons of revenues
arising with respect to the intangible transition property;

(xx) that no third party servicer(s) shall be approved or required
to replace ComEd in any of its servicing functions in whole or in part
unless such approval or requirement will not cause the then current rating
of the Notes to be withdrawn or downgraded;

(xxi) that the Commission acknowledges that ComEd or any successor
Servicer, in order to perform its functions as Servicer and to provide
proper reporting to the Note Issuer and the Note Trustee, is obligated to
impose such terms with respect to credit and collection policies applicable
to third-party collection agents as may be reasonably necessary to prevent
the then current rating of the Notes from being downgraded;

(xxii) that ComEd, or any successor Servicer, may take any action
permitted by law, including but not limited to disconnection of electric
service, for failure to pay all or any portion of the IFCs billed to the
same extent as ComEd (or any successor thereto)

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<PAGE>

would be able to take such action because of nonpayment of any other charge
for tariffed service;

(xxiii) that concurrently with the issuance of each series of Notes by
the Note Issuer, ComEd will place into effect a tariff in the form of the
instrument funding charge tariff provided herewith as Exhibit 4.0, in
accordance with Sections 18-103(d)(3), 18-104(a) and 18-104(j) of the Act
(220 ILCS 5/18-103(d)(3), 18-104(a), 18-104(j)), directing that the amount
of IFCs associated with such series and with all previously-issued and
still outstanding series be applied and invoiced to all customers paying
Applicable Rates, and that such IFCs be deducted, stated, and collected
separately from the amounts otherwise billed by ComEd or its successor for
Applicable Rates and that, to allow for review by the Commission and its
Staff, such tariffs shall be filed with the Commission no later than three
business days prior to the date of issuance of the series of Notes, and
shall become effective on the date of issuance of such series of Notes, and
that upon the effectiveness of such tariff, all of the intangible
transition property related to the subject IFCs shall constitute a current
property right and shall thereafter continuously exist as property for all
purposes;

(xxiv) that each of the creation and vesting of the intangible
transition property in CE Funding (including the right to obtain
reconciliation and true-up adjustments to the IFCs) and the transfer of the
intangible transition property from CE Funding to the Note Issuer shall
constitute an "absolute transfer" (within the meaning of Section 18-108 of
the

43
<PAGE>

Act (220 ILCS 5/18-108)) of any right, title and interest ComEd or CE
Funding, as applicable, may otherwise have had in the intangible transition
property created by the order, including any right ComEd may otherwise have
had to receive that portion of base rates, transition charges and other
Applicable Rates which has been deducted and stated separately pursuant to
the order, or to receive any proceeds thereof, and that such transfer shall
be irrevocable and enforceable as against ComEd and CE Funding or their
respective successors;

(xxv) that the intangible transition property created by the order,
as contemplated in the definition set forth in Section 18-102 of the Act
(220 ILCS 5/18-102), includes the IFCs and all related revenues,
collections, claims, payments, money or proceeds thereof;

(xxvi) that, as contemplated by Section 18-108 of the Act (220 ILCS
5/18-108), the property interest of CE Funding and the Note Issuer in the
intangible transition property created by the order shall not be defeated
by the commingling of such property with funds of ComEd (or any successor
thereto) or any other funds (including, but not limited to, funds of an
ARES) and that, accordingly, in the case of any such revenues, collections,
claims, payments, money or proceeds which are commingled with such other
property, revenues, collections or other payments, the portion allocable
to the IFCs may be determined by such reasonable methods of estimation as
are set forth in the Servicing Agreement contemplated by the order;

44
<PAGE>

(xxvii) that the Notes will be non-recourse except as to, and will be
secured only by and payable solely out of the proceeds of, the following
property: (A) the intangible transition property, (B) all rights of the
Note Issuer under the servicing agreements with ComEd (or any successor
servicer of the intangible transition property) and under any other
agreements entered into by the Note Issuer in connection with the
transaction, (C) any bank collection accounts, investment accounts or
similar reserve accounts established in connection with the issuance of the
Notes and all cash or investment property or other amounts on deposit
therein from time to time, (D) solely with respect to Notes, if any, which
bear a floating rate of interest, any interest rate hedging agreement
executed solely to permit the issuance of such Notes, (E) all rights to
obtain adjustments to the IFCs in accordance with Section 18-104(d) of the
Act (220 ILCS 5/18-104(d)), (F) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing, and
(G) all payments on or under and all proceeds in respect of any or all of
the foregoing (collectively, the "Note Collateral"); provided, however,
that notwithstanding the non-recourse nature of the transaction, ComEd
(individually, as Servicer, or otherwise) may (A) make representations and
warranties with respect to, among other things, the validity of CE
Funding's and its assignees' title to the intangible transition property,
(B) observe covenants for the benefit of CE Funding and its assignees, (C)
indemnify CE Funding and its assignees against any breaches of such
representations, warranties and covenants and to protect such parties
against other losses which result from actions or inactions of ComEd, and
(D) agree to remit to the Note Trustee, for the benefit of the Holders, a
portion of payments which it receives on account of lost tariffed

45
<PAGE>

revenues from which future IFCs would otherwise have been deducted, which
portion it has agreed constitutes proceeds of such IFCs;

(xxviii) that the Holders and the Note Trustee for the benefit of the
Holders shall be entitled to the benefit of the pledges and agreements of
the State of Illinois set forth in Section 18-105(b) of the Act (220 ILCS
5/18-105(b)) and that each of ComEd, CE Funding and the Note Issuer is
authorized to include such pledges and agreements in any contract with the
Holders, the Note Trustee or with any assignees pursuant to Section
18-105(b) of the Act (ID.);

(xxix) that all of the terms and provisions of the order binding on
ComEd (whether individually or as Servicer) shall, to the fullest extent
permitted by applicable law, be binding on ComEd's successors and assigns,
including any successor electric utility which takes over the provisions of
delivery services or other tariffed services within all or any part of
ComEd's service area as of the date of the order or any time thereafter;
and

(xxx) that ComEd shall file periodic reports with the Commission
setting forth the use of proceeds from each issuance of Notes and ComEd's
associated accounting entries, such reports to be filed within 90 days of
the receipt of proceeds from each issuance of Notes and at twelve-month
intervals thereafter until such proceeds have been fully accounted for, and
that such procedures will assure the proceeds from the Notes are

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<PAGE>

applied in accordance with the Commission's order as required by Section
18-111(4) of the Act (220 ILCS 5/18-111(4)).

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<PAGE>

WHEREFORE, Commonwealth Edison Company requests that the Commission,
in accordance with Section 18-104(g) of the Act (220 ILCS 5/18-104(g)), issue a
transitional funding order which "afford[s] flexibility in establishing the
terms and conditions of the [Notes], including repayment schedules, collateral,
required debt service and other reserves, interest rates and other financing
costs and the ability of [ComEd], at its option, to effect a series of
issuances" of Notes. Accordingly, Commonwealth Edison Company requests that the
Commission enter the transitional funding order attached hereto as Exhibit 6.0.

Respectfully submitted,

COMMONWEALTH EDISON COMPANY

BY:
----------------------------------
Ruth Ann M. Gillis
Vice President and Treasurer

Of Counsel:

David M. Stahl
Anastasia M. Polek
SIDLEY & AUSTIN
One First National Plaza
Chicago, Illinois 60603
(312) 853-7000

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<PAGE>

STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )

VERIFICATION

Ruth Ann M. Gillis, having been duly sworn upon her oath, deposes and
states as follows:

1. My name is Ruth Ann M. Gillis. I am Vice President and Treasurer
of Commonwealth Edison Company.

2. I have reviewed the foregoing Application for Transitional Funding
Order and Petition, am familiar with the facts set forth therein and verify
that, to the best of my knowledge and belief, these facts are true and correct.

--------------------------------------------
Ruth Ann M. Gillis

SUBSCRIBED and SWORN
to before me this ______ day
of April, 1998.

- ------------------------------------------------
Notary Public

My commission expires:
--------------------------

<PAGE>

EXHIBIT 99.2
TRANSITIONAL FUNDING ORDER

STATE OF ILLINOIS

ILLINOIS COMMERCE COMMISSION

COMMONWEALTH EDISON COMPANY :
:
APPLICATION FOR TRANSITIONAL FUNDING ORDER :
PURSUANT TO SECTION 18-103 OF THE ILLINOIS :
PUBLIC UTILITIES ACT AND REQUEST FOR APPROVAL : 98-0319
OF TRANSACTIONS WITH AFFILIATES PURSUANT TO :
SECTIONS 7-101, 7-102 AND 7-204A AND :
APPROVAL OF AN INSTRUMENT FUNDING CHARGE :
TARIFF. :

ORDER

By the Commission:

On April 22, 1998, Commonwealth Edison Company ("ComEd") filed with the
Illinois Commerce Commission ("Commission") a verified Application for
Transitional Funding Order and Petition ("Application"). ComEd requested a
transitional funding order ("TFO") pursuant to Section 18-103 of the Public
Utilities Act (hereinafter all Section citations refer to the Public Utilities
Act and will not be restated) in order (i) to establish non-bypassable charges
expressed in cents per kWh which would, from and after the effective date of the
associated tariff, constitute instrument funding charges ("IFCs") (as defined in
Section 18-102) which will be applied and billed to all customers and other
persons or entities obligated to pay ComEd (or any successor thereto) any
"Applicable Rates" (as defined below), (ii) to grant to ComEd Funding, LLC ("CE
Funding") rights to all "intangible transition property" ("ITP") (as defined in
Section 18-102) which relates to such IFCs and (iii) to authorize and approve
the assignment by CE Funding of such ITP and the issuance by the assignee of
"transitional funding instruments" ("TFIs") (as defined in Section 18-102). The
IFCs would be deducted from and stated separately from the Applicable Rates
charged on each customer's or other person's or entity's bill. The right to
receive the IFCs would constitute a current property right granted to and vested
in CE Funding, a limited liability company whose sole member will be ComEd. CE
Funding would, in turn, assign the right to receive the IFCs and certain other
property to ComEd Transitional Funding Trust, a special-purpose Delaware
business trust (the "Note Issuer") established to issue the Notes (as defined
below), and the right to receive the IFCs would be vested in the Note Issuer.

<PAGE>

CE Funding will be a "grantee," and the Note Issuer will be an "assignee," as
such terms are defined in Section 18-102. ComEd also requested (1) pursuant to
Sections 7-101, 7-102 and 7-204A, approval of an administrative agreement among
ComEd, CE Funding and the Note Issuer, (2) pursuant to Section 7-101, approval
of certain transactions with affiliates, and (3) approval of an IFC tariff.

During the pendency of these proceedings, appearances or petitions to
intervene were filed by the Staff of the Commission ("Staff"); the People of the
State of Illinois by the Illinois Attorney General (the "Attorney General"); the
People of Cook County by the Cook County State's Attorney ("Cook County"); the
City of Chicago (the "City"); a group of electric industrial customers known as
Illinois Industrial Energy Consumers ("IIEC");Enron Energy Services, Inc.
("Enron"); and an individual customer, Saul R. Wexler ("Wexler"). All of these
petitions were granted by the Hearing Examiners.

In their petitions to intervene, various parties referred to the effect of
the TFO on customers. This Order is intended to ensure, and does ensure, that
issuance of the Notes as required by Section 18-103(d)(5), will not cause the
rates for tariffed services to increase over the rates then in existence as
adjusted for the rate decreases provided in subsection (b) of Section 16-111.
Similarly, issuance of the Notes will not adversely affect the total amount of
rates paid by, or the terms or conditions of service provided to, customers.

Pursuant to notice as required by law and the rules and regulations of the
Commission, the matter came on for a status hearing before duly authorized
Hearing Examiners at the offices of the Commission in Chicago, Illinois, on May
7, 1998. Evidentiary hearings were held on June 4, 5 and 8, 1998. ComEd, Staff
and the other parties appeared by counsel. ComEd presented the testimony of Ruth
Ann M. Gillis, Vice President and Treasurer of ComEd; Lawrence S. Alongi,
Director of Rates of ComEd; Daniel E. Thone, Director of Financial Planning of
ComEd; Dr. Willard T. Carleton, Karl Eller Professor of Finance, University of
Arizona and Trustee, Teachers Insurance and Annuity Association; William A.
Abrams, President of Wm. A. Abrams Company, a financial consulting firm; Donald
L. Ocwieja, Director of the Treasury Department of ComEd; and Ellen Lapson,
Senior Director of Fitch IBCA, Inc. Staff presented the testimony of Scott
Rungren, Senior Financial Analyst, Finance Department, Financial Analysis
Division of the Commission; Garret E. Gorniak, Auditing Section, Accounting
Department, Financial Analysis Division; William G. Saxe, Rates Department,
Financial Analysis Division; and Dr. Eric P. Schlaf, Policy Program, Energy
Division of the Commission. Enron presented the testimony of Harry J. Kingerski,
its Director, Rates and Tariffs. At the close of the hearing on June 8, 1998,
the record was marked "Heard and Taken."

Initial briefs were submitted by ComEd, Staff, Enron, City, IIEC and
Wexler. Reply briefs were submitted by ComEd, Staff, Enron, and IIEC. The
Hearing Examiners' Proposed Order was issued on June 23, 1998. Thereafter,
Briefs on Exceptions were

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<PAGE>

filed by ComEd, Staff, Enron, City and Wexler. Further, Reply Briefs on
Exceptions were filed by ComEd, Staff, Enron and Wexler.
I. COMED'S APPLICATION.

ComEd has requested a TFO pursuant to the provisions of Article XVIII in
order to establish non-bypassable charges expressed in cents per kWh which will,
from and after the effective date of the associated tariff, constitute IFCs
which will be applied and billed to all customers and other persons or entities
obligated to pay ComEd (or any successor thereto) any "Applicable Rates" (as
defined in Section IV below). The IFCs will be deducted from and stated
separately from the Applicable Rates charged on each customer's or other
person's or entity's bill. Therefore, the IFCs will neither increase nor
decrease the total amount of the bill. The right to receive the IFCs will
constitute a current property right granted to and vested in CE Funding. CE
Funding will, in turn, assign the right to receive the IFCs and certain other
property to the Note Issuer and, as a result, the right to receive the IFCs will
thereafter be vested in the Note Issuer. The Note Issuer will issue notes (the
"Notes") to be classified as TFIs under Section 18-102. CE Funding will be a
"grantee," and the Note Issuer will be an "assignee," as such terms are defined
in Section 18-102. ComEd also seeks other approvals relevant to the subject
transaction, including approval of certain affiliated transactions and of its
proposed IFC tariff.

II. BACKGROUND OF THE TRANSACTION AND SECURITIZATION GENERALLY.

As contemplated by Article XVIII, the Notes will be "asset-backed
securities." A key feature of any such securities is that the asset or group of
assets underlying the asset-backed securities be "bankruptcy-remote" from the
entity originating such asset or group of assets, which in this case is ComEd.
More specifically, an asset-backed security must be secured by, and payable
solely from, a cash flow stream associated with an identifiable asset, the
collections from which are sufficient to pay debt service and related costs, and
the ownership of that asset must be vested in a limited-purpose entity, such as
a special-purpose corporation, trust or limited liability company, which is
insulated from the bankruptcy and credit risks of the originating entity. As a
result, the securities issued by such entity and secured by, and payable solely
out of, that cash flow stream should have less credit risk than debt securities
issued by the originating entity, here, ComEd, and investors therefore should be
willing to accept a lower rate of return for the asset-backed security than for
such other debt securities, as contemplated by Section 18-103(d).

In order to satisfy the requirement of bankruptcy remoteness, the proposed
transaction must be structured to ensure that, if ComEd were to become the
subject of a bankruptcy proceeding, the ITP would not be part of ComEd's
bankruptcy estate and therefore would not be subject to the claims of its
creditors. This goal is explicitly set forth in Section 18-108, which provides
that a sale, assignment or other transfer of ITP in a transaction approved by a
TFO "shall be treated as an absolute transfer of all of the

3
<PAGE>

transferor's right, title and interest in, to and under such intangible
transition property...which places such transferred property beyond the reach of
the transferor or its creditors". The subject transaction would isolate the
property right from ComEd and its creditors by, among other things, causing the
ITP to be granted directly to CE Funding (rather than being vested in ComEd and
transferred to CE Funding). The ITP then will be assigned by CE Funding to the
Note Issuer so as to vest such property rights in the Note Issuer.

A second element of the bankruptcy analysis focuses on the separate legal
status of ComEd, CE Funding and the Note Issuer. Although ComEd will be the sole
member of CE Funding, the transaction will be structured so that, in the event
of a bankruptcy of ComEd, CE Funding's separate corporate existence would be
respected and the assets and liabilities of CE Funding and the Note Issuer, as
CE Funding's assignee, would remain separate from the estate of ComEd. The
structural elements supporting such separate existence include, but are not
limited to, requirements that CE Funding be adequately capitalized, that ComEd
be adequately compensated on an arms'-length basis for the servicing functions
it performs in billing, collecting and remitting the IFCs on behalf of the Note
Issuer and that each of ComEd and CE Funding take certain steps to ensure that
creditors are not misled as to their separate existence. These structural
protections are very important because, without such protections, a bankruptcy
court might invoke the doctrine of "substantive consolidation" and disregard CE
Funding's separate existence. Substantive consolidation is an equitable doctrine
in bankruptcy cases which allows courts to disregard the separate existence of
two or more affiliated entities to ensure the equitable treatment of all
creditors and to maximize creditor recoveries. When entities are "substantively
consolidated" in a bankruptcy proceeding, their assets and liabilities are
pooled, thereby eliminating intercompany claims, and claims of third-party
creditors against any of those entities are generally treated as claims against
the common pool of assets created by consolidation.

Another important component in obtaining the desired credit rating for the
Notes is that the revenue stream associated with the IFCs must be secure. The
IFCs will be collected from all customers and other persons and entities
obligated to pay ComEd (or any successor thereto) any Applicable Rates, and the
credit rating for the Notes will depend on the predictability and stability of
that revenue stream even under financial stress or changes in circumstances.
Consistent with this goal, Article XVIII specifies that the grant of ITP,
once approved, is non-rescindable by the State and that the IFCs become
non-bypassable so long as a customer or other person or entity is obligated
to pay ComEd any base rates, transition charges or other rates for tariffed
services from which such IFC has been deducted and stated separately (Section
18-102). For example, customers who choose an alternative retail electric
supplier ("ARES") must continue to pay, (and in the event the ARES is
providing billing services, the ARES must remit on behalf of such customers)
applicable IFCs, and ComEd must continue to impose and collect such IFCs and
deduct and state separately such charges from its delivery and transition
charges and other Applicable Rates (as defined below).

4
<PAGE>

Similarly, to ensure that the stream of revenues is derived from a broad group
of customers, and therefore more secure, ComEd will not enter into any contract
with a customer who is, or who otherwise would be, obligated to pay IFCs unless
the customer agrees to pay CE Funding or its assigns, as applicable, an amount
equal to the amount that would be paid in IFCs if the customer took tariffed
services. ComEd, CE Funding and the Note Issuer also will agree that any
revenues received by ComEd from any such contract services shall, to the extent
IFCs would be assessed if such services were tariffed, be deemed to be proceeds
of, and included in, the ITP. In addition, if customers cease to take delivery
services and become obligated to pay to ComEd fixed payments of transition
charges under Section 16-108(h) or if ComEd becomes entitled to receive any
similar payments, then the portion of such payments allocable to the IFCs must
be promptly remitted by ComEd to the Note Trustee.

Further, Article XVIII expressly recognizes that additional credit
enhancement mechanisms, such as periodic true-up and reconciliation adjustments,
overcollateralization amounts and reserve funds, may be required. The aim of all
of these mechanisms is to give rating agencies and investors comfort, upon which
they can rely, that the IFCs and associated collections will be sufficient in
almost all circumstances to pay the interest and principal on the Notes on a
timely basis, again so as to justify a higher credit rating and lower cost of
funds than otherwise would be the case.

As mentioned above, one important credit enhancement mechanism is the use
of true-up and reconciliation adjustments. Section 18-104(d) expressly provides
that the Commission shall include in its order a procedure for periodic
adjustments, referred to herein as "reconciliation" and "true-up" adjustments,
to reconcile from time to time the IFCs received with the amortization schedule
for the Notes and to ensure adequate funds for paying interest and related fees
and expenses and for funding and maintaining required reserves. Through such
adjustments, investors' exposure to losses due to shortfalls in projected sales
of electricity, longer than estimated delays in bill collections and higher than
estimated bill uncollectibles is significantly mitigated.

Further, to ensure security of the revenue stream attributable to the ITP,
ComEd included in its proposed IFC tariff procedures that would apply whenever a
third party, which would include an ARES that is required to collect IFCs on
behalf of the Note Issuer, bills or collects IFCs on behalf of the applicable
customer. Such procedures include requirements that would (A) require any such
third party to remit IFC collections to the Servicer (as defined below) within
two business days of receipt, (B) allow the Servicer, within seven days after a
default by any such third party in remitting IFC collections, to assume or
transfer to another third party that defaulting entity's billing and collection
responsibilities, (C) grant the Servicer access to information not otherwise
available to the Servicer on kWh usage by the applicable retail customers to the
extent reasonably required for the Servicer to calculate and, if applicable,
bill the related IFCs owed by such customers, and (D) authorize ComEd to impose
such other terms with respect to credit and collection policies as may be
reasonably necessary to

5
<PAGE>

prevent the then current rating of the Notes from being withdrawn or
downgraded. Such procedures shall be designed to minimize the risk that
defaults by third-party collection agents will trigger the need for higher
IFCs through the true-up adjustments. To the extent that ARES act as such
third-party collection agents, ComEd will include a reference in any tariffs
filed by it under Section 16-118(b) to the provisions contained in the IFC
tariff. During the course of the hearings, additional testimony was proffered
regarding these issues. A discussion of that testimony and the arguments
raised by the parties is contained in Section VII below.

Another important mechanism of credit enhancement is overcollateralization,
which is commonly required in asset-backed securities transactions. Section
18-104(a) expressly provides that the amount of the ITP may be in excess of
the principal and interest on the TFIs in order to provide for, among other
things, the funding and maintenance of debt service and other reserves as
security to the holders of such instruments. In the subject transaction, it
is anticipated that CE Funding will be required to transfer capital to the
Note Issuer in an amount at least equal to 0.50% of the initial aggregate
principal amount of the Notes. Such funds may be contributed out of the net
proceeds from the Notes and will be used to pay debt service and related fees
and expenses in the event of a shortfall in IFC collections. In addition, in
order to enhance the likelihood that payments on the Notes will be made in
accordance with the schedule of expected amortization of principal of such
Notes (the "Expected Amortization Schedule"), which will be finalized at
pricing, ComEd has requested that the Commission set the IFCs at levels that
are expected to produce IFC collections which exceed the amounts required to
pay principal and interest on the Notes, and to pay all related fees and
expenses. This additional amount (the "Overcollateralization Amount") will be
collected approximately ratably over the expected life of the Notes (I.E.,
over the period from the issue date of the Notes through the latest scheduled
maturity date for any of the Notes as set forth in the Expected Amortization
Schedule). The Overcollateralization Amount will be held in a designated
subaccount for the benefit of the holders of the Notes. The actual
Overcollateralization Amount and the timing of the collection thereof will be
finalized prior to the issuance of the Notes and will depend on rating agency
requirements, investor requirements, tax considerations and other legal and
financial concerns at the time of issuance.

Another important feature of the proposed transaction is that IFCs will be
deducted and stated separately from amounts which ComEd otherwise would be
entitled to bill. The offsetting nature of the IFCs is an important customer
protection because it allows ComEd to receive the many benefits associated with
asset-backed securities while protecting customers from paying more for services
provided by ComEd than they would pay absent the transaction described in this
TFO.

An additional feature of the transaction is the State pledge. Pursuant to
Section 18-105(b), the State of Illinois has pledged and agreed that it will not
limit, alter, impair or reduce the value of the ITP or the IFCs. ComEd, CE
Funding and the Note Issuer

6
<PAGE>

will include this pledge in any contract with holders of the Notes, the Note
Issuer or with any assignees and other appropriate transaction documents. It is
contemplated that holders will rely on this commitment in purchasing the Notes
and that the rating agencies will rely on this commitment in assigning a credit
rating to the transaction.

A final key component of the transaction is that the Notes be treated for
federal income tax purposes as debt of ComEd and not as a sale of assets. The
economic benefits of the transaction could be eliminated effectively if the
issuance of the Notes resulted in current income to ComEd upon receipt of the
proceeds of the Notes, or if ComEd were unable to deduct the interest payments
on the Notes from taxable income. Accordingly, ComEd has requested a private
letter ruling from the Internal Revenue Service (the "IRS") to the effect that,
among other things, the issuance of the Notes and transfer of the proceeds to
ComEd will not result in gross income to ComEd, CE Funding or the Note Issuer
and that the Notes will constitute obligations of ComEd for federal income tax
purposes. Should the IRS not provide such a ruling, or rule adversely, ComEd
will reassess the transaction and, if possible, modify the transaction as needed
to eliminate the risk of current taxation. If any such modifications would cause
the structure to be outside of the bounds described in the Application, or
otherwise approved by the Commission, ComEd will take appropriate steps to seek
additional Commission approval.

III. DESCRIPTION OF PROPOSED TRANSACTION.

CE Funding will be created as a Delaware special-purpose limited liability
company, the sole member of which will be ComEd. The Note Issuer will be created
as a special-purpose Delaware business trust whose purpose and business
activities will be limited to such matters as are necessary or reasonably
related to the issuance of the Notes. The holders of the Notes will not be
entitled to exercise managerial control over the Note Issuer. The declaration of
trust establishing the Note Issuer will be further structured, however, so as to
preclude ComEd or CE Funding (or any elected officer or director of ComEd or of
any other "affiliated interest" within the meaning of Section 7-101) from
exercising control over the Note Issuer's operations or policies as long as the
Notes remain outstanding.

CE Funding will assign to the Note Issuer the ITP and all of its rights
under any related servicing agreements with ComEd. The Note Issuer will issue
and sell the Notes to investors (the "Holders") in an offering to be detailed in
an offering document for each issuance and sale of one or more series (each a
"Series") of such Notes. Each Series of Notes may be subdivided into one or more
classes ("Classes"). The Notes will be secured pursuant to the terms of an
indenture (the "Note Indenture") with an independent trustee (the "Note
Trustee"). The Notes will constitute "TFIs" under the Act.

The Notes will have an initial aggregate principal amount of not greater
than $3.4 billion, which amount does not exceed 25% of ComEd's total
capitalization

7
<PAGE>

(including both debt and equity) of $13,623,912,000, as of December 31, 1996
("1996 Total Capitalization"), calculated as required by Section
18-103(d)(6)(A). The ratio of ComEd's revenues from Illinois electric utility
retail customers in the 1996 calendar year to total electric retail revenues
for that year was 100%. ComEd may present subsequent applications for TFOs,
provided that the aggregate amount of all authorized grantee instruments or,
absent grantee instruments, TFIs (including the Notes), shall not exceed 50%
of ComEd's 1996 Total Capitalization, or approximately $6.8 billion, as
required by Section 18-103(d)(6)(B) and, as adjusted, pursuant to Section
18-103(d)(6)(A).

If the Notes have call or prepayment options and interest rates decline,
the Note Issuer could seek to refinance the Notes in order to take advantage of
lower interest rates. Through the true-up mechanism, any reduction in debt
service costs would reduce the level of IFCs thereafter charged. If the proceeds
of any such refinancing were used solely to repay outstanding Notes and did not
result in any increased debt service, no additional ITP would be created by such
a refinancing and the replacement Notes would not be a new issuance to be
counted towards the aggregate limits described above. ComEd would be required,
however, to notify the Commission of any changes in terms and seek approval for
any changes in terms or conditions of the refinancing which do not conform to
the requirements of this TFO.

The Notes, except to the extent specifically requested in a subsequent
application and authorized in a subsequent order relating to a Series other than
the initial Series, will have an expected maturity date of no later than
December 31, 2008. Both the latest expected maturity date of the Notes and the
final date on which IFCs are authorized to be imposed will be on or before
December 31, 2008. Section 18-104(l), however, provides that IFCs may continue
to be imposed beyond such date, if necessary, until the corresponding Notes have
been paid in full. ComEd has represented that the debt service schedule and
Expected Amortization Schedules for the Notes have been and will be calculated
to support full repayment of the Notes by the expected maturity date. In
addition to the expected maturity date, the rating agencies may require that the
Notes have a "legal final" date later than the expected maturity date which will
be the first date on which investors may exercise certain extraordinary
remedies. The use of such a "legal final" date in the documents will not extend
the date beyond which IFCs may be charged except as already permitted under
Section 18-104(l).

It is expected that the principal amount of the Notes will be paid in
approximately equal payments each year over the life of the Notes. ComEd's
projection for the Expected Amortization Schedule is attached hereto as Schedule
1.

It will be a condition of the offering that, at the time of issuance, the
Notes receive ratings from one or more nationally recognized statistical rating
agencies which would cause each Class of Notes to be rated in one of the four
highest categories assigned to debt instruments by such agency or agencies.

8
<PAGE>

The Notes will be non-recourse except as to, and will be secured only by
and payable solely out of the proceeds of, the following property: (A) the ITP,
(B) all rights of the Note Issuer under the servicing agreements with ComEd (or
any successor Servicer of the ITP) and all rights and property interests under
any other agreements entered into by or for the benefit of the Note Issuer in
connection with the transaction, (C) any bank collection accounts, investment
accounts or similar reserve accounts established in connection with the issuance
of the Notes and all cash or investment property or other amounts on deposit
therein from time to time, (D) solely with respect to Notes, if any, which bear
a floating rate of interest, any interest rate hedging agreement executed solely
to permit the issuance of such Notes, (E) all rights to obtain adjustments to
the IFCs in accordance with Section 18-104(d), (F) all present and future
claims, demands, causes and choses in action in respect of any or all of the
foregoing, and (G) all payments on or under, and all proceeds in respect of, any
or all of the foregoing (collectively, the "Note Collateral").

Notwithstanding the non-recourse nature of the transaction, ComEd
(individually, as Servicer or otherwise) will be required under the transaction
documents (A) to make certain representations and warranties with respect to,
among other things, the validity of CE Funding's and its assignees' title to the
ITP and (B) to observe certain covenants for the benefit of CE Funding and its
assignees. ComEd also will be required to indemnify CE Funding and its assignees
against any breaches of such representations, warranties and covenants and to
protect such parties against certain other losses which result from actions or
inactions of ComEd. Such indemnification typically is required in securitization
transactions and will not in any event cover credit losses due to the failure of
customers to pay their bills on a timely basis or losses in IFC collections due
to shortfalls in projected electricity usage. Also, as noted earlier, ComEd may
be required under the documents to remit to the Note Trustee, for the benefit of
the Holders, a portion of payments which it receives on account of lost tariffed
revenues from which future IFCs otherwise would have been deducted, which
portion it has agreed constitutes proceeds of such IFCs. Section 18-104(a)
requires that, except as otherwise described in the TFO, the TFIs will be
"non-recourse to the credit or to any assets of the electric utility other
than assets comprising intangible transition property or grantee instruments,
as applicable." ComEd believes that the limited indemnification and other
provisions described above do not conflict with the general requirement that
the Notes be non-recourse to the credit or assets of ComEd. Nonetheless, in
order to avoid any misunderstanding, ComEd has requested that the Commission
acknowledge the foregoing provisions in its Order.

ComEd currently anticipates that the Notes will be fixed-rate instruments.
Depending on market conditions at the time of the offering, however, it may
result in lower debt service costs for the Note Issuer to issue floating rate
Notes and then to enter into interest rate swaps or other hedging arrangements.
Accordingly, each Series of Notes may include one or more Classes of floating
rate Notes which accrue interest at a variable rate based on the index described
in the applicable offering document. If floating rate Notes are issued, the Note
Issuer will be required to enter into interest rate

9
<PAGE>

swaps or other hedging arrangements to protect the Note Issuer against the risk
that interest rate fluctuations would cause such floating rates to exceed the
fixed rates used to calculate the IFCs. In such event, ComEd would use the fixed
rate hedging cost and not the variable interest rate on the Notes to set the
level of IFCs.

ComEd will act as Servicer (in such capacity, together with any
successor-in-interest, the "Servicer") for CE Funding under the transaction
documents, pursuant to a servicing agreement (the "Servicing Agreement")
authorized under Section 18-104(f). CE Funding's rights under the Servicing
Agreement will be assigned to the Note Issuer. The documents will contain
provisions allowing the Servicer to be replaced under limited circumstances,
as contemplated by Section 18-104(f). The Servicer will be paid a servicing
fee in consideration for billing and collecting the IFCs on behalf of the
Note Issuer, calculating the true-up and reconciliation adjustments described
herein, and performing related services. It is important for the bankruptcy
analysis described above that this servicing fee be set on an arms'-length
basis. Although the final determination of such amount will depend on the
outcome of the rating agencies' review of the proposed transaction and
further analysis by ComEd of its servicing costs, it is expected that the
annual servicing fee will not exceed 0.25% of the initial aggregate principal
amount of the Notes (I.E., $8.5 million). In the event that IFCs are not
billed concurrently with other charges for services, the servicing fee will
be higher to reflect additional costs related thereto. It is not expected
that the annual servicing fee in such circumstances would in any event exceed
1.25% of the initial aggregate principal amount of the Notes (I.E., $42.5
million).

Pursuant to the terms of the Note Indenture, a collection account (the
"Collection Account") will be established and held by the Note Trustee for the
benefit of the Holders. The Collection Account will consist of four
subaccounts: a general subaccount, a reserve subaccount, a capital subaccount,
and, as discussed above, a subaccount for the Overcollateralization Amount.
Because of difficulties inherent in tracking IFC collections on a daily basis,
the transaction documents may contain procedures for determining the estimated
amounts of aggregate collections which are allocable to the IFCs, which
allocations will be subject to periodic reconciliations but otherwise will be
deemed conclusive. The collections on the IFCs will be remitted periodically to
the general subaccount and used to pay interest due and principal owed on the
Notes, trustee fees, servicing fees and certain other operating expenses
associated with the transaction and to replenish the capital subaccount to the
extent funds are withdrawn therefrom. IFC collections which exceed such required
payments will be transferred to the overcollateralization subaccount until the
amounts on deposit therein equal the Overcollateralization Amount (which may
increase over time). Thereafter, a limited amount of funds up to the current net
earnings on the funds in the Collection Account may be released to the Note
Issuer or as it directs. Otherwise, however, excess collections will be set
aside in the reserve subaccount for distribution to Holders in the event of
future IFC collection shortfalls. If, on any scheduled payment date for
principal or interest on the Notes or any related fees or expenses owed by the
Note Issuer, the amounts on deposit in the general subaccount of the Collection

10
<PAGE>

Account are insufficient for the Note Issuer to make such payments, funds on
deposit in the other collection subaccounts will, to the extent required under
the transaction documents, be withdrawn in order to satisfy such shortfalls.
Reconciliation calculations for future periods will reflect any balances in the
Collection Account which exceed the required reserve levels and will also
reflect any amount by which such balances are less than required reserve levels.
Similarly, true-up calculations will reflect amounts by which such balances are
less than the required reserve levels.

Certain details regarding the issuance of the Notes -- such as the average
interest rate, expected principal amortization and the level of required
reserves and the timing of funding thereof -- will not be able to be determined
until the time such Notes are issued. ComEd will file a statement of the final
terms of any Series of Notes with the Commission within 90 days of the receipt
of proceeds therefrom as required under Section 18-104(h).

IV. DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY AND INSTRUMENT FUNDING
CHARGES.

The ITP to be created pursuant to this order will represent primarily the
total IFCs expected to be billed over time. The IFCs, in turn, will be
calculated to generate sufficient revenues to pay the principal of the Notes in
accordance with the Expected Amortization Schedule, pay interest on the Notes,
together with servicing fees and other fees, costs and charges related thereto,
and to fund and/or maintain any required reserves in the collection subaccounts
described above, after giving effect to delays in bill collections and
uncollectibles. The aggregate dollar amount of IFCs scheduled to be received
over time will be a function of the average interest rate at closing, the other
costs of the transaction (e.g., ongoing fees and expenses), the timing and
amounts of overcollateralization or other forms of credit enhancement required
by the rating agencies and acceptable to the IRS, and other factors which may
not be known definitively until the issuance of the Notes. Moreover, the actual
aggregate dollar amount of IFCs will vary based upon, among other things, the
actual amount and timing of IFC collections, the actual fees and expenses
incurred and the actual earnings on amounts deposited into the Collection
Account. It is expected that the rating agencies will require, as a condition of
assigning a high credit rating to the Notes, that the authorized amount of the
ITP be sufficiently large to support repayment of the Notes notwithstanding any
delays in collections resulting from shortfalls in projected sales of
electricity, from adverse changes in customer payment patterns, from increases
in fees and expenses payable under the transaction, or from other circumstances
which may affect payments due on the Notes adversely. Accordingly, ComEd has
requested the Commission to authorize the creation and establishment of ITP in
an aggregate amount of $6.323 billion as described in the testimony of Ms.
Gillis. (ComEd Ex. 1.0). Such amount is less than the $12,735,160,000, rate
base established in ComEd's most recent rate case (Docket 94-0065) prior to
January 1, 1998, and is therefore within the amount of ITP authorized under
Section 18-104(a).

11
<PAGE>

The aggregate amount of the IFCs to be imposed at any time and from
time-to-time will be a function of, among other things, the principal amount and
expected maturity of, and scheduled amortization and interest rates on, the
Notes when issued, the levels of reserves maintained and required to be
maintained and the levels of fees and expenses related to the transaction, the
projections of electricity usage for the periods during which the Notes will be
issued and outstanding, the projected average timing of receipt of collections
from customers, the projections of uncollectibles, and the actual amount and
timing of IFC collections previously received. Based on the foregoing factors,
an amount (the "Debt Service Billing Requirement" or "DSBR") will be calculated
for each period as the amount of IFCs which must be billed in order to ensure
that IFC collections for such period will be sufficient to make all required
payments, including funding or replenishing any required reserves. The method
for calculating the DSBR was described in ComEd Ex. 1.0.

As required by Section 18-103(d)(4), the DSBR used to determine the
aggregate level of IFCs billed will be allocated among classes of retail
customers in accordance with percentage ratios determined by dividing the base
rate revenue from each such class by ComEd's total base rate revenue for the
1996 calendar year. The method for making such allocation was described in ComEd
Ex. 2.0, was found to be reasonable by Staff (Staff Ex. 3.0), and is reasonable
and appropriate. Based on the assumptions as to (A) pricing, amortization, fees
and expenses, issuance date, collection history, reserves and the timing of
payments with respect to the Notes used to calculate the DSBR, as set forth in
ComEd Ex. 1.0, (B) the timing of true-up and reconciliation adjustments set
forth in ComEd Ex. 2.0, (C) the allocations among customer classes as described
above, and (D) electricity usage set forth in ComEd Ex. 2.0, the initial cents
per kWh levels of the IFCs which ComEd believes most likely would need to be
collected from each customer class in order to amortize an expected $3.4 billion
aggregate principal amount of the Notes in accordance with its current
projection of the Expected Amortization Schedule, and to make all other related
payments described above, would be as follows:

IFC
----------
CUSTOMER CLASS DESCRIPTION (CENTS/KWH)
-------------- ----------- -----------
<S> <C> <C>
Residential - No Space residential accounts
Heat without space heating 1.181

Residential - Space Heat residential accounts
with space heating 0.760

Standby Service Rate 18 - Standby
Service accounts 0.467

Interruptible Service Rider 26 - Interruptible
Service accounts 0.371

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<PAGE>

Street Lighting - Fixture Rate 23 - Municipal Street
Based Rates Lighting accounts and
separately billed Rates
26 - Private Outdoor
Lighting accounts 1.583

Street Lighting - Dusk to accounts billed under
Dawn and Traffic Signal Rate 25 - Street,
Highway, and Traffic
Signal Lighting, as well
as contractual
agreements for similar
services 0.493

Railroads electric railroad
customers using
electricity for
traction power 0.698

Water-Supply and Sewage accounts billed under
Pumping Service Rate 24 - Water-
Supply and Sewage
Pumping Service 0.642

In Lieu of Demand non-residential in lieu
of demand accounts 1.119

0 to and including 100 kW non-residential accounts
Demand with highest billing demand
during previous billing
year from 0 to and
including 100kW 0.879

Over 100 to and including non-residential accounts
1,000 kW Demand with highest billing
demand during previous
billing year over 100 to
and including 1,000 kW 0.695

Over 1,000 to and including non-residential accounts
10,000 kW Demand with highest billing
demand during previous
billing year over 1,000 to
and including 10,000 kW 0.644

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<PAGE>

Over 10,000 kW Demand non-residential accounts
with highest billing demand
during previous billing year
over 10,000 kW 0.498

</TABLE>

However, in order to account for factors such as the actual interest
rate(s) for the Notes, the actual maturity date(s) and terms of the Notes,
movement of customers among classes, reduction in the size of classes and usage
changes in individual classes, ComEd has requested that the Commission authorize
per kWh IFCs for each class as follows:

CUSTOMER CLASS IFC CHARGE (CENTS/KWH)
-------------- ----------------------
<S> <C>
Residential - No Space Heat 1.476

Residential - Space Heat 0.950

Standby Service 0.701

Interruptible Service 0.464

Street Lighting - Fixture Based
Rates 2.375

Street Lighting - Dusk to Dawn
and Traffic Signal 0.740

Railroads 1.047

Water Supply and Sewage
Pumping Service 0.963

In Lieu of Demand 1.399

0 to and including 100 kW
Demand 1.099

Over 100 to and including
1,000 kW Demand 0.869

Over 1,000 to and including
10,000 kW Demand 0.805

Over 10,000 kW Demand 0.623

</TABLE>

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<PAGE>

The Commission finds ComEd's request to be reasonable.

In connection with and as a precondition to the issuance of the Notes and
the imposition of the IFCs and in accordance with Section 18-104(j), ComEd will
file a tariff with the Commission in the form attached to the Application as
Exhibit 4.0 and incorporated herein by reference, except that the filed tariff
must reflect actual IFCs for the initial period which shall not exceed the IFCs
approved herein, and shall otherwise be modified as set forth in Finding (12)
below. The actual IFCs included in the filed tariff will be calculated using the
following formula:

IFC(c) = DSBR X (BR96(c)/BR96)
---------------------
Q(c)

Where:

IFC(c) = Per kWh Instrument Funding Charge for customers in a
customer class during the Initial Applicable Period. The
amount in cents per kWh, rounded to the nearest 0.001CENTS,
to be billed for each kWh sold or delivered to customers in
the customer class in any monthly billing period during the
Initial Applicable Period.

DSBR = The total amount of Debt Service Billing
Requirement to be billed through the IFCs for energy sales
and deliveries to customers during the Initial Applicable
Period.

BR96(c) = Total Base Revenue for the customer class in 1996

BR96 = Total Base Revenue for ComEd in 1996

Qc = Projected kWh sales and deliveries to
the customers in the customer class for the Initial
Applicable Period.

The Initial Applicable Period is the period from the expected start
date of September 1, 1998 through June 30, 1999.

The rates and charges from which IFCs will be deducted and stated
separately (the "Applicable Rates") will include all tariffed charges including,
without limitation, charges for base rates and delivery services and transition
charges (including fixed payments of such charges). However, the Applicable
Rates shall not include late charges or charges set forth in those tariffs which
are filed specifically and primarily to collect amounts related to
decommissioning expense, taxes, franchise fees or other franchise cost
additions, costs imposed by local governmental units which are allocated

15
<PAGE>

and charged to the customers within the boundaries of such governmental units'
jurisdiction, renewable energy resources and coal technology development
assistance charges, energy assistance charges for the Supplemental Low-Income
Energy Assistance Fund, reimbursement for the costs of optional or non-standard
facilities and reimbursement for the costs of optional or non-standard meters,
or monies that will be paid to third parties (after deduction of allowable
administrative, servicing or similar fees); and provided that, to the extent any
Applicable Rate reflects compensation owed by ComEd for power or energy
generated by a person or entity other than ComEd, the IFC will be deducted and
stated separately from such Applicable Rate without giving effect to such
compensation. The tariff shall direct that the cents per kWh charges included in
the IFC be imposed, collected, deducted and stated separately from the amounts
otherwise billed by ComEd for Applicable Rates.

As required by Section 18-103(d)(5), the issuance of the Notes will not
cause the rates for tariffed services to increase over the rates then in
existence as adjusted for the rate decreases provided in Section 16-111(b).

ComEd also has requested the Commission in this TFO to approve, in
accordance with and as required by Section 18-104(d), procedures for periodic
adjustments to the IFCs to reconcile and true-up the revenues received
periodically from such IFCs with the amounts needed to amortize the Notes in
accordance with the Expected Amortization Schedule, together with the amount
needed to pay interest on the Notes, related fees and expenses, and to fund and
maintain the required reserves. Such adjustments, referred to herein as
"reconciliation adjustments" and "true-up adjustments," will be based on the
methodology described in ComEd Ex. 2.0 and will occur not less frequently than
annually. In addition, if on any scheduled date for payment of principal on the
Notes, the Servicer determines that the outstanding principal of the Notes
exceeds the scheduled principal balance by five percent or such greater amount
as the rating agencies may permit consistent with their rating of the Notes,
then the Servicer shall, within not more than 30 days, implement true-up
adjustments to adjust for such shortfall. All reconciliation and true-up
adjustments shall be implemented automatically pursuant to the tariff filed in
compliance with this Order. Further, as required by Section 18-104(d), if, as a
result of any such adjustment, the amount of any IFC as adjusted will exceed an
amount per kWh greater than the amount per kWh of the IFC initially authorized
by the Commission in this TFO, then ComEd shall be obligated to file amendatory
tariffs under Section 18-104(k).

V. DESCRIPTION OF USE OF PROCEEDS.

The Note Issuer will remit the net proceeds from the sale of the Notes to
CE Funding, which in turn will remit such proceeds to ComEd in consideration of
ComEd's request that CE Funding be granted the ITP. Such proceeds will be net of
any commercially reasonable transaction costs to be paid by the Note Issuer and
CE Funding and amounts deposited into any subaccounts of the Collection Account.

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<PAGE>

ComEd will use at least 80% of the proceeds to refinance debt and/or equity
in a manner which is reasonably expected to result in ComEd's cost of capital,
taking into account the costs of financing, in accordance with Section
18-103(d)(1)(A), being lower than it would be absent the transaction that is
the subject of ComEd's application. ComEd expects that the actual portion of
the proceeds used for such purposes will be approximately 96%. The basis for
ComEd's expectation that there will be a reduction in ComEd's cost of capital
is discussed by Ms. Gillis (ComEd Exs. 1.0 and 4.0), Mr. Thone (ComEd Exs.
3.0 and 6.0), Dr. Carleton (ComEd Ex. 7.0), and Mr. Abrams (ComEd Ex. 8.0). A
further discussion of these issues is contained in Section VII below.

The portion of the proceeds not used for such purposes (I.E., 20% or less
of the proceeds) will be used (A) to fund debt service and other reserves, (B)
to pay for costs and fees necessary or desirable in connection with the
marketing of the Notes, if any; (C) to pay for other costs associated with the
issuance and collateralization of the Notes, if any; and (D) to pay for the
costs associated with the use of proceeds from the Notes, including the costs
incurred since December 16, 1997 (the effective date of the Electric Service
Customer Choice and Rate Relief Law of 1997 (the "1997 Act")), or to be
incurred, in connection with recapitalization, refinancing and/or retirement of
stock and/or debt, any associated taxes, including federal and state tax
liabilities, and the costs incurred or to be incurred to obtain, collateralize,
issue, service and/or administer the Notes, if any, including interest or yield
thereon and other related fees, costs and charges. ComEd expects that the actual
portion of the proceeds used for the purposes described in the immediately
preceding sentence will be approximately 4%. A more precise description of the
use of proceeds, including the conclusion that the fees and costs described in
clauses (B), (C) and (D) are within commercially reasonable ranges, was set
forth in ComEd Exs. 1.0 and 4.0.

All proceeds transferred to ComEd's parent company, Unicom Corporation,
through a common stock repurchase transaction shall be used by Unicom
Corporation to retire and repurchase its publicly traded common stock (including
stock repurchased and retired in anticipation of such transaction) and to pay
transaction costs associated with such repurchase or retirement in an amount not
expected to exceed 0.20% of the repurchase price for such common stock, which
amount is commercially reasonable.

As required by Section 18-103(d)(1), none of the proceeds will be used to
repay or retire obligations incurred by an affiliate of ComEd other than as set
forth in the prior paragraph.

As required by Section 18-103(d)(1), ComEd's use of proceeds will not, as
of the date of application of the proceeds, result in the common equity
component of its capital structure, exclusive of the portion of its capital
structure that consists of obligations representing the Notes, being reduced
below the lesser of (1) 40% or (2) its common equity percentage as of December
31, 1996 adjusted to reflect any write-off of assets or common equity
implemented or required to be implemented as a result of the 1997 Act. As of
December 31, 1996, ComEd's common equity as a percentage of total

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capitalization was 44%. On December 31, 1997, however, ComEd wrote down $1.437
billion in assets due to the implementation of the provisions of the 1997 Act.
This results in an adjusted equity percentage of 37.8%. Ms. Gillis demonstrated
that, based on the proposed use of proceeds, ComEd's common equity component
will remain at or above 37.8% after giving effect to the proposed transaction.

As required by Section 18-111(4), ComEd will file periodic reports with the
Commission setting forth the use of proceeds from each issuance of Notes. Such
reports must be filed within 90 days of the receipt of proceeds from each
issuance of Notes and at twelve-month intervals thereafter until such proceeds
have been fully accounted for. The reports will include the relevant accounting
entries.

VI. TRANSACTIONS WITH AFFILIATES.

A. ADMINISTRATION AGREEMENT.

Because CE Funding and the Note Issuer will be special-purpose,
bankruptcy-remote entities with limited business activities, it is
anticipated that neither CE Funding nor the Note Issuer will have any
employees. Accordingly, both CE Funding and the Note Issuer need to enter
into an administrative agreement (the "Administration Agreement") with ComEd
pursuant to which ComEd shall perform ministerial services and provide
facilities for CE Funding and the Note Issuer to ensure that they are able to
perform such day-to-day operations as are necessary to maintain their
existence and perform their obligations under the transaction documents. The
Administration Agreement incorporates provisions of the Affiliated Interests
Agreement, as amended, approved by the Commission's Order in Docket 95-0615
(March 12, 1997) (the "AIA"), to ensure that ComEd will be reimbursed in
amounts commensurate with its costs of performing such services and providing
such facilities.

The Administration Agreement provides that ComEd may perform those services
and provide those facilities which are (A) allowed under the Commission-approved
AIA, and (B) reasonably necessary for CE Funding and/or the Note Issuer to
maintain their existence and perform their obligations under the transaction
documents.

Under the Administration Agreement, ComEd will be compensated on the basis
provided for in the AIA. Use of the compensation provisions included in the AIA
will serve to meet the requirement that ComEd and CE Funding transact business
at arms'-length because the AIA has been found by the Commission, in its Order
in Docket 95-0615 at 9, to "prevent[ ] cross-subsidization to the maximum extent
practicable under Illinois law." Therefore, adoption of the AIA provisions
should support a conclusion that transactions between ComEd and CE Funding are
arms'-length.

The public will not be harmed by, and will instead benefit by, ComEd's
entry into the Administration Agreement because such an arrangement will allow
for the most efficient and economical administration of CE Funding and the Note
Issuer.

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Accordingly, ComEd's entry into the Administration Agreement will reduce the
costs of the transaction. For these reasons, the Administration Agreement is in
the public interest and the public will be convenienced thereby.

B. OTHER TRANSACTIONS.

One or more of the entities involved in the transactions described herein
and transactions related thereto (E.G., transactions related to the repurchase
of common stock) may be an "affiliated interest" of ComEd within the meaning of
Section 7-101 or an affiliate of one of ComEd's affiliated interests. Such
entity or entities may act as a participating underwriter, the Note Trustee, or
other trustee, provider of any interest rate swaps or other hedging
arrangements, transfer agent or registrar, broker, tender agent, financial
advisor or a similar party.

ComEd's affiliated interests that presently perform such functions or, to
the best of ComEd's knowledge, have affiliates which perform such functions, and
thus might become involved in the transaction described herein or transactions
related thereto currently include The First National Bank of Chicago, Morgan
Stanley, Dean Witter & Co., Bank of Boston Corporation and William Blair &
Company, L.L.C. Each of these entities is related to ComEd solely by virtue of
the fact that each has an officer or director who is also an officer or director
of ComEd. ComEd represents that no such affiliation will have any effect on its
actions relating to the transactions described herein or any transactions
related thereto. It will not engage any such affiliated interest or affiliate of
an affiliated interest unless such engagement is commercially reasonable and
economical, nor will it pay, or agree to pay, such affiliated interest or
affiliate of such affiliated interest any fee or other compensation that is not
commercially reasonable and consistent with industry practices. ComEd will file
any such contract with the Commission within three business days of entry into
the contract.

If ComEd is not able to engage an affiliated interest or affiliate of an
affiliated interest to perform the banking, underwriting and investment banking
services described above, its ability to obtain such services at the most
competitive prices and from able, experienced entities may be limited. On the
other hand, if it can engage in such transactions with affiliated interests and
their affiliates, ComEd will be better able to ensure that the transaction
described herein and transactions related thereto are consummated efficiently
and economically with the assistance of experienced persons and entities.
Accordingly, the ability to engage in such transactions with affiliated
interests or affiliates of affiliated interests is in the public interest.

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VII. ISSUES RAISED DURING THE PROCEEDINGS.

The Act sets forth specific requirements which a utility must satisfy prior
to issuance of a TFO. Specifically, the Act sets forth the information that must
be included in the application (Section 18-103(c)) and provides that the
Commission shall issue the TFO if it finds that the conditions set forth in
Section 18-103(d) are satisfied. The Act provides that the TFO "shall create and
establish the proposed intangible transition property in the amount requested by
the applicant and approve the proposed sale, pledge, assignment or other
transfer of, or the establishment, creation and granting of rights in and to,
intangible transition property . . . the proposed issuance of [the Notes] and
... collection of the corresponding [IFCs]." Section 18-103(d). Several
additional requirements are set forth in various other Sections of Article
XVIII. In large part, it was not disputed that ComEd has complied with the
requirements for issuance of the TFO and the other approvals requested by ComEd.
Staff testimony included lengthy recitations of many of the statutory
requirements and the conclusion that those requirements had been met. (SEE,
E.G., Staff Ex. 1.0 at 3-7; Tr.197-98; Staff Ex. 3.0 at 3-10). In addition,
Staff witness Gorniak testified that ComEd's proposed accounting shown at ComEd
Ex. 4.0, Attachment 4.2, is reasonable. (Staff Ex. 2.0 at 6-7; Tr. 147-48).

During the course of the proceedings, only two issues were raised in any
material manner and only one related to a statutory requirement, I.E., whether
ComEd has demonstrated reasonably that its proposed use of the proceeds will
result in a reduction in its overall cost of capital. That issue is addressed in
Section A below and the other issue, which relates to collection of IFCs by
third parties, is discussed in Section B. In Section C, we address additional
issues raised by various parties in their briefs.

A. REASONABLE DEMONSTRATION OF REDUCTION OF OVERALL COST OF CAPITAL.

ComEd proposes that most of the proceeds from the Notes, approximately 96%,
be used to refinance debt and equity as provided for in Section 18-103(d)(1)(A).
Ms. Gillis testified that ComEd will use the proceeds to refinance, repurchase
and/or retire debt, preference stock, preferred stock and/or common stock that
is higher-cost than the Notes and/or to refinance at rates which are lower than
the rates otherwise available to ComEd. (E.G., ComEd Ex. 1.0 at 42). The Act
permits such uses as long as the utility reasonably demonstrates that such uses
will result in an overall reduction in the utility's cost of capital. Section
18-103(d)(1)(A). Here, the record reasonably demonstrates that issuance of the
Notes and use of the proceeds as proposed by ComEd will result in an overall
reduction of its cost of capital, taking into account the costs of financing.

In the context of public utility regulation, the cost of capital is the
weighted average of the utility's costs of debt, preference stock (and similar
securities), and common equity. (Rungren, Tr.230, 247; see also, e.g. CENTRAL
ILLINOIS PUBLIC SER. CO. V.

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COMMERCE COMM'N, 243 Ill. App. 3d 421, 441 (4th Dist. 1993); UNITED CITIES GAS
CO. V. COMMERCE COMM'N, 225 Ill. App. 3d 771, 780 (4th Dist. 1992); Order,
Docket 94-0065 at 95 (Jan. 9, 1995)). Accordingly, the Act requires ComEd to
reasonably demonstrate that, after application of proceeds from the Notes, its
weighted average cost of capital will be reduced. The record supports, and the
Staff agrees (Tr. 197-98), that ComEd has reasonably demonstrated that such uses
of the proceeds will result in an overall reduction in its cost of capital,
taking into account the costs of financing.

ComEd will use a portion of the proceeds from the Notes to retire long-term
debt which is higher-cost than the Notes and may also retire short-term debt if
the alternative would be to refinance such debt at a higher cost than the Notes.
(E.G., ComEd Ex. 4.0 at 2). The cost of debt and similar securities, such as
preference stock, is either known or readily determinable. (E.G., ComEd Ex. 4.0
at 2-3; Rungren, Tr.227, 244). When the actual cost of the Notes is known, ComEd
will determine which of its retirable debt issues are higher-cost than the
Notes. After the Notes are issued and ComEd receives the proceeds, it will
retire such issues until proceeds from the Notes allocated to such purpose have
been exhausted. (ComEd Ex. 4.0 at 3). In addition, if, at the time use of the
proceeds is being determined, there is debt which otherwise would have to be
refinanced at a cost higher than the cost of the Notes, proceeds will be
allocated to retiring that debt. (ID. at 4).

ComEd currently has approximately $5.84 billion of long-term debt with an
average embedded cost of 7.62%. (ID.). If, as ComEd contemplates, $1.5 billion
of long-term debt is retired and $3.4 billion of Notes are issued at an assumed
cost of 6.3%, the average embedded cost of its debt would decrease from 7.62% to
6.83%, or 79 basis points. (ID.). It is, of course, possible that a different
balance of Notes could be issued, a different amount of proceeds applied to the
retirement and/or refinancing of ComEd debt (within the indicated ranges), or
that costs of either the Notes or the debt refinanced and/or retired may differ.
Nonetheless, if proceeds from the Notes are used to refinance and/or retire
debt, its cost of debt would decrease: ComEd will not issue Notes to refinance
and/or retire debt unless it would result in a decrease of capital costs. (ID.).
The same analysis and reasoning apply to any use of the proceeds to reduce the
cost of preference stock and similar debt securities. Staff agrees that ComEd's
proposed use of proceeds will result in a reduction in its cost of debt
securities. (Tr.227-28, 244).

In addition to retiring and refinancing debt-type securities, ComEd may use
a portion of the proceeds from the Notes to repurchase some of its common
equity. Ms. Gillis testified that, based on conversations with investors,
financial analysts, rating agencies and investment bankers, and based on
relevant articles and reports, the market regards the proposed transaction as
beneficial to ComEd, which indicates that any effect on ComEd's cost of equity
due to issuance of the Notes would be favorable, I.E., the issuance would reduce
its risk and, therefore, its cost of equity. (ComEd Ex. 1.0 at 42-43). She
testified that over a six-month period she spent substantial time discussing
issuance of the Notes with members of the investment community, including

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all four of the major rating agencies, numerous investment banking firms and
many investors and in no case did any member of the investment community express
a concern that issuance of the Notes would increase ComEd's cost of capital.
(E.G., ComEd Ex. 4.0 at 6). She testified that " in each of the numerous cases
where an opinion was expressed, the opinion was that the issuance of lower cost
Notes and the repurchase, retirement and/or refinancing of higher cost debt and
equity would allow ComEd to reduce its costs, reduce its risks and increase its
financial flexibility so as to benefit ComEd." (ID.).

ComEd states that this conclusion is supported by the testimony of Mr.
William Abrams who has almost 30 years of experience with Duff & Phelps, one of
the four major credit rating agencies. He testified that issuance of the Notes
and use of the proceeds as proposed by ComEd would be expected to reduce its
cost of capital and that the Notes will be viewed as less of a burden than debt
of ComEd. (ComEd Ex. 8.0 at 5). Dr. Willard Carleton provided similar testimony.
Dr. Carleton, an expert on cost of capital matters, is on the investment board
of the Teachers Insurance and Annuity Association ("TIAA") which has over $30
billion invested in asset-backed securities. (ComEd Ex. 7.0 at 5-6). He examined
the proposed structure for the Notes and concluded that issuance of the Notes
and use of the proceeds as proposed by ComEd would reduce the riskiness of its
equity and reduce its overall cost of capital. (ID. at 7-8). The Company also
claimed that failure to obtain approval for issuance of the Notes may well have
an adverse effect on its cost of equity. (ComEd Ex. 1.0 at 43).

Although Staff's testimony preliminarily expressed concern that ComEd's
initial testimony had not demonstrated reasonably that the planned use of
proceeds would result in an overall reduction in its cost of capital, it also
noted that Staff was still in the process of reviewing additional information
from ComEd related to this issue. (Staff Ex. 1.0 at 12). After reviewing Mr.
Thone's rebuttal testimony (ComEd Ex. 6.0), Staff agreed that ComEd had
reasonably demonstrated that application of the proceeds would result in a
reduction in its overall cost of capital. (Tr.197-98). Staff agreed with ComEd
that the RELATIVE change in its overall cost of capital due to issuance of the
Notes and application of the proceeds -- regardless what the precise cost of
capital or any specific component thereof is today -- would be downward, I.E.,
lower, as is required by Section 18-103(d)(1). (Tr. 251). ComEd pointed out that
the record contains no evidence to the contrary.

The record reasonably demonstrates that issuance of the Notes and
application of the proceeds as proposed by ComEd will result in a reduction in
its overall cost of capital. Accordingly, ComEd's proposed uses of proceeds
constitute permissible uses within the meaning of Section 18-103(d).

B. BILLING AND COLLECTION OF IFCS BY THIRD-PARTIES.

As set forth in Section II above, ComEd has requested that the Commission
approve certain specific provisions governing how third-party collectors
(including

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ARESs) would bill, collect, and remit IFCs (E.G., ComEd Ex.1.0 at 34-37). These
provisions are included in the IFC tariff and would require that: (1) if, for
whatever reason, ComEd does not have information on customer's kWh usage, the
third party possessing such information must provide the information ComEd
needs to comply with the statutory requirement that IFCs be assessed on a per
kWh basis; (2) a third-party who has actually collected IFCs, will remit such
collections to the Servicer within two business days of receipt; (3) if a
third-party collector fails to remit IFCs within seven days thereafter, the
third-party collector would lose its rights to bill and collect IFCs. In
addition, ComEd requested the flexibility to impose other billing and
collection terms necessary to ensure that the credit ratings assigned to the
Notes will not be reduced. (E.G., Application at PARA 8). ComEd claimed that
these provisions are necessary because credit rating agencies and financial
institutions will place great importance on the guidelines governing
third-parties' billing, collection and remittance of the IFCs and this could
affect the rating and/or cost of the Notes. (E.G., ComEd Ex. 10.0 at 5-7).

These provisions were the source of considerable dispute among ComEd, Enron
and Staff. While no party objected to the application of those provisions to any
entity other than ARESs, both Staff and Enron maintained that they should not be
applied to ARESs. (Enron Ex. 1.0; Staff Ex. 4.0).

Article XVIII does not contain any specific provisions requiring the
Commission to impose or authorize billing, collection and remittance policies in
a TFO. Staff acknowledges, however, that the Commission has the authority to
approve such policies in this proceeding. (Staff Brief at 13; Tr.274-75). Staff
recommends that the Commission, if it is inclined to do so, evaluate the
proposed credit and collection policies under the standards set out in Section
16-118(b), so as to determine whether ComEd has posited "commercially
reasonable" terms and whether "other just and reasonable terms and conditions"
are appropriate. As a preliminary matter, however, both Staff and Enron argue
that these provisions need not be addressed in the instant proceeding, but left
to be decided in a Section 16-118(b) tariff proceeding where single-billing
procedures are squarely at issue. (Staff Ex. 4.0 at 2-3; Enron Ex. 1.0 at 8) and
where, it is expected, more ARES will participate. Outside of this argument,
neither party has presented any reason contrary to our consideration of such
provision.

In contrast, ComEd has presented evidence showing that billing, collection
and remittance provisions at issue will affect the risk associated with the
Notes and the property owned by the Note Issuer. Both Ms. Gillis and Ms. Lapson
testified that these provisions are absolutely critical to the way credit rating
agencies and other financial institutions view the securities. (ComEd Exs. 4.0
at 8-9 and 10.0 at 5-7). Ms. Lapson-- who is with Fitch IBCA, one of the
agencies that is expected to rate the Notes-- concluded that "[i]f the
Commission does not address this relevant issue, it would call into question the
State's pledge to protect the securitized stream of revenues for the benefit of
the Note holders, thereby increasing the risk associated with the Notes." (ID.
at 7).

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ComEd also argues that the provisions of Section 16-118(b) speak only to
the collection by an ARES of charges for "the delivery services provided by the
electric utility." Section 16-118(b). There is no mention in Section 16-118(b)
of an ARES collecting IFCs. According to ComEd, this supports its position that
the collection of IFCs is not a proper subject for, and therefore should not be
deferred to, a future Section 16-118(b) proceeding. The Commission notes that
neither Staff nor Enron has addressed or offered any other interpretations of
this statutory language in any of their briefs.

The Commission agrees with ComEd that this proceeding is the most
appropriate forum in which to consider its proposed billing, collection, and
remittance arrangements with respect to the IFCs. Investors and the financial
community surely will look to the terms of this Order in making decisions with
respect to the Notes. The proceeding in which Enron and Staff contend these
issues should be addressed -- a future proceeding to consider ComEd's Section
16-118(b) tariff -- may be ill-suited for consideration of these issues because
the focus there would be in some ways narrower, and in other ways broader, than
in the situation at hand. (ComEd Ex. 4.0 at 8-9). That other proceeding will
deal ONLY with a tariff that "would allow alternative retail electric suppliers
. . . to issue single bills to the retail customers" both for services provided
by the ARES and for services provided by ComEd, with no special emphasis on the
collection of IFCs. Section 16-118(b). We further note that the provisions at
issue here concerning collection of IFCs by third parties are intended to
"extend to ALL entities which collect charges due to ComEd", and not just to
ARES (ComEd Ex. 4.0 at 8 (emphasis added)), although they do take account of the
"single-billing" feature. Moreover, we would be remiss to ignore the
uncontradicted evidence which shows that the billing, collection, and remittance
provisions will affect the risk associated with the Notes and the property owned
by the Note Issuer.

Enron and Staff continue to argue that issues related to the billing and
collection of IFCs by third-parties should be addressed in a future docket
pursuant to Section 16-118(b). In addition to invoking the plain language of
Section 16-118(b) and the limitations set out therein, ComEd also directs our
attention to certain provisions in Article XVIII which refer to the separate
collection of IFCs (Section 18-104(j) and the right granted the owner of the ITP
to levy its own tariffs to collect IFCs (Section 18-105(a). We agree that terms
for the collection and remittance of IFCs by third-party collectors fall under
the umbrella of Article XVIII's collection provisions and, for this additional
reason, are a proper subject for our consideration in this proceeding.

Having decided this threshold issue, we now turn to the substance of the
terms and policies ComEd would have us approve. The first of these proposals
requiring that ARESs provide usage information that the ARES has, but it ComEd
does not, is reasonable in our view. It is undisputed that the statute requires
IFCs to be assessed on a per kWh basis. Section 18-102. Staff recognized that
ComEd must have access to such information (Staff Ex. 4.0 at 11-12), and that
ComEd's proposal would not provide it with any information that it should not
already possess in its capacity as a

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delivery services provider. (ID. at 12-13). Since Staff claims that this
provision seeks to address a problem that should rarely arise, we see no problem
in having such terms already in place to cover those rare instances. Mr.
Kingerski testified that such a requirement would be acceptable to Enron if the
Order made clear that only total kWh usage information need be provided. (Tr.
376). We agree with Mr. Kingerski's proposal.

In another provision, ComEd proposes that third-party collectors, including
ARESs, be required to remit IFCs to the Servicer within "two business days" of
receipt. As Dr. Schlaf recognized, the issue here is how soon should ARESs be
required to remit money which they have in their possession but which does not
belong to them. (Tr.286). Mr. Kingerski, however, contended that requiring
remittances within two business days would be "unreasonable, administratively
burdensome, and anti-competitive" (Enron Ex. 1 at 5), and Dr. Schlaf similarly
argued that it would be "unduly burdensome" and unnecessary. (Staff Ex. 4.0 at
10-11).

ComEd pointed out that these assertions are wholly unsupported by any
evidence. Neither witness had conducted, or could even cite to, any study or
analysis of the costs associated with ComEd's proposal. (Tr. 277; Tr. 377-82).
Nor could either produce any evidence that this requirement might discourage
Enron or any other potential supplier from seeking certification as an ARES.
(Tr. 276 Tr. 276-277 378;). ComEd maintained that Mr. Kingerski did not even
attempt to find out about Enron's own policies and practices regarding (a) what
requirements Enron and its affiliates placed on others who collect funds for
them, or (b) the remittance of funds Enron collects for others. In the absence
of such evidence ComEd argues that the Commission cannot find the requirement to
be burdensome or anti-competitive.

ComEd maintains that the record evidence establishes that this provision,
or some other similar remittance arrangement, is necessary to lower the risk of
the Notes and thereby lower their cost -- which is the whole point of the
General Assembly's authorization for the issuance of such financial instruments
in the first place. (SEE, E.G., ComEd Ex. 4.0 at 10 (quoting Duff & Phelps
report); ComEd Ex. 10.0 at 6). Enron contends that ComEd has failed to provide
any justification or proof supporting this assertion. Enron also contends that
the Duff & Phelps Credit Rating Co. ("DCR") credit agency report cited in ComEd
Ex. 1.0 at 37 conflicts with ComEd's assertion. That is, the DCR does not
specify a specific number of days for remittance of IFC collections. (Tr. 44).
Mr. Kingerski pointed out that, under certain circumstances, this additional
remittance schedule could require an ARES to make daily payments to ComEd for
IFC collections. (Enron Ex. 1.0 at 5).

Enron argues that such a provision no doubt would increase the cost of
doing business in Illinois and create competitive barriers to the Illinois
electricity market. Enron points out that ComEd witness Ocwieja admitted that
the 1997 Act does not require ARESs to remit the collection of IFCs within a set
number of days. (Tr. 188-189).

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<PAGE>

According to ComEd, such requirements are extremely common in the industry
and have not proven burdensome in the least. (SEE, E.G., ComEd Ex. 4.0 at 11-12;
ComEd Ex. 9.0 at 3-4). Moreover, as Mr. Ocwieja testified, it is reasonable to
presume that any ARES that wishes to engage in "one-stop" billing will need to
have in place a computerized billing system that permits it to track separately
the IFCs it collects, and that once the system is in place it would require
little if any additional ongoing personnel time to remit collected IFCs to
ComEd. (ComEd Ex. 9.0 at 9). Indeed, the record shows that Enron itself insists
on the much more stringent requirement that payments be not only MADE in two
days, but CLEARED in two days when it sells energy options. (ComEd Ex. 4.0 at
11).

ComEd argues that to whatever extent ARESs are permitted to retain IFCs,
they will enjoy the benefits of an interest-free loan. (ComEd Ex. 9.0 at 5;
ComEd Ex. 4.0 at 11-12). With respect to the collection of IFCs, ARESs should be
mere conduits, just as ComEd, as Servicer, will be. If ARESs are permitted to
retain IFCs, they will obtain what amounts to an interest-free loan, giving
ARESs an unwarranted financial (and competitive) advantage over ComEd. (ComEd
Ex. 4.0 at 12). We note that ComEd's arguments as to the time value of money do
have merit.

Certainly, there must be some terms articulated that designate the time by
which third-party collectors must remit IFC payments to ComEd. The only question
is what is reasonable, taking into account all of the respective interests and
concerns. Both Dr. Schlaf and Mr. Kingerski offered alternative proposals. One
option would be to increase the number of days by which remittance of IFC
payments must occur from two days to seven days. (Staff Ex. 4.0 at 11). Dr.
Schlaf also proposed that the Commission require an ARES to remit all IFC
revenues due to ComEd once a month, regardless of whether payments were actually
received from the customer. (ID.). Another option is to require the ARES to
remit collections on the designated date(s) either once or twice each month,
E.G. on the 15th or 30th of every month. (Enron Ex. 1.0 at 6). Mr. Kingerski
suggested that paying bills monthly or on a specific day of the month would be
commercially reasonable. Alternatively, he proposed the remittance of IFC
collections on the date or dates where an ARES is required to remit other
payments to ComEd for delivery services or any other types of services ComEd
will be providing. (Enron Ex. 1.0 at 6).

In her rebuttal testimony, Ms. Gillis also offered an alternative proposal
whereby a third-party collector would pay IFCs within 15 days from billing
provided that, (a) the third-party collector pays all IFCs billed to customers
regardless of whether payments actually are received from such customers ; and
(b) third parties who do not have investment-grade credit, I.E., BBB--or better,
must post a deposit or comparable security. Under this alternative, the IFC
collector need make only two payments to ComEd each month. (ComEd Ex. 4.0 at
15).

Without coming to a determination as to what is a "commercially reasonable"
time for the remittance of charges collected by ARESs pursuant to Section
16-118(b),

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we believe that the proposals set out can be modified to address both the
interest of ARESs in less burdensome practices and the interests of ComEd in
obtaining timely remittances without having to provide interest-free loans to
competitors. The Commission believes that a seven-day remittance of all
collections, as proposed by Staff, would be reasonable and appropriate. We are
led to this conclusion because, in theory, under ComEd's original proposal, an
ARES could retain the monies collected for eight days and not suffer any adverse
consequences. We also believe it would be appropriate to provide third-party
collectors that issue bills, which include IFCs, with the alternative proposed
by ComEd on rebuttal. (ComEd Ex. 4.0 at 14-15). Thus, third-party collectors
may, at their option, choose to pay IFCs within 15 days of the date of ComEd's
bill, provided that (1) the third-party collector pays all IFCs for which it
bills regardless of whether payments actually are received from customers, and
(2) a third-party collector who does not have investment-grade credit ratings
(BBB- or better) must post a deposit or comparable security equal to one month's
estimated IFC collections. A 15-day period for payment is reasonable, especially
considering that the vast majority of ComEd's non-residential customers must pay
within 15 days of ComEd's bill and, prior to May 1, 2002, only non-residential
customers will be eligible to take service from an ARES. ID.; Section 16-104(a).
Third-party collectors may elect the option best suited to their individual
situation, by providing ComEd with written notification of their election and
with the understanding that the arrangement may not be changed for a period of
one calendar year from the date of election.

ComEd continues to urge acceptance of its two day remittance proposal given
the evidence showing that almost 1,000 entities currently collecting charges due
to ComEd remit those funds within two days, or less, of the time they are
received. (ComEd Br. Exc. at 2). According to ComEd, two days is appropriate
because it lowers the risk on the Notes, it is a common practice in the industry
and, with computerized one-stop billing operations, it is easy to remit within
this period. Staff filed no Exceptions to the Proposed Order's 7 and 15-day
remittance option, but Enron continued to press for remittance to be made only
once a month. We have not been provided with any new arguments or compelling
reasons to alter the remittance schedule set out above.

While the Commission believes it is reasonable and appropriate to establish
collection and remittance policies for IFCs in this docket, we are mindful that
other proceedings are anticipated which may have some bearing on the provisions
we here approve. To some degree, both ComEd and Enron recognize this to be the
case. (ComEd Ex. 4.0 at 15; Enron Ex. 1.0 at 6). Enron agreed that it would be
"commercially reasonable" to remit IFCs on the same basis as other charges are
remitted to ComEd. (Enron Br. Exc. at 8) and the testimony of Mr. Kingerski
suggests more frequent remittances. (Enron Ex. 1.0 at 5). Similarly, the
Commission recognizes that the billing and collection requirements will apply to
the almost thousand entities which collect charges due to ComEd and generally
remit those charges within two business days or less. Therefore, together with
the remittance schedule set out above, the Commission approves the addition of
the following condition:

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Notwithstanding the above, if the third party collector otherwise
is required to remit payments to ComEd on a more frequent basis, IFCs
shall be remitted at the same time as such other payments. (ComEd Ex.
4.0 at 15).

This means that while the time for remitting IFC collections to ComEd will NOT
be extended, it may, depending on the outcome of a future proceeding or other
mutual arrangement, be more restricted.

While Staff contended that it is unfair to ARES to set policies in this
proceeding which may be subject to change in a later proceeding, we disagree.
This Proposed Order sets out our reasoning for a change in policy. Notably,
Enron has not formally excepted to this provision.

The Commission further considers the reasonableness of ComEd's proposal
that, within "seven days" of a default in remitting IFCs, there would be a
reversion to dual-billing only with respect to IFCs. As Staff recognized (Staff
Ex. 4.0 at 14), ComEd included this provision to ensure that third parties who
elect to offer their customers "one-stop" billing do not withhold IFC
collections from the Servicer of the Notes (ComEd Ex. 4.0 at 13). The record
demonstrates that such provisions are quite common in the business world and
benefit the vast majority of customers who pay their bills on a timely basis (by
decreasing uncollectible revenue expenses). (ID.).

Staff agrees that there should be some time limit after which an ARES
should be considered to be in default. (Staff Ex. 4.0 at 14). We note Dr.
Schlaf's observation that determining a reasonable amount of days depends to
some extent on when the ARES must remit its IFC collections. (ID.). The seven
days proposed by ComEd, however, appeared unreasonable to Dr. Schlaf, who
recommended allowing a period of 15 to 30 days to elapse before the ARES should
be considered in default. Even if such a time limit were established, Staff
argues that it still would be appropriate to have a procedure in place to allow
an ARES to retain or regain its ability to offer single-billing because there
may be circumstances where a legitimate dispute arises over the amounts to be
remitted. (ID.). Given that ComEd would have a contractual right to assume
responsibility for all utility charges without any dispute mechanism or
mechanism to determine whether a billing error was made, Mr. Kingerski
recommended a Commission complaint procedure be established for determining
those disputes. (Enron Ex. 1.0 at 7).

Staff and Enron further assert that ComEd's concerns regarding an ARES's
financial resources and creditworthiness may be unsubstantiated because all ARES
will have to meet minimum financial requirements before they can be certified in
Illinois. (Enron Ex. 1.0 at 7; Staff Ex. 4.0 at 14). Enron notes Dr. Schlaf's
observation that under the 1997 Act, the Commission has the authority to
penalize an ARES or even revoke its service certificate. (Staff Ex. 4.0 at 8).

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ComEd argues that simply because an ARES has met minimum financial
requirements BEFORE being certificated offers Note Holders and credit agencies
no comfort in the event that the ARES LATER experiences financial difficulty or
simply refuses to remit IFCs to the Servicer. As Ms. Gillis testified, ComEd
must have some means of enforcing a third-party collector's obligation to remit
IFCs, and, because termination of service altogether would be inappropriate
under these circumstances, it is a reasonable alternative for ComEd to be
allowed to revert to billing for IFCs in the event of a default. (ComEd Ex. 4.0
at 14). According to ComEd, imposition of this condition in no way affects an
ARES's ability to collect any charges other than IFCs.

The Commission agrees with Staff and ComEd to the extent that there must be
a time limit in place after which an ARES should be considered to be in default.
It is for the benefit of all involved that times be set and clearly articulated,
so as to give fair notice of expected conduct and expected consequences. We
further recognize that it is important to distinguish between those instances
where there is a financial problem or unwarranted refusal to remit, and where
there is a legitimate dispute as to the amount collected.

Whether and to what extent IFC collection disputes will arise is, at this
point, a matter of speculation. If and when a dispute materializes, however, it
is only appropriate for the third-party collector to timely remit the UNDISPUTED
portions of its collections. We also see no reason why the third-party collector
cannot remit payment of the disputed amount UNDER PROTEST (or make some other
suitable and agreeable financial arrangements) pending a hearing on the matter.
ComEd contends that a procedure similar to that contained in Sections 280.160(a)
and (b) of the Commission's Rules (which address disputes regarding customer
bills) is appropriate. ComEd sets out the particulars of this informal process
which, if unsuccessful, culminates in the third-party collector submitting a
complaint to the Commission pursuant to the procedures outlined in Section
280.170. (ComEd Br. Exc. at 6-7).

While the Commission favors informal resolutions, we withhold expressing
any view on the proposed dispute resolution mechanism or adopting same in this
Order for the reason that the Commission has no desire to micro-manage ComEd. We
believe it appropriate however, to provide more detail and balance on the formal
remittance dispute process as suggested by both ComEd and Enron. We agree with
Enron that, if the ARES is successful during the dispute process (informal or
formal), it should be allowed to receive interest on the disputed amount paid to
ComEd. We further are of the opinion that when a remittance dispute cannot be
resolved informally, ComEd and the third-party collector shall jointly file a
complaint with the Commission and thus, no party will be singled out to bear the
burden of proof. Through these measures, the ARES can retain the single-billing
authority which it values and still pursue its remedies effectively. At the same
time, ComEd is protected.

If, however, a third-party collector simply refuses to pay or suffers a
financial setback affecting its ability or willingness to pay, a different
mechanism is needed. In

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such circumstances, a reversion to dual-billing is plainly warranted. We agree
with ComEd that default occurs on the date that remittance is due under either
of the options made available. Thus, where 10 days have elapsed from the time
remittance is due, ComEd may provide written notice to the third-party collector
of its intent to begin to bill customers previously billed by the third-party
collector for IFCs because of the third-party collector's default in remitting
IFCs when due (with a copy to the Commission). If ComEd receives no response
initiating dispute resolution or no payment by the 5th day thereafter, a
reversion to dual-billing for the IFCs is appropriate. If ComEd receives a
response unrelated to a dispute and/or payment within this time, the third-party
collector will be presumed liable for the Commission-authorized rate of interest
during the interval between the elected due date for payment and the date of
actual payment to ComEd. Reversion to dual-billing for IFCs does not limit the
rights of ComEd, any successor Servicer, CE Funding, the Note Trustee or the
Note Holders to recover, with interest, IFCs collected but not remitted by the
third-party collector.

As to the last of the provisions, the Commission agrees with Staff that
ComEd should not be permitted to impose unilaterally other billing and
collection terms it deems necessary to prevent the ratings on the Notes from
being withdrawn or downgraded. We cannot ignore Staff's concern that this would
constitute a potentially limitless tool with which ComEd could harm competitors.
(Staff Ex. 4.0 at 15). While we recognize that ComEd, as Servicer of the Notes,
may need to put in place policies and procedures which cannot be anticipated, in
advance of their need, to ensure that IFCs are paid such that the
creditworthiness of the Notes is maintained, and that such action may in some
circumstances, need to be taken quickly (SEE ComEd Ex. 4.0 at 13-14; ComEd Ex.
10.0 at 5-6), we still believe that Commission oversight under Article IX is
needed.

Thus, the language purporting to authorize the unilateral imposition of
billing and collection terms should be deleted from ComEd's Rider IFC. In the
event that ComEd wants either to change or to add other provisions to its
billing and collection terms, it should be required to file a new or
supplemental tariff.

Finally, with respect to all of the issues related to billing and
collection of IFCs by third-parties, the Commission recognizes that no entity
will be REQUIRED to bill or collect IFCs. Instead, these issues will arise, and
an entity will be required to comply with the procedures set forth above, only
when the entity CHOOSES to issue single bills which include IFCs or CHOOSES to
collect charges which include IFCs.

C. ISSUES RAISED ON BRIEFS.

The City contends that Article XVIII restricts the Commission's authority
in this proceeding. The City recommends that the Commission resist ComEd's
efforts "to conscript the Commission into its marketing team;" for thus, the
Commission's regulatory role would be threatened. Specifically, the City
objects to ComEd's Proposed TFO, Finding (19), which merely recites the
statutory requirements regarding

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the pledge of the State of Illinois, as stated in Section 18-105(b). Also, the
City objects to Finding (21) of the TFO dealing with a fact finding regarding
bankruptcy law, which the City claims is outside the expertise of the
Commission.

The Commission rejects the City's arguments. In no case does the City
suggest that any of the proposed findings are incorrect or contrary to the law.
If anything, the City fully agrees that the relevant findings mirror the
relevant portions of Article XVIII and that those provisions are applicable
regardless of whether or not they are included in the TFO. (e.g. City Br. at
2-3). Nor does the City dispute the unrebutted evidence that the market will
regard with suspicion a TFO which does not include a recitation of the
statutory safeguards or that such a TFO may result in a credit rating that is
lower and/or costs that are higher than would otherwise be the case. (See
City Br. at 3; Ellis, ComEd Ex. 1.0 at 13-14). Moreover, we agree with ComEd
that the Commission is charged with jurisdiction over the Act including
Article XVIII, and the findings and ordering paragraphs of this Order do
nothing more or less than apply Article XVIII provisions to the proposed
transactions.

Mr. Wexler's brief sets out a number of concerns and suggestions for the
Commission most of which, ComEd argues, are either in disregard of the record or
in disregard of the law. At the outset, Wexler claims that ComEd uses a cost of
equity of almost 13% while no evidence shows that such a rate actually reflects
ComEd's cost of equity today. The Commission agrees with ComEd that nothing in
the Act requires that ComEd's current cost of equity be determined in this
proceeding; only that ComEd reasonably demonstrate that there will be a
reduction in its overall cost of capital. (Section 18-103(d)(1)(A)). Moreover,
in the analyses which Mr. Thone performed and Mr. Rungren examined, a cost of
equity of 12.28% was used which was the cost of equity established by the
Commission in ComEd's most recent rate case. In any event, Mr. Thone performed
analyses to determine whether the Miller model was sensitive to changes in the
leveraged cost of equity, I.E., whether the results would change if the starting
cost of equity were higher or lower than 12.28%. (Thone, ComEd Ex. 3.0 at 8).
Those analyses demonstrated that the model was not sensitive to such changes.
(ID. at 9). These analyses should satisfy Mr. Wexler's concerns.

According to Wexler, the Commission should require ComEd to demonstrate
that it is not replacing lower-cost capital with higher-cost capital and should
prohibit such actions. However, he indicates that if ComEd shows such
replacement is justified, then it should be allowed. ComEd questions whether Mr.
Wexler understands the term "cost of capital" to be, as the Commission has
found, "the sum of the cost of the components of the capital structure, i.e.,
debt, preferred and preference stock, and common equity, weighted by their
relative proportions in the capital structure." Order on Remand, Dockets 87-0427
ET AL. at 377 (Mar. 8, 1991) REV'S IN PART ON OTHER GROUNDS; BUSINESS AND
PROFESSIONAL PEOPLE FOR THE PUBLIC INTEREST V. COMMERCE COMM'N, 146 Ill. 2d 175
(1991); SEE ALSO Rungren, Tr.230. According to ComEd, Mr. Wexler seems to equate
the cost of equity with dividends paid. (Wexler Br. 3). Although dividends are
an important component in some of the methodologies used to quantify the cost of
equity,

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many more factors are relevant to the determination of the cost of equity,
including stock price, investor expectations on growth, business and financial
risks facing the firm and movement of the security VIS-A-VIS the market. (E.G.,
Rungren, Tr.231-32, 234). In the end, we reject Mr. Wexler's claim that ComEd's
"attempt to show a net reduction in the cost of capital is questionable" because
the record shows that ComEd has made the required demonstration.

Wexler also proposes that, in conjunction with this Order, the Commission
should (a) require that the savings ComEd expects (in the neighborhood of $200
million annually) be reflected in a reduction to rates; and (b) a docket be
opened to determine the amount of savings and the commensurate rate
reduction. This proposal stems from his assertion that no "public purpose" is
served in having ratepayers pay for retiring equity without any reduction in
rates. ComEd points out that this proceeding has been brought pursuant to
Article XVIII and specific provisions of Article VII, none of which relate to
the establishment of rates or require any demonstration regarding rate
levels. Instead, the Act specifically provides other mechanisms and
procedures which relate to the level of rates which a utility may charge its
customers. SEE, E.G., Sections 9-202, 9-250, 16-111(a), (b), (e). If Mr.
Wexler is dissatisfied with the rates charged by ComEd, he can file a
complaint or seek whatever other relief is allowed under a relevant section
of the Act.

ComEd further argues that, even if a rate decrease were authorized to
reflect the savings for discrete expenses, which it is not, there is no
evidentiary support for the magnitude of savings suggested by Mr. Wexler,
I.E., "in the neighborhood of $200 million." (Wexler Br. 4). The record
clearly demonstrates that this number does not include taxes and other costs
related to the Notes. (Gillis, Tr. 171-173). More importantly, Mr. Wexler's
suggestion that there will be $200 million in savings ignores the fact that
ComEd will no longer have the portion of its revenues which will constitute
IFCs because the right to those revenues will be owned by the Note Issuer for
the benefit of the Note Holders. As the Commission has recently found, a
transaction which has both costs and benefits must be considered in its
totality. ORDER, Dockets 96-0245/96-0248 at 7 (March 31, 1997). Finally, to
the extent that Mr. Wexler suggests that the failure to reduce rates in this
matter may somehow raise a "concern" of constitutional magnitude, ComEd
claims he is wrong. The payment of rates found to be just and reasonable by
the Commission, as were ComEd's rates, does not, as a matter of law,
constitute harm. SEE E.G., KLLM, INC. V. ALLEN'S CORNER GARAGE AND TOWING
SERVICE, INC., 1998 WL 142396, *5 (N.D. Ill. Mar. 24, 1998);

ComEd refers to well-settled legal principles which prevent us from
ordering a rate decrease in the context of this proceeding. The rule against
single-issue ratemaking prohibits rate adjustments based on discrete revenue or
expense items, such as the savings anticipated to result from application of the
proceeds from the Notes, thereby "ignoring the totality of [the utility's]
circumstances." E.G., A. FINKL & SONS CO. V. COMMERCE COMM'N, 250 Ill. App.
3d 317, 315 (1st Dist. 1993); Order, COMMONWEALTH EDISON CO., Dockets
96-0245/96-0248 (cons.) at 16 (Mar. 31, 1997). In

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addition, ComEd argues that its rates have been approved by the Commission, such
that they are presumed to be just and reasonable. E.G., CITY OF CHICAGO V.
COMMERCE COMM'N, 15 Ill. 2d 11, 16 (1958). Moreover, even if it were otherwise
proper for Mr. Wexler to question the level of ComEd's rates in this proceeding,
he would have the burden of demonstrating that ComEd's rates were NOT just and
reasonable, an evidentiary showing which is not even hinted at on this record.
We are persuaded by the correctness of ComEd's position and the legal support it
provides. Furthermore, to the extent that Wexler suggests that ratepayers are
required to "pay for retiring equity," he misapprehends the nature of the IFCs.
It is undisputed that ratepayers will not be "paying" rates or charges that are
any greater than they would be absent issuance of the Notes. The Act absolutely
prohibits issuance of the Notes from increasing the amounts customers otherwise
would owe to ComEd and the Commission believes it has made that clear in this
Order.

In his Reply Brief on Exceptions Mr. Wexler asks the Commission to open a
docket, providing for a lowering of the tariff and a repayment of any
"overcharges" to ratepayers, if in any prior year more revenues were collected
than were needed to amortize the Bonds and pay required reserves. Given the
outlines of his proposal, Mr. Wexler apparently and mistakenly still believes
that ratepayers are somehow being "charged" to support the Notes. This, however,
is not the case.

Mr. Wexler also contends that it is inappropriate for Unicom to use
proceeds from a ComEd common stock repurchase to buy back Unicom common stock
unless Unicom's other subsidiaries contribute to the cost of the buy back. Mr.
Wexler states that the absence of such a requirement will provide a "benefit" to
Unicom's other subsidiaries without any payment on their part for this benefit.
Initially, the record does not support that Unicom's other subsidiaries will
receive a "benefit" from this use of the proceeds. Further, Section
18-103(d)(1)(A) explicitly provides that any proceeds transferred to Unicom
through a ComEd common stock repurchase must be used to repurchase Unicom
stock. Accordingly, Mr. Wexler's proposed condition is rejected.

Mr. Wexler suggests that the Commission require information from ComEd
demonstrating the validity and enforceability of the State's pledge not to limit
or impair the ITP nor the instrument funding charges. SEE Section 18-105(b).
ComEd argues that Mr. Wexler provides no basis for his conclusion that the State
"apparently received no consideration for that pledge." (SEE ID. at 4). More
importantly, Mr. Wexler provides no explanation (1) of the means by which the
Commission would conduct such an investigation; (2) how or why ComEd should be
required to demonstrate what the consideration was; or (3) what the Commission
could or should do with the results of such an investigation. We agree with
ComEd that Mr. Wexler's proposal, in both form and substance, should be
rejected.

Wexler also suggests that, before approving the instant transactions, the
Commission should require ComEd to demonstrate that the $1.4 billion in
write-offs on December 31, 1997 meets the statutory standard. According to
ComEd, Wexler would

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have the Commission ignore Ms. Gillis' uncontested testimony that the relevant
write-offs were proper and were implemented as a result of the 1997 amendments
to the Act. (ComEd Ex. 10 at 41). ComEd asserts that if Mr. Wexler, or any other
party, disputed the basis for the write-offs, there was ample opportunity,
before the record was marked "Heard and Taken," for discovery and the submission
of contrary evidence or for cross-examination of Ms. Gillis as to the basis for
her testimony. We agree with ComEd that the evidence in question sufficed as a
PRIMA FACIE showing and note that this evidence stands uncontradicted,
unrebutted and unchallenged on the record.

Wexler further suggests that the Order set out, as a pre-condition, the
receipt of a positive letter ruling from the IRS. ComEd points out that the
evidence is uncontested that, even if the IRS were to provide an adverse ruling,
it may well be possible to modify the transactions to eliminate the risk of
current taxation, thus preserving the benefits of the transactions. (ComEd Ex.
1.0 at 19). The evidence does not, as Mr. Wexler claims, show that an adverse
IRS ruling "would" eliminate the benefits of the transaction. (Wexler Br. 5). We
believe it settled on the record that if issuance of the Notes and use of
proceeds will not result in savings to ComEd, ComEd will not engage in the
transaction. (ComEd Ex. 4.0 at 4). Moreover, the record shows that if any of the
modifications would cause the transactions to fail outside the bounds approved
by the Commission, ComEd agrees to, and is required to, seek Commission approval
for the changes. (ComEd Br. at 5; ComEd Ex. 1.0 at 19).

Wexler also asks the Commission to "inquire further" whether issuance of
the "bonds" might result in less revenues available to ComEd to pay its ordinary
operating expenses and will put the Company at risk to provide service to its
customers. ComEd identifies the phenomenon to which Wexler refers as "cash flow"
or "earnings variability" and explains that the effect of this phenomenon on the
cost of capital was fully addressed by the Miller and Hamada model analyses
performed by Mr. Thone. (Thone, ComEd Ex. 6.0 at 4; Rungren, Staff Ex. 1.0 at
8). There is no contrary evidence to assess. We believe Mr. Wexler had full
opportunity to question Mr. Thone as to any aspects of his analyses at the
hearing, and therefore the Commission rejects the suggestion to "inquire
further" on this issue.

In his Brief on Exceptions, Mr. Wexler suggests that ComEd may experience
only minimal cost savings from the issuance of the Notes, (a suggestion which
contradicts his previous assertion of "substantial" cost savings) such that
ComEd's ability to pay the expenses associated with providing reliable service
to ratepayers may be hampered. On the basis of such speculations, Mr. Wexler
asks the Commission to open a new docket to determine ComEd's present and future
ability to provide reliable service to ratepayers (Br. Exc. at 9-10). We decline
this suggestion because nowhere on the record has it been shown that reliability
is at issue in this proceeding. Moreover, the Commission is already addressing
reliability in other docketed proceedings.

Finally, Mr. Wexler sets out a laundry list of findings and ordering
paragraphs that he asks the Commission to excise from the Proposed Order. For
the most part, he

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makes a general claim that those findings and orders merely replicate the
provisions of the Act. He also would have the Commission delete certain words
and phrases in other findings which he believes to raise questions of securities
law and related property and contractual rights outside the Commission's
expertise. On all these points, Mr. Wexler's arguments are vague in that he
fails to set out his objections to any one finding with specificity and clarity.
ComEd argues that Mr. Wexler would have us delete findings that the Act requires
the Commission to make (e.g. Finding 7); that are appropriate for a TFO to
contain (Finding 26); and, that relate to the Commission's authority (Finding
7). For the same reasons that we reject City's arguments, we also reject Mr.
Wexler's less detailed claims.

IIEC seeks reassurance that the IFCs will have no impact on a customer's
bill regardless of how the electric services market eventually unfolds.
Specifically, IIEC recommends that the Commission Order include an express
finding that the IFCs are to be deducted and stated separately from base rates
and transition charges, and, where applicable, from other rates for tariffed
service. Further, IIEC requests that the Order express a finding which states
that "the Commission interprets and understands the subject statutes to prohibit
any increase in a customer's bill due to the IFC's" and that "this finding is
consistent with ComEd's application." (IIEC Br. at 4). This party also expressed
concerns as to the "legal final" date set out in Ms. Gillis' testimony and its
meaning with respect to the December 31, 2008 maturity dates for the notes in
question. (IIEC Br. at 5-7). Finally, given that ComEd presently is awaiting an
IRS ruling and is undecided as to what actions it would take in the event of an
adverse ruling, IIEC seeks to emphasize again that, under no circumstance,
should the issuance of IFCs increase a customer's bill. According to IIEC,
customers should be indifferent to IFCs being imposed and collected.

The Commission believes that this Order should provide the reassurance that
IIEC seeks. Specifically, the imposition of IFCs will not, under either the
circumstances outlined by IIEC or any other circumstances, increase the total
charges to ComEd's customers over those that the customers would pay absent the
imposition of IFCs.

VIII. COMMISSION FINDINGS AND ORDERING PARAGRAPHS.

The Commission, having considered the entire record herein and being fully
advised in the premises, is of the opinion and finds that:

(1) ComEd is a corporation engaged in the generation, transmission,
distribution and sale of electricity to the public in Illinois, is a
public utility within the meaning of Section 3-105 and is an electric
utility within the meaning of Articles XVI and XVIII, and is
authorized to

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file, and has filed, in proper form, an Application with the
Commission pursuant to Section 18-103 for issuance of a TFO;

(2) the Commission has jurisdiction over ComEd and of the subject matter
of this proceeding;

(3) the recitals of fact and law and the conclusions reached in the
prefatory portion of this Order are supported by the record and are
hereby adopted as findings of fact and law;

(4) the proposed creation, establishment and granting of rights in and to
ITP in the amount of $6.323 billion, which does not exceed the
allowable amount of ITP in accordance with Section 18-104(a), such ITP
will be vested in CE Funding as an original right and not by
assignment from ComEd and the proposed assignment of such ITP to the
Note Issuer, which ITP will include all right, title and interest of
CE Funding and the Note Issuer, as its assignee, to impose and receive
the non-bypassable authorized IFCs in this Order and all related
revenues, collections, claims, payments, money or proceeds thereof,
including all right, title and interest of CE Funding and the Note
Issuer in, to, under and pursuant to this TFO, should be authorized
and approved;

(5) ComEd, pursuant to Section 18-104(f), is authorized to contract with
CE Funding and/or the Note Issuer to bill and collect the applicable
IFCs for the benefit and account of CE Funding and/or the Note Issuer
and their assigns, pursuant to which contract ComEd or such affiliate
(or any successor thereto) will account for and remit the applicable
IFCs, without the obligation to remit any investment earnings thereon,
to or for the account of CE Funding and/or the Note Issuer, and the
obligation of ComEd or such affiliate to bill, collect and remit the
applicable IFCs shall continue irrespective of whether ComEd (or any
successor thereto) is providing electric power and/or other services
to the retail customers and other persons obligated to pay such IFCs;

(6) the proposed issuance and sale of TFIs in an aggregate principal
amount of up to $3.4 billion by the Note Issuer to Holders in the form
of the Notes and the proposed pledge and assignment to the Note
Trustee, for the benefit of such Holders, of all of the Note Issuer's
right, title and interest in and to the ITP and other Note Collateral
as security for such Notes, the $3.4 billion amount of which does not
exceed the amount permitted under Section 18-103(a), should be
authorized and approved;

(7) the proposed imposition and collection, through December 31, 2008 (as
such date may be extended pursuant to Section 18-104(1)), from all
retail customers and other persons and entities obligated to pay
charges

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pursuant to Applicable Rates, of IFCs in the amounts requested in
Section 27 of the Application and as set forth in Section IV hereof
which amounts shall be non-bypassable charges expressed in cents per
kWh and calculated using the methodology described in ComEd Ex. 2.0
and which IFCs will not be subject to any defense, counterclaim or
right of set off arising as a result of failure by ComEd (or any
successor) to perform or provide past, present or future services, as
set forth in Section 18-104, should be authorized and approved;

(8) the proposed allocation of such IFCs among ComEd's customer classes
according to the methodology described in ComEd Ex. 2.0 and Section IV
of this Order is consistent with Section 18-103(d)(4) and should be
authorized and approved;

(9) the proposed true-up and reconciliation adjustment mechanisms
described herein should be authorized and approved;

(10) ComEd's entry into the Administration Agreement would be in the public
interest and the public would be convenienced thereby and, therefore,
should be authorized and approved;

(11) ComEd's ability to enter into the transactions with other affiliated
interests or affiliates of such affiliated interests as described
herein is in the public interest and the public would be convenienced
thereby and, therefore, should be authorized and approved; provided
that ComEd file a copy of any relevant contract with the Commission
within three business days of entry into such contract;

(12) the IFC tariff proposed by ComEd, subject to adjustment to reflect (A)
the actual IFCs pursuant to the formula set forth herein, (B) the
actual true-up and reconciliation adjustment processes, (C) that the
only kWh usage information a third party need provide to ComEd is
total monthly kWh usage information, and (D) that IFCs shall be
remitted within seven days of receipt, provided however that, if the
third-party collector otherwise is required to remit payments to ComEd
or its successor on a more frequent basis, IFCs shall be remitted at
the same time as such other payments, and that third-party collectors
may, at their option, by providing to ComEd a written notification of
their election of the option, which election may not be changed for a
period of one calendar year after it is exercised, choose (in lieu of
remitting IFC collections within seven days of receipt) to pay IFCs
within 15 days of the date of ComEd's bill provided that (1) the
third-party collector pays all IFCs for which it bills regardless of
whether payments are actually received from customers, and (2) a
third-party collector who does not have investment-grade credit
ratings (BBB- or better) must post a deposit or comparable security
equal to one month's

37
<PAGE>

estimated IFC collections, (E) the formal dispute resolution process
and associated IFC remittance procedure set forth in Section VII(B) of
this Order, and (F) that, if a third-party collector does not remit
IFCs when due the third-party collector will be in default and ComEd
may, 10 days thereafter, send a notice and take actions related to
defaults delineated in Section VII(B) of this Order, should be
authorized and approved;

(13) CE Funding will be a "grantee" and the initial owner of the ITP to be
created by this Order; the Note Issuer will be an "issuer" and an
"assignee"; the Holders, along with the Note Trustee, will be
"holders" and the Notes will be "transitional funding instruments" as
all such terms are defined in Section 18-102;

(14) the uses of proceeds described by ComEd in its application constitute
permissible uses of proceeds under Section 18-103(d)(1), the costs
associated with the issuance and collateralization of the TFIs as
described by ComEd are commercial reasonable, and ComEd's proposal for
deducting the proposed IFCs and stating such charges separately from
ComEd's or its successors' Applicable Rates is consistent with the
provisions of Section 18-103(d)(3) and should be authorized and
approved;

(15) as contemplated by Section 18-103(d)(2), the expected maturity date
for the Notes and the final date on which the IFCs are authorized to
be collected shall each occur no later than December 31, 2008;
provided that, as set forth in Section 18-104(l), if the Notes have
not been paid in full at such time, the right of the Note Issuer to
impose and collect IFCs (and the obligation of ComEd or its successor
to continue to deduct such IFCs from Applicable Rates) shall continue
beyond such date until such time as the Notes have been paid in full;

(16) in accordance with Sections 18-103(d)(5) and 18-111(3), imposition of
IFCs based on this Order will not cause the base rates, transition
charges or other rates for tariffed services paid by any retail
customer of ComEd, class of retail customers of ComEd or other person
or group of persons obligated to pay any such rates (A) to exceed the
levels then in effect, as adjusted for the rate decreases required by
Section 16-111(b), or (B) to increase above the levels which ComEd
would have been allowed to charge had it not been authorized to impose
and collect IFCs and, in addition, as contemplated by Section
18-104(j), the deduction of the IFCs from ComEd's (or its successor's)
Applicable Rates for tariffed services shall not be construed as a
change in or otherwise require a recalculation of the authorized
amounts of such rates and charges under Sections 16-102, 16-107,
16-108 or 16-110, or otherwise;

38
<PAGE>

(17) attached hereto as Schedule 1 is a reasonable projection of the
Expected Amortization Schedule (it being understood that such Schedule
will be finalized only when the Notes are priced);

(18) ComEd or any successor Servicer must allocate any shortfall in
payments received from any customer or any other person or entity
obligated to pay Applicable Rates first ratably to the Note Issuer and
ComEd based on the amount owed for IFCs and the amount of other fees
and charges, other than late charges, owed to ComEd or any successor
(or to an ARES to the extent the Servicer is providing billing
services therefor), and second, all late charges shall be allocated to
ComEd or any successor;

(19) consistent with the pledge and agreements of the State of Illinois
provided in Section 18-105(b), notwithstanding any other provision of
law, none of this Order, the ITP created and established pursuant
hereto nor the IFCs authorized to be imposed and collected hereunder
will be subject to reduction, postponement, impairment or termination
by any subsequent action of the Commission, all as provided in Section
18-104(c), and the Commission will not revoke, amend or otherwise
change the tariffs evidencing the Note Issuer's right to receive IFCs
in any manner which would defeat the legitimate expectations of the
Holders to receive such IFCs on a timely basis and each of ComEd, CE
Funding and the Note Issuer is authorized to include such pledge and
agreements in any contract with the Holders, the Note Trustee, or with
any assignee;

(20) consistent with and in furtherance of the provisions and objectives of
Sections 18-105(b), 18-107 and 18-108, to the full extent permitted by
the Act and by all other applicable law, the ITP created and
established by this Order and the right to impose and collect IFCs
contemplated hereunder will constitute property rights of CE Funding
and its assigns, including the Note Issuer and its assigns (as well as
the Note Trustee on behalf of Holders) which property has been placed
beyond the reach of ComEd and its creditors, as in a true sale, and
which property rights may not be limited, altered, impaired, reduced
or otherwise terminated by any subsequent actions of ComEd or any
third party and which shall, to the full extent permitted by law, be
enforceable as against ComEd, its successors and assigns, and all
other third parties (including judicial lien creditors) claiming an
interest therein by or through ComEd or its successors and assigns;

(21) as provided under Section 18-107(c) and consistent with the provisions
and objectives of Sections 18-105(b), 18-107 and 18-108, the lien of
the Note Trustee on the ITP shall: (A) attach automatically to such
ITP from the time of issuance of the Notes; (B) be continuously
perfected through a filing with the Chief Clerk of the Commission; (C)
be enforceable against

39
<PAGE>

ComEd, CE Funding, the Note Issuer, and all third parties, including
judicial lien creditors; (D) from and after the filing described in
clause (B) above, constitute a continuously perfected security
interest in and lien on all then existing or subsequent revenues and
proceeds arising with respect to the associated ITP, whether or not
the electric power and energy included in the calculation of such
revenues and proceeds have been provided; (E) rank prior to any other
lien, including any judicial lien, which subsequently attaches to the
ITP or to any other rights created by this Order or any revenues or
proceeds of the foregoing; and (F) not be defeated or adversely
affected by changes to this Order or to the IFCs payable by any retail
customer, class of retail customers or other person or group of
persons obligated to pay such IFCs nor by commingling of revenues
arising with respect to ITP with any funds of ComEd, any successor, CE
Funding or the Note Issuer;

(22) in order to ensure that the allocations of IFCs be maintained across
the broadest possible range of customers and in accordance with
Section 18-103(d)(4) and in order to ensure that the IFCs be
non-bypassable, (A) neither ComEd nor any successor thereto shall
enter into any contracts with any customer obligated (or who would,
but for such contract, be obligated) to pay IFCs if, as a result
thereof, such customer would not receive tariffed services, unless
the contract provides that the customer will pay an amount to CE
Funding or its assigns, as applicable, equal to the amount that would
be paid in IFCs if the services provided under such contract were
tariffed services, and (B) the Commission acknowledges and concurs
in the parties' intent that any revenues received by ComEd or any
successor thereto from any such contract services shall, to the
extent of the authorized amount of the IFCs included therein, be
deemed to be proceeds of, and included in, the ITP;

(23) in the event of default by ComEd or any successor Servicer in payment
to or for the benefit of the Note Issuer of the IFCs, the Commission,
upon application by (A) the Note Trustee or the Holders as
beneficiaries of the lien provided for under Section 18-107(c), (B)
the Note Issuer or its assignees, or (C) pledgees or transferees of
the ITP, shall, without limiting any other remedies of such persons,
order the sequestration and payment to or for the benefit of such
persons of revenues arising with respect to the ITP;

(24) no third party servicer(s) shall be approved or required to replace
ComEd in any of its servicing functions in whole or in part unless
such approval or requirement will not cause the then current rating of
the Notes to be withdrawn or downgraded;

40
<PAGE>

(25) ComEd or any successor Servicer, in order to perform its functions as
Servicer and to provide proper reporting to the Note Issuer and the
Note Trustee, is obligated to impose such terms with respect to credit
and collection policies applicable to third-party collection agents as
may be reasonably necessary to prevent the then current rating of the
Notes from being downgraded and will set out any new terms in a
supplemental tariff; and may take any action permitted by law,
including but not limited to disconnection of electric service, for
failure of payment for all or any portion of the IFCs billed to the
same extent as ComEd (or any successor thereto) would be able to take
such action because of nonpayment of any other charge for tariffed
service;

(26) concurrently with the issuance of each series of Notes by the Note
Issuer, ComEd will place into effect a tariff in the form of the IFC
tariff attached to the Application as Exhibit 4.0 (as modified in
accordance with Finding (12)), in accordance with Sections
18-103(d)(3), 18-104(a) and 18-104(j), directing that the IFCs
associated with such series and with all previously-issued and still
outstanding series be applied and invoiced to all customers paying
Applicable Rates, and that such IFCs be deducted, stated, and
collected separately from the amounts otherwise billed by ComEd
or its successor for Applicable Rates and that, to allow for review
by the Commission and its Staff, such tariffs shall be filed with the
Commission no later than three business days prior to the date of
issuance of the series of Notes, and shall become effective on the
date of issuance of such series of Notes, and that upon the
effectiveness of such tariff, all of the ITP related to the subject
IFCs shall constitute a current property right and shall thereafter
continuously exist as property for all purposes;

(27) each of the creation and vesting of the ITP in CE Funding (including
the right to obtain reconciliation and true-up adjustments to the
IFCs) and the transfer of the ITP from CE Funding to the Note Issuer
shall constitute an "absolute transfer" (within the meaning of Section
18-108) of any right, title and interest ComEd or CE Funding, as
applicable, otherwise may have had in the ITP including any right
ComEd otherwise may have had to receive that portion of base rates,
transition charges and other Applicable Rates which has been deducted
and stated separately pursuant to this Order or to receive any
proceeds thereof, and such transfer shall be irrevocable and
enforceable as against ComEd, CE Funding or their respective
successors;

(28) as contemplated by Section 18-108, the property interest of CE Funding
and the Note Issuer in the ITP created by this Order shall not be
defeated by the commingling of such property with funds of ComEd (or
any successor thereto) or any other funds (including, but not limited
to, funds

41
<PAGE>

of an ARES) and, accordingly, in the case of any such revenues,
collections, claims, payments, money or proceeds which are commingled
with such other property, revenues, collections or other payments, the
portion allocable to the IFCs may be determined by such reasonable
methods of estimation as are set forth in the Servicing Agreement
contemplated by this Order;

(29) the Notes will be non-recourse except as to, and will be secured only
by and payable solely out of the proceeds of, the following property:
(A) the ITP, (B) all rights of the Note Issuer under the servicing
agreements with ComEd (or any successor servicer of the ITP) and all
rights and property interests under any other agreements entered into
by or for the benefit of the Note Issuer in connection with the
transaction, (C) any bank collection accounts, investment accounts or
similar reserve accounts established in connection with the issuance
of the Notes and all cash or investment property or other amounts on
deposit therein from time to time, (D) solely with respect to Notes,
if any, which bear a floating rate of interest, any interest rate
hedging agreement executed solely to permit the issuance of such
Notes, (E) all rights to obtain adjustments to the IFCs in accordance
with Section 18-104(d), (F) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing,
and (G) all payments on or under and all proceeds in respect of any or
all of the foregoing (collectively the "Note Collateral"); provided,
however, that notwithstanding the non-recourse nature of the
transaction, ComEd (individually, as Servicer, or otherwise) may (A)
make representations and warranties with respect to, among other
things, the validity of CE Funding's and its assignees' title to the
ITP, (B) observe covenants for the benefit of CE Funding and its
assignees, (C) indemnify CE Funding and its assignees against any
breaches of such representations, warranties and covenants and to
protect such parties against other losses which result from actions or
inactions of ComEd, and (D) agree to remit to the Note Trustee, for
the benefit of the Holders, a portion of payments which it receives on
account of lost tariffed revenues from which future IFCs otherwise
would have been deducted, which portion it has agreed constitutes
proceeds of such IFCs;

(30) all of the terms and provisions of this Order binding on ComEd shall
be binding on ComEd's successors and assigns, including any successor
electric utility which takes over the provisions of delivery services
or other tariffed services within all or any part of ComEd's service
area;

(31) ComEd shall file periodic reports with the Commission setting forth
the use of proceeds from each issuance of Notes and its associated
accounting entries, such reports to be filed within 90 days of the
receipt of proceeds from each issuance of Notes and at twelve-month
intervals

42
<PAGE>

thereafter until such proceeds have been fully accounted for, and that
such procedures will ensure the proceeds from the Notes are applied in
accordance with the Commission's Order as required by Section
18-111(4);

(32) in accordance with Section 18-104(g), ComEd, CE Funding and the Note
Issuer, should be afforded flexibility in establishing the terms and
conditions of the Notes, including repayment schedules, collateral,
required debt service and other reserves, interest rates and other
financing costs and the ability of ComEd, at its option, to effect a
series of issuances of Notes;

(33) whenever a true-up or reconciliation results in an adjustment to IFCs,
ComEd shall provide to the Commission Staff, the adjusted IFCs along
with supporting documents and calculations at least three business
days prior to the date on which the adjusted IFCs will take effect and
shall also, in the case of a true-up review, notify the Staff by
telephone, with a confirming facsimile the same day directed to the
Director of Accounting, the Director of Finance, and the Manager of
the Financial Analysis Division, no later than seven business days
prior to the day on which any adjusted IFCs would take effect whether
the true-up review will result in adjusted IFCs;

(34) no later than the date on which adjusted IFCs resulting from a true-up
or reconciliation will take effect, ComEd shall file with the Chief
Clerk of the Commission a listing of the adjusted IFCs for each class,
a copy of which will be kept with ComEd's Schedule of Rates in each
office in which the Schedule is available for public inspection;

(35) the allocation of IFCs among ComEd's classes of retail customers is
consistent with the requirements of Section 18-103(d)(4);

(36) the aggregate principal amount of Notes shall not, and the aggregate
principal amount of Notes authorized by this Order does not, exceed
the amount specified in Section 18-103(d)(6); and

(37) ComEd's Application should be approved.

IT IS THEREFORE ORDERED that ComEd's Application is approved.

IT IS FURTHER ORDERED that rights in and to ITP in the amount of $6.323
billion are hereby created and established, which ITP will be vested in CE
Funding as an original right and not by assignment from ComEd, and the proposed
assignment of such ITP to the Note Issuer is hereby approved, which ITP will
include all right, title and

43
<PAGE>

interest of CE Funding and the Note Issuer, as its assignee, as enumerated in
Finding (4).

IT IS FURTHER ORDERED that ComEd, pursuant to Section 18-104(f) shall
assume the rights and obligations set forth in Finding (5).

IT IS FURTHER ORDERED that, consistent with Section 18-104(f), the interest
in the ITP may be assigned, sold or otherwise transferred, in whole or in part,
and may, in whole or in part, be pledged or assigned as security to or for the
benefit of a holder or holders.

IT IS FURTHER ORDERED that the proposed issuance and sale of TFIs in an
aggregate principal amount of up to $3.4 billion, as outlined in Finding (6),
are hereby authorized and approved.

IT IS FURTHER ORDERED that the provisions of Finding (7) are authorized and
approved.

IT IS FURTHER ORDERED that the proposed allocation of such IFCs among
ComEd's customer classes according to the methodology described in ComEd Ex. 2.0
is authorized and approved.

IT IS FURTHER ORDERED that the proposed true-up and reconciliation
adjustment mechanisms described herein are authorized and approved.

IT IS FURTHER ORDERED that ComEd's entry into the Administration Agreement
would be in the public interest and the public would be convenienced thereby
and, therefore, is authorized and approved.

IT IS FURTHER ORDERED that ComEd's ability to enter into the transactions
with other affiliated interests or affiliates of such affiliated interests as
described herein is in the public interest and the public would be convenienced
thereby and, therefore, such transactions are authorized and approved and ComEd
shall file with the Commission any related contract within three business days
of entry into such contract.

IT IS FURTHER ORDERED that the IFC tariff proposed by ComEd, subject to the
conditions set forth in Finding (12), is authorized and approved.

IT IS FURTHER ORDERED that CE Funding will be a "grantee" and the initial
owner of the ITP; the Note Issuer will be an "issuer" and an "assignee"; the
Holders, along with the Note Trustee, will be "holders"; and the Notes will be
"TFIs," as such terms are defined in Section 18-102.

IT IS FURTHER ORDERED that the uses of proceeds described by ComEd
constitute permissible uses of proceeds under Section 18-103(d)(1) and are
authorized

44
<PAGE>

and approved and that the costs described therein are commercially reasonable,
and its proposal for deducting the proposed IFCs and stating such charges
separately from ComEd's or its successors' Applicable Rates is consistent with
the provisions of Section 18-103(d)(3) and is authorized and approved.

IT IS FURTHER ORDERED that the proceeds from the issuance of the Notes
shall be used for the purposes set forth in Section 18-103(d)(1).

IT IS FURTHER ORDERED that, as contemplated by Section 18-103(d)(2), the
expected maturity date for the Notes and the final date on which the IFCs are
authorized to be collected shall each occur no later than December 31, 2008,
subject to the conditions set forth in Finding (15).

IT IS FURTHER ORDERED that the allocation of IFCs among ComEd's classes of
retail customers proposed in the Application is consistent with the requirements
of Section 18-103(d)(4) and is authorized and approved.

IT IS FURTHER ORDERED that the Servicer, on behalf of CE Funding, as a
grantee, and on behalf of the Note Issuer, as an assignee under the Act, is
authorized and directed to impose and collect IFCs from all customers of ComEd
or any other persons or entities who are obligated to pay ComEd any Applicable
Rates.

IT IS FURTHER ORDERED that, in accordance with Sections 18-103(d)(5) and
18-111(3), imposition of IFCs in accordance with this Order satisfies the
requirements described in Finding (16).

IT IS FURTHER ORDERED that Schedule 1 attached hereto is a reasonable
projection of the Expected Amortization Schedule and the $6.323 billion of ITP
which ComEd has requested does not exceed the amount of ITP which may be created
and established in accordance with Section 18-104(a), and the maximum aggregate
principal amount of Notes requested to be issued hereunder does not exceed the
amount permitted under Section 18-103(d)(6).

IT IS FURTHER ORDERED that ComEd must allocate any shortfall in payments
received from any customer or any other person or entity obligated to pay
Applicable Rates as set forth in Finding (18).

IT IS FURTHER ORDERED that, consistent with the pledge and agreements of
the State of Illinois, notwithstanding any other provision of law, none of this
Order, the ITP nor the IFCs authorized to be imposed and collected hereunder
shall be subject to the actions proscribed in Finding (19).

IT IS FURTHER ORDERED that, consistent with Sections 18-105(b), 18-107 and
18-108, the ITP and the right to impose and collect IFCs contemplated hereunder
will constitute property rights with the attributes as set forth in Finding
(20).

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<PAGE>

IT IS FURTHER ORDERED that, as provided under Section 18-107(c), the lien
of the Note Trustee on the ITP shall have the attributes described in Finding
(21).

IT IS FURTHER ORDERED that in order to ensure that the allocations of IFCs
be maintained across the broadest possible range of customers and in accordance
with Section 18-103(d)(4) and in order to ensure that the IFCs be non-by
passable, the provisions set forth in Finding (22) shall be observed.

IT IS FURTHER ORDERED that, in the event of default by ComEd or any
successor Servicer in payment to or for the benefit of the Note Issuer of the
IFCs, the Commission, upon the application by (A) the Note Trustee or the
Holders as beneficiaries of the lien provided for under Section 18-107(c), (B)
the Note Issuer or its assignees, or (C) pledgees or transferees of the ITP,
shall, without limiting any other remedies of such persons, order the
sequestration and payment to or for the benefit of such persons of revenues
arising with respect to the ITP.

IT IS FURTHER ORDERED that ComEd or any successor, in order to perform its
functions as Servicer and to provide proper reporting to the Note Issuer and the
Note Trustee, is hereby authorized to impose on third-party collection agents
such terms with respect to credit and collection policies as may be reasonably
necessary to prevent the then current rating of the Notes from being downgraded
with such terms being first set out in a supplemental or amended tariff and may
take any action permitted by law, including but not limited to disconnection of
electric service, for failure to pay for all or any portion of the IFCs billed
to the same extent as ComEd (or any successor thereto) would be able to take
such action because of nonpayment of any other charge for tariffed service.

IT IS FURTHER ORDERED that, concurrently with the issuance of each series
of Notes by the Note Issuer, ComEd will place into effect a tariff in the form
of the IFC tariff attached to the Application as Exhibit 4.0, (as modified in
accordance with Finding (12)) in accordance with Sections 18-103(d)(3),
18-104(a) and 18-104(j), directing that the IFCs associated with such series
and with all previously-issued and still outstanding series be applied and
invoiced to all customers paying Applicable Rates, and that such IFCs be
deducted, stated, and collected separately from the amounts otherwise billed
by ComEd or its successor for Applicable Rates and that, to allow for review
by the Commission and its Staff, such tariffs shall be filed with the
Commission no later than three business days prior to the date of issuance of
the series of Notes, and shall become effective on the date of issuance of
such series of Notes, and that upon the effectiveness of such tariff, all of
the ITP related to the subject IFCs shall constitute a current property right
and shall thereafter continuously exist as property for all purposes.

IT IS FURTHER ORDERED that each of the creation and vesting of the ITP in
CE Funding (including the right to obtain reconciliation and true-up adjustments
to the

46
<PAGE>

IFCs) and the transfer of the ITP from CE Funding to the Note Issuer shall
constitute an "absolute transfer" (within the meaning of Section 18-108), of any
right, title and interest ComEd or CE Funding, as applicable, otherwise may have
had in the ITP and that such transfer shall have the attributes described in
Finding (27).

IT IS FURTHER ORDERED that the ITP created by this Order, as contemplated
in the definition set forth in Section 18-102, includes the IFCs and all related
revenues, collections, claims, payments, money or proceeds thereof.

IT IS FURTHER ORDERED that, as contemplated by Section 18-108, the property
interest of CE Funding and the Note Issuer in the ITP shall not be defeated by
the commingling of such property with funds of ComEd (or any successor thereto)
or any other funds (including, but not limited to, funds of an ARES) and that,
accordingly, in the case of any such revenues, collections, claims, payments,
money or proceeds which are commingled with such other property, revenues,
collections or other payments, the portion allocable to the IFCs may be
determined by such reasonable methods of estimation as are set forth in the
Servicing Agreement contemplated by this order.

IT IS FURTHER ORDERED that the Notes will be non-recourse except as to, and
will be secured only by and payable solely out of, the proceeds of the property
enumerated in Finding (29).

IT IS FURTHER ORDERED that the Holders and the Note Trustee for the benefit
of the Holders shall be entitled to the benefit of the pledges and agreements of
the State of Illinois set forth in Section 18-105(b) and that each of ComEd, CE
Funding and the Note Issuer is authorized to include such pledges and agreements
in any contract with the Holders, the Note Trustee or with any assignees
pursuant to Section 18-105(b).

IT IS FURTHER ORDERED that, in accordance with Section 18-104(g), ComEd, CE
Funding and the Note Issuer should be afforded flexibility in establishing the
terms and conditions of the Notes, including repayment schedules, collateral,
required debt service and other reserves, interest rates and other financing
costs and the ability of ComEd, at its option, to effect a series of issuances
of Notes.

IT IS FURTHER ORDERED that all of the terms and provisions of this Order
binding upon ComEd (whether individually or as Servicer) shall, to the fullest
extent permitted by applicable law, be binding on ComEd's successors and
assigns.

IT IS FURTHER ORDERED that ComEd shall file periodic reports with the
Commission setting forth the use of proceeds from each issuance of Notes and
ComEd's associated accounting entries, such reports to be filed in accordance
with Finding (31).

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<PAGE>

IT IS FURTHER ORDERED that whenever a true-up or reconciliation results in
an adjustment to IFCs, ComEd shall provide to the Staff the adjusted IFCs along
with supporting documents and calculations at least three business days prior to
the date on which the adjusted IFCs will take effect and shall also, in the case
of a true-up review, notify the Staff by telephone, with a confirming facsimile
the same day directed to the Director of Accounting, the Director of Finance,
and the Manager of the Financial Analysis Division in accordance with Finding
(33).

IT IS FURTHER ORDERED that no later than the date on which adjusted IFCs
resulting from a true-up or reconciliation will take effect, ComEd shall file
with the Chief Clerk of the Commission a listing of the adjusted IFCs for each
class, a copy of which will be kept with ComEd's Schedule of Rates in each
office in which the Schedule is available for public inspection.

IT IS FURTHER ORDERED that any objections, petitions and motions which
remain undisposed of shall be disposed of consistent with the ultimate
conclusions contained in this Order.

IT IS FURTHER ORDERED that subject to the provisions of Section 10-113 of
the Public Utilities Act and 83 Ill. Adm. Code 200.880, this transitional
funding order is final; it is not subject to the Administrative Review Law.

By Order of the Commission this 21st day of July, 1998.

Chairman

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<PAGE>

SCHEDULE 1
PROJECTED REPAYMENT SCHEDULE

NOTE SCHEDULED NOTE SCHEDULED
-----------------------------------------------------------------------
<S> <C> <C> <C>
1 Sep 98 $3,400,000,000 15 Mar 04 $1,564,228,689
15 Mar 99 3,257,556,373 15 Jun 04 1,485,000,000
15 Jun 99 3,160,000,000 15 Sep 04 1,404,062,184
15 Sep 99 3,067,468,989 15 Dec 04 1,320,000,000
15 Dec 99 2,980,000,000 15 Mar 05 1,234,401,949
15 Mar 00 2,890,999,904 15 Jun 05 1,155,000,000
15 Jun 00 2,810,000,000 15 Sep 05 1,073,974,706
15 Sep 00 2,726,929,990 15 Dec 05 990,000,000
15 Dec 00 2,640,000,000 15 Mar 06 904,571,433
15 Mar 01 2,552,744,136 15 Jun 06 825,000,000
15 Jun 01 2,475,000,000 15 Sep 06 743,886,645
15 Sep 01 2,394,733,806 15 Dec 06 660,000,000
15 Dec 01 2,310,000,000 15 Mar 07 574,748,653
15 Mar 02 2,223,718,845 15 Jun 07 495,000,000
15 Jun 02 2,145,000,000 15 Sep 07 413,797,783
15 Sep 02 2,064,306,333 15 Dec 07 330,000,000
15 Dec 02 1,980,000,000 15 Mar 08 244,918,227
15 Mar 03 1,894,033,186 15 Jun 08 165,000,000
15 Jun 03 1,815,000,000 15 Sep 08 83,712,279
15 Sep 03 1,734,158,942 15 Dec 08 0
15 Dec 03 1,650,000,000

</TABLE>

<PAGE>

STATE OF ILLINOIS

ILLINOIS COMMERCE COMMISSION

ORDER

July 21, 1998

<PAGE>

TABLE OF CONTENTS

<S> <C>
I. COMED'S APPLICATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

II. BACKGROUND OF THE TRANSACTION AND SECURITIZATION GENERALLY.. . . . . . . . . . . . . . 3

III. DESCRIPTION OF PROPOSED TRANSACTION.. . . . . . . . . . . . . . . . . . . . . . . . . 7

IV. DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY AND INSTRUMENT FUNDING CHARGES.. . . . . 11

V. DESCRIPTION OF USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

VI. TRANSACTIONS WITH AFFILIATES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

A. ADMINISTRATION AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

B. OTHER TRANSACTIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

VII. ISSUES RAISED DURING THE PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . 20

A. REASONABLE DEMONSTRATION OF REDUCTION OF OVERALL COST OF CAPITAL.. . . . . . . . . 20

B. BILLING AND COLLECTION OF IFCS BY THIRD-PARTIES. . . . . . . . . . . . . . . . . . 22

C. ISSUES RAISED ON BRIEFS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

VIII. COMMISSION FINDINGS AND ORDERING PARAGRAPHS. . . . . . . . . . . . . . . . . . . . . 35

</TABLE>